Taking its dispute over appropriated code directly to Linux users, SCO is to sell licences for any Linux system based on kernel version 2.4.x and later.

It may also take legal action against any company using Linux without that licence.

SCO is claiming the legal right to license Linux after being awarded copyrights for Unix System V code, which it maintains has been illegally used in the Linux kernel.

Until now, SCO's case had been against IBM for breach of its contract for putting that code into Linux.

"As of today it is a different game. Our legal fairway just got a lot wider," said Darl McBride, president and chief executive at SCO.

According to the company, commercial Linux customers that purchase the new UnixWare licence will not be liable for any past copyright violations. They will also be covered for any future use of Linux in a run-only, binary format.

"We are balancing the demands of the marketplace with our rights to protect our valuable Unix property," stated McBride.

SCO confirmed that Fortune 1000 and Global 500 companies will be targeted with the new licences at first.

Details of pricing have yet to be formulated and SCO explained that it would only determine pricing after consultation with key Linux users. Bulk pricing and discounts will be available.

However, analysts immediately questioned SCO's licensing plans and the threat of legal action.

"If users do not sign up, that would leave SCO having to prove infringement in each individual case," said George Weiss, vice president and research director at Gartner.

Other analysts believe that some companies might even welcome a sensibly priced licence fee.

"SCO won't be stupid about the pricing. They won't gouge customers," said Laura DiDio, senior analyst, application infrastructure and software platforms, at the Yankee Group.

She added that, even at $500 or $1,000 a server, the licence could still represent a better deal for major Linux users when compared with the alternatives.

"That's not too bitter a pill to swallow if it removes the cloud hanging over a Linux deployment or potentially having to pay damages," explained DiDio.

But other analysts are less certain that companies will be willing to pay such fees.

"If they opt for the same $500 fee for UnixWare licences, that can amount to a substantial amount of money," said Weiss. "Total cost of ownership isn't the only reason that companies choose Linux, but it is a factor."

If the licensing fee is seen as prohibitive, SCO's move could also cap many users use of Linux, according to analysts.

Much of SCO's copyright claim revolves around the symmetric multiprocessing (SMP) features in the Linux version 2.4 kernels. But use of that code is limited and enterprises may opt to run earlier versions of Linux.

"Most users are not using the infringing code but using Linux just to run virtual private network, domain name system or web servers without any regard to the SMP capabilities," stated Weiss.

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