SCO v. IBM settlement deal is done, but zombie case shuffles on elsewhere

One strand of the ancient and convoluted SCO versus IBM legal mess that sought to determine who owns UNIX – and perhaps has a claim over Linux – may be about to end.

The case commenced in 2003, but its roots go even deeper.In 1998 IBM, the Santa Cruz Operation (SCO – a vendor of UNIX for x86 CPUs) and others teamed to create Project Monterey, with the aim of developing a version of UNIX that worked on multiple hardware platforms.

Which is just what the Linux community had started doing, too.

By 2001, IBM decided Linux was the future and quit Project Monterey, even acquiring some of the participants. By then Big Blue had created an experimental cut of its own UNIX-like AIX operating system that used some SCO code. But once Monterey was abandoned, IBM contributed some of its IP to Linux.

SCO took exception to those contributions, as it felt IBM had given away its assets to the open-source Linux code base.

Cue lengthy and astoundingly labyrinthine litigation, because even though SCO went bust its IP lived on under new owners. IBM kept fighting and entities that inherited SCO's IP kept trying new angles, finding new funding, or both. One player, Xinuos, filed its own claim against IBM in March 2021. Big Blue dismissed the claims as meritless.

The case persisted because the prize is enormous – a definitive win could potentially mean the winner has a chance to claim partial ownership of Linux. Seeing as Linux is at the heart of a billion smartphones a year, plus countless other devices, the royalty stream could be colossal.

But that dream appears to have died – for one heir of SCO, at least. Documents filed in the Bankruptcy Court for the District of Delaware last week suggest a settlement payment of just $14.25 million will see the matter closed.

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The filing that led to that conclusion was made by bankruptcy Trustee of TSG Group – the name SCO gave itself after selling its IP to Xinuos in 2021.

The motion for settlement states that, if agreed, it concludes litigation between TSG and IBM.

The trustee recommends the settlement because it is felt that "ultimate success of the Trustee's claims against IBM is uncertain". While the trustee could litigate the claims, it would be expensive to do so – more so if IBM appealed.

"The Settlement Agreement provides an immediate and substantial monetary recovery and creates important liquidity for the benefit of all creditors and claimants," the document states.

The documents state that Big Blue is good with this – so one strand of this ancient case looks set to conclude.

The Xinuos strand, however, remains unresolved. Therefore the matter of whether or not IBM has a case to answer also remains unresolved. ®