It must stick in Sun Microsystems Inc CEO Scott McNealy’s throat to pay a tax to arch enemy Microsoft Corp on every copy of Solaris x86 it sells, but relief maybe at hand after Redmond released Santa Cruz Operation Inc from a similar royalty obligation following the European Commission’s ruling that the terms of its contract with SCO infringe trade competition laws. SCO had petitioned the EC and US Department of Justice claiming its contract with Microsoft according to which it had to pay Redmond up to $15 for every copy of Unix shipped for use on Intel-based computers – and maintain compatibility with Microsoft’s old Xenix Unix operating system – was anti- competitive. As it turned out, contracts such as the one with SCO, whose terms run in perpetuity, have no standing at the EC. Sun says its lawyers are now investigating pursuing similar action. The contractual obligation to Microsoft dates back to 1988 when Microsoft agreed to drop its Xenix product line – one of the earliest, and certainly the most successful implementation of Unix for Intel chips – in return for royalties and an agreement from then Unix owner AT&T Co to maintain Xenix compatibility in all future versions of Unix for Intel. Novell Inc inherited that agreement when it went on to acquire Unix from AT&T in 1993, and in turn passed it on to SCO in 1995 when it exited the Unix market. SCO paid out $4m in royalties to Microsoft last year, an amount it could hardly afford given it lost $15.2m on $193.7m in its last fiscal year. Sun bought its Unix revenue stream out from Novell back in March 1994 and at the time was claiming to have royalty-free rights to the code. Only now has it become clear Sun’s been cutting a royalty check to Redmond ever since though how much it’s actually paid is unclear as it’s pretty tight-lipped about its Solaris x86 shipments. IDC says SCO products accounted for 78% of Unix-on-Intel unit shipments in 1996 compared with Sun’s 10%.
