IBM 2008 Annual Report Download - page 99

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Notes to Consolidated Financial Statements
INTERNATIONAL BUSINESS MACHINES CORPORATION and Subsidiary Companies
Note O.
Contingencies and Commitments
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The company is involved in a variety of claims, demands, suits, inves-
tigations, tax matters and proceedings that arise from time to time in
the ordinary course of its business, including actions with respect to
contracts, intellectual property (IP), product liability, employment,
benefits, securities, foreign operations and environmental matters.
These actions may be commenced by a number of different parties,
including competitors, partners, clients, current or former employees,
government and regulatory agencies, stockholders and representa-
tives of the locations in which the company does business.
The following is a summary of some of the more significant legal
matters involving the company.
The company is a defendant in an action filed on March , 
in state court in Salt Lake City, Utah by The SCO Group (SCO v.
IBM). The company removed the case to Federal Court in Utah.
Plaintiff is an alleged successor in interest to some of AT&T’s Unix
IP rights, and alleges copyright infringement, unfair competition,
interference with contract and breach of contract with regard to the
company’s distribution of AIX and Dynix and contribution of code to
Linux. The company has asserted counterclaims, including breach of
contract, violation of the Lanham Act, unfair competition, inten-
tional torts, unfair and deceptive trade practices, breach of the
General Public License that governs open source distributions,
promissory estoppel and copyright infringement. In October ,
the company withdrew its patent counterclaims in an effort to sim-
plify and focus the issues in the case and to expedite their resolution.
Motions for summary judgment were heard in March , and the
court has not yet issued its decision. On August , , the court in
another suit, The SCO Group, Inc. v. Novell, Inc., issued a decision
and order determining, among other things, that Novell is the owner
of UNIX and UnixWare copyrights, and obligating SCO to recog-
nize Novell’s waiver of SCO’s claims against IBM and Sequent for
breach of UNIX license agreements. At the request of the court in
SCO v. IBM, on August , , each of the parties filed a status
report with the court concerning the effect of the August th Novell
ruling on the SCO v. IBM case, including the pending motions. On
September , , plaintiff filed for bankruptcy protection, and all
proceedings in this case were stayed. In the SCO v. Novell case, on
November , , SCO filed its notice of appeal to the U.S. Court
of Appeals for the Tenth Circuit, which included an appeal of the
August ,  ruling.
On November , , the company filed a lawsuit against
Platform Solutions, Inc. (PSI) in the United States District Court
for the Southern District of New York, alleging that PSI violated
certain intellectual property rights of IBM. PSI asserted counter-
claims against IBM. On January , , the court permitted T
Technologies, a reseller of PSI computer systems, to intervene as a
counterclaim-plaintiff. T claims that IBM violated certain antitrust
laws by refusing to license its patents and trade secrets to PSI and by
tying the sales of its mainframe computers to its mainframe operating
systems. On June , , IBM acquired PSI. As a result of this
transaction, IBM and PSI dismissed all claims against each other, and
PSI withdrew a complaint it had filed with the European Commission
in October  with regard to IBM. Litigation between the com-
pany and T continues. In January , T filed a complaint with
the European Commission alleging that IBM violated European
Commission competition law based on the facts alleged in the pending
U.S. litigation.
The company is a defendant in an action filed on March ,
 in the United States District Court for the Eastern District of
Texas by SuperSpeed LLC, which alleges that certain IBM products
infringe five patents relating generally to cache coherency tech-
niques. SuperSpeed seeks damages and injunctive relief. The case is
set for trial in June .
The company and certain of its subsidiaries are defendants in an
action filed on August ,  in the United District Court for the
Eastern District of Texas by JuxtaComm Technologies, Inc., which
alleges that certain IBM products infringe a patent relating to the
transformation and exchange of data between different computer
systems. JuxtaComm seeks damages and injunctive relief. The case is
set for trial in November .
In October , a purported collective action lawsuit was filed
against IBM in the United States District Court for the Northern
District of California by  former IBM employees alleging, on
behalf of themselves and allegedly similarly situated former employees,
that the company engaged in a pattern and practice of discriminating
against employees on the basis of age when it terminated employees,
both in connection with reductions in force and individualized
determinations (Syverson v. IBM). Initially, the District Court dis-
missed the lawsuit on the basis of release agreements signed by all
the plaintiffs. On appeal, the Ninth Circuit reversed the trial court’s
finding that the release barred these claims, and in January , after
denial of IBM’s petition for rehearing, the matter was returned to the
trial court for further proceedings. On October , , the court
dismissed with prejudice plaintiffs’ claim for relief under the Older
Workers Benefit Protection Act, and dismissed with leave to amend
plaintiffs’ claim asserting disparate impact age discrimination with
respect to individualized terminations. On November , , plain-
tiffs filed a Third Amended Complaint, amending the disparate
impact claim. IBM filed its answer on November , . On
January , , the case was dismissed with prejudice.
In January , the Seoul District Prosecutors Office in South
Korea announced it had brought criminal bid-rigging charges against
several companies, including IBM Korea and LG IBM (a joint ven-
ture between IBM Korea and LG Electronics, which has since been
dissolved, effective January, ) and had also charged employees of
some of those entities with, among other things, bribery of certain