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Embarrassing Dispatches From The SCO Front 715

An anonymous reader writes "Dennis Ritchie has acknowledged he with Ken Thompson wrote the code cited as 'proof' by SCO. This seems to fit perfectly with Bruce Perens' Analysis of SCO's Las Vegas Slide Show, and undermine Blake Stowell's claim 'At this point it's going to be his word against ours." Andreas Spengler writes "In the ongoing battle between SCO and the Linux community, German publisher Heise has shown that not only was the Linux implementation of the Berkeley Packet filter written outside of Caldera (now SCO), but that it was common practice there and at other companies to remove the BSD copyright notices from the internally used source code. In effect, SCO has proven publicly that they violated the BSD license." (Warning, article is in German.) Finally, a semi-anonymous reader writes "Learn all about how IBM's stomach will be roasted on a pyre of CDs at WeLovetheSCOInformationMinister."
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Embarrassing Dispatches From The SCO Front

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  • by Anonymous Coward on Saturday August 23, 2003 @01:50PM (#6773559)
    Well, it's getting to be that time...

    As soon as they have to publish their 10Q everyone is going to see that SCO has little future revenue and that the execs have been engaged in wash-trades to pump and dump the stock. I'm mildly amused that the SEC and FTC haven't stepped in to prevent all the stock-holders from being royally screwed over. Nope... Nope... the government will step in only after everyone has been fucked and the execs are kicking it in Bermuda on everyone else's retirements.
  • by TWX ( 665546 ) on Saturday August 23, 2003 @01:54PM (#6773572)
    ...for some software developers whose code was misappropriated by a certain publicly traded company to start filing cease-and-desists against that company for violation of copyright. I wonder how much of SCO's products would be unsellable under such conditions.

    This isn't to say that everyone else is perfect, but then again, everyone else hasn't tried to benefit from open source licenses only to turn around and bash the concept while still using the technology that they gained from such licensing.
  • by Krapangor ( 533950 ) on Saturday August 23, 2003 @01:57PM (#6773595) Homepage
    They just presented it as an example for code coping. And indeed this code was copied although not from the SCO codebase. But this really doesn't matter. Their main point is their far reaching definition of derivative works.
    Personally I'm rather surprised about the naivity of US developers. Do they really don't notice what it's all about. This is not just about Linux and OSS any longer. If SCO succeeds with their far reaching definition of derivative works than this would crush all US based software develoment.
    Any jerk could argue that by just using a interface/library you created a "derivative work". Device drivers will be owned by OS producers useless you got special contracts. This will blow up OOP - because when you create a child class from a class in a library you create a "derivate work" of this kind. This applies to most programs using the java gui.

    You might say know: Well, that's because SCO's claims are fucked and rubbish. Therefore these strange implications. But remember that this is a lawsuit in the US. You can get several millions of dollars for being too stupid to open a McDonalds coffee cup there.

  • by Anonymous Coward on Saturday August 23, 2003 @02:04PM (#6773639)
    At this point I guess we can assume we aren't going to hear from SGI or Marcelo. I can't blame them this is a legal issue and they aren't trying to pump up any stock prices so there is no reason to speak publicly from their points of view.
    What we have is code that is definitely not "line-by-line copying". It is either New Unix code modified to fit into Linux or Old Unix code that was updated to work in Linux in a way similar (but not the same) as how the same thing was done in New Unix.

    Cutting Unix code and pasting it into Linux would be a violation of copyright but that isn't what happened here. Is using Unix code as a model to make a Linux function a violation of copyright?

    Another point is that given two 5 million line collections of code that do the same things, written by people trained the same ways and potentially building from the same base, our common sense ideas of what can be a coincidence and what can't may not apply.

    Buy anyway, SCO has repeatedly asserted that there is line-by-line copying from New Unix into Linux. They gave two examples that clearly are not that. They have also shown that they can show examples of disputed Linux code without violating their "contracts". The question for SCO is "You keep saying you have line-by-line copying. Where is it?"
  • by Anonymous Coward on Saturday August 23, 2003 @02:08PM (#6773664)
    Just a wild conspiracy theory.

    Someone who holds a copyright to some part of the linux kernel has invoked the DMCA with SCO's upstream provider. Since SCO has been distributing the linux kernel in voilation of the GPL, thus violating this person's copyright.

