A tiny German software company has thrown some sand in the gears of The SCO Group Inc.’s roaring legal machine.

As anyone interested in open-source software will know by now, SCO is claiming that its copyright-protected code was illegally copied into the Linux operating system. The company has sued IBM Corp. alleging copyright infringement and breach of contract, and earlier this month sued two Linux users, DaimlerChrysler AG and auto parts retailer AutoZone Inc., over their use of the open-source operating system.

But what some folks don’t know is that Univention GmbH, a small startup software venture in Bremen, Germany, has successfully halted the Lindon, Utah, company from making copyright infringement claims in the country — Europe’s largest open source market.

Univention was one of three organizations last year to win a temporary restraining court order against SCO Group GmbH, forcing SCO’s German subsidiary to stop spreading allegations about Linux copyright violations. On Feb. 18, Univention struck an out-of-court settlement with the SCO unit, said Univention Founder and Managing Director Peter Ganten.

“We told SCO that we intended to defend our position in court after the restraining court order expired,” he said. “SCO could have challenged us in court but chose not to.”

However, the two companies could still end up in front of a judge if SCO isn’t careful, Ganten warned.

In an interview last week with the German edition of the Financial Times newspaper, Gregory Blepp, vice president of licensing at SCO in the U.S., said he was working with great intensity to create legal conditions that require Linux users in Germany to purchase SCO’s intellectual property licenses.

“This statement is a bit astonishing,” Ganten said. “It would really surprise us if SCO is already trying to breach our out-of-court settlement less than one month after signing it.”

Univention’s lawyers are currently reviewing the issue, according to Ganten. “We will take legal action if we determine that SCO is attempting to breach the out-of-court settlement,” he said.

A fuzzy issue, according to Ganten, is whether an employee of SCO in the U.S. can make claims in Germany. The out-of-court settlement prohibits only employees of the German subsidiary from making copyright violation claims in the country.

On Mar. 4, just three days after Univention publicly announced the out-of-court settlement, SCO in the U.S. commissioned a public relations agency in Germany to translate and circulate a news release pointing to copyright claims.

“This is the sort of borderline behavior we’ve seen from SCO since we reached the agreement,” Ganten said.

In the February out-of-court settlement, the German SCO subsidiary agreed to refrain from maintaining or disseminating any of these four assertions:

— Linux operating systems contain unlawfully acquired intellectual property from SCO Unix;

— end users, if they use Linux, could be held liable for the violations of SCO intellectual properties;

— Linux is an unauthorized derivative of Unix;

— buyers of Linux operating systems other than SCO Linux or Caldera Linux may be subject to criminal prosecution.

As part of the settlement, the German subsidiary agreed not to claim publicly that proofs of copyright violation would be provided soon, unless they are provided to Univention within one month from such an announcement. In addition, the unit committed to pay Univention a penalty of

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Jim Love, Chief Content Officer, IT World Canada