Microsoft aiding SCO campaign?

More evidence emerged Thursday about Microsoft's role in encouraging the anti-Linux campaign being waged by the SCO Group, a small Lindon-based company.

BayStar Capital, a private investment firm, said Microsoft suggested that it invest in SCO, which is engaged in a legal campaign against Linux, a rival to Microsoft's Windows.

BayStar took Microsoft's suggestion to heart and invested $50 million in SCO last October. But a spokesman for BayStar, Robert McGrath, said, "Microsoft didn't put money in the transaction, and Microsoft is not an investor in BayStar." He added that Microsoft executives were not investors as individuals in the investment firm, which is based in San Francisco.

McGrath said the suggestion came from unidentified "senior Microsoft executives" but not Bill Gates, Microsoft's chairman, or Steven A. Ballmer, its chief executive.

Microsoft, McGrath said, is not indemnifying the investment firm against risk or otherwise indirectly supporting BayStar's move. "The issue for BayStar," he said, "is whether there is a good return on its investment in SCO."

Microsoft, Sun Microsystems and a few other companies have struck deals with SCO to license its technology. SCO owns the rights to Unix, an operating system initially developed at Bell Labs. SCO contends that Linux, a variant of Unix, violates its contract rights.

SCO's legal campaign began last year when it sued IBM, a leading corporate supporter of Linux. SCO recently stepped up its legal attack by filing suit against two companies that use Linux, DaimlerChrysler and AutoZone.

The defendants are fighting the lawsuits, saying they have done nothing wrong and challenging SCO's claim that its rights are as broad as the company contends.

Microsoft stands to gain most from any slowing of the advance of Linux, which is maintained and debugged by a network of programmers who share code freely. That model of building software is called open source development.

It is not particularly surprising that Microsoft, given its interests, played the go-between for an investment in SCO. "But (what) this shows is that there is a lot more than meets the eye in SCO's litigation strategy," said Jeffrey D. Neuburger, a technology and intellectual property expert at the law firm of Brown Raysman Millstein Felder & Steiner. "SCO has an agenda, and Microsoft clearly has an agenda, and it's doing whatever it can to further its cause."