    Doesn't the DMCA give the power to turn off access to the Internet and ask questions later?
  • by mm0mm ( 687212 ) on Saturday August 23, 2003 @02:19PM (#6773715)
    What's more intriguing to me is a surge [yahoo.com]of their stock for the last two days. How could this be possible, after they revealed their own stupidity by showing BSD-lisenced code as smoking guns for IBM/IP case? Who'd buy a pile of shit?

    Maybe hundreds of millions of retarded private investors are visiting SCO.com and that's causing their servers down. hehe
  • Erp! (Score:5, Interesting)

    by jd ( 1658 ) <imipak@yahoGINSBERGo.com minus poet> on Saturday August 23, 2003 @02:20PM (#6773717) Homepage Journal
    Talk about "expert witnesses"! You can't get much more expert than this. This is not just going to dent SCO's case, it is going to seriously dent SCO. Why? After all, this is a "geek fight", and nobody in industry cares about geeks. (We might know how important we are to civilization, but that doesn't mean any PHB's do!)


    First and foremost, it dents their credibility. Either they don't know what they own, or they are guilty of intellectual theft. Either way, would you subcontract to a company with serious IP issues? No, this isn't going to do SCO any good at all. It would raise way too many questions with those with the money. Such as "are they going to steal anything from us?"


    Second, it raises the issue of liability. If SCO have been open to doing a bit of IP theft of their own, in the past, then will SCO customers be subject to unexpected license fees themselves? Since SCO clearly thinks they can demand fees from Linux users, it would logically follow that SCO UnixWare users may be subject to fees from other companies, if SCO has incorporated IP without authorization.


    The US Navy is a big SCO UnixWare user, and it has plenty of cash. That makes it a nice, juicy target for corporations who have even a halfway decent case of SCO misusing their IP. The Navy is more likely to pay than not - Governments tend to be wary of bad publicity in the run-up to a major election, and virtually anything asked for is going to be loose change to the DoD.


    But let's say that happens. Is the DoD likely to stick with SCO? After getting bitten, even if the bite is relatively mild? Probably not. SCO isn't strictly approved for the sort of use it gets. Quietly shifting to a "trusted" OS may well prove cheaper both financially and politically.


    Government spending dwarfs spending by virtually all companies in the US, combined. The loss of Government orders would devastate a company like SCO, which probably gets much of its income that way. It is also likely to turn the fortunes of whoever the Government turned to. (Likely HP or Sun, as those tend to be favourites with the US Government.)


    Neither of these companies has been doing well, of late, but a major contract shift - or even the suspicion of one - could change that in a big way.


    This is not just a consequence of these statements, but is a consequence of the ramifications of all aspects of this case. If you follow the chain far enough, one thing is very clear. Whether SCO wins or (more probably) loses, there's going to be a reckoning, and the tech landscape will shift.

  • by Vlad_the_Inhaler ( 32958 ) on Saturday August 23, 2003 @02:40PM (#6773819)
    There is a site around which purports to look at this from a legal standpoint [lamlaw.com] as opposed to our 'IANAL' standpoints. The author there has been making it clear for a while now that SCO's lawyers are making one ludicrous and unsustainable claim after another. David Boies (sp?) has taken this case on a 'percent if we win' basis but has also been making claims that led the author to wonder if he knew anything about law at all. A couple of weeks ago, the author commented that SCO's behaviour was so obviously suicidal that the only explanation was: they are running this for a third party. The third party in question being a large monopoly based in the northern Seattle area.

    Leaving that site's analysis now: When SCO folds - as it soon will - this presumably means that they will be unable to meet the legal bills of the (for example) IBM and RedHat lawyers. SCO's strategy has to be to exist for as long as possible so that their company can be milked for all it is not even worth, and then run.

    That is the SCO directors, their lawyers have made a very eloquent case for the adoption of Gowachin Law [lojban.org] in real life. (sorry about that link, it was the best I could find).

    Gowachin Law was a creation of the 'Dune' author, Frank Herbert, and appeared in several of his ConSentiency books. The losing lawyer is killed by the winning one. There are ill-defined rules where other participants - including judges who do not meet standards - can also be killed.

    The whole idea is that the participants are personally responsible for their misdeeds. Gowachin law is not going to be adopted any time soon, but the current system has obviously failed in that this turkey has been allowed to run for so long.
  • by Anonymous Coward on Saturday August 23, 2003 @02:44PM (#6773836)
    SCOX had a surprise profit and has lots of press. That's enough to alert the "day traders". Check out the volume chart on SCOX. The profit is probably an infusion of cash from Microsoft. Technically SCOX's suit is against Microsoft, but it's really Microsoft vs. the GPL. This is a FUD attack planned and paid for by Redmond.

