Linked by Roberto J. Dohnert on Tue 10th Jun 2003 01:06 UTC
On March 7th 2003, the SCO Group filed a lawsuit against IBM for misappropriation of tradesecrets and contractual agreements. The scope of SCOs complaint is that IBM introduced parts of Unix System V and Project Monterey into the Linux kernel. Project Monterey was a effort to port IBM's AIX 5L onto the Intel Itanium platform, IBM withdrew from that project for reasons unknown according to the press, I believe that it was because the Itanium is a bomb. 
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At that point the commercial providers essentially have a black hole of liability. Even once the code base is made clean, that liability does not instantly vanish. SCO will be going over and start knocking on doors with settlement offers. Should those be met with resistance, then they'll be followed up with lawsuits to get their remedy.
IANAL, of course, but IIRC, you can't be held liable for copyright infringement if you have no way of knowing you're infringing the copyright. SCO has not as of yet sent out any cease & desist letters, which would seem to be a prerequisite to collecting any damages, even statutory damages, for infringement. Now, those letters may yet come, but they haven't come yet, AFAIK. You have to make a good faith effort to stop infringement before you can collect damages for the infringement. (Although you don't forfeit your right to eventually send the C&D letters & sue for infringement at some time in the distant future - like you do if you fail to defend trade secrets or trademark in a timely fashion).
So there's no liability to anyone using/redistributing Linux in the good faith belief that SCO is full of it - until SCO sends them a C&D, at which point they could sue SCO for barratry or something like that (assuming SCO is really blowing smoke). With the exception of suing IBM, all SCO has done could be characterized as sabre-rattling - no real legal impact whatsoever.
The real legal danger is that, if they can prove that infringement is taking place (and they're not the ones infringing), they have the possibility of stopping distribution (and possibly use) of the infringing code. This certainly qualifies as FUD, and if I were a CEO of a large corporation with a huge installed base of Linux systems running mission-critical applications, I might be a little nervous. SCO might be able to shut down my company for a few weeks while the kernel developers sanitize the code.
OTOH, if SCO does send out C&D's, they'd probably have to identify the infringing code with some specificity, something they're loath to do right now. Once the code is sanitized, it could pretty well prevent SCO from doing the same thing in the future. And if hundreds/thousands of businesses could be put on "hold" until Linux is "fixed," it suddenly gives those businesses a nice motivation for funding Linux kernel development. The end result could be a huge influx of funds for a "sanitized" Linux. But I'm probably dreaming....