SCO says to act against IBM if no deal by Friday Reuters, 06.11.03, 7:01 PM ET
By Reed Stevenson
SEATTLE (Reuters) - SCO Group Inc., which claims International Business Machines Corp. illegally used parts of its Unix software in other programs, said Wednesday that it could revoke its license to the world's largest computer company unless they settled this week.
Lindon, Utah-based SCO is suing IBM for more than $1 billion and warned 1,500 other companies last month that they may be violating SCO's intellectual property rights because parts of its Unix software code are being used in Linux.
Unix is a widely-used operating system for networked computers that was first developed by AT&T Corp. Various versions of Unix are now used to run corporate and government computer systems for serving up Web pages, accounting, manufacturing and storing information.
Linux, unlike proprietary versions of Unix and Microsoft Corp.'s Windows programs, is a version of Unix that can be copied and modified freely.
IBM, which had licensed Unix code in order to develop its own Unix-based system called AIX, is also one of the biggest champions of Linux, which it supports in order to sell its hardware and services to corporations. SCO claims that IBM transferred some AIX code over to Linux.
"If we don't have a resolution by midnight on Friday the 13th, the AIX world will be a different place," SCO President and Chief Executive Darl McBride told Reuters.
"We've basically mapped out what we will do. People will be running AIX without a valid license," said McBride, who offered no specific details on what action SCO would take.
IBM declined to say whether it was in negotiations with SCO to meet Friday's deadline.
"IBM believes that our contract with regard to AIX is irrevocable and perpetual and there is nothing further to discuss," said IBM spokeswoman Trink Guarino.
SLEEPING GIANT
Some industry experts see SCO's campaign as an attempt to gain a windfall settlement, most likely by selling itself to IBM or another industry heavyweight.
SCO, formerly known as Caldera Systems Inc., owns the intellectual property rights to Unix but also makes versions of Unix that run on Intel Corp.'s microprocessors, which also serves as the main platform for Windows and Linux.
Intel-based computers are generally considered cheaper than other high-end systems offered by IBM or Sun Microsystems Inc. and have been gaining ground in corporations.
SCO posted a profit of $3.8 million during the first half of its current fiscal year, compared to a loss of $17.6 million a year earlier, due in part to increased income from its Unix assets.
McBride said SCO's Unix intellectual property had been previously under-utilized by the company: "We've spent the last couple of quarters waking the sleeping giant."
So far, that initiative has reaped rewards for McBride, SCO's 340 employees and shareholders. SCO's shares have skyrocketed in the past year to $8.65, its latest close on Wednesday from a 52-week low of 60 cents.
SCO also won a license from Microsoft, which agreed to pay SCO to ensure that it would not violate intellectual property rights when developing software that works with Unix. But Microsoft's move was widely seen as an attempt to lend weight to SCO's attack on Linux, which Microsoft views as a threat to its Windows franchise.
McBride also said it had resolved most of its differences with another software maker, Novell Inc. which had previously owned the rights to Unix.
Novell acquired the rights to Unix in 1992 and later sold those rights to SCO in 1995. SCO developed the first commercial version of Unix for Intel chips and was IBM's partner in developing AIX.
But with the growth of Microsoft's Windows software and the advent of Linux as a popular alternative to Unix, SCO struggled. Microsoft even owned a portion of the company, but sold it in 2000.
Copyright 2003, Reuters News Service Source: www.forbes.com