A decades-long legal fight over who owns Linux moved closer to ending after a three-judge panel rejected claims against IBM and Red Hat, ruling that time has run out for further challenges. The decision, issued August 10th by the United States Court of Appeals for the Second Circuit, upheld a lower court's dismissal of the case brought by Xinuos, a legal successor to the Santa Cruz Operation. The ruling affirms that original agreements governing a 1998 software project mean it's now too late to revisit ownership disputes.
The legal saga began in 1998 when IBM partnered with the Santa Cruz Operation on Project Monterey, an effort to build a single version of UNIX that could run on multiple processor types. When that alliance collapsed—largely because Linux emerged as a multi-platform operating system with a revolutionary development model—IBM added some Project Monterey code to Linux. SCO and its legal heirs claimed they owned that code and therefore had rights over Linux, which now runs in billions of devices worldwide. In 2021, one SCO successor settled with IBM for $14.25 million, a figure that reflected years of failing to produce strong proof for its claims.
Xinuos filed a fresh claim arguing IBM knew it didn't own the code it gave to Linux but instead held only a non-exclusive license to use it, and that contributing Project Monterey code to Linux violated that license. The US District Court for the Southern District of New York dismissed the case, and the Appeals Court agreed, finding that Xinuos tried to frame the dispute as a licensing matter but was actually making an ownership argument. The Appeals Court also ruled that the statute of limitations has expired for such claims.
The stakes were enormous because Linux's ubiquity across billions of devices could theoretically generate massive royalties—the report notes that Huawei collects $0.50 per device for Wi-Fi 7 patents alone, suggesting Linux rights could be worth far more. But Xinuos hasn't given up yet. The company plans to petition for a rehearing before the full bench of the Court of Appeals, though law firm Kaplan says the Second Circuit grants such reviews in less than 0.03 percent of cases it handles, and only when significant errors or major legal questions justify it. With two courts now rejecting the claims and the legal window essentially closed, the long battle appears headed for a final resolution that leaves Linux's ownership status unchallenged. For companies that have built infrastructure on Linux over the past quarter-century, the ruling removes lingering uncertainty about whether ancient code contributions could expose them to retroactive claims. The wider implication extends beyond this particular dispute: as open-source software becomes foundational to global technology, the legal system's willingness to draw a line under old grievances will shape how confidently enterprises commit to collaborative development models.