SCO acquired certain rights to the UNIX operating system from Novell. Now SCO is suing IBM, claiming that their UNIX intellectual property was used in the AIX operating system. SCO is also threatening Linux users with the same allegation. SCO has refused to publicly produce any evidence to support their allegations, and there is widespread skepticism about SCO's claims.
It's complicated, but you can scan some past headlines by searching for keyword "sco".
SCO Group is the new name of Caldera, Inc., a Utah firm founded by Ray Noorda, the founder of Novell. Caldera was a linux distributor. It went public in 2000 with the idea of becoming "the next Red Hat."
It did not become the next Red Hat. It sort of fell on its butt. Caldera bought the UNIXware business of the Santa Cruz Operation (the company formerly known as SCO). That company changed its name to Tarantella; it is still in Santa Cruz. Caldera changed its name to SCO Group.
SCO's complaint against IBM alleges breach of contract, unfair competition, and misappropriation of trade secrets. You will hear this described in press accounts as a copyright infringment case, or even a patent infringement case. To date SCO's complaint contains no such cause of action. It is a 'contract' dispute.
The actual contract is an old one between IBM and AT&T. SCO inherited it as part of the properties it purchased with UNIXware.
Most of the SCO claims turn on the idea that IBM violated the AT&T contract by contributing certain code to linux. No one seriously disputes that the code in question was written by IBM, or by Sequent, which has since become a subsidiary of IBM. SCO does not claim authorship of this code, nor do they allege that it was part of the original AT&T UNIX code.
SCO's claim revolves around a rather expansive definition of the term "derivative work." For example, one of the SCO claims concerns a feature called "JFS." This is an IBM product originally written for OS/2, subsequently ported to AIX, and also contributed to linux. SCO alleges that by porting this code to AIX, IBM made it a "derivative work" of UNIX and hence SCO property. This is for the court to decide. Were the court to decide in SCO's favor, any product ported to UNIX would become an SCO property. This would include Oracle, PeopleSoft... lots of things. Similarly, all things ported to Windows (Photoshop, Dreamweaver, ad infinitum) would become derivative works of Windows and hence the property of Microsoft. Such a ruling would have the effect of shifting billions of dollars in shareholder assets instantly, bankrupting hundreds of companies. Will the courts do it? The Golden Beak insists there is a good chance of this. I say no.
SCO has also announced publicly that it has cancelled IBM's right to sell or use AIX, and that AIX users are running illegal software. IBM and the AIX users are taking the position that SCO has issued an interesting press release.
SCO has also announced that it will soon begin selling "protection" licenses to linux users. These licenses will offer protection from lawsuits by SCO. "Buy our product or we will sue you," is the apparent sales pitch. Many people in the trade press think this is a serious danger. No one else does. SCO has not demonstrated that it owns any part of linux; it merely screams loudly that this is so. Their first lawsuit against a linux user should be an interesting one. In the interim, SCO could potentially be charged with the fraud of "misrepresentation of need," which means taking money from someone under the (false) pretense that the product is "needed." There is currently no reason to believe that anyone running linux "needs" a license from SCO to do so. It is simply a loud claim that SCO makes in the press.
Many people suspect that SCO is a dying company that is attempting to sue its way to prosperity; or failing that, to at least run a satisfying "pump and dump" on its stock. The stock has in fact risen from 60 cents to 12 dollars with all of this hype, and the insiders are indeed dumping, including the CFO. The VP of Engineering recently sold all his stock and resigned. This is the guy who has seen all the secret files of copied code with which SCO will trounce IBM when they get to court. He inexplicably chose not to hang around for the $3 billion payday, choosing instead to get out now with the stock at $12. Perhaps he needed to spend more time with his family.