Source: http://gl.scofacts.org/gl-20040704170212250.html
Timestamp: 2017-09-20 09:25:44
Document Index: 748292025

Matched Legal Cases: ['§78', '§78', '§7', '§7', '§2', '§13', '§ 13', '§13']

GrokLaw: Caldera's Complaint - Caldera v. IBM - as text
Caldera's Complaint - Caldera v. IBM - as text
Sunday, January 04 2004 @ 05:02 PM EST
Here is SCO's original Complaint in the matter of Caldera Systems, Inc., d/b/a The SCO Group v. IBM.
Attorneys for Plaintiff Caldera Systems, Inc.
d/b/a The SCO Group
a) misusing and misappropriating SCO’s proprietary software; b)inducing, encouraging, and enabling others to misuse and misappropriate SCO’s proprietary software; and c) incorporating (and inducing, encouraging, and enabling others to incorporate) SCO’s proprietary software into open source software offerings.
5. Plaintiff SCO is a Delaware corporation with its principal place of business in Utah County, State of Utah. 6. Defendant IBM is a Delaware corporation with its principal place of business in the State of New York.
8. Venue is properly situated in the Third Judicial District pursuant to Utah Code Ann. §78-13-5-7 in that plaintiff’s action arose in the State of Utah and IBM maintains an office or place of business in Salt Lake County.
9. This Court has in personam jurisdiction over IBM pursuant to Utah Code Ann. §78-27-24 on the bases that IBM (a) is transacting business within this State, (b) is contracting to provide goods and services within this State and (c) is causing tortious injury and breach of contract within this State.
10. UNIX is a computer software operating system. Operating systems serve as the link between computer hardware and the various software programs (“applications”) that run on the computer. Operating systems allow multiple software programs to run at the same time and generally function as a “traffic control” system for the different software programs that run on a computer.
11. By way of example, in the personal computing market, Microsoft Windows is the best-known operating system. The Windows operating system was designed to operate on computer processors (“chips”) built by Intel. Thus, Windows serves as the link between Intel-based processors and the various software applications that run on personal computers.
12. In the business computing environment for larger corporations (often called the “enterprise” environment), UNIX is widely used.
13. The UNIX operating system was built by AT&T Bell Laboratories. Initially, UNIX was used to power AT&T’s telecommunications business.
17. All commercial UNIX “flavors” in use today are based on the UNIX System V Technology (“System V Technology”).
21. In the computing industry, the term “desktop computers” is sometimes used to refer to the less powerful computers used by individuals and some businesses and the term “workstation” is sometimes used to refer to the more powerful computers used primarily by enterprises.
22. The personal computing market for relatively low-priced desktop computers came to be dominated by the Windows operating system software operating on Intel-based processor chip sets. Thus, the acronym “Wintel” became known in the industry as the combination of Windows and Intel for relatively low-priced desktop computers for the personal computing market.
24. As computers grew in popularity to perform business functions, the processing power of Intel-based processor chips also began to increase dramatically. Consistent with Intel founder Gordon Moore’s famous prediction, computer chips remained inexpensive while exponentially increasing in power and performance.
27. SCO’s early engineers faced difficult design challenges in modifying UNIX for effective use on an Intel processing platform. The principal design constraint centered around the limited processing power the Intel chip possessed in the early 1980’s. The Intel chip (designed as it was for personal computers) was not nearly as powerful as the enterprise chips used by IBM, Sun, SGI and others in their respective UNIX offerings.
28. Based on the early design constraint of Intel’s limited processing power, SCO found an appropriate enterprise market niche for the early versions of SCO UNIX—single-purpose applications such as point-of-sale control, inventory control and transactions processing, with the highest possible reliability. Intel processors were fully capable of performing these relatively simple, repetitive tasks, and could do so at a lower cost and as reliably as the more powerful enterprise processing platforms sold by the other UNIX vendors, such as Sun and IBM.
31. The simplicity and power of this “UNIX on Intel” business model helped SCO grow rapidly. SCO gained other large enterprise customers such as CitiGroup, K-Mart, Cendant, Target Stores, Texas Instruments, BMW, Walgreens, Merck, Sherwin Williams, Radio Shack, Auto Zone, British Petroleum, Papa John’s Pizza, Costco and many others.
