SCO Group Claims First Linux IP Licensee

SCO Group Monday said it has its first customer for its controversial Intellectual Property Compliance License for SCO UNIX Rights.

The Lindon, Utah-based company would not disclose who exactly plopped down the $699 per CPU for the one-time run-time license in binary form, but Blake Stowell, a spokesperson with SCO, told it was a Fortune 500 company that SCO is not currently involved in litigation with. SCO is currently suing IBM for violating its copyrights.

SCO said the buyer is remaining anonymous at this time based on confidentiality provisions of the agreement, but a license was purchased for each of the Linux servers running its business. Stowell said more may be revealed during SCO’s earnings report this Thursday.

“Whether or not SCO has a valid case, companies will check their tolerance for risk and that could have led them to make this business decision,” independent industry analyst Stacey Quandt told

Quandt said it is also unlikely that the SCO licensee will receive any criticisms based on its reluctance to come forward. “They may just be using Linux internally,” she said.

The mystery company may not even be directly related to Linux. Hewlett-Packard, Dell, Red Hat and SuSE all denied any involvement with SCO’s Linux license.

The news comes less than a week after the announcement of the SCO IP License for Linux program.

“We’ve had more than 300 companies in the first four business days of this program contact SCO to inquire about SCO’s Intellectual Property License for Linux,” Chris Sontag, senior vice president and general manager, SCOsource, SCO’s software licensing division said in a statement. “This Fortune 500 company recognizes the importance of paying for SCO’s intellectual property that is found in Linux and can now run Linux in their environment under a legitimate license from SCO. We anticipate this being the first of many licensees that will properly compensate SCO for our intellectual property. After having initiated the program last week, we are very pleased with the licensing interest to date.”

However, Deutsche Bank Securities analyst Brian Skiba, who visited with SCO last week and took a look at its evidence of copying from the UnixWare kernel into Linux, pointed out that many of those calls likely did not come from companies interested in buying a license.

“Some of those companies probably were leaving colorful messages that were not necessarily that they wanted to engage in a license,” Skiba told “[SCO] even told me that probably a third of those customers were calling to basically complain.”

SCO executives claim Linux is essentially software piracy, and it is ready to open a new revenue stream by giving Linux users immunity to copyright violations through licensing. The company bases its claims on files.

The company has been making friends, and enemies, in the world of computer operating systems. The company, which develops operating systems and network management software for PCs and servers, owns the copyrights to the UNIX operating system and is claiming that the UNIX-derived Linux OS contains source code of unlicensed UNIX System V code and UNIX System V derivative code in the Linux 2.4 and 2.5 kernels, which were illegally copied from UNIX.

Microsoft and Sun Microsystems have already paid for a UNIX license from SCO Group this year.

SCO’s crusade against Linux began with IBM. On March 6, the company sent a letter to IBM Chairman and CEO Sam Palmisano, warning him that IBM had allegedly breached its contract with SCO by contributing portions of its Unix-based AIX code to the open source movement, and by introducing concepts from Project Monterey, a joint effort by SCO and IBM to develop a 64-bit Unix-based operating system for Intel-based processing platforms, into Linux. IBM scrapped Project Monterey in May 2001.

Editor’s note: Senior editor Thor Olavsrud contributed to this report.

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