Today’s the day: SCO to name large user in lawsuit

The SCO Group plans to expand its Linux legal attack today by filing a lawsuit against a large company using the open source operating system.

SCO CEO Darl McBride announced the plan on Monday at the Software 2004 conference in San Francisco but didn't identify the company beyond saying it would have a recognised name.

SCO, which owns a disputed amount of Unix intellectual property and claims some of the code was improperly used in Linux, threatened in November to sue Linux users, although it missed a self-imposed mid-February deadline.

"We missed by a couple weeks. The first one won't show up until tomorrow," McBride said.

After his speech he said the company has two potential targets. The first target will be a company that has a Unix license from SCO already, giving SCO some contractual leverage in the case. McBride said. In addition, the suit will involve copyright infringement claims.

"We've been in communication with them" about the licence issue, McBride said. "Now it's time to move to the litigation part of the enforcement."

SCO is seeking to charge companies $699 per single-processor server to use Linux, which is closely related to Unix. Thus far, only a "handful" of companies have taken up SCO on the plan.

SCO began arguing in March 2003 that IBM illegally moved Unix technology to Linux. The Lindon, Utah-based company now seeks more than $5bn in damages from IBM.

SCO also sued Novell - a recent Linux convert and a prior owner of the Unix technology - over Novell's assertions that it still owns Unix copyrights.

In addition, Red Hat, the leading seller of Linux, filed a suit seeking a declaration that the company didn't violate SCO's copyrights or trade secrets.

Other suits are planned, McBride said on Monday.

Cases such as the suit against IBM "typically range in the $10m to $15m range," McBride said but the company is confident it can afford the costs. In 2003, it received a $50m investment and now has a cash balance of about $64 million, he said.

The suit against the Linux user is separate from IBM's case, McBride said. Though the first case will involve a company that has a Unix licence, the company plans others against companies who don't have that existing business tie to SCO, he added.

SCO announced its first public licensee Monday, EV1Servers.net. Robert Marsh, CEO, described his choice as "strictly a business decision".

"By executing this agreement, we provide a degree of certainty that they're not going to get wrapped up in this quagmire," Marsh said.

Several Linux advocates are offering various legal protections around Linux but those didn't prove sufficient for EV1Servers.Net. Red Hat has offered to replace any code that's found to violate SCO's intellectual property, while Novell will underwrite Linux defence costs.

But the SCO licence "is what our customers were asking us for", Marsh said. EV1Servers.net hosts websites, many of them to intermediaries that themselves sell websites to the eventual customers.

McBride said the arrangement with EV1Servers.net is perpetual and that SCO doesn't offer companies their money back if courts later find SCO's claims baseless. It will bring in revenue that will be material to SCO's financial results, he added.

Stephen Shankland writes for CNET News.com.