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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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April 04, 2005

Will SCO Case Make The Finish Line?

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Posted by Dana Blankenhorn

It's beginning to look like the SCO-IBM case won't make it to the finish line, an end to discovery and summary judgement.

SCO's sponsors are blowing up. Literally.

Maureen O'Gara (left), whose name is like fingers rubbing a balloon to most in the open source community, and is regularly accused by them of being an SCO shill, reported last month that both Ray Noorda's daughter and another executive with Canopy Group, SCO's largest owner, committed suicide.

More telling, perhaps, was her reference to SCO itself, a company she has regularly defended on teleconferences. She called it "the infamous SCO Group."

When your shark-jumper jumps ship, who's left?

The real news from last month is that Canopy's position in SCO has transferred to former Canopy CEO Ralph Yarro, who chairs the SCO board. When the former VC leaves his firm and becomes your CEO, you've got no net below you and (most likely) no new money coming in the door.

SCO could use new money, because when it finally delivered its financial results for fiscal 2004 (on April Fool's Day no less) it had a net loss of $23.3 million on revenue of $42.8 million, against profits of $5.4 million and $79.2 million in revenue. Why? Because sales of licenses to Linux users totaled just $809,000, down from $25.8 million in 2003.

How can this be bad news for open source?

Simple. If SCO fails to make it to the end of discovery, the judge in the case can't set a precedent that will keep others from trying the same con.

Comments (13) + TrackBacks (0) | Category: Copyright | Linux | Software | law


COMMENTS

1. josh gosh on April 5, 2005 10:58 PM writes...

The importan thing is who ends up owning the UNIX code.

Even if a judge dismisses the SCO suit, that doiesn't prevent, say, a certain evil empire, from creating a NEW puppet company to buy the UNIX rights at auction from SCOs trashheap and start this all over again.

What is REALLY needed is for a white-knight to buy all of SCOs rights (after bankruptcy so the villians don't profit) then open source UNIX once and for all....

Permalink to Comment

2. Bob T. on April 6, 2005 12:37 AM writes...

"The important thing is who ends up owning the UNIX code."

(a) it's not important because GNU/Linux isn't UNIX
(b) it's already evident who owns UNIX code: Novell.

Permalink to Comment

3. F Love on April 6, 2005 12:52 AM writes...

If SCO goes bankrupt, the case will still grind on. IBM's counter suit charges will still be in play and those WILL be pursued. Because they contain criminal charges as well as civil ones.

What ever makes people think that justice stops just because one of the parties is unable to attend? SCO has prepaid for their legal costs in any event. Even in bankruptcy they will still be liable for any civil settlements that are reached. But the fees would have to go through the bankruptcy judge.

Since most of that 2003 fee was from two companies , MS and Sun, it isn't surprising that fees have dropped off a cliff now, is it? I'm surpised they made as much as they did. I guess there just aren't as many suckers in the world as SCO thought. Too bad for Darl and Co.

They made a lot of noise and made a lot of claims, but when it came time to prove them in court, well, there just wasn't any evidence there, was there?

Since the judge has already remarked about how little evidence they have presented, and since they are not likely to find any, no matter how long they dig through all that mountain of stuff they have requested from IBM, I think the summary judgement is just about a slam dunk any way you look at it. No jury. Just a judgement.

Why? Because so far they have not produced one single matter of substance to ARGUE before a jury.

Then we move to the counter suit charges, including those RICO charges. Do you think IBM will show any mercy here? Do you think they SHOULD? I wouldn't if I were in their shoes. They mean to make an example of this pipsqueak of a company. So they don't have to EVER do this again.

That's just good business.

I pity any SCO employees that are out there though. I'm sure that most of them had no idea just how stupid their CEO really was. Pity they had to find out the hard way. But that's the way life goes.

Cheers,

Frank

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4. Steve Randall on April 6, 2005 04:06 AM writes...

I agree the case was a non-starter... but during the period when the share price rose above $15 all the major share-holders were dumping LOTS of stock into the market.

Maybe they're not so stupid, it's not a way to carry-on a viable business but it's a great way to maximise revenue as one dies.

And the press and stock-market sucked it up. Personally I wish I had bought 1000 shares in SCO when they were bottom-feeding at $2!! Hindsight is a wonderfull thing.

Steve

Permalink to Comment

5. Matthew C. Tedder on April 6, 2005 04:20 AM writes...

I find it interesting that we actually have a situation here were people (aware of the case) universally stand behind a big corporation against a little company.

This, in and of its self might be a new precident. Here we are asking the big guy to flatten the little one without mercy.

Perhaps some day IBM will have new management and the tables will turn so that the people will be once again unhappy with IBM, but for the time being they have really played their cards well in the GNU/Linux communities.

