The authors of unix had worked on another OS first. It was called Multics for Multiplexed Information and Computing System. Unix was named after multics and was intended as sort of an insult since Multics had become too complex. I have seen some sources that claim the unix was originally spelled unics and was shortened to unix as sort of an early example of hacker spelling.
Multics may still be around somewhere. It was still being used in the late 80's.
I thought he just called it linux becuase it naturally ran together with UNIX and Linus. Oh well, if I ever become an OS programmer, I can call my creation ALEX, and make up some useless ancronym for it.