Anybody following the SCO Group story is aware that, in the last couple of
weeks, the company has issued a new set of threats. Among other things,
SCO claims that it will, soon, file suit against at least one Linux user.
It is tempting to disregard these threats as just more bluster coming out
of the company. Threats against other Unix vendors have failed to come to
pass, the deadline for the company's "half-price Linux License" promotion
continues to recede, the flood of invoices they promised us never appeared,
etc. Why should things be different this time? When the weakness of SCO's
case and the fact that a copyright suit would require a rather more
straightforward unveiling of the company's evidence is considered, more
lawsuits may seem unlikely.
There is, however, a recent
Gartner Group pronouncement which is relevant here:
SCO has declared in filings with the U.S. Securities and Exchange
Commission that its competitive position could decline if the
company can't obtain additional financing. The latest share issue
will dilute shareholders' investments about 3.5 percent. It comes
on top of a previously announced arrangement giving Boies, Schiller
& Flexner a 20-percent share in SCO if the company were sold. SCO
also received an investment of $50 million from BayStar Capital in
return for 17.5 percent of outstanding shares. We believe that
these moves compromise SCO's mission as a software
company. Increasingly, the legal and financial aspects of the
intellectual property infringement cases will absorb the company's
attention, and a law firm will be in an increasingly powerful
position to set the overall agenda for its compensation. Therefore,
SCO will likely pursue claims against Linux users quickly.
Of course, one could rephrase the above more succinctly: the company has no
revenue stream and the lawyers are running the show. SCO has no real
alternatives to income from litigation at this point, and its lawyers have
nothing to lose from filing more lawsuits.
Gartner could be right: SCO might indeed try to open up more legal
fronts in the near future.
If the company chooses its
targets carefully, it might just succeed in finding one that will decide to
settle rather than get involved in a long intellectual property case.
Or so SCO management must hope.
At this point, however, there is enough
information about the company's claims out there that any SCO target which
takes the time to research the situation may well turn out to be less of a
pushover than SCO might wish. In fact, as SCO carries out its search for
the softest targets, chances are good it will pass over any company which
makes it clear that it will fight back. Potential recipients of SCO
licensing claims would do well to bear that in mind.
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