SCO Licenses Unix Intellectual Property To Microsoft

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In the most recent twist in the developing drama between a key Unix vendor and the open-source community, The SCO Group confirmed that it has licensed its Unix technology to rival operating-system vendor Microsoft.

As part of the deal, which was formally announced Monday, Microsoft said it licensed SCO's Unix patents and source code as a gesture to support the intellectual property rights of all vendors and to ensure compatibility between the Windows and Unix/Linux operating systems.

Terms of the deal were not disclosed. Ironically, Microsoft, which once owned an 11 percent stake in SCO, came under fire in the 1990s for requiring SCO to include outdated Microsoft code in its Unix operating system and to pay steep royalties on that code.

While some say that Microsoft is joining forces with SCO to slow the advance of Linux, Microsoft executives said Monday that the intellectual property issues SCO raises are substantial.

"The announcement of this license is representative of Microsoft's ongoing commitment to respecting intellectual property and the IT community's healthy exchange of [intellectual property] through licensing," said Brad Smith, general counsel and senior vice president at Microsoft, in a statement. "This helps to ensure [intellectual property] compliance across Microsoft solutions and supports our efforts around existing products like Services for Unix that further Unix interoperability."

SCO has been at the center of controversy since launching a Unix source code licensing program last fall to allegedly protect and monetize the Unix patents and technology it acquired from Novell in 1995, which were originally developed by AT&T.

Lindon, Utah-based SCO in March filed a $1 billion lawsuit against IBM, alleging that Big Blue violated its existing licensing agreements with SCO by turning over its Unix intellectual property assets to the open-source community for use in developing Linux. IBM has vigorously denied those allegations.

SCO upped the ante last week by confirming that it had sent out a letter warning corporate customers that they may be in violation of its Unix patents simply by using Linux products in-house.

Some skeptics have speculated that the motivation behind SCO's aggressive licensing campaign is an attempt to position itself for a buy. However, SCO executives maintain that they are merely trying to protect their intellectual property and generate appropriate revenue by enforcing its licensing provisions.

One analyst agreed that Microsoft would like to get it hands on SCO and its extensive reseller channel so that it could migrate SCO's many Unix users--especially point-of-sale customers--to Windows.

However, he disputed the likelihood that an acquisition would happen. Rather, the latest licensing deal serves multiple Microsoft's purposes, one of which is to slow down Linux.

"There's obviously an agenda on Microsoft's part. They want SCO to win this case because if they do, it will cause a considerable amount of chaos in the market," said George Weiss, a vice president at Gartner. "They've transitioned away from attacking Linux head-on, and they're doing it back door, indirectly, [employing] a much subtler strategy of trying to align themselves with SCO in the interest of [intellectual property]."

Channel partners expressed mixed sentiments about SCO's licensing deal with Microsoft. One Linux solution provider said SCO's licensing agreement with Microsoft simply serves political interests of both vendors to slow down Linux's success in the marketplace.

"I think Microsoft is paying a small amount of money to create a mountain of perception that the SCO claims regarding Linux have weight," said Anthony Awtrey, vice president at I.D.E.A.L. Technology, a solution provider in Orlando, Fla. "I would view this the same as the U.S. funding the enemies of our enemies. Large potential gain for very little risked."

One Microsoft solution provider agreed that the licensing deal is likely motivated by Microsoft's interest to hurt Linux, but nevertheless said its stance with SCO to protect intellectual property will likely add weight to SCO's legal case against IBM.

"This will make IBM's case much thinner," said the solution provider. "Microsoft will play they're the good guys doing the right thing, but we know that's never true."

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