I am guessing that SCO will be broke, they will loose most in summary judgement and the rest in IBM's counter-claims. It will declare bankruptcy and IBM will be given many of the SCO assets (including the UNIX business rights and any copyright or patent ownership (if those claims prevail in court).

What will IBM do with that? I don't think it's in IBM's interests to run the UNIX business and if they end up with any copyrights or patents, they are likely to set them all free. If not, will Novell?

Matthew

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6. Mikko on April 6, 2005 05:12 AM writes...

"If SCO fails to make it to the end of discovery, the judge in the case can't set a precedent that will keep others from trying the same con."

What does SCO have to show for their con-artistry? More than $10 million spent on litigation, rapid destruction of any software business they may have had, getting sued by IBM for patent infringement and two suicides. I think those should work as a deterrent for anyone who is thinking of doing the same, verdict or no verdict in the case.

Mikko

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7. Vegard Engen on April 6, 2005 06:05 AM writes...

"I find it interesting that we actually have a situation here were people (aware of the case) universally stand behind a big corporation against a little company."

Well - sometimes, it's the big guy that's right, and the small guy that's wrong. And in a way, it was not an attack on just IBM, all the way there have been an implied attack on a lot of small guys, also. Yes, every Linux developer and user out there have in some ways been attacked, the tool they have developed and learnt to love because of it's stability, scalability and flexibility, has been accused of being nothing more than a rip-off.

There is indeed a lot of people that would have been harmed if in some weird way SCO should win anything in this case. And the "alternative" computer industry could risk a set-back of years - in the public view. All the confidence and support that it has gained the last years among business, could experience a major set-back.

But as we all know, the allegations are not true. But it's no wonder so many people devote time and effort to help prove they're not true.

Permalink to Comment

8. Peter on April 6, 2005 07:31 AM writes...

"I find it interesting that we actually have a situation here were people (aware of the case) universally stand behind a big corporation against a little company."

I think it's more that a lot of people who remember how things actually happened are mad as hell and are cheering for the large company that stepped up to the plate to squash these scammers.

I remember reading comp.os.minix and watching as Linus built his OS. I remember reading Thompson's and Ritchie's papers in BSTJ about how they developed Unix and how others improved and contributed parts. There's no way a bunch of mercenary scammers like Darl and his gang should be allowed to claim ownership of something that was (and is) a group effort.

I'm not always a fan of big business, but in this case, I offer my thanks to IBM and their lawyers for stepping up to squash these guys.

Permalink to Comment

9. I R A Darth Aggie on April 6, 2005 09:55 AM writes...

"If SCO fails to make it to the end of discovery, the judge in the case can't set a precedent that will keep others from trying the same con."

In which case, IBM will win via summary judgement. As pointed out by other comments, a court case *just* *don't* *stop* because one side or the other can't continue. No, SCOX's lawyers have signed on for the duration. Even bankruptcy proceedings will only give SCOX temporary relief. And depending on the type bankruptcy, the bankruptcy court may choose to appoint a new management group.

And they may be more amenable to settling on IBM's terms.

Permalink to Comment

10. the_rajah on April 6, 2005 02:17 PM writes...

"And they may be more amenable to settling on IBM's terms."

I don't think so.. There will be no settlement.

IBM will take this clear through the courts to the end so that a judgement is made and a precedent is clearly set. Otherwise there is the risk of having to fight the same battle again. It's clearly to IBM's benefit along with many other parties that it be done this way. Besides, what does SCO have to offer, especially after bankruptcy?

Permalink to Comment

11. dog on April 6, 2005 02:58 PM writes...

Rather than: "Because sales of licenses to Linux users totaled just $809,000", I think you meant to say "Unix users", didn't you? Hope so!

Permalink to Comment

12. Sproggit on April 6, 2005 05:04 PM writes...

Not entirely sure of my facts here, but with respect to IBM being required to pursue all the way to favourable judgement, one thought occurs to me. This case is now boiling down from the numerous claims SCO originally bought to a contractual dispute about what rights IBM has under the various license agreements, and about what rights SCO has that it purchased, via Santa Cruz Operation, from Novell.

What I'm suggesting here is that the limit of the case has now been framed there. IBM need to prove that they are not in breach of any legal agreement that they have with SCO. Nothing more.

Of course, we all hope that they will continue to the end, to help ensure that corporate raiders and IP Thieves will not be tempted to grab from the FOSS community in the future... However, I don't see anything from a legal perspective that is going to require them to do that - even though they have shown truly incredible commitment to Linux in the last couple of years.

But hey... we'll see soon enough.

Permalink to Comment

13. Bilbo on April 7, 2005 05:24 AM writes...

Company goes bankrupt so others may try the same trick.

I can just see it now, I want go bankrupt first, no let me try next.

I don't think so.

As the case itself long ago ceased to have anything to do with linux (the second morphing saw an end to that), your article has no foundations.

Permalink to Comment

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