32. As Intel’s prominence grew in the enterprise computing market, SCO’s early version of UNIX also grew into the operating system of choice for enterprise customers who wanted an Intel-based computing solution for a high volume of repetitive, simple computing transactions.
33. SCO’s software offering based on its early development of UNIX for high volume, repetitive computing transactions is known in the market as “SCO OpenServer.”
37. A “shared library” is a common set of computer code inside an operating system that performs a routine function for all the applications (software programs) designed to run on that particular operating system. Thus, Microsoft Windows has its own set of shared libraries. SCO OpenServer (UNIX designed for Intel chips) has its set of own shared libraries. Sun Solaris (UNIX designed for SPARC chips) has its own set of shared libraries.
38. The shared libraries of all operating systems are designed with “hooks.” These “hooks” are computer code that trigger the operation of certain routine functions. A software developer can shorten the development effort for any new software program and create a more efficient code base by writing programs that access the various “hooks” of the operating system, and thereby use a shared set of code built into the operating system to perform the repetitive, common functions that are involved in every program.
39. Every one of the specialized applications (software programs) designed by various third-party software developers for use on the SCO OpenServer operating system was written to access the various “hooks” built into SCO OpenServer; and therefore designed to access the SCO OpenServer Shared Libraries.
40. The SCO OpenServer Shared Libraries are the proprietary and confidential property of SCO. SCO OpenServer has been licensed to numerous customers subject to restrictions on use that prohibit unauthorized use of any of its software code, including without limitation, the SCO OpenServer Shared Libraries.
42. While the original SCO OpenServer operating system performs with all the reliability and dependability of other UNIX systems, it was originally designed for the initially low processing power of Intel chips. Therefore, SCO OpenServer does not contain, or require, the same level of scalability and extensibility that other versions of UNIX offer.
43. During or about 1992, SCO’s predecessor in interest, Novell, Inc. (“Novell”), acquired all right, title and interest in and to the UNIX Software Code from AT&T for $750 million in Novell stock. For branding purposes, Novell renamed UNIX as “UnixWare.”
48. SCO was ready to offer large enterprise customers a high-end UNIX computing platform based on inexpensive Intel processors. Given the rapid growth of Intel’s performance capabilities and Intel’s popularity in the marketplace, SCO found itself in a highly desirable market position. In addition, SCO still has its SCO OpenServer business for retail and inventory-targeted functions, with its 4,000 applications in support.
52. In furtherance of Project Monterey, SCO expended substantial amounts of money and dedicated a significant portion of SCO’s development team to completion of the project.
53.Specifically, plaintiff and plaintiff’s predecessor provided IBM engineers with valuable information and trade secrets with respect to architecture, schematics, and design of UnixWare and the UNIX Software Code for Intel-based processors.
a) Software Agreement Number Soft-00015 (“AT&T/IBM Software Agreement” attached hereto and incorporated herein as Exhibit A);
62. In addition, AT&T and IBM entered into a side letter on that date (“AT&T IBM Side Letter” attached hereto and incorporated herein as Exhibit C).
63. Thereafter, Amendment X to Software Agreement SOFT-00015, as amended, was executed on or about October 16, 1996 by and among IBM, The Santa Cruz Operation, Inc. (“SCO”) and Novell, Inc. (“IBM Amendment X” attached hereto and incorporated herein as Exhibit D).
64. Collectively these agreements, side letter and amendment are referred to hereinafter as the “AT&T/IBM UNIX Agreements.”
65. Pursuant to the AT&T/IBM UNIX Agreements, the parties agreed, inter alia, to the following terms and conditions:
b) IBM may not transfer or dispose of the UNIX Software Code in whole or in part (AT&T/IBM Software Agreement §7.10);
c) IBM is required to hold all UNIX Software Code subject to the AT&T/IBM Agreements in confidence (Software Agreement §7.06(a) as amended by Side Letter ¶9); and
66. The cumulative effect of these provisions requires IBM to protect the UNIX Software Code against unrestricted disclosure, unauthorized transfer or disposition and unauthorized use by others.
