Unix developer The SCO Group has stepped up its efforts to collect licence fees from Linux users and reported a quarterly net loss as a result of legal costs associated with its intellectual property rights campaign.

SCO sent out letters to selected large Linux users charging them with violations of the US Digital Millennium Copyright Act. The letter outlines what SCO claims are copyright violations related to Linux. Certain application binary interfaces have been copied from SCO's Unix System V code into Linux without proper authorisation or copyright attribution, said the company.

Additionally, SCO said that it is mailing notices to its Unix licensees requiring them to certify full compliance with their Unix source code agreement. This includes certifying that the licensee is not using Unix code in Linux, has not allowed unauthorised use of licensed Unix code and has not breached confidentiality provisions, SCO said.

SCO has raised the ire of the open source community by claiming that Linux is an unauthorised derivative of Unix. The company is embroiled in a lawsuit with IBM over a Unix licence and in May sent out a first letter to Linux users warning them of potential legal liability for the use of Linux.

Legal fees associated with its intellectual property rights campaign pushed SCO into the red in its fourth fiscal quarter ending Oct. 31. The company reported a net loss of US$1.6 million, compared to a loss of $2.7 million in the year-ago period.

Excluding $9 million in legal fees, SCO would have reported net income of $7.4 million, the company said.

Fourth quarter revenue jumped to $24.3 million from $15.5 million a year ago, the company said. The SCO source licensing initiative accounted for $10.3 million of total revenue, the result of licensing agreements with Microsoft and Sun Microsystems earlier in the year, SCO said.

Looking ahead, SCO expects revenue for the first quarter of its 2004 financial year, which ends Jan. 31, to be between $10 million and $15 million. Unix products and services are expected to account for the bulk of revenue, while revenue from licensing is expected to be minimal as the company finalises license agreements.