Judge rules Novell can pursue royalty claims against SCO

Novell Inc., the second-biggest seller of Linux software in the United States, can pursue royalty claims against bankrupt software maker SCO Group Inc., a judge ruled.

SCO filed for court protection from its creditors in September, a month after a U.S. judge in Utah ruled that Novell, not SCO, owned the copyrights to the Unix operating system. SCO had been seeking billions of dollars from International Business Machines Corp., saying Unix code was improperly included in the free Linux computer operating system distributed by IBM.

In the Aug. 10 ruling, Novell was given permission to seek some of the royalties SCO had been collecting from other companies for Unix. SCO's bankruptcy filing came just three days before a trial was to be held on the issue, and the Novell case was automatically put on hold.

"Without a ruling on the liability issues, Novell's rights in these bankruptcy cases remains undetermined, and the value of Novell's claim will remain a troubling issue for the court, Novell and debtors," U.S. Bankruptcy Judge Kevin Gross in Wilmington, Del., said in a ruling issued Tuesday.

Gross said SCO wouldn't be able to file a reorganization plan "until they know what liability they have to Novell."

SCO, based in Lindon, Utah, bought certain rights to the Unix operating system, which Linux was modeled on, from Novell in 1995 for $145 million.

The agreement included the right to license Unix to others. SCO sued for slander of title after Novell publicly disputed ownership of the Unix copyrights and said that the 1995 license didn't give SCO the right to demand royalties from IBM or other users of the Linux system.

Novell, based in Waltham, Mass., also can argue at trial that SCO didn't have the right to enter into licensing agreements with Microsoft Corp. and Sun Microsystems Inc.

Microsoft, the world's biggest software maker, makes the Windows operating system that runs about 95 percent of the world's personal computers. IBM, the world's largest computer-services provider, has licensed the Unix code for more than two decades and supports Linux, an open-source system whose underlying code is shared freely.

Novell spokesman Kevan Barney said the company is pleased "that the Utah case can move forward." He declined to comment further. SCO spokeswoman Jessica Beffa said the company had no comment.

Novell and rival Red Hat Inc. make money selling their versions of Linux, as well as related software and services.