67. In addition, IBM’s ability to sublicense UNIX Software Code for the use of others is restricted under §2.01 of the Sublicensing Agreement as follows:
c To use, and to permit DISTRIBUTORS to use, SUBLICENSED PRODUCTS without fee solely for testing CPUs that are to be delivered to customers and for demonstrating SUBLICENSED PRODUCTS to prospective customers.
70. One or more of the different versions of UNIX-based operating systems sold by Sun, IBM, SCO, SGI, and others, is the operating system of choice for large enterprise computing operations in virtually 100% of the Fortune 1000 companies.
71.UNIX gained this prominence in the computing marketplace because of twenty years of development and over one billion dollars invested by plaintiff and its predecessors to create a stable, reliable operating system to perform the mission critical work required by large enterprises.
72. The recent rise of the global technology economy has been powered in large part by UNIX. Virtually every mission critical financial application in the world is powered by UNIX, including electronic transfers of funds. Real time stock trades are powered by UNIX. Inventory controls and distributions are powered by UNIX. All major power grids and all major telecommunications systems are powered by UNIX. Many satellite control and defense control systems are powered by UNIX. Virtually every large corporation in the world currently operates part or all of its information technology systems on a UNIX operating system.
74. A new operating system derived from and based on UNIX recently has become popular among computer enthusiasts for use on personal, educational-based, and not-for-profit projects and initiatives. This operating system is named Linux.
75. The name “Linux” is commonly understood in the computing industry to be a combination of the word “UNIX” (referring to the UNIX operating system) and the name “Linus.” The name “Linus” was taken from the person who introduced Linux to the computing world, Linus Torvalds.
76. The initial market positioning of Linux was to create a free UNIX-like operating system to be used by developers and computer hobbyists in personal, experimental, and not-for-profit applications. As such, Linux posed little, if any, commercial threat to UNIX.
81. In addition, the GPL provides that, unlike SCO’s UNIX operating system or IBM’s AIX operating system or Sun’s Solaris operating system, no warranty whatsoever runs with its software. The GPL includes the following language:
BECAUSE THE PROGRAM IS LICENSED FREE OF CHARGE, THERE IS NO WARRANTY FOR THE PROGRAM, TO THE EXTENT PERMITTED BY APPLICABLE LAW?THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAM IS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU ASSUME THE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.
87. As market awareness of Linux evolved, IBM initiated a course of conduct with the purpose and effect of using Linux to unfairly compete in the enterprise market. At that point in time, four important events were occurring simultaneously in the enterprise software computing marketplace:
a) Intel chips were becoming widely demanded by enterprise customers since Intel’s processing power had increased and its cost had remained low;
90. To accomplish the end of transforming the enterprise software market to a services-driven market, IBM set about to deliberately and improperly destroy the economic value of UNIX and particularly the economic value of UNIX on Intel-based processors.
“Project Monterey was actually started before Linux did. When we started the push to Monterey, the notion was to have one common OS for several architectures. The notion actually came through with Linux, which was open source and supported all hardware. We continued with Monterey as an extension of AIX [IBM UNIX] to support high-end hardware. AIX 5 has the best of Monterey. Linux cannot fill that need today, but over time we believe it will. To help out we’re making contributions to the open source movement like the journal file system. We can’t tell our customers to wait for Linux to grow up.
We’re willing to open source any part of AIX that the Linux community considers valuable. We have open-sourced the journal filesystem, print driver for the Omniprint. AIX is 1.5 million lines of code. If we dump that on the open source community then are people going to understand it? You’re better off taking bits and pieces and the expertise that we bring along with it. We have made a conscious decision to keep contributing.”
93. IBM, however, was not and is not in a position legally to “open source any part of AIX that the Linux community considers valuable.” Rather, IBM is obligated not to open source AIX because it contains SCO’s confidential and proprietary UNIX operating system and, more importantly, the code that is essential for running mission critical applications (e.g., wire transfers) for large businesses.
“Another example is when IBM realized that the open-source operating system (OS) Linux provided an economical and reliable OS for its various hardware platforms. However, IBM needed to make changes to the source to use it on its full range of product offerings.
