It has been a busy week for people watching the rapidly growing set of SCO
cases. Here we will try to summarize the current state of affairs.
The company announced its
first-quarter results, which were just as bad as had been expected. SCO's
revenues are down almost 20% from one year ago, and the reported loss is
$2.3 million. The actual loss, however, was $5.2 million; some
residual accounting weirdness in the BayStar deal allowed SCO to paper over
the difference. SCO will not be able to use that trick in the future,
however; instead, the restructuring of the BayStar deal will likely force
the reporting of a significant loss in the second quarter.
The end result is that SCO is not making any money. The Unix business is
dying, helped along by SCO's "sue your customers" business model. The
company has only managed to sell "a handful" (Darl McBride's word) of
"Linux licenses" - $20,000 worth in the first quarter. The company's stock
has fallen to about half of its peak value ($22.29, last October). Things
are not looking good for the SCO group. In such a situation, the quarterly
conference call did not look like it would be much fun for SCO's
management. So it was time to set up a diversion.
That diversion came in the form of two new lawsuits - the long-promised
end-user suits, sort of. The first is against AutoZone, a
former SCO customer which switched to Linux. SCO claims "AutoZone
violated SCO's UNIX copyrights by running versions of the Linux operating
system that contain code, structure, sequence and/or organization from
SCO's proprietary UNIX System V code in violation of SCO's
copyrights." The actual complaint (available as an 8-page PDF file) is
surprisingly vague; the core of the suit can be found in two paragraphs:
On information and belief, parts or all of the Copyrighted Material
[Unix] has been copied or otherwise improperly used as the basis
for creation of derivative work software code, included one or more
Linux implementations, including Linux versions 2.4 and 2.6,
without the permission of SCO.
Defendant has infringed and will continue to infringe SCO's
copyrights in and relating to Copyrighted Materials by using,
copying, modifying, and/or distributing parts of the Copyrighted
Materials, or derivative works based on the Copyrighted Materials
in connection with its implementations of one or more versions of
the Linux operating system, inconsistent with SCO's exclusive
rights under the Copyright Act.
In the IBM case, SCO has alleged that IBM helped AutoZone misuse SCO's Unix
shared libraries on Linux. When dealing directly with AutoZone, however,
that claim has gone away. The complaint as a whole looks like a desultory
effort, not something that was months in the making.
The second suit is against DaimlerChrysler.
In this case, SCO is picking on a Unix licensee which has refused to answer
SCO's "compliance certification" demand from last December. This suit is
not directly related to Linux, yet; SCO is just trying to force compliance
with a Unix license clause (allegedly) giving SCO the right to demand this
sort of certification. Darl McBride admitted in the conference call that
less than half of the recipients of the demand letter have responded to it.
Conceivably, SCO might actually have a case here - but it has little to do
with Linux users.
SCO did announce one
new SCOsource customer: EV1Servers.Net. This company (formerly RackShack)
bought a license to cover its 20,000-some Linux servers. EV1Servers claims
that it is just trying to protect its customers, but quite a few of those
customers have been rather vocal in their discontent. Surely
EV1Server.Net's appearance in this
Microsoft case study last September is purely coincidental.
The Novell case is currently waiting for SCO's response to Novell's motion
to dismiss the case. SCO has asked for more time (until March 5) to
put together this response;
Novell has indicated that it will not oppose that request - but only as
long as SCO files no other motions during that time. In this way, perhaps,
Novell will be able to get quick consideration of its motion without being
slowed down by the usual SCO delaying tactics.
In the IBM case, the long-awaited ruling on the various motions to compel
discovery has finally been issued; we have it in PDF format. Both sides are
ordered to come up with a lot of stuff. SCO is told to be very specific
about what lines of code it's complaining about, and also "the lines
of code that SCO distributed to other parties." IBM has to come up
with a lot of AIX and Dynix code, and to talk more about its Linux
contributions. The ruling does not appear to be a clear victory for either
The Utah court also allowed SCO to amend
its complaint against IBM, deleting its trade secret claims and adding
copyright violation claims. IBM had not contested this change, so there
was no real reason for the court to turn it down.
The Red Hat case is still waiting for the judge to rule on SCO's
motion to dismiss. This ruling should be easy; SCO, remember, claimed that
it was not threatening Red Hat or its customers. Red Hat had plenty of
evidence to the contrary already, but the fact that AutoZone
was a Red Hat customer has clarified the situation even further.
In Australia, CyberKnights has taken
the next step and filed a formal complaint with the Australian
Competition and Consumer Commission. The ACCC has already been sitting on
one complaint; time will tell if the second complaint results in action.
In Germany, SCO reached an out-of-court settlement with Univention stating
that SCO will refrain from making claims against Linux without evidence.
It is a minimal agreement which does little to truly shut the company up,
Increasingly, the SCO story looks as if it is entering the final chapters.
Regardless of how many more suits the company files, it appears unable to
halt the decline of its stock price and of how the company and its claims
are perceived (the questions at the latest conference call were rather
less friendly than in the past). SCO, by all appearances, is going down; unfortunately, the
company may well be able to make quite a bit more trouble before its story
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