Update: Novell hits back at SCO on Unix claims

Novell is taking The SCO Group to task over SCO's legal claims over Unix and against Linux software.

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Novell on Wednesday said it never transferred the copyrights and patents of Unix System V when it sold the software to SCO in 1995. SCO claims all Unix flavors in use today are based on Unix System V, and that it owns the software code and licensing rights to that software.

Novell, however, said SCO is apparently aware that it lacks these copyrights and patents because over the past few months SCO has "repeatedly asked Novell to transfer the copyrights to SCO, requests Novell has rejected," Novell's Chief Executive Officer and President Jack Messman wrote to SCO's President and CEO Darl McBride.

Novell included the entire text of that letter, along with additional comments, in a press release issued Wednesday.

SCO launched an initiative in January called SCOsource to more aggressively enforce the licensing of its Unix software. That initiative led to SCO's $1 billion lawsuit against IBM in March and to later SCO allegations that Unix code it owns has been illegally copied into the Linux operating system kernel.

SCO's McBride disputed those claims on Wednesday during a conference call to discuss SCO's quarterly earnings, saying SCO's attorneys have reviewed the 1995 sales contract and have concluded there is no doubt SCO owns the aforementioned copyrights and patents.

McBride acknowledged SCO initially found confusing language in the 1995 sales contract and approached Novell to clarify the matter. Initially, the Novell executives he talked to agreed the language was confusing, but some higher-ups later came back and said Novell owned the said patents and copyrights, an assertion SCO disagreed with, McBride said.

In a statement, SCO responded to Novell on Wednesday saying it owns "contract rights" to Unix and that its lawsuit against IBM doesn't involve patents or copyrights but rather breach-of-contract allegations.

"Contracts are by order of magnitude more powerful than copyrights or patents" in the legal arena, McBride said in the conference call.

While SCO isn't waging a copyright or patent fight regarding its Unix intellectual property, it's confident it would win such a battle in court, McBride said.

SCO said it has the contractual right to "prevent improper donations of UNIX code, methods or concepts into Linux by any UNIX vendor" and that it intends to "protect and enforce" all of the company's contracts with its over 6,000 licensees.

"Copyrights and patents are protection against strangers. Contracts are what you use against parties you have relationships with. From a legal standpoint, contracts end up being far stronger than anything you could do with copyrights," SCO said in its response.

SCO recently struck up a licensing deal with Microsoft for SCO's Unix software. That deal raised eyebrows, since it brought together two of the most disliked companies among Linux backers. Microsoft executives have said that Linux software has become a significant challenger to Microsoft products.

In its letter Wednesday, Novell's Messman also asked SCO to present specific evidence to back up its claims that proprietary Unix code from SCO has been illegally copied into Linux software, including the Linux kernel. The companies were scheduled to discuss the matter on Tuesday, but Novell didn't show up for the meeting, according to McBride.

Messman acknowledged in his letter that SCO had offered to disclose some of its evidence of alleged Linux infringements to Novell. However, Messman questioned SCO's condition that Novell must sign a confidentiality agreement to not disclose the information. Specifically, Messman fears the non-disclosure agreement might also bar Novell and others from replacing any offending code, in which case the agreement would not be useful to them, Messman wrote.

SCO's position is that it must require a confidentiality agreement in order to prevent its Unix intellectual property from being disclosed, said Chris Sontag, senior vice president and general manager of SCOsource, the new division in charge of managing and protecting the company's Unix intellectual property.

SCO plans to disclose this evidence under non-disclosure agreements to analysts, journalists, industry watchers, and corporate users beginning in June, Sontag said.

The Linux operating system can be obtained free of charge and its source code can be modified, copied and redistributed by anyone. Linux includes a kernel, which is developed by Linus Torvalds and volunteer programmers worldwide, and GNU operating system software from the Free Software Foundation. SCO said recently it hasn't yet found infringements to its proprietary code in GNU software.

SCO announced recently it was suspending its own Linux business and sent letters to about 1,500 large companies warning them they could be held liable for intellectual property violations related to their use of Linux software.

On Friday, Linuxtag, a German Linux lobbying association, threatened to take SCO's German subsidiary to court over what Linuxtag terms SCO's "unfair competitive practices." Linuxtag is giving SCO until May 30 to either back up its allegations that SCO Unix code has been copied illegally into the Linux kernel or back off from those allegations. If SCO does neither, Linuxtag will take the German subsidiary to court in Germany. Linuxtag wants to prevent SCO from harming its competitors with unsubstantiated claims, intimidating customers and damaging Linux's reputation, the group said.

Richard Seibt, CEO of SuSE Linux AG, also complained about the vagueness of SCO's allegations against Linux. SuSE knows what is in its code and has had processes in place to avoid violating intellectual property rights, he said Wednesday. "So we really don't understand what SCO is talking about," he said.

-- John Blau in Boston contributed to this story.