IBM received help from the open-source community with these changes and in return, released parts of its AIX OS to open source. IBM then sold its mainframes running Linux to Banco Mercantile and Telia Telecommunications, replacing 30 Windows NT boxes and 70 Sun boxes respectively - obviously a win for IBM, which reduced its cost of maintaining a proprietary OS while increasing its developer base. IBM's AIX contributions were integrated into the standard Linux source tree, a win for open source.”
"IBM executives speaking here at the company's solutions developer conference outlined reasons for the company's Linux support, pointing to features in the operating system that could push it past UNIX for back-end computing. While they admit that Linux still has a way to go before it can compete with the functions available on many flavors of UNIX, IBM officials said that Linux could prove more cost-effective and be a more user-friendly way to manage servers.
"‘We are happy and comfortable with the idea that Linux can become the successor, not just for AIX, but for all UNIX operating systems,’ said Steve Mills, senior vice president and group executive of the IBM Software Group, during a news conference.”
Mills hinted that the company's full development capabilities will be brought to bear in engineering the Linux kernel to offer vastly improved scalability, reliability and support for mixed workloads--and to obliterate UNIX.”
99. The only way that the pathway is an “eight-lane highway” for Linux to achieve the scalability, SMP support, fail-over capabilities and reliability of UNIX is by the improper extraction, use, and dissemination of the proprietary and confidential UNIX Software Code and libraries. Indeed, UNIX was able to achieve its status as the premiere operating system only after decades of hard work, beginning with the finest computer scientists at AT&T Bell Laboratories, plaintiff’s predecessor in interest.
103. But for IBM’s coordination of the development of enterprise Linux, and the misappropriation of UNIX to accomplish that objective, the Linux development community would not timely develop the quality or customer support necessary for wide-spread use in the enterprise market.
113. Because IBM’s misappropriation was willful, malicious, and in reckless disregard of Plaintiff’s rights, SCO is entitled to an award of exemplary damages against IBM in an amount equal to two times the amount of damages, pursuant to Utah Code Ann. §13-24-4(2).
a) Misappropriation of trade secrets and confidential information of plaintiff;
THIRD CAUSE OF ACTION (Interference with Contract)
127. IBM’s tortious conduct was also intentionally and maliciously designed to destroy plaintiff’s business livelihood and all opportunities of plaintiff to derive value from the UNIX Software Code in the marketplace. As such, this Court should impose an award of punitive damages against IBM in an amount to be proven and supported at trial.
129. IBM has numerous obligations under the AT&T/IBM UNIX Agreements, some of which are detailed below.
IBM is further required by ¶2.01 of the Sublicensing Agreement to obtain confidentiality agreements from its distributors and customers, and by ¶3 of the Side letter to obtain the same from contractors.
133. IBM is prohibited under Section 2.05 of the Software Agreement from using UNIX for others. The applicable language provides:
134. The cumulative effect of these provisions requires IBM to protect SCO’s valuable UNIX trade secrets against unrestricted disclosure, unauthorized transfer or disposition and unauthorized use by others.
135. Notwithstanding these provisions, IBM has subjected SCO’s UNIX trade secrets to unrestricted disclosure, unauthorized transfer and disposition, unauthorized use, and has otherwise encouraged others in the Linux development community to do the same. SCO, therefore, has terminated IBM’s license to use UNIX-based software products. (See letter dated March 6, 2003, attached hereto and incorporated herein as Exhibit E).
4. For damages under the Fourth Cause of Action for breach of contract of the AT&T/IBM UNIX Agreements together with additional damages through and after the time of trial foreseeably and consequentially resulting from IBM’s breach of contract in an amount to be proven at the time of trial;
6. For exemplary damages under Utah Code Ann. § 13-24-1 in an amount equal to twice the award under the First Cause of Action for misappropriation of trade secrets;
7. For attorneys’ fees as provided by Utah Code Ann. §13-24-5 and by contract in an amount to be proven at trial; and
Jury Trial Demand Pursuant to U.R.Civ.P. Rule 38(b), plaintiff demands trial by jury of any issue triable of right by jury and tenders the statutory jury fee upon the filing of this Complaint.
Attorneys for Plaintiff Caldera Systems, Inc. d/b/a
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