SCO owes Novell $2.55 million in royalties, judge rules

SCO Group Inc., the bankrupt software developer that claims to own copyrights to the Unix operating system, owes Novell Inc. $2.55 million in unpaid royalties, a judge has ruled.

U.S. District Judge Dale Kimball in Salt Lake City said Wednesday that SCO wasn't authorized to enter into a licensing agreement with Sun Microsystems Inc. and should turn over the royalties it received. He rejected other royalty claims by Novell over a Microsoft Corp. contract. SCO said Novell had asked for more than $20 million.

Last year, Kimball ruled that Waltham, Mass.-based Novell, not SCO, owned the copyrights to the Unix operating system and that an agreement between the two companies only gave SCO limited rights. That decision forced SCO, based in Lindon, to seek bankruptcy protection in September.

The dispute began when SCO claimed IBM had included the Unix code in the freely available Linux operating system that competes with Microsoft's Windows. It was demanding billions of dollars in damages from users of the Linux system.

Novell publicly disputed SCO's rights, and SCO sued for slander, prompting the question over ownership rights. The IBM case was halted after the bankruptcy filing.

SCO said in a statement it is reviewing the decision and the ruling is an "important step" in getting the case before an appeals court. It said the royalties claims rejected by Kimball involved UnixWare or OpenServer sales, "where the bulk of SCO's revenue is earned."

"We continue to disagree with the premise of this trial and believe that Novell is not owed anything, but that they have interfered with SCO's Unix rights," the company said.

In April, a SCO attorney said in court that the company was negotiating to sell its assets to Stephen Norris & Co. Capital Partners LP. SCO has until Aug. 11 to file a reorganization plan that details any proposed sale and describes how the Novell suit may affect creditors.

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