Court Says Novell, Not SCO, Owns Unix

In a win for open source software and Linux, a federal court has ruled against SCO Group Inc., indicating that Novell Inc. is the rightful owner of the Unix operating system copyright. SCO had been seeking billions of dollars, or $700 for every computer that runs Linux -- from hundreds of companies including IBM -- and is also in litigation with Red Hat, a maker of Linux software, an alternative to Microsoft's Windows. "The court's ruling has cut out the core of SCO's case and, as a result, eliminates SCO's threat to the Linux community based upon allegations of copyright infringement of Unix," said Novell general counsel Joe LaSala. SCO claimed to have purchased Unix (originally developed by AT&T in the 70s) from Novell in 1995, and in 2003 said Linux was an illegal knockoff of Unix and filed suit against IBM, claiming that Big Blue had unfairly taken part of the Unix code and given it to the Linux developers. The Utah court, however ruled that SCO merely licensed and never purchased Unix from Novell ("The bill of sale is clear: all copyrights were excluded from the transfer," the ruling said), meaning SCO probably can't sue Linux users or IBM for copyright infringement. James Zemlin, executive director of the Linux Foundation called the ruling "a meaningful message in terms of people adopting open-source software." SCO and IBM couldn't be reached to comment. In the wake of the ruling, some are questioning the future of SCO, which trades around $1.50/share, and posts quarterly losses of more than $1M on revenue of just about $6M.

Sources: New York Times, Bloomberg, Wall Street Journal
Commentary: The Future Of Linux Still Dark [24/7 Wall Street] • Open Source to Compete With Traditional Networking FirmsMicrosoft’s Open Source Claim: What Are These Patents Really All About?
Stocks/ETFs to watch: SCOX, NOVL, IBM

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