SCO has come under fire after suspending its Linux distribution pending the resolution of the intellectual property issues surrounding the operating system.

The vendor claims IBM has caused some of its Unix code to be embedded in Linux, including the Linux kernel, resulting in all commercial Linux distributors misusing its intellectual property.

It is already suing IBM for $1bn, but has now turned its sites on other distributions and users of Linux.

The company has emailed partners warning them that Linux "contains unauthorized SCO Unix intellectual property". It has also written to 1,500 users warning that they too may be legally liable for using its code.

Chris Sontag, SCOsource general manager and SCO senior vice president, said: "The same issue applies in terms of inappropriate intellectual property in Linux being distributed by any commercial distribution. So Red Hat, SuSE, or any other commercial distribution would have equal liability."

Dan Kusnetsky, vice president of systems software research at analyst IDC, said: "By attacking IBM over Unix intellectual property and implying that it might have implications with Linux, [SCO] has put Linux suppliers on notice."

SCO has also threatened to revoke IBM's AIX (Unix) licence on 13 June, leaving every AIX site using unlicensed software. IBM has refused to comment on what action it will take ahead of the court case.

The vendor's decision to turn to the courts has angered the market.

"I really don't know what [SCO] is playing at. It's wasting money. Are you going to argue with IBM?" said Richard Last, managing director of IBM Linux-based systems reseller Digica.

Peter Dawes-Huish, sales director at reseller LinuxIT, saw the move as self-destructive. "We think it will founder in the quagmire of the US courts," he said.

"In general we look at this with bemusement. We don't really understand the business rationale behind it."

"I don't think there's a lot that anyone can do that can stop the open source movement now," said Shobana Patel, managing director at reseller Open Minds High Availability Solutions.

While analysts are dismissive of SCO's chances of winning in court, they say the action may slow the gathering momentum of Linux.

It SCO turns its sights on Linux, Kusnetsky said, Microsoft could "claim victory and Linux would be faced with a serious problem", because many corporations are watching the operating system's evolution with growing interest.

He suggested that Microsoft would declare victory and say "we told you so. We said this was a possibility with intellectual property and because it was us saying it everyone thought it was sour grapes."

Companies were starting to see Linux as a mainstream choice, Kusnetsky added, but "this would put a chill on that. It won't stop [installations] but it will lengthen the decision cycle."