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18 July 2008, 15:12

SCO vs Linux : Now SCO must pay Novell $2.5 million

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SCO has been ordered by a US court to pay Novell $2.5m over licensing for UNIX. This latest twist comes Almost a year after SCO was found guilty of violating Novell's copyrights and failing to pay license fees. Novell charges that it is owed $19.9 million.

In the 43-page statement handed down by Judge Dale Kimball, the $9 million that Sun Microsystems paid to SCO for UNIX licensing, for Solaris and OpenSolaris, is already taken into account. $1.5 million was then deducted for a similar licence sold to Microsoft that did not include Unix copyrights, putting the new figure at $7.6 million; the court then ruled that a third of that sum should be paid to Novell.

This comparatively small sum – SCO's CEO Darl McBride was hoping for $40 million in damages – does not include court costs or interest. A court will now have to decide how and whether SCO can pay the fine because the company has filed for bankruptcy under Chapter 11. Both Novell and SCO can still appeal Judge Kimball's fine.

Both parties can also claim that they won the case. Novell managed to take SCO's original defamation charge and demonstrate a violation of copyright. SCO can also claim victory because it was able to reduce the disastrous initial sentence a year ago by arguing that there is a difference between Unix System V sources and UnixWare / Open Servers as original SCO products – and that this difference is crucial for Novell's claims. Judge Kimball followed SCO's logic in his ruling.

At the same time, however, the judge also made it clear that SCO ignored that distinction itself in its antidote licence called SCOsource and hence sold a mislabelled product. Therefore, licensees of such as could also use this ruling to press charges against SCO. Since PeoplePC recently took over EV1Servers and PeoplePC was subsequently taken over by EarthLink, there will probably not be much interest in the pursuing the antidote license issue.

Nonetheless, this aspect could have serious consequences for SCO, whose new business plan includes the sale of the company's intellectual capital to Steven Norris Capital Partners. The buyer would then continue to press charges against companies that use Linux in cases where SCO believes that copied lines of code are being used illegally. In a case in which SCO is pressing charges against IBM, this issue will play an important role.

SCO is quoted in the Daily Herald stating that it welcomes the fine because it gives the company an opportunity to challenge the ruling. SCO says it still believes that Judge Campbell's ruling of last August is incorrect. Novell has yet to comment on the fine.

Detlef Borchers


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