A federal appeals court Monday overturned a 2007 decision that Novell owns the Unix code, and the ruling now clears the way for SCO to pursue a $1 billion copyright infringement case against IBM.
In a 54-page decision, the 10th Circuit Court of Appeals said it was reversing the 2007 summary judgment decision by Judge Dale Kimball of the U.S. District Court for the District of Utah, which found that Novell was the owner of Unix and UnixWare copyrights.
SCO CEO Darl McBride told the Salt Lake City Tribute that the decision was a "huge validation for SCO" and that it would enable the company to continue its lawsuit against IBM and a related suit against Novell.
SCO sells Unix-based software technology and mobile services, including UnixWare for enterprise applications and SCO OpenServer for small and midsize businesses. Just last week, the company released a virtualized version of its OpenServer 5.0.7 Unix operating system.
Monday, the Circuit Court also ruled on other issues in the case and remanded those for trial, including issues around Novell's alleged duty to transfer ownership rights to the computer code in question.
The ruling likely will re-open the company's litigation of IBM, based on a relationship SCO has with private equity firm Stephen Norris Capital Partners.
In February of last year, Stephen Norris Capital Partners pumped up to $100 million into SCO believing the rulings against the company could be reversed on appeal to a higher court. The firm's commitment requires SCO to "aggressively continue" its ongoing litigation against Novell and IBM, as well as another case against AutoZone Inc.
The case traces its root to 1993 when Novell paid more than $300 million to purchase UNIX System Laboratories, which owned the UNIX copyrights and licenses.
Two years later, Novell decided to sell the UNIX business to SCO.
The two have differing stories on whether that sale included ownership of the copyright to the code.
In 2004, Novell claimed it owned the rights to Unix after SCO had decided on litigation a year earlier to enforce Unix copyright.
In 2003, SCO claimed that Linux was an illegal derivative of the Unix code, which SCO said it had purchased from Novell. SCO then went head-hunting, picking IBM as its first target in a $1 billion copyright infringement suit claiming Big Blue had violated SCO's rights by contributing Unix code to Linux.
Microsoft joined the fray shortly thereafter, agreeing to license Unix code from SCO and then using the association to fuel confusion over open source licenses and the liability they could carry for corporate users.
SCO eventually sent letters to some 1,500 large companies, warning them that their use of Linux could infringe on SCO's intellectual property. SCO then turned on Novell when it claimed Unix ownership.
But that did not go well for SCO
A summary judgment in the SCO vs. Novell case was issued on Aug. 10, 2007, when Judge Kimball ruled that Novell owned the Unix and UnixWare copyrights. Eventually, the district court awarded a $2.5 million judgment to Novell.
Shortly thereafter, SCO filed for Chapter 11 of the U.S. Bankruptcy Code.