Shares of business software distributor the SCO Group tumbled in early trading Monday following a judge's ruling that the company has no ownership claim on the Unix operating system.
As of 11 a.m. Monday, SCO shares (NasdaqCM:SCOX) were off about 70% to 47 cents.
On Friday, Utah federal court judge Dale Kimball rejected SCO's claim that an earlier deal with Novell gave the company full ownership rights over Unix. The ruling effectively gutted a lawsuit that SCO filed against Novell in 2004.
Kimball ruled that Novell owns Unix. He did not address SCO's claim that Novell's SUSE Linux product infringes on Unix copyrights.
SCO spent millions of dollars pursuing the case and in the past had warned investors that a courtroom loss could jeopardize its ability to continue operating.
Not only did SCO lose its claim to Unix, it also may have to repay millions of dollars to Sun Microsystems and Microsoft. Both of those companies had previously purchased Unix licenses from SCO. Novell also won the right to effectively order SCO to drop a breach of contract action against IBM related to Unix.
SCO officials on Monday said the company is considering its options in light of Friday's ruling. "Although the district judge ruled in Novell's favor on important issues, the case has not yet been fully vetted by the legal system," the officials said in a statement that hinted at the possibility of an appeal. "We will continue to explore our options with respect to how we move forward from here," said the officials.
For their part, Novell officials on Friday said they welcomed Kimball's decision. "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 Joe LaSala, Novell's senior VP and general counsel, in a statement.
Shares of Novell (NadaqGS:NOVL) were trading up about 4.7% in late morning trading Monday, to more than $6.70 per share.