Does Novell-SuSE deal tread on non-compete clause?

Novell has denied claims by SCO Group that its planned acquisition of SuSE Linux violates an 8-year-old non-compete agreement.

The enterprise software company issued a statement on Tuesday dismissing a claim by SCO CEO Darl McBride that the acquisition contravenes an agreement signed in 1995. That's when Lindon, Utah-based SCO acquired Unix System 5 from Novell.

"Mr. McBride's characterisation of the agreements between Novell and SCO is inaccurate," Novell said in the statement. "There is no non-compete provision in those contracts and the pending acquisition of SuSE Linux does not violate any agreement between Novell and SCO."

The Provo, Utah-based software maker went on to say that it had not received "formal communication from SCO on this particular issue" and that it would respond if the Linux antagonist formally pursued the matter.

McBride's comments were made during a conference call on Monday in which he discussed SCO's continued retention of Boies Schiller & Flexner, a law firm whose partner David Boies represented the US government in its anti-trust case against Microsoft.

"We bought the Unix System 5 rights from Novell back in '95, and there was non-compete language that would prevent Novell from competing against our core offerings," McBride was quoted as saying in a transcript provided by SCO. "Linux is a knockoff of Unix. There can't be a more straightforward reading of the non-compete clause."

By "reading", SCO clarified on Wednesday, McBride meant "violation".

In the conference call, McBride hedged on whether SCO intended to sue Novell over the alleged contract infringement.

"When the Novell-SuSE deal is complete, we will take measures to enforce the non-compete agreement with Novell," McBride said, according to the transcript. "I don't know that it will turn into a lawsuit. That depends upon how they respond, and if they put a competitive product in the marketplace."

Paul Festa writes for CNET News.com.