Back in 2007, it seemed like the SCO nightmare was done; the company had
suffered a summary judgment depriving it of its claim to the Unix
copyrights and it had gone into bankruptcy proceedings. In the latter half of 2009,
though, SCO is still here. Now, an appeals court has
part of the 2007 judgment was erroneous and must be reconsidered; some worry
that SCO could come back, zombie-like, to terrorize again. The real threat
may not be SCO, though, but what comes after.
The agreement between Novell and the Santa Cruz Operation was a mess which
never clearly spelled out what was being sold. It is far from surprising
that Novell and the company now known as the SCO Group disagree on its
particulars. The lawyers involved in making that agreement, quite simply,
did not do their job. Even so, the district court, in 2007, was able to
obtain enough clarity from this document to conclude that there was no
question at all of whether the Unix copyrights had been transferred to
SCO. The result was a summary judgment throwing out SCO's claims
regarding those copyrights. That judgment was welcomed in the community,
but there may be justice to SCO's claim that it was a little too hasty.
The appeals court took that view of the district court ruling, finding SCO's arguments
sufficiently credible to create some doubt as to the facts in the case. As
the ruling states:
When a contract is ambiguous, and parties present conflicting
evidence regarding their intent at the time of the agreement, a
genuine issue of material fact exists which cannot be determined
summarily by the court.
It is worth noting that the appeals court did not rule that the
copyrights do, in fact, belong to SCO. In fact, the ruling reads:
We recognize that Novell has powerful arguments to support its
version of the transaction, and that, as the district court
suggested, there may be reasons to discount the credibility,
relevance, or persuasiveness of the extrinsic evidence that SCO
All the court has said is that there is enough doubt here that a full trial
is needed to resolve the question. The end result could well be the same -
Novell could still win - but SCO has created enough uncertainty to gain its
full day in court.
SCO did not prevail in all of its appeals, though. The district court had ruled
that SCO had converted ("stolen") $2.5 million in licensing revenue from Sun
which, by the asset purchase agreement, truly belonged to Novell. The
appeals court agreed with this part of the summary judgment and left SCO
on the hook. This ruling has led some observers to believe
that SCO may now head quickly into Chapter 7 bankruptcy, resulting in
the liquidation of the company. Should that happen, it is said, the SCO zombie will
truly be gone forever.
Unfortunately, the end of the SCO Group would not necessarily mean the end
of the troubles it has created. Chapter 7 bankruptcy would result in
the sale of SCO's remaining assets to pay the claims of the company's
creditors. Those assets are likely to include office chairs belonging to
both remaining employees, a storage locker full of unsold Caldera OpenLinux
boxes, Darl McBride's bullhorn, a few SCO Mobile Server manuals - and the
claimed ownership of the Unix copyrights. The bankruptcy trustee's job
will be to sell all of these assets for the highest price possible.
The Unix copyright "asset" is an uncertain value, to say the least; it
could evaporate entirely when SCO v. Novell runs its full course. But SCO
v. Novell was always a sideshow; the real game is the multi-billion dollar
claims against IBM. Who would be willing to bet that no trolls willing to
try for that payoff exist? Instead, such trolls must certainly exist, and
some of them will be well funded. One of them could come out of the
bankruptcy process owning these "assets" and the related lawsuits.
What we could see then is a new push on these claims, with more money
behind it and, possibly, less buffoonery as well. The new owner might just
succeed in establishing ownership of the Unix copyrights - that agreement
is, as was stated previously, a mess - and carry the IBM case forward. The
fact that SCO's original claims against IBM are still without merit
offers little comfort; we could be in for another extended period of FUD
and bad press before the courts finally come to that conclusion.
Things need not go that way, of course. Should SCO go into chapter 7,
we might see Novell and/or IBM hold their noses and buy the Unix claims
themselves, putting an end to the entire affair. It could be the cheapest
way for them to go. One assumes that lawyers in those companies are
thinking about their options at this point; they, too, must be tired of
this whole circus by now.
to post comments)