Novell Challenges SCO Claims On Unix Code

Novell is countering SCO's claim that it owns operating systems derived from Unix source code.
Novell has challenged SCO Group's claim to own operating systems derived from Unix source code. SCO last year terminated IBM's right to sell the Unix-based AIX and Dynix operating systems, citing the improper transfer of Unix source code and development methods into Linux. Novell, which in 1995 sold certain rights to Unix to SCO's predecessor Caldera, has countered by claiming SCO has no right to claim ownership of Unix code that AT&T, the original licenser of Unix, licensed to Sequent, the company that created Dynix and SVRX, another Unix derivative. IBM now owns Sequent.

In January, SCO sued Novell specifically to prevent Novell's interference in SCO's case against IBM. That suit alleges that Novell has interfered with SCO's ownership of Unix and UnixWare. Novell on Wednesday filed a motion to dismiss SCO's suit. Still, SCO continues to assert its ownership of Unix source code. In response to Novell's motion to dismiss, SCO issued a statement saying that "the transfer of these [Unix] copyrights is made plain, clear, and unambiguous in the 1995 Asset Purchase Agreement between SCO and Novell."

In August, SCO moved to terminate the right of IBM's Sequent division to license Unix System V source code for its Dynix/ptx operating system, citing the improper transfer of Sequent's Unix source code and development methods into Linux. SCO claims that IBM and Sequent violated their rights to Unix System V by allegedly contributing about 148 files of direct Sequent Unix code to the latest Linux kernels, containing 168,276 lines of code.

This contribution, SCO alleges, had the effect of providing NUMA (non-uniform memory access) and RCU (read-copy update) multiprocessor code that Linux was previously lacking. IBM in 1999 bought Sequent Computer Systems' NUMA technology in an $810 million deal and has used it as a central component of IBM's data-warehousing strategy.

The legal dispute between SCO and IBM over Linux isn't scheduled to reach trial for another year, and the stakes and issues raised could look very different than they do now. SCO has de-emphasized its claims that IBM misappropriated SCO-owned trade secrets. At the same time, SCO has petitioned a Utah court to increase copyright-infringement damages sought from IBM from $3 billion to $5 billion.

The changing nature of SCO Group's grievance against IBM highlights the complexity of this case, says Blaney Harper, a partner with Washington law firm Jones Day. "The fact that [SCO Group is] changing their emphasis, at a minimum, is an indication that the defendants haven't likely stolen anything, and that they aren't going to be able to paint the defendants [IBM] as bad actors," he says.

Still, the facts in any case as complicated as this will change as the case goes along, and so will the tactics, Blaney says. "There is a give and take on either side that's natural in such a complicated case."

Another legal expert points out that copyright claims are easier to prove than trade secrets cases, but that copyright law is tricky in that it protects works but not ideas. In other words, a piece of code that's central to a particular function might not be copyrightable, says Thomas Carey, a partner with Boston law firm Bromberg & Sunstein LLP. In a copyright case, it may be difficult to prove that a company can copyright code that's essential to the function of the product. Carey likens this to laws that prohibit authors from copyrighting ideas.

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