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SCO Caps Legal Fees

Officials at the SCO Group put a $31 million cap on legal fees, as they continue their controversial litigation against several high-profile companies over parts of the Linux kernel.

According to a filing with the Securities and Exchange Commission (SEC), SCO paid its teams of lawyers $12.6 million to cover outstanding legal fees and expenses and agreed to pay a $2 million quarterly stipend through December 2005. The Lindon, Utah, company will still need to pony up any money required for consultants, expert testimony or other types of expenses, and have agreed to set aside a $5 million escrow account to cover those costs.

The Unix-based software development company is currently embroiled in a $5 billion lawsuit with IBM , in which it claims Big Blue took licensed Unix System V code from its AIX operating system and used it to bolster the Linux kernel.

SCO is also suing Novell , Red Hat , Auto Zone and Daimler-Chrysler for other alleged Linux-based infractions.

Also included in the SEC filing is a contingency fee to be assessed if SCO collects revenues from its licensing program, sells the company or wins any one of the court cases it's currently involved in: 33 percent up to the first $350 million; 25 percent up to $700 million; and 20 percent for anything more than $700 million.

A roundup of some background stories on the dispute:

internetnews.com's Timeline of the SCO/IBM Case
March 6, 2003 SCO files initial breach of contract lawsuit against IBM for $1B
May 14, 2003 SCO suspends Linux sales, sends 1,350 letters to customers
June 16, 2003 SCO terminates IBM's System V licensing contract
July 21, 2003 SCO gets System V, UnixWare copyrights
August 13, 2003 SCO terminates IBM subsidiary Sequent's System V contract
September 25, 2003 IBM files counterclaim to SCO suit
December 5, 2003 Judge gives SCO 30 days to show infringing code
January 12, 2004 SCO hands infringing code to IBM
February 6, 2004 SCO seeks to add two copyright claims to IBM suit, raise stakes to $5B
February 26, 2004 IBM says it won't contest infringement additions to suit
February 27, 2004 Court adds copyright claims to SCO's IBM suit
March 29, 2004 SCO seeks to split breach of contract, infringement claims into separate trials
March 31, 2004 IBM files second counterclaim to SCO suit
July 15, 2004 SCO files a Renewed Motion to Compel while it continues lawsuit activities against Novell, Red Hat and AutoZone.
August 18, 2004 IBM calls for summary judgment on SCO's contract claims