ST. THOMAS, U.S. Virgin Islands, March 31, 2021 /PRNewswire/ -- Xinuos, Inc., a software company headquartered in the U.S. Virgin Islands
that provides commercial customers with server operating systems, today
filed a copyright infringement and antitrust lawsuit against
International Business Machines Corp. ("IBM") and Red Hat, Inc. ("Red
Hat") in the United States District Court of the Virgin Islands,
St. Thomas and St. John Division. Xinuos alleges that IBM and Red Hat,
using wrongfully copied software code, have engaged in additional,
illegal anti-competitive misconduct to corner the billion-dollar market
for Unix and Linux server operating systems.
"While this case is about Xinuos and the theft of our intellectual property," said Sean Snyder,
President and CEO of Xinuos. "It is also about market manipulation that
has harmed consumers, competitors, the open-source community, and
innovation itself."
According to the complaint, at their peak, Xinuos' operating systems
were the most widely-used operating systems in the Unix/Linux server
operating system market. Xinuos' UnixWare 7 and OpenServer 5 and 6
server operating systems were popular because they were stable,
reliable, and easy to manage. Xinuos alleges that in or around this
time, IBM's server operating systems were declining in popularity and
new entrants to the market, such as Red Hat, were gaining market share
and threatening IBM's server operating system business, its underlying
business selling server hardware, as well as related software and
services.
Xinuos' complaint alleges that IBM then took unlawful steps to
improve its market position and safeguard its business from competition:
"First, IBM stole Xinuos' intellectual
property and used that stolen property to build and sell a product to
compete with Xinuos itself. Second, stolen property in IBM's hand, IBM
and Red Hat illegally agreed to divide the relevant market and use their
growing market powers to victimize consumers, innovative competitors,
and innovation itself. Third, after IBM and Red Hat launched their
conspiracy, IBM then acquired Red Hat to solidify and make permanent
their scheme."
The complaint further alleges that IBM has been misleading its
investors about its rights to use Xinuos' code for more than a decade:
"IBM has made demonstrably and
materially misleading statements in securities filings about its
ownership interest in the Code. In every annual report filed with the
SEC since 2008, IBM has represented that a third-party owns all of the
UNIX and UnixWare copyrights, and that this third-party has waived any
infringement claim against IBM. These self-serving representations are
demonstrably false and misleading to investors and potential asset
purchasers."
The complaint also details IBM's and Red Hat's alleged conspiracy, summarizing it as follows:
"Thereafter, IBM and Red Hat…divided
the market for enterprise clients to protect IBM's precious high-end
server, software, and services business, they promoted each other's
operating system products, and they granted each other special technical
access and abilities that were not made generally available and from
which Xinuos and others were specifically excluded. These bad acts
continue to this day."
Xinuos alleges that the IBM and Red Hat conspiracy has harmed the
open-source community and specifically Xinuos' OpenServer 10 product,
which is based on FreeBSD, an open-source UNIX-based operating system
and alternative to Red Hat's Linux-based open-source operating system,
RHEL. "By dominating the Unix/Linux server operating system market,
competing open-source operating systems, like our FreeBSD-based
OpenServer 10, have been pushed out of the market," said Snyder. "This
prevents developers and consumers from receiving the benefits that these
products have to offer."
Xinuos asserts claims under the copyright infringement provisions of
17 U.S. Code §101, the Sherman Antitrust Act, the Clayton Antitrust Act,
the Virgin Islands Antimonopoly Law, and Virgin Islands Unfair
Competition and Unjust Enrichment common law. Xinuos has asked for both
monetary damages and injunctive relief.
About Xinuos, Inc.
Xinuos provides commercial customers with operating systems that are
reliable, dependable, and secure for mission-critical applications that
demand rock-solid performance. The Xinuos general-purpose operating
systems are on pace with hardware and software industry advances and are
designed to power any size business that requires stability,
reliability, and scalability. Learn more at www.xinuos.com.
Contact:
Simone Jackenthal
SJackenthal@tridentdmg.com
(202) 923-5296
SOURCE Xinuos
https://www.prnewswire.com/news-releases/xinuos-sues-ibm-and-red-hat-for-antitrust-violations-and-copyright-infringement-alleges-ibm-has-been-misleading-its-investors-since-2008-301259756.html