Shares of Novell (NOVL: news, chart, profile) rose 13 cents, or 4 percent, to $3.13 in Nasdaq trading. SCO shares (SCOX: news, chart, profile) fell $2.11, or 24 percent, to $6.60.
Orem, Utah-based SCO sent a letter on May 12 to Linux software users, notifying them that "Linux infringes on our Unix intellectual property and other rights." SCO said that it owns the patents, copyrights and core technology of Unix, which is said to be the basis of the freely available and fast-growing Linux operating system.
In a statement, Provo, Utah-based Novell, which sold its Unix technology to SCO in 1995, said Wednesday the Unix copyrights and patents never transferred to SCO. It also said SCO doesn't have facts to back up its assertion that certain Unix code had been copied into Linux.
Novell added that in recent months, SCO executives had asked Novell to transfer the Unix copyrights to SCO -- a request that was denied.
Darl McBride, SCO's chief executive, said Wednesday that although SCO discussed the contract with Novell recently, the companies did not talk about copyrights or patents.
"We talked to those guys, but there was never one comment at any time that, 'Hey, we want to buy copyrights from you,' " McBride said. "It was very clear in our minds that we already purchased that."
In recent weeks, SCO has been trying to persuade companies that sell Linux, including computer maker IBM (IBM: news, chart, profile), to take out an SCO license, particularly for clustering technologies in Linux that are used to tie groups of computers together to complete heavy-duty tasks.
SCO sued IBM on May 7, in a Utah state court, over misappropriation of trade secrets, unfair competition, and breach of contract. The complaint alleges that IBM tried to destroy SCO's Unix to benefit IBM's Linux services business.
McBride added that unless more companies start licensing SCO's property, he may also sue Linus Torvalds, who is credited with inventing the Linux operating system, for patent infringement.