Microsoft played a bigger part than previously suggested in SCO's running dispute with IBM. According to papers filed by IBM in a Utah court, investment company BayStar's investment in SCO was backed by Microsoft.

Microsoft's senior vice president of corporate development and strategy promised that Microsoft would "guarantee" BayStar's part in a $50 million investment in SCO, according to the declaration from BayStar managing member Larry Goldfarb. Previously, BayStar executives had merely claimed that Microsoft had introduced the investment company to SCO.

After BayStar made the investment, however, Microsoft stopped returning the company's phone calls and the Microsoft executive who made the promise, named in the filing only as Mr Emerson, was likely fired, according to Goldfarb.

BayStar ultimately sold its investment back to SCO at a loss. The investment company blamed SCO's high cash burn rate and the questionable viability of its products for its decision to sell, Goldfarb said.

Microsoft would not respond to IBM's claim, although according to a report in The Wall Street Journal, a Microsoft spokesman said it had never made any such guarantee to BayStar.

If Microsoft did make such an offer to BayStar it would have been a very risky move, one industry analyst said.

"Given the enormous scrutiny that Microsoft is under, I think it's extremely unlikely that they would have engaged in any kind of conspiracy because the potential upside simply isn't great enough and the potential downside is great," said Gary Barnett, an analyst with Ovum.

The battle between IBM and SCO started in 2003 when SCO charged IBM with offering open source software based on source code that SCO claimed to own. The company then threatened to sue businesses using Linux for patent infringement. In July of this year a judge dismissed nearly 200 SCO claims, saying the company didn't offer enough detail of the alleged patent infringements.

A PDF of last week's filing is posted on the Groklaw Web site at http://www.groklaw.net/article.php?story=2006100801442692.