Last Shot for SCO Group, Dec 29, 2004

With most of Wall Street betting against it, SCO Group could face a last chance at redemption in a series of court battles that will play out over the next few weeks.

The SCO Group, a company engaged in complicated litigation regarding Unix and Linux, reported another quarter of financial losses on Tuesday, spurred by dwindling software and licensing revenue.

SCO has altered its name, ownership and strategy a few times since then but can there be any employees, backers or customers who still genuinely believe that SCO's main commitment is to improving its primary product? Selling some of it would be a nice start

G2 Computer Intelligence Inc., a small provider of high-tech newsletters, filed a motion Tuesday with the Utah district court that's hearing SCO Group's lawsuit against IBM, asking the court to unseal any protected documents related to the case.

The SCO website appears to have been hacked over the Thanksgiving holiday weekend. A page on the site displays a "SCO vs World" story which proclaims "Recently we found parts of our code in almost all Microsoft(R) software. We want to bring an action against Microsoft(R) and our legal department is working on that."

According to a report by research and analysis firm Netcraft , the main SCO Group Web site was down for an extended period on Monday, while several related domains were taken offline as well.

Though it doesn't appear that Microsoft was in the driver's seat when it came to SCO's legal attack on Linux, Microsoft's financial assistance was unusual and crucial.

Did Novell just drop a bombshell in its ongoing IP (intellectual property) war with SCO over who owns Unix, or is just one more fight in their legal battle?

It's up to Judge Kimball to decide what persuades him, but this document gives him a peg to hang his hat on and to dismiss SCO's complaint. And if he decides SCO has no UNIX copyrights, what exactly can it do to anyone then? The legal cases would then start to stagger and fall, like dominos in a row

The SCO Group has signed a previously announced agreement with two law firms that will cap legal expenses for its Linux and Unix litigation at $31 million, the company said in a legal filing Thursday.

SCO is rethinking its corporate response to Groklaw - a sign that not all battles against reality are worth fighting

What have all of SCO's legal actions amounted to? In many ways, not much, but in others, SCO has profoundly changed how we think about technology

A top Australian lawyer has said that SCO's case against IBM is unlikely to cause any Linux licences to be invalidated.

Despite what TechWorld, InfoWorld, Groklaw, and other IT news outlets reported or implied yesterday and today, The SCO Group said it still plans to post a new Web site that tells the company's side of the story of its breach-of-contract lawsuits against IBM, Novell, and other companies.

The SCO Group has apparently put off plans to launch a website providing infomation and commentary on the company's legal disputes.

A controversy has emerged over a story written by Maureen O'Gara in Linux Business Week dealing with the SCO vs. IBM case.

SCO CEO Darl McBride is unjustly trash talking Groklaw again. So I would like to present the antiFUD...

After a year and a half of being flamed, dissected and dismissed on the Groklaw.net Web site, The SCO Group Inc. (SCO) has decided to set up a Web site of its own to cover the latest happenings in its many legal disputes.

"We will be launching a Web site in a few weeks to tell our side of the story," said Darl McBride, SCO's president and chief executive officer (CEO), speaking at the Etre conference in Cannes Tuesday. "We think IP (intellectual property) is very important and to go back to the Wild West metaphor there was a movement in America called the Gold Rush and (open source proponents) are looking for your gold," he said.

At Rouse's Supermarkets in Louisiana, it was just another July day in 2004. Customers placed their summer grocery selections on the conveyor belts; cashiers scanned them and collected the amount due using their touch-screen terminals, just like always. But underneath the hustle and bustle at the checkout lanes, a silent revolution had taken place. Even though their PC-based cash registers seemed the same, the operating system that all the technology rested on had changed from SCO Unixware to Linux.

Protect your intellectual property now or risk having your business sacked by open souce-touting bandits, The SCO Group President and CEO Darl McBride warned an audience of tech industry leaders, analysts and investors at the Etre conference in Cannes on Tuesday.

McBride, whose company is mired in litigation with IBM and others over patent infringement claims concerning Unix source code, warned of the "high stakes" if companies in the software and music businesses don't protect their property now.

Here is the letter SCO has filed with The Honorable Sue Robinson, the judge presiding over the Red Hat v. SCO lawsuit, their periodic report on how things are going in the SCO v. IBM lawsuit, as required by Judge Robinson's April Order. It's a fairly straightforward account of what has happened since July, no bells, no whistles, just a wee bit of spin on the last paragraph -- about IBM withholding predicate discovery blah blah, over a year, blah blah, despite a court order, blah blah, the same story they told Judge Kimball, but this is, blessedly, the short version.

BayStar Capital, the investment fund that arranged a $50 million cash infusion for the SCO Group, has begun selling its common shares.

BayStar and SCO arranged a deal in June in which the Linux litigator would buy back all 40,000 of BayStar's preferred shares for $13 million and 2.1 million shares of common stock. BayStar started selling those shares last week, according to Securities and Exchange Commission filings.

