The US Federal Court of Appeal rejected the appeal of Xinuos (UnXis), which bought the SCO business in 2011 Group. Xinuos had sought to reopen legal proceedings against IBM and Red Hat, who were accused of transferring SCO’s intellectual property into the Linux kernel. The panel of three judges refused to review the earlier decision of the US District Court for the Southern District of New York due to the expiration of the statute of limitations.
Additionally, the appellate court upheld the decision that the claim was insolvent because Xinuos tried to present the case as a licensing dispute over someone else’s property, while in reality, the dispute revolved around unproven ownership. In the lawsuit, Xinuos claimed that IBM knew the code transferred to the Linux kernel did not belong to it, but that IBM had only a non-exclusive license to use it. By transferring the code, Xinuos alleged IBM violated the terms of this license.
In 2003, SCO accused IBM of transferring Unix code to Linux kernel developers. It was later revealed that all rights to the Unix code belonged to Novell, not SCO. Novell then sued SCO, accusing it of using someone else’s intellectual property to sue other companies. To proceed with their legal actions against IBM and Linux users, SCO needed to establish their rights to Unix.
Despite SCO’s disagreement with Novell, after repeated proceedings, the court determined that when Novell sold its Unix OS business to SCO, it did not transfer the rights to own its intellectual property to SCO. As a result, SCO’s accusations against other companies were deemed unfounded. In 2021, Xinuos, the successor to SCO, attempted to launch a new lawsuit alleging that IBM violated antitrust laws by displacing competing systems and unlawfully utilizing another entity’s intellectual property to create a competing product.
Xinuos plans to petition for a retrial of the case by the full Court of Appeals, although the likelihood of a rehearing being granted is low. Typically, a review is only ordered in exceptional cases where significant errors in the previous proceedings are identified. According to data from the Kaplan law firm, the US Federal Court of Appeals only allows for review in 0.03% of the cases it reviews.