The issue in question is this:
SCO owns the COPYRIGHT to Unix and the original SysV codebase. It doesn't own any patents. Copyrights and Patents are different things.
IBM, Sequent and SCO were collaborating on a next-generation UNIX product for IA64 called Monterey. As things tend to do, it fell apart.
Sequent had some AMAZING technology in Multiprocessing PC-based systems (I used 'em when I was in college). IBM ate Sequent and released patented/released some of Sequent's technology as part of AIX (IBM SysV). IBM, being the largest holder of patents in the world, saw no reason to discontinue the trend.
As it happens, the Monterey group had worked on some things that were similar to what IBM released in AIX.
Later, IBM released portions of the same technology to as improvements in Linux.
SCO (generally) claims that 1. All improvements to SysV not made by Sun (which bought itself free some time ago) belong to SCO. 2. IBM improved SysV first, therefore the technology in question is "SysV". 3. This issue is even more clear because SCO was part of Monterey, too, so they can identify the code in question.
IBM's response is that they own the patents and there's no obligation to give them up, that different programmers implemented the SysV code and Linux code (i.e. there wasn't a copy/paste) and that IBM's agreements with AT&T and Novell (previous holder of the copyright) are such that they have no contractual obligation to SCO to do anything.
(IBM, btw, was probably the single largest reseller for the old SCO and its products. New SCO is basically the same company as Caldera, the "linux company" that wanted to charge per seat licenses for Linux. Anyone see irony here on any level?).