US retail group advises retailers SCO lawsuit appears 'unfounded'

By Matt Whipp

Posted on 6 May 2004 at 13:00

US retail group the National Retail Federation has advised its members to ignore SCO threats, saying it expects retailers that use Linux will survive any litigation from the Unix company.

In a statement NRF CIO Dave Hogan said he believed the SCO's claims 'are without merit' and that it has so far failed to specify 'which parts of Unix System V have been copied into Linux'.

Recently, SCO has filed lawsuits against car companies AutoZone and DaimlerChrysler for what SCO contends is an illegal use of its intellectual property in Unix and Linux. However, these are just the first of a number of litigations planned by the company. It has also sent letters to major Unix licencees and Linux-using companies threatening legal action if they fail to comply with its demands.

Hogan suggests that SCO's business model may be to generate revenues through litigation. Indeed, BayStar Capital, a company that invested $20mn in SCO last year, wanted to redeem its investment. It said SCO had contravened certain terms of the investment agreement and had urged SCO to drop its Unix business and concentrate on its intellectual property assets.

SCO's financials for the most recent quarter showed it had spent $3,440,000 to pull in just $20,000 revenues from litigating and licensing its intellectual property assets.

But Hogan doubts whether SCO even owns the Unix property it claims, saying 'Novell Corporation filed a court challenge to The SCO Group's claim of Intellectual Property rights, demonstrating serious questions regarding whether The SCO Group ever gained legal ownership to Unix System V... Novell is the last company that can demonstrate legal ownership of Unix System V'.

Strictly speaking, it is SCO that filed against Novell in a Slander of Title suit following Novell's pubic claims that it retains certain ownership rights to Unix and registering a number of Unix copyrights.

But in its court filings, Novell has asserted that the documents relating to the purchase of Unix by SCO from Novell are not clear about which Unix properties have been transferred to SCO, and can not be relied upon in court as proof that particular Unix assets were assigned to SCO.

As such, it provides a defence for Novell in its claims that the documents don't prove ownership, but perhaps does little to positively establish who does.

The National Retail Federation is the world's largest retail trade association.