SCO bet the company on a $1B lawsuit — then learned it never owned the Unix copyright

The SCO Group was formed in 2002 when Caldera International renamed itself after acquiring the Unix operating system assets of the Santa Cruz Operation. SCO owned UnixWare and OpenServer, two commercial Unix distributions, and employed about 400 people. In fiscal 2003, the company reported $79 million in revenue and $3.4 million in profit — its best year.

On March 6, 2003, SCO sued IBM for at least $1 billion, claiming IBM had misappropriated SCO's trade secrets by contributing portions of its Unix-based AIX operating system into the Linux kernel. The lawsuit was the opening move in an aggressive legal campaign to monetize SCO's Unix intellectual property. SCO hired David Boies, the lawyer who had argued the US v. Microsoft case, and created the SCOsource division to sell Unix license rights to Linux users. For a time, the strategy appeared to work — SCO's stock rose from under $1.50 to over $22.

The strategy collapsed on August 10, 2007, when Judge Dale Kimball ruled in SCO v. Novell that Novell — not SCO — had always owned the Unix copyrights. SCO owed Novell 95% of the revenue it had collected from licensing Unix. Five weeks later, SCO filed for Chapter 11 bankruptcy protection. The company had spent over $31 million on legal fees. SCO's Unix and mobility assets were sold off in 2011; the company converted to Chapter 7 liquidation in 2012. The remnant of the IBM lawsuit dragged on until 2021, when it was settled for a tiny fraction of the original claim.