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Copyright Ruling Smacks SCO Group

By Ivy Lessner Staff Reporter

8/13/2007 2:17 PM EDT
Click here for more stories by Ivy Lessner

A judge's slap-down of SCO Group's (SCOX - Cramer's Take - Stockpickr - Rating) Unix copyright claims may have dealt it a final blow.

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A judge in the U.S. District Court for Utah sided with Novell (NOVL - Cramer's Take - Stockpickr - Rating) on most of SCO's claims for owning Unix copyrights, parts of which are the basis for open-source Linux software, which Novell sells.

Shares in Lindon, Utah-based SCO Group were down $1.12, or 71.9%, to 44 cents Monday. Back in 2003, the stock traded near $20 a share. It has since shrunk to a micro-cap stock, with revenue of $26.8 million in 2006.

SCO had claimed to own substantial chunks of the Unix code and threatened to sue IBM (IBM - Cramer's Take - Stockpickr - Rating) and nearly everybody else in the open-source industry, including customers, for reparations.

"Novell is the owner of the Unix and UnixWare copyrights," U.S. District Judge Dale Kimball, wrote in Friday's decision. Furthermore, Novell can require SCO to waive claims against IBM, he ruled.

Novell and IBM have a long-standing partnership in furthering the use of open-source Linux software in the enterprise.

"Today's court ruling vindicates the position Novell has taken ... and it settles the issue of who owns the copyrights of Unix in Novell's favor," Joe LaSala, Novell general counsel, said in a statement issued Friday. "The court's ruling has cut out the core of SCO's case and, as a result, eliminates SCO's threat to the Linux community."

"We are extremely pleased with the outcome," LaSala stated.

Novell was up 32 cents, or 5%, to $6.74. SCO Group could not be reached for comment.

SCO Group's revenue for the first two quarters of 2007 was down 16.9% year over year, to $14.5 million. The majority of its revenue is Unix-related. The company posted a loss of 5 cents a share for each of those quarters. SCO Group spent just over $1 million on litigation costs in the second quarter.

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