Businesses currently using Linux must seriously consider turfing it out, according to Kieran O'Shaughnessy, regional general manager for SCO Australia and New Zealand.

On Wednesday, the company sent letters to 1,500 top international businesses warning that they may be held liable for breach of copyright for using Linux, which allegedly contains copied proprietary Unix source code.

"I think organisations need to reassess their position with regard to Linux," said O'Shaughnessy. "They need to make a call in consultation with their legal advisors as to how they perceive the risks and whether they think it is a practical and viable path to go down, given the question marks SCO is raising over the Linux product."

SCO currently owns the intellectual property rights over the source code for Unix, which was developed by AT&T. AT&T sold those rights to Novell, which sold them to Unix vendor SCO. SCO was taken over by Linux vendor Caldera, which subsequently changed its name back to SCO.

"Users of Linux are getting a benefit from Linux which they are in effect not entitled to because it takes advantage of SCO's property without any authorisation," claimed O'Shaughnessy.

While major Linux vendors such as Red Hat deny SCO's claims, it is end users who may be most at risk, according to Gartner analyst George Weiss. "Red Hat, like most other independent software vendors, uses indemnification clauses in the end-user license agreement to absolve itself from liability or damages based on the content of the software," said Weiss in a report.

O'Shaughnessy agreed, adding: "Because it is an open source project, at the end of the day nobody can really stand up and say 'we know everything that's gone into Linux and we'll indemnify you, Mr Customer, because it's our product and we control what goes into it'. There's so many contributors to Linux that the opportunity for copyrighted material to get into Linux is very real."

It was "a very real possibility" that CEOs or CIOs would order their IT departments to remove Linux from their systems, at least until the copyright issues were sorted out. "It's going to be very disruptive," O'Shaughnessy said.

In March, SCO initiated a lawsuit against IBM for using copyrighted Unix code to improve Linux. The company has not ruled out further legal action. "We have at this time announced no other legal action or intent on legal action," said O'Shaughnessy. "What has been said is that we will pursue and protect our intellectual property and pursue people we believe have violated our intellectual property."

The company has also withdrawn from sale its own Linux distribution, SCO Linux, part of the UnitedLinux family of Linux distributions that also includes SuSE, TurboLinux and Conectiva.

"We can't in good faith also be selling a product that we believe there are serious question marks over in terms of intellectual property or copyright infringement," explained O'Shaughnessy. "We've taken what we view as a major step, and an indication of how seriously we take this whole matter by withdrawing what is a strategic product from our portfolio."

However, he claimed that SCO has by no means given up on Linux.

"We announced a suspension, not a termination. We feel that for the good of Linux, these intellectual property and copyright question marks need to be resolved. Once these can be rectified and resolved once and for all, then there's every chance we would get back into Linux," O'Shaughnessy said. He was unable to provide an estimate of how long that might take, however. "I couldn't even begin to guess. Once you get into the legal world, anything's possible," he said.

Subscribe now to Australian Technology & Business magazine.

Copyright © 2009 CBS Interactive, a CBS Company. All Rights Reserved.
ZDNET is a registered service mark of CBS Interactive. ZDNET Logo is a service mark of CBS Interactive.