The latest legal interchange between SCO and IBM concerns discovery. That Big Blue meanie, IBM, is asking the judge to dismiss the case and thus kill the entertaining stream of news that it regularly produces. SCO accuses IBM of not handing over millions of lines of code for SCO to analyze - indeed stonewalling - in order to deny SCO the ability to prove its ever-so-reasonable case. (After all, what's $5 billion between friends). SCO is also asking for IBM to provide a roadmap to help it analyze the code.

Utah's SCO Group says it needs an evidentiary "road map" in order to prove IBM improperly released proprietary Unix code into the freely distributed Linux operating system.

And the Lindon-based software company told U.S. District Judge Dale Kimball on Wednesday that IBM itself should be compelled to provide that map to navigate millions of lines of Unix and Linux code and identify key contributors to its Linux-related applications and releases.

IBM attorneys have argued that SCO Group has failed to provide any evidence that IBM allowed proprietary Unix code to enter the Linux operating system.

Lawyers for IBM also argued SCO's $US5 billion ($7.2 billion) lawsuit making that claim should be dismissed.

IBM asked a judge to rule that its additions to the free Linux operating system don't infringe copyrights owned by SCO Group.

The issue, raised at a hearing yesterday in federal court in Salt Lake City, centers around SCO's claim that IBM and other companies use code from SCO's Unix operating system in Linux.

Linux adversary The SCO Group has repeated its demands for IBM to show it software code and other potential evidence, and has attacked the credibility of key IBM witnesses.

In a motion filed Monday with U.S. District Court in Salt Lake City, SCO asked the court to delay any ruling on IBM's request for summary judgment until Big Blue fully complies with all requests for "discovery," the process by which litigating parties turn over potential evidence. The court is scheduled to hear one of IBM's claims for partial summary judgment on Wednesday.

SCO's abject failure to threaten, cajole or persuade practically anybody to buy its so-called Linux licenses without a court-loaded shotgun - coupled with the small fortune it's been spending on lawyers to get that shotgun loaded in the face of IBM's slippery resistance - has forced it into cutting a new deal with its legal counsel that puts a cap on their bills.

Meanwhile - with its stock in the tank - SCO has also swallowed a poison pill meant to defend it against "any potential undervalued takeover attempts." It claims it knows of none, but it's playing it safe anyhow.

With its cash reserves dwindling and losses continuing to mount, The SCO Group Inc. is taking measures to cut its expenses and ensure it will have enough cash to process its lawsuit with IBM Corp, the company announced during its quarterly earnings conference call Tuesday. SCO reported a loss of $7.4 million on revenue of $11.2 million for the third quarter - a loss that was affected by the $7.2 million in legal expenses the company incurred during the quarter, which ended July 31.

The fight between The SCO Group and BayStar Capital, which concerned the contentious end of the financing deal between them that fueled SCO's Linux litigation, may finally have come to an abrupt and quiet end Wednesday.

According to Blake Stowell, communications director at Lindon, Utah-based The SCO Group Inc., "BayStar requested the $13 million and the 2,105,263 shares of SCO common stock certificates SCO owed BayStar for its $40 million worth of Series A-1 shares within the last 48 hours, and SCO has sent it, which confirms the deal we had announced on July 23."

Tired of being portrayed as the bad guys of IT, Kieran O'Shaughnessy, director of SCO Australia and NZ, last week declared "we are not the anti-Christ of cyberspace" but a defender of Unix fighting the monolithic power of IBM.

Claiming SCO's business was stolen by "foul means", O'Shaughnessy said the company didn't just go out and pick a fight with IBM, but was backed against a wall and had to fight back.

IBM asked a federal court to bar the SCO Group, a Linux adversary, from distributing any Linux software, in the latest filing in their ongoing legal battle.

In a motion for partial summary judgment filed Wednesday in U.S. District Court in Salt Lake City, IBM asks the court to rule in favor of its counterclaim alleging SCO has violated the terms of one of the most common licenses under which Linux software is distributed.

IBM has taken another swing at the SCO Group's faltering attack on Linux, filing a motion seeking dismissal of SCO's contract claims.

The motion for partial summary judgment, filed Friday in U.S. District Court in Salt Lake City, centers on SCO's claims that IBM violated a contract that permitted Big Blue to use Unix operating system code controlled by SCO. SCO contends that IBM overstepped its bounds by freely distributing Linux software that reuses parts of the Unix code.

An IBM representative declined to comment.

The SCO Group Inc. earlier this month hosted its SCO Forum in Las Vegas, where the focus was less on litigation and more on product upgrades and road maps. Darl McBride, SCO's CEO, talked with eWEEK Senior Editor Peter Galli about the challenges and opportunities facing the Lindon, Utah, company.

Two months after a Utah judge refused to dismiss a slander lawsuit filed against Novell Inc. by The SCO Group Inc., the Linux vendor has again moved for dismissal of the case, according to documents filed late last week in the U.S. District Court for the District of Utah.

Although SCO's litigation has not alienated every open-source advocate, the company will still have difficulty in generating positive feelings in the larger community. "They've lost quite a bit of goodwill," George Weiss of Gartner research said. "Whether they can come back from that remains to be seen."

