Silicon Graphics is the latest technology company to be dragged into The SCO Group's dispute over the Linux operating system.

In a letter dated 13 August, addressed to SCO's legal department and released to the media Wednesday, SCO Chief Executive Officer Darl McBride claims that SGI's contributions to Linux put it in breach of its 1986 Unix licensing agreement, originally signed with AT&T but subsequently transferred to SCO.

According to McBride's letter, "SGI flagrantly permitted the copying and use of our proprietary information without any knowledge of the identities of the recipients" and "subjected our source code to unrestricted disclosure, unauthorized transfer and disposition, and unauthorized use and copying."

The letter threatens to terminate SGI's Unix licence as of 14 October should SGI fail to "remedy all violations."

Terminating SGI's Unix licence would affect SGI's Irix operating system, which uses SCO's System V Unix code, according to SCO spokesman Blake Stowell. "It would mean that they would have to either stop shipping it, or destroy or return all copies of Irix to SCO," Stowell said.

SGI responded to SCO's letter in early September with a letter claiming that SCO's allegations were without merit, said SGI spokeswoman Marty Coleman.

"Our license is fully paid and non-terminable. They can't terminate it." she said. "We don't believe that their allegation of breach of contract has any merit."

SGI appears set to follow in the footsteps of IBM Corp., which in June had its license to distribute its AIX operating system revoked by SCO following similar allegations. IBM continues to distribute AIX and the question of whether it breached its System V Unix agreement is now the subject of a US$3 billion lawsuit.

Prior to revoking IBM's Unix licence, SCO sued the computing giant for breach of contract. Stowell declined to say whether or not SCO was planning similar legal action against SGI.