Goodbye to SCO – end of the road for Microsoft’s anti-Linux puppet? Or is it?

This was news from last month but it’s interesting to catch up on some of the back story behind SCO, who recently announced that they might permanently go under despite filing for bankruptcy.

In a bizarre twist of outcomes from legal action originally started by SCO against Novell over the ownership of the Unix copyright, the courts found Novell to still be the legal owner. This resulted in SCO being found to owe Novell licensing fees to the sum of over $25 million for when it sold Unix licenses to Sun and Microsoft.

At this point SCO is left owing everything it has to Novell since the courts ruled in favor of Novell remaining the rightful owner of Unix. SCO’s pending lawsuits against IBM (for $5 billion, alleging that IBM’s AIX version of Unix contained code protected by Unix patents owned by SCO), RedHat, Daimler Chrysler (already dismissed) and Autozone, are at this point all at the discretion of Novell to waive the legal action, which it has done. Since SCO has most likely spent it’s $25 million in licensing revenue from Sun and Microsoft on legal fees to fund it’s legal actions, it’s questionable how SCO is going to pay up to Novell.

In the latest episode in this saga this week, SCO has appealed to the court to be allowed to sell it’s Unix business to an investment company, York Capital Management, for $36 million in cash. In addition, York will pay up to $10 million to settle SCO’s outstanding liabilities and lend SCO an additional $10 million to allow SCO to continue it’s legal actions. Why any investment company would want to get involved with SCO, a sinking ship at this point boggles the mind. Their legal attempts to squeeze money out of Linux users and distributors have failed, as have their claims on patent infringements by Linux. Their own legitimate Unix business at this point must be dwindling to the point of non-existance as a result of all the legal action failures and embarrassment this has brought them. The Inquirer have an interesting theory on why this investment company is interested:

As a matter of fact, JGD Management Corp., doing business as York Capital Management, shares its street address at 1118 East Green Street in Pasadena, California 91106, with Arrowhead Research Corp. The CEO and Chairman of Arrowhead Research is R. Bruce Stewart, who also founded Acacia Research Corp. Acacia Research is the parent of IP Innovation, the company that recently filed patent infringement lawsuits against Linux distributors Red Hat and Novell. Suddenly all of this ties together and becomes clearer.

Microsoft have stated that they have no involvement with Acacia, despite by some strange coincidence that Brad Brunell, Microsoft‚Äôs former general manager of IP licensing, was recruited to Acacia’s management team just before they filed their lawsuit against Novell and RedHat. Microsoft Director of Mobile & Embedded Division Jonathan Taub, also a former IP attorney, also recently left Microsoft and joined Acacia as Vice President.

So, JGD/York/Acacia’s only interest is in continuing SCO’s legal battles again Linux? The track record so far has not been successful to say the least – is this another thinly veiled injection of capital from Microsoft to continue their anti-Linux campaign? Microsoft after all have had their hand inside SCO for sometime now – here’s a quick run down:

The interesting part that ties this all together is to remember where SCO acquired it’s Unix based operating system from in the first place. Microsoft originally licensed Unix from AT&T back in 1979, and when it started to focus on the future of Windows and (at the time) OS/2, sold Xenix, it’s version of Unix, to SCO in 1987, retaining a 25% share in SCO. This is an interesting piece of Microsoft Unix history that I think is often overlooked in all the articles over the past few years covering Microsoft’s involvement in all of this. However, it gets stranger, and for Linux, possibly more scary than you could ever believe. Brian Proffitt speculates in his blog that there is possibly an even more compelling reason why Microsoft is showing such an interest. Proffitt mentions that as part of the transfer of Xenix to SCO (or at the time Santa Cruz Operation, which later became The SCO Group), there was a condition in the contract that Microsoft should receive royalties from the sales of Xenix. Further more, SCO’s derivative Unix products must include certain parts of Microsoft’s original Xenix source. Now, taking this to the next level, what if parts of Microsoft’s Xenix code which SCO continued to include in it’s version of Unix found it’s way by some means into Linux?

Somehow I don’t think we’ve seen the end of SCO yet.