SCO declares bankruptcy after failed patent suits

Service provider SCO Group ended a major phase in the history of both UNIX and Linux today by declaring chapter 11 bankruptcy, forcing the company to reorganize before it can resume normal business. The sometimes scorned company said it had decided to take the action before it was absolutely necessary to make sure its existing UnixWare and mobile-oriented Me Inc. services would continue running while it returned to a profitable state, which had been damaged by the legal costs incurred as part of its lawsuits against several high profile firms for allegedly violating patents SCO held for UNIX source code.

The company earned a hostile reaction from the Linux community over the past several years after the company sued IBM and Novell, accusing both of illegally writing SCO-owned UNIX source code into their versions of Linux and profiting from the efforts. These and companies who were simply using UNIX, such as automaker DaimlerChrysler, were allegedly responsible for licensing or certifying their use of Linux with SCO. Both IBM and Novell denied the charges, with the latter successfully defending itself in court and claiming the UNIX copyrights for itself.

Informally, many users and journalists had attributed SCO's lawsuits to an attempt to compensate for the company's struggling service business, relying on expected lawsuit winnings and Linux royalties to support itself until it could improve its existing sources of income. At one point, Microsoft is said to have provided financial support for SCO's court fees.