In a series of legal disputes between SCO Group and Linux vendors and users, SCO alleged that its license agreements with IBM meant that source code IBM wrote and donated to be incorporated into Linux was added in violation of SCO's contractual rights. Members of the Linux community disagreed with SCO's claims; IBM, Novell, and Red Hat filed claims against SCO.
On August 10, 2007, a federal district court judge in SCO v. Novell ruled on summary judgment that Novell, not the SCO Group, was the rightful owner of the copyrights covering the Unix operating system. The court also ruled that "SCO is obligated to recognize Novell's waiver of SCO's claims against IBM and Sequent". After the ruling, Novell announced they had no interest in suing people over Unix and stated "We don't believe there is Unix in Linux". The final district court ruling, on November 20, 2008, affirmed the summary judgment, and added interest payments and a constructive trust.
On August 24, 2009, the U.S. Court of Appeals for the Tenth Circuit partially reversed the district court judgment. The appeals court remanded back to trial on the issues of copyright ownership and Novell's contractual waiver rights. The court upheld the $2,547,817 award granted to Novell for the 2003 Sun agreement.
On March 30, 2010, following a jury trial, Novell, and not The SCO Group, was unanimously found to be the owner of the UNIX and UnixWare copyrights. The SCO Group, through bankruptcy trustee Edward Cahn, decided to continue the lawsuit against IBM for causing a decline in SCO revenues.
On March 1, 2016, SCO's lawsuit against IBM was dismissed with prejudice; SCO filed an appeal later that month. The case was finally settled in 2021.
Overview Unix is a major computer operating system, developed in the United States of America. Prior to the events of this case, the intellectual property rights (IP) in Unix were held by Unix System Laboratories (USL), part of AT&T, but the area of IP ownership was complex. By 2003, the rights in Unix had been transferred several times and there was dispute as to the correct owner in law. Also, some of the code within Unix had been written prior to the Copyright Act of 1976, or was developed by third parties, or was developed or licensed under different licenses existing at the time. The software company SCO Group (SCO), formerly Caldera International, asserted in 2003 that it was the owner of Unix, and that other Unix-type operating systems—particularly the free operating system Linux and other variants of Unix sold by competitor companies—were violating their intellectual property by using Unix code without a license in their works.
SCO initially claimed, and tried to assert, a legal means to litigate directly against all end-users of these operating systems, as well as the companies or groups providing them—potentially a very substantial case and one that would throw fear into the market about using them. It was unable to formulate such a case, however, because the Unix copyrights were weakly worded, there was no basis in patent law, and breach of trade secrets would only affect the one or few companies who might have been alleged to have disclosed trade secrets. Lacking grounds to sue all users generally, SCO dropped this aspect of its cases.
The assertions were heavily contested. Claims of SCO's own copyright violations of these other systems were raised, along with claims related to SCO being bound by, or violating, the GPL licence, under which SCO conducted business related to these systems. Claims were also made that the case was substantially financed and promoted by Microsoft and investment businesses with links to Microsoft; around that time (1998–2004 onwards), Microsoft was fiercely engaged in various FUD tactics such as its Get the facts campaign, that sought to undermine or discredit Linux as a possible competitor to its own Windows operating systems and server systems.See Microsoft Halloween documents leak for more detail. Microsoft's licensing chief claimed that specific examples have been given in private, in:
In the end, SCO launched only a few main legal cases—against IBM for improper disclosure and breach of copyright related to its AIX operating system, against Novell for interference (clouding the issue of ownership), against DaimlerChrysler for non-compliance with a demand to certify certain matters related to Unix usage, and against Linux business and former client AutoZone for violating SCO's rights by using Linux. Separately, the Linux company Red Hat also filed a legal claim against SCO for making false claims that affected its (Red Hat's) business, and to seek a court declaration that SCO had no ownership rights in Linux code.
In 2007, a court ruled in SCO v. Novell that Novell and not SCO was the owner of the Unix copyrights. , most of these cases have been resolved, or largely resolved, and none of the rulings have been in SCO's favor.
Timeline and major cases
At the beginning of 2003, SCO claimed that there had been "misappropriation of its UNIX System V code into Linux". The company refused to identify the specific segments of code, claiming that it was a secret that they would reveal only to the court. They did say that the code could be found in the SMP, RCU and a few other parts of the Linux kernel.
On 6 March 2003, they announced that they were suing IBM for $1 billion, claiming that IBM transferred SCO trade secrets into Linux. That amount later rose to $3 billion, and then again to $5 billion. Later that year in May 2003, Novell stated publicly that it owned the AT&T Unix intellectual property that SCO claimed IBM violated, a statement confirmed by a jury trial in 2007, and that demolished SCO's infringement suit.