    The day traders don't know that SCO's evidence is bogus; all they know is that there's a lot of interest in the the story. The bubble will, of course, burst as soon as enough people realize that SCO is going down.

    My question is, how do you "short" SCOX ??? Does anybody have some cookbook instructions? I've bough stock but never shorted, how do you do it?

  • Re:SCO doesn't care (Score:5, Interesting)

    by aussersterne ( 212916 ) on Saturday August 23, 2003 @02:44PM (#6773838) Homepage
    They may even know they are wrong, but that won't stop them from trying to use the system to get $$.

    This is what so many slashdot readers and posters on other forums don't understand... It's not about the legal details. SCO is of the ilk that believes "if it's legal, it's moral" and will use that logic to extract $$$ from whomever they can using whatever components of "the system" they can. They will have no qualms about destroying anyone's livelihood, anyone's hard work or indeed half the software industry to line their own pockets.

    And if all of this mass destruction does occur, in the post-mortem interview as they are lining their pockets they will happily answer press questions with "Obviously it's ethical! Everything we've done is according to the letter of the law."

    Recklessly self-serving corporate logic of this type is a bigger evil than "the terrorists" who are at least fighting for something that they believe; in the long run and big picture, this type of profiteering is probably more dangerous as well. The world can sustain a lot more 9/11 attacks than it can Exxon Valdez disasters, Bhopal disasters or Papel Cataguazes disasters, all of which were about profits and nothing else.
  • www.sco.org ?? (Score:3, Interesting)

    by fmouse ( 130442 ) on Saturday August 23, 2003 @02:45PM (#6773851) Homepage
    Sco's website is dark at this time. Hmmm. Traceroute stops at an Alter.net router, probably in Denver or Salt Lake City. Could some naughty child have been doing something nasty to the nice people at SCO? Shame on them!
  • by invckb ( 551932 ) on Saturday August 23, 2003 @03:05PM (#6773953)
    I believe it was a short squeeze.

    When a stock is borrowed to short, it has to be returned upon demand. The short seller will have to buy replacement shares at the current price. More sellers are willing to sell at this price, which causes more shorted shares to be called for return. This becomes a cycle that can rapidly bump up the price for a day or two.

    Shorting a stock is definitely a short term gamble. It would be better to use options, but they are not offered on SCOX.
  • pressure (Score:3, Interesting)

    by sstory ( 538486 ) on Saturday August 23, 2003 @03:18PM (#6774004) Homepage
    So Ritchie and company can end this SCO issue by convincing IBM to pay for the lawyer's fees necessary to sue SCO for copyright violation, asking for damages of $100 per sold SCO license of Ritchie's code.
  • by JanneM ( 7445 ) on Saturday August 23, 2003 @03:22PM (#6774023) Homepage
    95 degrees Celsius isn't "superheated" - it's the preferred temperature for brewing coffee. Many - especially cheap - home brewers get the temperature too low, with pissy coffee as a result.

    Actually, a better way to brew good coffee is one of those push thingies - you boil water, and pour it right over the coffee grounds in the pot, wait maybe 2-3 minutes, then filter and drink. It is still well over 90 degrees at that point. It is also a fine cup of coffee.

    So congratulations; thanks to this "reasonable" lawsuit, you can't get a really well-made cup of coffee in the US anymore.
  • by Vlad_the_Inhaler ( 32958 ) on Saturday August 23, 2003 @03:38PM (#6774098)
    IBM were originally sued, and for a very large sum.
    It is IBM's right to defend themselves the best way they can, this includes countersuits.
    I have no problems with anything IBM has done in this conflict up to now. They are also defending the GPL by invoking it, good work guys - the GPL being dragged through a major court case with the big lawyers behind it is a good thing.

    apologies to '1066 and all that'
  • by Tsu Dho Nimh ( 663417 ) <abacaxi@@@hotmail...com> on Saturday August 23, 2003 @03:46PM (#6774141)
    "Doesn't the DMCA give the power to turn off access to the Internet and ask questions later?"

    Yes ... but the person you got shut down merely has to file a "put up or shut up" reply with the ISP, and the person who made the DMCA complaint MUST proceed to filing a formal infringement court case within 10 days or shut up for all time. It's not something you should do lightly.

    Some eBay users were being hassled by a fabric manufacturer, because they mentioned their name and showed the fabric made into various objects, or were reselling vintage fabric. The manufactuer accused them of violating their design copyrights by showing the pictures. It was VERY easy to get them to back off, just by firing back a "sez who?" and teelling them that they had 10 days to file something sreoius. The harassment stopped.

