Microsoft and SCO strike deal over UNIX

Out-Law News | 20 May 2003 | 12:00 am | 1 min. read

Microsoft has struck a deal with SCO Group to license SCO's patents and source code for the UNIX operating system. It is the same code that is the subject of a $1 billion claim by SCO against IBM, alleging that IBM infringed UNIX code in developing the Linux operating system.

The move will ensure Microsoft’s intellectual property compliance with the code, and will allow compatibility between UNIX and the Windows operating system. But Microsoft sees Linux as a threat to Windows and speculation is rife about how Microsoft's licensing deal for UNIX will impact Linux.

UNIX originated at Bell Labs in 1969. It evolved with many versions being provided by various companies, universities, and individuals, becoming the first open operating system that could be amended or improved by anyone.

The operating system is widely used in workstations. Linux is a UNIX derivative that was designed to give PC users a free or very low-cost operating system comparable to the more expensive UNIX systems, although its use in the business environment is growing.

There are intellectual property rights in UNIX – and SCO purchased significant parts of them in 1995, including source code, source documentation, software development contracts, licenses and other intellectual property that pertained to UNIX-related business.

IBM originally entered into a UNIX licence agreement with AT&T in February 1985 in order to produce the AIX operating system. SCO subsequently acquired its rights in UNIX. The agreements required that IBM hold the UNIX software code in confidence, and prohibited unauthorised distribution or transfer.

But SCO alleges that IBM gave the rights away to Linux and in March this year launched a $1 billion lawsuit against IBM. At the end of last week, SCO warned that Linux is an unauthorized derivative of UNIX and that legal liability for the use of Linux may extend to commercial users. It has suspended all of its future sales of the Linux operating system until further notice.

About 1,500 commercial users of Linux then received a letter from SCO, stating in part that “legal liability that may arise from the Linux development process may also rest with the end user.”

The letter went on to say, “Similar to analogous efforts underway in the music industry, we are prepared to take all actions necessary to stop the ongoing violation of our intellectual property or other rights.”

Unsurprisingly, Linux users are both outraged and anxious about the move, which is bound to affect the marketability of the system - a fact that will surely please Microsoft because, although it holds 90% of the desktop operating system market share, it has acknowledged Linux as a threat. It is conceivable that the UNIX deal indicates that Microsoft is betting on the validity and enforcement of SCO's patents.