Some educated parties noted that the USL v. BSDi case had shown that the Unix copyrights are weak and unenforceable. SCO did not claim patent infringement, as according to the US Patent and Trademark Office database, no AT&T or Novell patent was ever assigned to SCO. The UNIX trademark was not owned by SCO. That left arguing over trade secrets, which, after some opposition, proved hard to take beyond a breach of contract between SCO and IBM, and consequentially, a claim only against IBM.
That left SCO with little legal ground, and therefore it began multiple legal claims and threats against a number of the major names in the computer industry, including IBM, Hewlett-Packard, Microsoft, Novell, Silicon Graphics, Sun Microsystems and Red Hat.
By mid-2004, five major lawsuits had been filed:
SCO v. IBM Red Hat v. SCO SCO v. Novell (not directly related to Linux, the suit has more to do with Unix copyrights) SCO v. DaimlerChrysler SCO v. AutoZone
In multiple initial court filings, SCO publicly implied that a number of other parties have committed copyright infringement, including not only Linux developers, but also Linux users.
UNIX SVRx SCO's claims were derived from several contracts that SCO asserted transferred UNIX System V Release 4 intellectual property assets. The UNIX IP rights originated with Unix System Laboratories (USL), a division of AT&T. In 1993, USL sold all UNIX rights and assets to Novell, including copyrights, trademarks, and active licensing contracts. Some of these rights and assets, plus additional assets derived from Novell's development work, were then sold to the Santa Cruz Operation in 1995. The Santa Cruz Operation had developed and was selling a PC-based UNIX until 2000, when it then resold its UNIX assets to Caldera Systems, which later reorganized into Caldera International and changed its name to SCO Group.
Through this chain of sales, SCO claimed to be the "owner of UNIX". The validity of the claims was immediately and hotly contested by others. SCO claimed copyright to all UNIX code developed by USL, referred to as SVRx, and licensing contracts originating with AT&T, saying that those were inherited through the same chain of sales. The primary document SCO presented as evidence of these claims was the "Asset Purchase Agreement", defining the sale between Novell and the Santa Cruz Operation. SCO claimed that the sale included all copyrights to the UNIX code base and contractual rights to the licensing base. The other parties disagreed.
UNIX copyrights ownership Arguably, the status of copyrights from some of the assets of the USL was murky, since UNIX code is a compilation of elements with different copyright histories. Some code was released without copyright notice before the Copyright Act of 1976 made copyright automatic. This code may be in the public domain and not subject to copyright claims. Other code was affected by the USL v. BSDi case, and is covered by the BSD License.
Groklaw uncovered an old settlement made between Unix System Laboratories (USL) and The University of California in the case of USL v. BSDi. This settlement ended a copyright infringement suit against the university for making BSD source code freely available that USL felt infringed their copyrights. The university filed a counter suit, saying that USL had taken BSD source code and put it in UNIX without properly acknowledging the university's copyright. This settlement muddied the question of SCO's ownership of major parts of the UNIX source code. This uncertainty was helpful in SCO's attempts to cast doubt on Linux, which did use some BSD code.
Novell challenged, ultimately successfully, SCO's interpretation of the purchase agreement. In response to a letter SCO sent to 1500 companies on May 12, 2003,May 12, 2003 letter to Novell Chairman and CEO Jack Messman hosted by Novell. Novell exchanged a series of lettersNovell's Unique Legal Rights with SCO beginning in May 2003, stating that the copyrights for the core UNIX System V were not included in the asset purchase agreement and were retained by Novell. In October 2003, Novell registered those copyrights with the US Copyright Office.
In response to these challenges from Novell, SCO filed a "slander of title" suit against Novell, SCO v. Novell. SCO claimed that Novell was interfering with their business activities by clouding the ownership of UNIX copyrights (that is, SCO claimed Novell was doing what SCO was actually doing). SCO's claim for special damages was dismissed on June 9, 2004, for "failure to specifically plead special damages." SCO was given 30 days "to amend its complaint to more specifically plead special damages". In the same ruling, the judge stated that it was questionable whether or not the Asset Purchase Agreement transferred the relevant copyrights, reasoning that the ASA amendment by which SCO was claiming to have acquired those rights contained no transfer language in the form of "seller hereby conveys to buyer" and that it used ambiguous language when it came to the question of when and how and which rights were to be transferred.