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SCO Group files bankruptcy

by on15 September 2007


Seeks Chapter 11 asset protection

We reported
recently that SCO Group has been litigating over ownership of Unix intellectual property rights, and that the U.S. District Court ruled several weeks ago against SCO Group and held that patent rights still belonged to Novell. In an unexpected move, the SCO Group filed for reorganization under Chapter 11 bankruptcy protection on September 14th.

The filing of the bankruptcy petition has put all SCO Group’s assets under protection by the bankruptcy court from its creditors during the Chapter 11 reorganization period.  This means that the upcoming U.S. District Court hearing for Monday, September 17th to determine the amount of damages the SCO Group owes Novell is now on hold, as are all other litigation matters involving SCO Group.

The history of this case began with AT&T selling its Unix intellectual property interests in 1995 to Novell Networks. Novell then sold its Unix intellectual property rights that same year to the Santa Cruz Operation (SCO). Caldera Systems (now known as the SCO Group), once a Linux seller, acquired Unix rights for OpenServer and UnixWare from SCO and scrapped its sales of Linux.

SCO Group sued IBM in 2003, claiming that IBM had misappropriated SCO’s trade secrets and engaged in unfair competition when IBM illegally copied code from the Unix OS and used it in an open-source Linux OS on IBM computers. At that time IBM had a license from SCO to ship its own version of Unix, known as AIX.

SCO Group also claimed that IBM’s use of Linux was an unauthorized derivative of Unix, since SCO Group believed it had exclusive copyright ownership of the Unix OS after its Unix intellectual property purchase from Novell Networks. The Judge ruled, however, that the Unix and UnixWare copyrights are still owned by Novell, short-circuiting SCO Group’s claims against IBM and clearing the way for development of open-source Unix for platforms such as Linux.

SCO Group has continued to sell UnixWare software to attempt to expand into the mobile devices software market, but has been losing millions, in addition to the millions it has spent on litigation. The Judge was also ready to levy the amount of damages that SCO Group now owes Novell after almost twelve years of patent infringement.  It is a cruel irony that Caldera, now part of SCO Group, was once a Linux seller; and had they not dumped their interests in Linux years ago they would now be in a position to benefit from Unix going to Linux OS.

Last modified on 15 September 2007
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