SCO Group said yesterday that it registered a copyright for its Unix software to strengthen its lawsuit against IBM, sending its shares up as much as 20%.
Lindon, Utah-based SCO, which claims its blueprint for Unix software is embedded in versions of the free Linux operating system that IBM distributed to its customers, also said that beginning in a few weeks, it would offer licences to companies that are using those versions of Linux.
"We have a solution here that gets you clean and gets you square with the use of Linux without having to go into the courtroom," SCO chief executive Darl McBride said during a conference call.
Armonk, New York-based IBM, the world's largest computer company, has disputed SCO's claims, saying it has not shown it any code contributed by IBM to Linux -- the open source software that can be copied and modified freely -- which violates SCO's intellectual property rights.
"SCO needs to openly show the Linux community any copyrighted Unix code which they claim is in Linux," IBM spokesperson Trink Guarino said. The company has said in the past that the suit is baseless.
SCO said that registering the copyright strengthens its lawsuit against IBM because it opens another avenue to enforcing and protecting intellectual property rights.
"This copyright puts us in a stronger position to protect our intellectual property rights," said Chris Sontag, a senior VP in charge of SCO's licensing efforts.
But one legal expert questioned the importance of the move, saying that registering the copyright simply sets SCO up to be able to go after IBM for copyright infringement.
"I do not consider it a significant step in the lawsuit in any way, although they will probably paint it differently," said Brian Ferguson, an attorney at McDermott, Will, & Emery in Washington DC.
Licensing aimed at corporations
SCO sued IBM in March for more than $1 billion for taking its Unix code, which IBM used to create its own version of Unix called AIX, and introducing it into the Linux user community.
After being rebuffed by IBM, SCO revoked the company's right to use and distribute software based on Unix in early June -- a move that IBM in turn rejected.
SCO's new licensing programme, which will be launched in a few weeks, will allow corporate Linux users to continue using the software without fear of infringing on its Unix rights.
"SCO seems to be asking customers to pay for a licence based on allegations and not facts," IBM's Guarino said.
Sontag said SCO would allow non-commercial, individual Linux users to use the software without a licence.
SCO's licensing move is an effort to boost income for the company, which sells its own version of Unix. McBride declined to provide the financial impact of the new licensing programme but said that it has significant value to SCO.
Investors agreed, sending SCO's shares up $1.37, or 11.46%, to $13.32 in Nasdaq trade, after rising as high as $14.38, a level not seen since February 2001. The stock has risen fivefold since the company sued IBM in March.
IBM was off $1.22, or 1.46%, at $82.50 on the New York Stock Exchange.
So far, SCO's efforts have paid off with other companies licensing Unix for their own use or to develop software that works with Unix. Microsoft, the world's largest software-maker, licensed Unix rights from SCO and recently SCO confirmed that Sun Microsystems, a major distributor of Unix-based systems, was also a licensee.
"What they are doing is a crude shakedown," said Eric Raymond, president of the Open Source Initiative, "they can expect total hostility from the open source community."
Open source supporters argue that software should be developed by communities of users who share and exchange ideas in an environment free of constraints. SCO's lawsuit against IBM is a "power grab against the future", Raymond wrote in a position paper.
David Boies, the former government prosecutor who led the Department of Justice anti-trust case against Microsoft, and now represents SCO, said he is ready to fight IBM in court.
"As a litigator, I always assume these [disputes] are going to go to a court resolution. That's what I'm preparing to do," he said.
(Additional reporting by Caroline Humer in New York.)
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