The threat of higher indemnity fees in the future may be the only way to shift more SCOSource licences today, because further lawsuits have been put on ice

SCO has hinted that it may soon raise the cost of its intellectual property (IP) licences, which it says companies running Linux need to buy in order to avoid being sued.

The SCO Group's ongoing legal battle against IBM and others is having a negative impact on the company, leaving it with few new customers for its Unix software and current users reluctant to pay additional licensing fees.

Both issues are taking a serious financial toll on the company, which saw its revenue for the second quarter drop by half and sales from its SCOsource division, which licenses its Unix intellectual property, nearly evaporate.

The SCO Group is looking to bundle its controversial Linux licences with its Unix products.

SCO claims that Linux users need to buy the licences because Linux contains some of its intellectual property, placed there without consent.

The nasty legal battle between SCO Group and IBM may soon grow wider, as SCO executives have dropped a new bombshell.

In private interviews during their annual user conference in Las Vegas this week, SCO executives said they have discovered that IBM lacks proper licenses for its Unix-based AIX operating system, heart of a multibillion-dollar business for IBM.

SCO alleges that since 2001, AIX has contained code for which IBM does not have a license. Moreover SCO claims to have found internal IBM e-mails in which IBMers acknowledge this shortcoming.

The SCO Group has sold the first of its controversial Linux licences in the UK.

Richard Perkins, regional director for UK and Ireland at the company, told vnunet.com that two companies had signed up for licences in the past quarter, but would not give further details.

Linux supporters who hate SCO would have been shocked to see SCO CEO Darl McBride greeted with a roar of applaud from about 500 SCO resellers and integrators at its annual SCO Forum trade show.

Why was the "most hated man in IT" so warmly greeted? Because SCO's Unix products make them money. It's that simple.

The copyright case that the SCO Group filed against IBM last year appears to have had one unanticipated effect outside of the realm of intellectual property. The lawsuit is making Indian outsourcing companies wary of going the open source route when they handle work for clients.

Officials at Infosys in Bangalore, the most widely known among the myriad Indian outsourcing companies, told NewsForge that while the company's use of open source technologies for its clients was not significant at this point of time, the SCO case has had an impact.

As The SCO Group Inc.'s reseller and developer community gathers for its annual SCO Forum convention in Las Vegas this week, one question on many attendees' minds will be whether the company's future will be as a software vendor or as a litigator. Though SCO's lawsuits against IBM Corp., Novell Inc., DaimlerChrysler AG and AutoZone Inc. have attracted a great deal of attention in the last year, they have not helped SCO's bottom line. The company is facing mounting financial losses, which have been spurred by millions of dollars in legal fees, a flagging Unix business, and anemic sales of its SCOsource Linux licensing program, which brought in just $11,000 in revenue during the company's most recent financial quarter.

The SCO Group kicks off its customer and partner conference next week, but its legal case against IBM is likely to overshadow its product announcements.

SCO public relations director Blake Stowell told vnunet.com that the two main areas of focus at the event in Las Vegas will be on new product releases taking place during the next six months, "and the protection of our intellectual property, especially our case involving IBM".

Webmaster's note: The staff here at Linux Online wants to congratulate Pamela Jones on this award and thank her for this great resource that she provides.

Things have been so busy, I am just now getting to tell you that Groklaw has won the 2004 Linux Journal Editors' Choice Award, for Best Nontechnical or Community Web Site. You are a large part of what makes Groklaw what it is, so I wanted to make sure you knew our work has been recognized.

When Unix vendor SCO Group launched its legal attack against Linux in March 2003 it did so with the confident assertion that the open source operating system contained elements of its Unix System V code and that IBM, which it was suing, put it there.

Like Iraq's weapons of mass destruction however, SCO's evidence of Unix System V code in Linux has proved elusive and the question of Unix code in Linux has slipped further and further from court. As Linux users, developers and vendors continue to go about their business, SCO's search for code of mass destruction will have to continue if SCO is to convince the world that it did not launch its war against Linux on a false premise.

Just because SCO has been doing badly lately doesn't mean that its battles against Linux are even close to being over. Darn it!

Just when the Unix community thought that the fractious BayStar-SCO dispute was history, the investment house proved everyone wrong. The company now says it will sue SCO and continue the pair's troubled financial relationship.

The SCO Group Inc. had depended on BayStar Capital II LP to give it the financial fuel it needed to pursue its Linux lawsuits, however, the two earlier this year began to fight over control of SCO's direction. BayStar wanted the Unix company to focus on its litigation and discontinue software development.

Webmaster's note: The Sydney Morning Herald will be moving to a registration-based service soon, but their is a link to see this story without registering

The SCO Group says it is satisfied with the outcome of its litigation against DaimlerChrysler, as the latter had now certified its compliance with its UNIX software agreement.

A court in Michigan dismissed most of SCO's suit on Wednesday. SCO had accused the German car company in March this year of breaking the terms of its UNIX licensing contract.

SCO said in a statement that the purpose of the litigation was "was to force them (DaimlerChrysler) to certify their compliance to their UNIX software agreement that they entered into."

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