May 28, 2003 (12:05 PM EDT)
Novell: SCO Doesn't Own Unix

Read the Original Article at InformationWeek

Novell on Wednesday challenged SCO's ownership of the intellectual property of Unix, saying that Novell, rather than SCO, owns that property. The statement casts doubt on SCO's $1 billion intellectual property lawsuit against IBM, and on its warning to Linux users that they, too, might be in violation of SCO's intellectual property.

Novell also threatened to file a lawsuit of its own against SCO. In an open letter to SCO, signed by Jack Messman, chairman, president, and CEO of Novell, the company said, "SCO's actions are disrupting business relations that might otherwise form at a critical time among partners around Linux technologies, and are depriving these partners of important economic opportunities. We hope you understand the potential significant legal liability SCO faces for the possible harm it is causing to countless customers, developers, and other Linux community members. SCO's actions, if carried forward, will lead to the loss of sales and jobs, delayed projects, canceled financing, and a balkanized Linux community."

Novell says SCO doesn't own the copyrights and patents for Unix. In the letter to SCO, Novell says: "Apparently, you share this view, since over the last few months you have repeatedly asked Novell to transfer the copyrights to SCO, requests that Novell has rejected."

Unix was invented by AT&T. Novell acquired Unix and transferred at least some of the intellectual property to SCO in 1995. Later, SCO transferred its Unix property and the SCO trademark to a company then called Caldera. SCO changed its name to Tarantella, and Caldera later changed its name to the SCO Group.

"Novell did not sell the Unix intellectual property to SCO," Linux advocate Bruce Perens said, "Instead, they sold SCO a license to develop, sell, and sub-license Unix. The title to Unix copyrights and patents remains with Novell. To back up this assertion, Novell refers to public records at the Library of Congress Copyright Office and the U.S. Patent Office."

Novell says in its letter: "For now, we demand that SCO either promptly state its Linux infringement allegations with specificity or recant the accusation made in your letter. Further, we demand that SCO retract its false and unsupported assertions of ownership in Unix patents and copyrights or provide us with conclusive information regarding SCO's ownership claims. In the future, we hope SCO will adhere to standards of strict accuracy when stating its rights in Unix."

SCO defended its claims in a brief E-mail statement.

"SCO owns the contract rights to the Unix operating system. SCO has the contractual right to prevent improper donations of Unix code, methods or concepts into Linux by any Unix vendor," the company said.

SCO said its rights do not depend on copyrights and patents, but rather on a contractual relationship with IBM. "Copyrights and patents are protection against strangers," SCO said. "Contracts are what you use against parties you have relationships with. From a legal standpoint, contracts end up being far stronger than anything you could do with copyrights.

The exact wording of the contract transferring intellectual property between Novell and SCO is unclear, SCO CEO and president Darl McBride said in the company's quarterly earnings conference call on Wednesday. He said he approached Novell executives informally to clarify the issue soon after taking over the company a year ago, and told Novell executives it made no sense to transfer the products without the copyright. "That would be like selling someone a book, but you don't get the words inside it," McBride said. He said Novell executives initially agreed, but higher-ups squashed plans to transfer the patents and copyrights to SCO. "Their simple math was, `If SCO wants it, then we must want it too.' They took a simple position and said, `If SCO needs this then we're going to put our foot in the ground and hold this.'"

He said two executives each from Novell and SCO, who were involved in the initial negotiations, could corroborate that the intent was to transfer patents an copyrights to SCO, and he offered to provide their names and phone numbers.

"Copyrights and patents are not even the battle we are fighting, but if we do, we're confident that a judge will rule on our side," McBride said.

In March, SCO sued IBM for allegedly violating SCO's Unix intellectual property, and issued a warning to 1,500 of the largest companies in the world this month that they might be liable for violations of SCO's intellectual property if they use Linux.

SCO IBM's Linux license for AIX runs out June 13, and if IBM does not come to terms with SCO by then, SCO will revoke the license, McBride said. He declined to provide specifics on what consequences IBM will face at that point.