SCO revokes IBM’s UNIX licence and demands $3 billion

Yesterday's developments are the latest in a dispute between the software company and IBM over an alleged breach of SCO's patents in the UNIX system.

In February 1985, IBM entered into a licence agreement with the then owner of the UNIX system, AT&T, in order to produce its own AIX operating system. The agreements required that IBM hold the UNIX software code in confidence, and prohibited unauthorised distribution or transfer.

SCO purchased many of the patents in UNIX in 1995, including source code, source documentation, software development contracts, licenses and other intellectual property that pertained to UNIX-related business.

SCO alleges that IBM gave the rights away to Linux and in March this year launched a $1 billion lawsuit against IBM. In May, SCO warned that Linux is an unauthorized derivative of UNIX and that legal liability for the use of Linux may extend to commercial users. It suspended all of its future sales of the Linux operating system until further notice.

SCO yesterday exercised the right of termination which it says was granted under the original 1985 UNIX Software and Sublicensing Agreements between IBM and AT&T. SCO notified IBM on 6th March 2003 that it intended to terminate in 100 days, if IBM did not correct certain actions that allegedly violate the agreement. As of the deadline - midnight, 13th June 2003 - IBM had not complied with SCO's request, and termination was triggered.

SCO at the same time filed an amendment to the original lawsuit against IBM, for a permanent injunction forcing IBM to cease and desist all use and distribution of AIX and to destroy or return all copies of the so-called UNIX System V source code.

In the amended complaint, SCO is seeking at least $3 billion from IBM, comprising $2 billion for alleged breaches of contract and $1 billion for unfair competition, in addition to unspecified damages for misappropriation of trade secrets and punitive damages.

"IBM has chosen to continue the actions that violate our source code and distribution agreements," said Darl McBride, President and CEO of the SCO Group yesterday.

He continued:

"Over the last several months, SCO has taken all of the steps outlined in the UNIX licensing agreements to protect its rights. Today SCO is requesting that the court enforce its rights with a permanent injunction. IBM no longer has the authority to sell or distribute AIX and customers no longer have the right to use AIX software."

IBM's Director of Media Relations, Trink Guarino, responded in a statement that, "IBM's Unix license is irrevocable, perpetual and fully paid up. It cannot be terminated."