The 28-year fight over who owns Linux is nearly over

A US appeals court has thrown out the last live claim in the long fight over who owns Linux. Simon Sharwood reported the ruling for The Register on Sunday.

The dispute began in 1998. The company still fighting it, Xinuos, now has one long-shot move left.

What the court decided

Three judges of the US Court of Appeals for the Second Circuit affirmed the lower court on 10 August. Guido Calabresi, Steven Menashi and Sarah Merriam signed the summary order.

The order affirms the judgment of the Southern District of New York. It calls Xinuos’s remaining arguments “without merit”.

A summary order carries no precedential effect.

What IBM does not dispute

The order is unusually blunt about what is not in question.

IBM does not dispute that Xinuos owns the copyrighted code. It does not dispute that it took the code from Project Monterey and put it into its own products, “which it continues to iterate and release for sale”.

What IBM has argued, through decades of litigation, is that it had the right to do so.

Why the claim failed

The case turned on timing rather than merit. The operative question was when the claim accrued.

A plaintiff can bring a copyright infringement claim within three years of any infringing act. An ownership claim accrues once, when a diligent plaintiff should have known about it.

The court found this claim accrues once. IBM never disputed taking the code, so the dispute “does not involve the nature, extent or scope, of copying”, the order says. It involves whether IBM had the legal right.

“The contested action, IBM’s taking of the code in 2001, was a one-time event.”

Even applying the Copyright Act’s three-year window, and even dating Xinuos’s knowledge to 2011, a claim filed in 2021 arrives too late.

The appeals court sided with Xinuos on one point

The district court had treated the claim as an ownership dispute. The Second Circuit disagreed with that.

Both sides framed the fight as being about IBM’s right to use the code, the order says, “which reflects a dispute over a license rather than a dispute over the ownership of the code”.

It cited a 2007 ruling that a non-exclusive licence conveys no ownership interest. Then it affirmed the dismissal anyway, because the accrual analysis lands in the same place.

Where this started

In 1998 IBM and The Santa Cruz Operation began a joint venture called Project Monterey. The goal was a family of UNIX-based operating systems, including versions for Intel’s coming IA-64 processor and IBM’s Power architecture.

Intel and Sequent also signed up, according to The Register.

A Joint Development Agreement governed the work. Each party licensed the other its code. Section 22.3 gave them two years from any breach to bring a related claim.

How it fell apart

Linux arrived and already ran on multiple processors. IBM decided that was the future and left.

Santa Cruz announced in 2000 that it was selling much of its business to Caldera Systems. IBM terminated Project Monterey in 2001.

IBM then allegedly contributed Monterey code to Linux and to its own AIX and Z operating systems, The Register reported in July. Santa Cruz’s successors said they owned that code.

Twenty-three years in court

Caldera sued IBM in Utah in March 2003, and later renamed itself SCO Group. It filed for bankruptcy in 2007.

In January 2011 SCO Group sold almost its entire software business to Xinuos. The agreement carved out “any rights, claims or causes of action related to” IBM.

A Utah district court granted IBM summary judgment in 2016. The Tenth Circuit sent the misappropriation claim back for trial in 2018.

SCO Group and IBM settled in August 2021 for $14.25m, a figure The Register says reflects years of failing to produce strong evidence.

Xinuos objected and lost

Xinuos told the bankruptcy court the settlement could be read to cover its own claims against IBM and Red Hat. The court overruled the objection and approved the deal.

The release covered all rights in litigation claims “pending or that may be asserted in the future against IBM and Red Hat”.

Its own case ran five years

Xinuos filed against IBM and Red Hat on 31 March 2021. The parties later dropped the Red Hat claims by joint stipulation.

Judge Seibel granted IBM summary judgment in a bench ruling in January 2024, and denied reconsideration that April. Final judgment came on 2 April 2025.

Crowell & Moring argued for Xinuos on appeal. Latham & Watkins argued for IBM.

What was at stake

Linux runs in billions of devices. Sharwood offered a way to size the prize.

Huawei announced in June that it would charge $0.50 per unit for Wi-Fi 7 patents. Its licences covered more than 1.2 billion consumer devices by the end of 2024.

If half a dollar is the going rate for a wireless standard, the royalties available from an operating system could run higher.

One move left

Xinuos intends to petition for the case to be reheard by the full bench of the Court of Appeals.

That rarely works. The Second Circuit has allowed reviews in fewer than 0.03% of the cases it has handled, on figures from the Kaplan Law Firm cited by The Register.

What the ruling does not settle

The order does not decide whether IBM was entitled to the code. It decides that nobody can litigate the question now.

IBM has been shipping products built on that code for a quarter of a century, and still sells mainframes today. It is also betting $240m on open-source AI inference.

The question of what open code is worth has not gone away. Alibaba wants to charge the biggest users of its open model, Nvidia paid $6bn to license Poolside’s software, and attackers hijacked 1,500 Arch Linux packages in June.