The SCO Group has terminated IBM's right to sell its AIX operating system and is seeking an additional $2bn worth of damages from Big Blue.

SCO has filed a permanent injunction that requires IBM to "cease and desist all use and distribution of AIX", and to return all copies of Unix source code to SCO.

"IBM no longer has the authority to sell or distribute AIX and customers no longer have the right to use AIX software," said Darl McBride, SCO president and chief executive (pictured).

SCO's lawsuit claims that IBM broke its contract with SCO by allowing parts of SCO's Unix V source code, licensed to IBM for use in AIX, to be used in the rival Linux operating system kernel.

As a result, SCO gave IBM a 100-day period before its licence to sell AIX systems was withdrawn, which ended at midnight, Friday 13 June. Having failed to reach an agreement, termination of IBM's contract was automatic, said SCO.

SCO's amended filing seeks $3bn from IBM's multibillion-dollar AIX-related businesses. According to SCO, these damages began to accrue since last Friday's deadline and cover all IBM's AIX-related business, including services, hardware and software.

SCO has refused to rule out "enforcing" its rights against AIX customers. "The AIX users are innocent bystanders in this and we don't want to be heavy-handed with them, but we won't rule out enforcing our rights on IBM or its customers either," said SCO spokesman Blake Stowell.

In a swift response IBM, which counts national governments and some of the world's largest companies among its AIX user base, reiterated its belief that the suit has no merit.

"SCO continues to make its claims. IBM's Unix licence is irrevocable, perpetual and fully paid up. It cannot be terminated," said Trink Guarino, IBM spokeswoman, in a statement.

AIX customers have nothing to fear from the SCO action, Guarino added. "As always, IBM will stand behind our products and our customers."

Analysts said users will have to wait and see what happens next. "There's not much AIX users can do at this point other than perhaps ask IBM to indemnify [them] from liability," said George Weiss, vice president and research director at Gartner.