  • by Otis_INF ( 130595 ) on Saturday August 23, 2003 @03:52PM (#6774165) Homepage
    "In the ongoing battle between SCO and the Linux community, German publisher Heise has shown that not only was the Linux implementation of the Berkeley Packet filter written outside of Caldera (now SCO), but that it was common practice there and at other companies to remove the BSD copyright notices from the internally used source code. In effect, SCO has proven publicly that they violated the BSD license."
    Not only SCO proved that they violated the BSD license, every Linux distro does.

    Now, reading the replies on this article, I find it remarkable no-one has noted this. No offence, but even when code is licensed under the BSD license, that license has to be obeyed. You can't remove copyright claims because you think that's necessary. When someone violates the GPL, hordes of people think they have to say something bad about the possible violator. However, it seems the Linux kernel as well violates an OSS license, which is IMHO as bad as violating a GPL license or any license.
  • dents more than SCO (Score:3, Interesting)

    by twitter ( 104583 ) on Saturday August 23, 2003 @04:16PM (#6774264) Homepage Journal
    First and foremost, it dents their credibility. Either they don't know what they own, or they are guilty of intellectual theft. Either way, would you subcontract to a company with serious IP issues?

    This case is really the end of proprietary software. McBride thought he was going to ride over the world of free software and be able to tie it all up in "derivative works" arguments. The case was designed to hard me credibility of free software, but it's going to have exactly the opposite effect. It is being shown, in the show trial atmosphere SCO has created, that free software is squeaky clean while proprietary software has issues. They stole BSD code and did not even know it. How's that for sloppy, irresponsible, unauditable and all those things? SCO is going to go down in flames and no one is going to be dumb enough to accuse publically published software of theft again. If SCO and Caldera are not really clean, what comercial software vendor is? Could Microsoft's code stand up to such an inspection? The whole weight of SCO and Microsoft FUD has been transfered where it always belonged, to people who have code to hide. The whole basis of proprietary software has been broken - they don't have anything others don't and they have to steal from public software to get what they need. It is impossible for them to continue their charrade about "innovation" and "theft". Good riddance.

  • by Ian Lance Taylor ( 18693 ) <ian@airs.com> on Saturday August 23, 2003 @04:21PM (#6774284) Homepage
    The fact that Dennis Ritchie wrote the code (the malloc implementation) doesn't undermine SCO's statements at all. Ritchie wrote the code as an employee of AT&T, and unless he had a very unusual contract, AT&T owned the code he wrote. AT&T held a copyright on the code which, thanks to Congress, will last until we are all dead. AT&T sold that copyright to Novell, which sold it to the old SCO, which sold it to the current SCO. So although Ritchie wrote it, SCO still holds the copyright, which is all they have ever claimed.

    For that matter, it's worth noting that the fact that the code appeared in versions of BSD before 4.4 doesn't undermine SCO's claims either, because those versions of BSD require a Unix source code license, which Linux does not have. The fact that the code appeared in the Lions' book is also irrelevant, since the book carries a clear statement that the code is presented for educational value only, and that nobody is permitted to run it or base their own code on it.

    SCO's claims are undermined by the fact that they released the code under a Berkeley style license back when they were named Caldera. That shows that the code has no significant value, and that Linux users would not be liable for damages even if SCO sued them. However, it's also worth noting that including the code in Linux violated the terms of SCO's license, because it did not credit Caldera as the license required.

    So as far as I can see SCO still does have a tenuous claim on some versions of Linux on the basis of this code, although there is no way that any court would award them any damages for it.

    It's all somewhat moot in any case since the code has been removed from current versions of Linux. Anybody bothered by SCO just needs to upgrade to kernel versions 2.4.22 or 2.5.75 or later.
  • Not so fast (Score:5, Interesting)

    by Burdell ( 228580 ) on Saturday August 23, 2003 @04:34PM (#6774333)
    Not that I want to support SCO in ANY way, but two things:
    • The license under which the "historical" versions of Unix are released is a BSD style license with the advertising clause. The advertising clause makes it incompatible with the GPL, according to the license comparison [gnu.org] at the FSF site. So, it is not legal to pull code from the historical Unix versions into the Linux kernel, unless the historical Unix code in question was licensed from UCB under the BSD license (UCB retroactively removed the advertising clause from their code).
    • DMR worked for AT&T on the code is now owned by SCO. So SCO does have legal ownership of that code and is allowed to control how it is released. Much of it (including the code in question) was released under the license mentioned above, but that license conflicts with the GPL as used by the Linux kernel.
    So, if DMR's old Unix code was used verbatim in the Linux kernel AND it is not available under a license different than the historical Unix license, then the kernel is violating SCO's license terms.
  • You want numbers ... (Score:2, Interesting)

    by Anonymous Coward on Saturday August 23, 2003 @04:39PM (#6774350)
    $500,000 to $1,000,000 per quarter in legal fees (source: Darl McBride, on the quarterly earnings calls).

