Yesterday, UnixWare/OpenServer vendor Xinuos filed a lawsuit in the US Virgin Islands, alleging intellectual property theft and monopolistic market collusion against joint defendants IBM and Red Hat.
If this sounds like a familiar, worn-out story, it should. Xinuos is the company that bought the remnants of the SCO Group in 2011. The SCO Group, in turn, is a company best known not for its actual products, but for its lawsuits against IBM and Linux. That lawsuit began in 2003 — funded in part by a very different Microsoft, just five years after the leak of the Halloween documents in which Microsoft acknowledged the “long-term viability” of open source software and discussed strategies to push it out of the market.
At the heart of the original lawsuit is SCO’s claim that IBM took proprietary code from SCO Unix and inserted it into the Linux kernel. The next 18 years were not favorable for SCO, which first filed for bankruptcy in 2007 and then sold its intellectual property (but not its litigation rights) in 2011 to Xinuos, then called UnXis.
Here’s a short timeline:
- March 2003 – SCO Group claims ownership of AT&T Unix, Linux is an unauthorized derivative of AT&T Unix, and IBM has violated contractual obligations by distributing Linux
- May 2003 – Novell publicly states that SCO does not own the intellectual property of AT&T Unix in question, Novell does
- January 2004 – Novell publicly releases all Linux users from lawsuits over AT&T Unix intellectual property. SCO responds through Novell . to sue
- July 2005 – Novell sues SCO, seeking damages in excess of SCO’s assets
- August 2007 – US Federal Judge Kimball rules that Novell owns the UNIX and UnixWare copyrights
- August 2009 – US 10th Circuit Court of Appeals partially overturns Kimball’s ruling, allowing SCO to continue pursuing Unix copyright ownership
- June 2010 – Jury reaches unanimous verdict confirming Novell ownership of Unix copyrights
- July 2010 – SCO Appeal SCO v. Novello again
- August 2011 – Court of Appeal upholds decision for Novell
The observant reader will note that although SCO v. Novello was decided, appealed, affirmed, appealed again and finally confirmed in 2011, SCO v. IBM was still going on in 2011, when Xinuos (then UnXis) bought the intellectual property from SCO. That zombie lawsuit is — with all conviction —still pending today… and now comes an extremely similar lawsuit from Xinuos, who you will recall owns the rest of the SCO Group.
The new lawsuit alleges that IBM incorporated unspecified code from the company’s UnixWare and OpenServer code into IBM’s own AIX operating system. It also claims that IBM and Red Hat colluded directly – at one point; the lawsuit offers no timeline – to divide the entire Unix-like OS market into major business opportunities for IBM and smaller opportunities for Red Hat, leaving Xinuos out in the cold:
First, IBM stole the intellectual property from Xinuos and used that stolen property to build and sell a product to compete with Xinuos itself. Second, with stolen property at the hands of IBM, IBM and Red Hat agreed to divide the relevant market and use their growing market power to victimize consumers, innovative competitors and innovation itself. Third, after IBM and Red Hat launched their conspiracy, IBM then acquired Red Hat to consolidate their plan and make it permanent.
Xinuos elaborates on the damage it believes it felt in the full lawsuit:
As a result of these activities, Xinuos has been excluded from significant opportunities in the market. For example, despite Xinuos offering a FreeBSD-based operating system of significant commercial value to business users, Xinuos was unable to secure as much financial support or customer interest in OpenServer 10 as it could and should have due to market conditions. Indeed, the market has been so disrupted that Xinuos has found that over 70% fewer of its customers are able to license its new operating system than would be available in a functioning market. The shielding effect on Xinuos is also felt by all competitors.
Even more astonishing, the company claims that IBM is expressly out to destroy FreeBSD as a whole:
IBM’s strategy with Red Hat was expressly to destroy FreeBSD, on which Xinuos’ most recent innovations are based.
And it goes on to demand not just damages, but the complete undoing of IBM’s acquisition of Red Hat:
The merger must be declared illegal in violation of at least section 7 of the Clayton Act, and IBM and Red Hat must be ordered to divest each other and null and void all associated agreements between them.
The “Fact Background” section ends with this bold statement, on page 44 of Xinuos’ 57-page complaint:
The result has made it impossible for Xinuos to compete on fair terms and has denied consumers access to Xinuos’ high-quality products. The result is also a highly dysfunctional market. High-quality products have no penetration capabilities. Budding rivals have no chance to grow. Prices are skyrocketing. Enough is enough. IBM and Red Hat have abused their control of the Unix/Linux operating system market for far too long, and intervention is the only way to fix what they’ve broken.
It’s worth noting that the complaint makes absolutely no mention of SUSE Linux Enterprise Server or Ubuntu – either one might come to the mind of a reasonable onlooker thinking of “rivals” of Red Hat Enterprise Linux – and no mention is made of it. explanation for the market growth experienced by those distributions.