It has been a busy week or so in the SCO case. Time to catch up with all
that has been happening.
The company has filed a
new Form S-3 as part of the BayStar deal. That deal allows for a
conversion of BayStar's preferred stock to the regular variety, so SCO had
to go through the motions to
register another 3.85 million shares for sale. As usual, these
filings give a rare window into what is happening inside a company.
In this filing, SCO revealed (though not in so many words) that its fourth
quarter results are going to be horrible. The company did (as was
disclosed previously) get another $8 million from Microsoft for a
"broader" Unix license. But the company will have to record a charge of
$8.7 million related to the BayStar deal. The company also will take
a $9 million hit to account for the $1 million in cash and
400,000 shares of stock that it has given to its lawyers. As a result, the
company's income will be $17 million lower than it would otherwise
have been. It does not look like a profitable quarter for The SCO Group.
SCO's law firm (Boies, Schiller & Flexner LLP) will be taking on the
company's defense in the Red Hat case, and in IBM's countersuit as well.
There was a great effort to put a positive spin on things at SCO's
November 18 conference call (transcript
available here); it is claimed that SCO will be setting
Boies et al. on Linux end users within "the next 90 days." These, it is
claimed, will be direct copyright suits, based on a whole new pile of
"directly copied" code that has been found lurking somewhere in the Linux
kernel. Of course, they can't tell us where that code would be.
The conference call hinted that, if SCO does really decide that it needs
more legal battles, it is likely to go after HP customers. There was much
satisfied talk of HP's indemnification offer, and speculation as to whether
HP would pay license claims directly or choose, instead, to defend a
lawsuit. As had been predicted months ago, HP's indemnification offer may
well have just served to turn that company - and its customers - into
low-hanging fruit for an SCO legal offensive.
SCO has finally spoken out on Novell's acquisition of SUSE. That deal,
says SCO, would violate Novell's non-compete agreement with SCO. If the
acquisition goes forward, SCO claims it plans to take action against
Novell. Happily for us, the agreement in question is available
on the net; the relevant text (section 1.6) reads:
Seller [Novell] agrees that it shall use the Licensed Technology
[Unix] only (1) for internal purposes without restriction, or (2)
for resale in bundled or integrated products sold by Seller which
are not directly competitive with the core products of Buyer [SCO]
and in which the Licensed Technology does not constitute a primary
portion of the value of the actual bundled or integrated product.
If you buy SCO's argument that Linux is Unix with the serial numbers
filed off, then SCO might actually have a leg to stand on here. If,
instead, you believe that Linux is Linux and SCO has no right to steal it,
SCO's non-compete argument makes no sense. The non-compete agreement only
applies to what Novell does with Unix.
In the Red Hat case, SCO continues to try to get the suit thrown out, or,
at least, to delay things. Given the "90 days" discussion in the
teleconference, SCO's position that it has not threatened to sue anybody
appears to be even shakier than before. This case is now waiting for a
ruling from the judge on the various motions.
In the IBM case, the November 21 conference before the judge looms.
If it still appears that SCO is failing to respond to IBM's discovery
requests, oral arguments will happen on December 5. Sometime
thereafter, SCO could find itself compelled by the judge to put forward its
evidence or shut up. SCO may try to draw its own motion to compel
discovery into the discussion as well.
responses to IBM's requests included some amusement in the form of a
list of files that, according to SCO, contain its property. The file list
And so on. Many people wondered why the files were listed in this sort of
"flattened" form until it was pointed out that SCO's Unix offerings lack a
version of "grep" which can do recursive searches. They had to have some
poor intern rename all of the files into a single directory so that they
could search through them.
Their searches were simplistic, to say the least. One of the files listed
was (in standard Linux naming format) include/asm-m68k/spinlock.h,
the entire contents of which are:
#error "m68k doesn't do SMP yet"
One does, indeed, wonder how Linux was able to compete before IBM stole all
that nice SCO technology. Seriously, though, it appears that SCO did a
simple grep for "SMP" and listed every file that popped up with no regard
to what was contained therein. Thus we see the quality of SCO's evidence.
Recent rhetoric from SCO has brought with it an interesting change: the
company is now, repeatedly, talking about the old USL v. BSDI settlement.
For those who have not yet seen it, taking some time to read the
ruling which led to that settlement may be worthwhile. The
introduction in the "statement of facts" is eerily familiar:
The central issue here is whether Defendants BSDI and Regents
appropriated parts of Plaintiff's allegedly proprietary program
"UNIX," and then used and distributed these parts without
authorization in violation of Plaintiff's copyrights and trade
"Allegedly proprietary" is the judge's wording.
This judge concluded that USL had failed to show that any
copyrights or trade secrets in Unix could be enforced. The subsequent
settlement freed the BSD code base for distribution. SCO is the successor
to USL; why it wants to reopen this case at this time is currently a
mystery. There have been occasional hints from SCO that it plans to go
after BSD in the future; perhaps they are trying to tell us that this
attack is getting closer. One publication quoted Darl
McBride as saying that suits against BSD could happen in the first half
of next year.
Where things will go from here is anybody's guess. The motions to compel
in Utah and Red Hat's suit in Delaware could bring things to a head
relatively quickly. Counting on the U.S. justice system to bring this
situation to a quick conclusion is risky, however. We may be fighting this
battle for some time yet.
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