    $8 million per quarter in SCO Source revenues from Microsoft and Sun (source: 10-Q's).

    SCO will not run out of money for their lawyers, because Microsoft and Sun are fronting the money.
  • by mec ( 14700 ) <mec@shout.net> on Saturday August 23, 2003 @05:35PM (#6774608) Journal
    Why Friday?

    Well, actually, the run-up started Thursday morning. Here is a five-day graph. [yahoo.com] Look at the price and the volume starting on Thursday morning.

    I don't know. But here are some guesses:

    Somebody is trading on news that hasn't become public yet. Like maybe, Monday, we'll hear that some huge company bought a Linux license for a lot of money. I am disinclined to believe this because news like that generally comes out within 24 hours, and it's been longer than that since Thursday morning. But it could happen.

    Or ...

    Somebody is trading on a really effective rumor that hasn't become public yet. It's hard to prove or disprove this either way.

    Or ...

    Somebody had a big short position and they capitulated (bought a lot of stock back). This happens on Friday afternoons because short-sellers are wary about holding big short positions over the weekend. But this move started Thursday morning!

    Or ...

    Somebody is intentionally buying a lot of stock in order to squeeze the short-sellers. There is no need to invoke an anti-Linux motive here; if they can buy at $11, and sell at $13, that's good money. And it does not take much to set off a stampede in a stock shorted as heavily as this.

    Or ...

    After McBride said "Slide A equals Slide B", the pro-SCO people waited to see if the Linux people would say anything really devastating, such as "Slide B does not appear anywhere in our code, McBride pulled that out of his ass!"

    McBride did his show on Monday, and we got all our responses into the media by Tuesday night. So this hypothesis is that the SCOX-ers were waiting to see what we had before they committed, and then it took another day (Wednesday) for the SCOX-ers to convince themselves that we didn't have a crushing reply to McBride.

    The trouble with this hypothesis is that a whole day (Wednesday) is too much time for a volatile stock like SCOX. With that hypothesis, I'd expect more of a rally Monday, followed by a dip on Tuesday and Wednesday, with big volume. But that didn't happen. The volume numbers say that McBride's announcement on Monday and the Linux'ers reaction on Tuesday were both not important.

    Summary ...

    I don't like any of these explanations very much.
  • by Vlad_the_Inhaler ( 32958 ) on Saturday August 23, 2003 @05:46PM (#6774662)
    The whole structure of Gowachin Law was an interesting exercise and one of the main aims of those fictional Gowachin lawyers was to avoid allowing cases they could lose to a courtroom - most cases were settled out of court at the behest of the party with the worse case. I am sure you did not seriously think I am expecting it to be implemented.
    Actually, in your example, the landlord would probably not find a lawyer prepared to take this to court. In the books, the lawyer had the power as well as the responsibility - his client would be bound by the lawyers wishes.

    My point though, was that the legal system in the US allows people like McBride and his hired hands to make the most outrageous claims (GPL invalid because more than 1 copy is illegal) and it is to their advantage. SCO shares go up, SCO directors can sell their shares for more.

    German law is by no means perfect, but SCO were (afaik) served cease and desist orders in Germany. They ceased. They desisted.
  • Re:Not so fast (Score:5, Interesting)

    by stwrtpj ( 518864 ) on Saturday August 23, 2003 @06:03PM (#6774746) Journal
    DMR worked for AT&T on the code is now owned by SCO. So SCO does have legal ownership of that code and is allowed to control how it is released.

    Caldera later released UNIX System 3 (which contains the same code) into the public domain. This happened after the release under a BSD license, thus this action trumps the first. They can't claim they didn't know what they were doing, as that is no excuse for releasing code that you did not intend.

