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SCO says IBM hurt profits

Published: Tuesday, March 6 2007 12:05 a.m. MST

In its ongoing litigation against International Business Machines Corp., the SCO Group Inc. on Monday said IBM hurt SCO's relationship with several high-tech powerhouses, causing SCO's market share and revenues to plummet.

In a hearing before U.S. District Judge Dale Kimball, an attorney for Lindon-based SCO said IBM "pressured" companies to cut off their relationships with SCO. And "the effect on SCO was devastating and it was immediate," Mark James said.

SCO's multibillion-dollar suit contends that IBM violated a licensing contract by putting SCO Unix source code into Linux, a free "open source" computer operating system.

IBM on Monday argued for summary judgment on the matters of unfair competition and business interference, but SCO contends that a jury trial is needed.

On the interference claims, among companies SCO claims IBM directly contacted are BayStar Capital Management, Intel, Oracle, Computer Associates, Hewlett Packard and Novell. An IBM representative talked to those companies after IBM allegedly put Unix into Linux and began pursuing its own Linux strategy, SCO alleges.

As an example, James said Novell's CEO at one time promised a clarification to the companies' contract that would clearly state that SCO owned the Unix copyrights. But Novell later asserted copyright ownership and IBM helped Novell acquire SuSE Linux, he said, adding that a jury should be able to see that IBM interfered with SCO's contractual relationship with Novell.

But IBM attorney Todd Shaughnessy said SCO has presented no evidence of IBM interference among the companies. He contended SCO cannot show that the conversations between IBM and those companies ever occurred and that, if they did, that they damaged SCO's relationships with those companies. What's more, he said, assuming the conversations occurred, urging companies to move away from SCO is not against the law, Shaughnessy said.

SCO claims IBM hurt relationships with 177 companies, including the seven allegedly directly contacted by IBM. Fourteen more are former SCO customers, and the remainder are companies "that may have used Linux," Shaughnessy said.

But SCO's declining relationship with customer companies began in 2001 — before alleged IBM interference — and was not IBM's fault. He said there are "any number of reasons" their relationships with SCO soured.

As for Novell asserting Unix copyright claims — the subject of a lawsuit between Novell and SCO — Novell acted on its own behalf, Shaughnessy said.

SCO is unable to say if, when and why 14 former SCO customers opted for Linux, Shaughnessy said. SCO's claim requires speculation that the companies use Linux, that they "use Linux only because of IBM" and that without Linux they would have opted for a SCO product, he said.

Kimball took the matters under advisement, as he did after hearings for other motions for summary judgment last week.

Kimball has pushed back the trial in the IBM case until the SCO/Novell case is resolved.


E-mail: bwallace@desnews.com

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