SCO first made claims in
2003 to intellectual property rights in the UNIX operating system.
AT&T owned the system and sold it to Novell in 1992. The Santa
Cruz Operation purchased rights to the system from Novell in 1995
in a contract that specifically excluded copyright ownership from
the sale.
In 2003 and in subsequent suits SCO, a successor company to The
Santa Cruz Operation, has claimed intellectual property rights in
the UNIX system. Novell said that it retained the copyright in the
system.
A US judge, Dale Kimball of the US District Court for the
District of Utah, has said that Novell does own the UNIX
copyrights. He said that SCO now owes Novell millions of dollars in
licencing income it received from its UNIX customers, such as
Microsoft and Sun Microsystems.
SCO had claimed that Novell was wrong to claim ownership of the
system, but Kimball said in his ruling that "there is no basis in
the evidence before this court for finding that Novell's public
claims of ownership were a misappropriation or seizure of SCO's
property".
The agreement between the two companies was to allow SCO's
predecessor company the right to sell UNIX licences to third
parties. Under that deal it kept a 5% fee, meaning that 95% of its
fees should have been paid by it to Novell.
Now that the Court has found that Novell, and not SCO, owned the
copyrights to the software, SCO could owe millions in royalty
payments. Kimball said that Microsoft and Sun alone paid combined
royalties to SCO of $26 million.
"As a matter of law, the court concludes that SCO breached its
fiduciary duties to Novell by failing to account for and remit the
appropriate royalty payments to Novell for the SVRX portions of the
2003 Sun and Microsoft Agreements," said Kimball in his ruling.
"Because of the decrease in SCO's revenues and assets, Novell fears
that it will be unable to collect on its claim for royalties."
"The company is obviously disappointed with the ruling issued
last Friday," said a SCO statement. "Although the district judge
ruled in Novell's favor on important issues, the case has not yet
been fully vetted by the legal system and we will continue to
explore our options with respect to how we move forward from
here."
There is a related case against IBM that has also been
undermined by the ruling. IBM licensed UNIX from AT&T in the
1980s and SCO claimed that it had let some of the UNIX programming
code 'leak' into the now-popular Linux open source operating
system.
The verdict in the IBM case was put on hold while the Novell
case was decided. If SCO does not own UNIX, though, then it cannot
take an action against IBM for alleged infringement of UNIX
copyrights.
"SCO is obligated to recognize Novell's waiver of SCO's claims
against IBM," said Kimball.
There is likely to still be some kind of trial over the issues
in autumn. Novell had issued counter-claims against SCO which could
proceed to trial following the ruling, and SCO still claims that it
owns the copyright in modifications to the software made after the
date of the original licensing agreement.
It is also thought possible that IBM will take its counterclaims
to court.
