SCO-Novell Deal Was Confusing From The Start

The intellectual-property dispute over the Unix operating system has roots in 1995 deal that was murky even then.

John Foley, Editor, InformationWeek

June 12, 2003

3 Min Read

The confusion and uncertainty surrounding SCO Group's intellectual-property claims over the Unix operating system have a precedent -- the confusion and uncertainty that surrounded Santa Cruz Operation's acquisition of the technology back in 1995.

A look back at how the deal evolved shows there were nearly as many questions as answers when the former Santa Cruz Operation, Novell, and Hewlett-Packard revealed their complicated plan. (Caldera Systems acquired some of the assets of Santa Cruz Operation in 2001; Caldera subsequently changed its name to The SCO Group.)

In a story dated Sept. 18, 1995--two days before the three-way deal was announced--InformationWeek reported that Novell was in negotiations with other technology companies as it looked for a "way out" of the Unix business, which Novell had purchased from AT&T's Unix Systems Laboratories two years earlier. Among the options mentioned in the article was turning over some Unix development work to HP (Novell Seeks Help To Develop Unix). When Robert Frankenberg, Novell's CEO at the time, announced the deal at the Unix World conference in New York on Sept. 20, HP was in fact one of the parties involved, signing up to develop a 64-bit version of Unix.

Yet, as soon as the technology-for-stock arrangement with SCO was revealed, questions began to surface. Was SCO, a $200 million company that held its annual user conference on the laid-back campus of the University of California at Santa Cruz, up to the challenge of being the Unix caregiver for the entire IT industry? "The deal, if mishandled, could further divide an already fragmented market," InformationWeek reported (SCO To Take Novell's Unix Business).

Within a month, it became clear that SCO, Novell, and HP had yet to work out all the details of the ambitious, yet complex, plan. In an article titled "Future Unix: The Devil's In The Details," InformationWeek reported in November that the companies had still not determined how Novell's 400-person Unix development staff would be split among the three, which pieces of their various Unix operating systems would be used in a merged platform, or "how the partners will protect their intellectual property (Future Unix: The Devil's In The Details)."

That last point stands out given SCO's pending $1 billion intellectual-property lawsuit against IBM and threats of potential legal action against Linux vendors and users. SCO and Novell signed an asset purchase agreement on Sept. 19, 1995, about the time InformationWeek reported some details were still in flux. More than a year later, on Oct. 16, 1996, the companies signed an amendment to their contact that attempted to clarify ownership of Unix trademarks and copyrights.

By December of 1995, cracks had formed in the alliance. SCO and HP had yet to agree on the code base for their joint development work, raising questions and concern among computer makers (Unix Unity Foundering?).

It's unclear just how the events of eight years ago relate to SCO Group's current claims and maneuvers, but SCO Group and Novell disagree now over at least some aspects of the original deal. In May, Novell issued a statement challenging SCO Group's ownership of Unix copyrights and patents. Earlier this month, SCO responded by releasing an excerpt of the Oct. 16, 1996, contract amendment, which it claims confirms its ownership of the Unix copyrights.

SCO Group has threatened to revoke IBM's Unix license if IBM doesn't remedy allegations laid out in a March lawsuit. The deadline for meeting SCO Group's demands was Friday, June 13. IBM has denied any wrongdoing.

About the Author(s)

John Foley

Editor, InformationWeek

John Foley is director, strategic communications, for Oracle Corp. and a former editor of InformationWeek Government.

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