  • Lawsuit (Score:3, Interesting)

    by WindBourne ( 631190 ) on Saturday August 23, 2003 @06:04PM (#6774756) Journal
    Can the BSD ppl nail SCO for Copyright removal? of course, the real question is will they? I would love for them to file a major one against them.
  • by jonwil ( 467024 ) on Saturday August 23, 2003 @06:25PM (#6774846)
    Basicly, people are listening to the SCO claim of "code x looks like code y" and not to the claim of "yes but it was never SCOs in the first place/it was released under a free licence" simply because right now those claims havent been legally proven. For example, the claim of "the code was released under a free licence", its not possible for the unwashed masses to know for sure that the copy of the code in the kernel started out as the "under a free licence" version and not some other "SCO copyright" version. Also, its not yet possible to prove the claim "it wasnt SCOs in the first place" since its not possible to be 100% legally binding sure yet that the code SCO is showing isnt SCOs
    Anyhow, I just wish the court case would begin so that SCO is forced to show everything it has and we can begin in ernest looking for reasons why SCOs claims are garbage
  • by Anonymous Coward on Saturday August 23, 2003 @06:58PM (#6775016)
    I remember reading that the linux version of the BSD packet filter is NOT a direct code lift. It was rather a complete rewrite and therefore did not need the bsd copyright included.

    The code was different enough that SCO was using it as an example of linux people stealing their code and "obfuscating" it.

    The SCO code is a direct lift, however.
  • Boycott Canopy (Score:3, Interesting)

    by Anonymous Coward on Saturday August 23, 2003 @07:41PM (#6775163)
    original post [pclinuxonline.com]

    As an employee of a company in the same office buildings as SCO and partly funded by Canopy Group, I strongly encourage a boycott of all companies funded by the Canopy Group.

    Taking money from Ralph Yarrow (Canopy) made all of us sick to our stomachs but we held our noses and moved into their offices in the hope their stake would stay small. And we were out of business if we didn't.

    There was a lot of buzz about mergers a few weeks ago. It seemed that everyone was going to join into one large company called, you know it: SCO! That buzz ended yesterday. Now the talk, all over the group, is how to distance ourselves from SCO and Canopy. The mention of our company on Slashdot resulted in very negative feedback and two potential customers walking away. Other's got it even worse. I hear Trolltech spent most of the day on the phone smoothing things over with their customers. Upper management meetings were held all afternoon among the group's companies (I'm not privvy to those, but can guess the subject matter). Companies that were considering a merger with SCO (some as close as 5 days away) are now backpedalling as fast as they can.

    Canopy Group is the key to pressuring SCO. Thats where they get their money and their actions could harm the whole group and Canopy's plans. Pressure on the Canopy Group's members will result in pressure on SCO.

    Save me from SCO! Boycott Canopy Group. If they want to point a gun at their own head, I'd rather they do it away from me. Write letters to the all the Canopy Group companies. We are all very small and even a few letters would have a major effect. The three we received yesterday sent management into a tizzy. Oh, yeah. And start at the bottom of the alphabetical list of companies, please.

    Thanks for listening...
  • by mec ( 14700 ) <mec@shout.net> on Saturday August 23, 2003 @08:46PM (#6775383) Journal
    Right, you mention two of the big valuation models for stocks. First there's the model that a stock worth is the current value of its expected future dividend stream -- or som e flavor of that, depending on your philosophy of accounting. According to that model, I think the whole company is worth maybe $10 million to $50 million for its conventional products and services, and perhaps $50 million to $100 million (being generous) as an option on a lawsuit.

    The next model is that you try to figure out why other people are buying stock. You try to figure out what is going to be fashionable next month and buy it this month (or figure out what will be disgusting next month and short-sell it this month).

    People using the first model are like retail buyers -- end users of stock, almost. People using the second model are like merchants or wholesalers -- they buy the stock because they think someone else will want it a little bit later.

    I sorta think that bubbles happen when a lot of people become wholesalers and think they are going to sell to other wholesalers with no clear idea of where the end of the value chain is. Warren Buffett says that he asks this question: "would I buy this stock if the stock market was open only once a year?"

    Also, some people are momentum traders -- they buy whatever is going up. The ordinary laws of supply and demand do not apply, because the demand curve actually turns UP with increasing price, and the supply curve turns a little bit DOWN. So the curves do not cross in that beautiful Econ 1 diagram, and the usual negative-feedback loops of micro-economics become damaging positive-feedback loops.

    I think that's what's happening to SCOX. Lots of momentum buyers, not enough fundamental buyers (where "fundamental" includes "chances of winning IBM suit" * "value of suit" of course).

    That still leaves the question: why were Monday, Tuesday, Wednesday flat, and then big price increases on heavy volume on Thursday, Friday.

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