SCO will turn its sights on Novell once the latter has completed its $210m acquisition of SuSE, with a claim that Novell signed a non-competition clause when it sold SCO the rights to Unix in 1995.

The company cliams that any Linux distribution marketed by Novell would put the firm in breach of the non-compete clause. This stops it from competing directly with SCO's Unix-on-Intel business, according to SCO.

Darl McBride, chief executive of SCO, commented: "When SCO bought Unix from Novell there was clear non-compete language in the contract to prevent Novell from competing against us.

"When the Novell/SuSE deal is completed then we may have to enforce that non-compete agreement."

Novell has hit back at the threats, arguing that SCO's characterisation of the agreement has been inaccurate.

"There is no non-compete provision in those contracts, and the pending acquisition of SuSE Linux does not violate any agreement between Novell and SCO," the company said in a statement.

SCO plans to contact Novell to discuss the non-competition clauses once the SuSE deal has gone through. It said that although Novell can develop software products that work with an operating system, it cannot enter the operating system market.

"This is something that Novell will have to work out with SCO if the acquisition goes through and they continue to develop Linux," added Stowell.

Additional reporting by Jonathan Collins.