SCO Denied Motion To Change IBM Case Again

Rob writes "SCO Group Inc's attempt to change its legal case against IBM Corp for the third time has been denied by the judge, who has also set the two companies a deadline to present their respective evidence with specificity. Despite repeated public declarations that it has evidence Linux contains Unix code that infringes its copyright, SCO has yet to present any evidence to the court." Bad news for them all around, lately.

Why is their stock nonzero?

[Little Pink Bunny]

I don't really invest beyond my 401K and a few other small things, so I don't really understand what's going on with their share price. Why is it not much lower than it is? I understand the "unlimited upside, negligible downside" idea, but it seems like that upside is rapidly vanishing with no good news likely on the horizon.

Don't investors typically eventually say "ain't gonna happen" and walk away? Is there an obvious reason why this hasn't happened yet?

Where it all ends

[Anonymous Coward]

There's a lot of discussion on Groklaw about what happens when tSCOg goes bankrupt.

The minute tSCOg loses the first of the many cases it has going, it goes bankrupt. Its fate is then in the hands of the bankrupcy trustee and the creditors. My guess is that all the cases then get settled out of court on terms agreeable to the creditors. In the case of IBM this means a declaration that Linux is totally unemcumbered by anyone's Unix IP.

I bet Sun buys SCO

[team99parody]

My guess is that the creditors auction off SCO's assets (which include any remaining contested IP) to the highest bidder.

I furthermore guess that this bidder will be Sun, because it's a major licensee of SCO IP and would ABSOLUTELY NOT want to be in a position of having it's Solaris based on the IP of any other potential acquiror.

Then we'll have some peace for a while, as whomever ends up owning this IP will not have the stomach to continue the lawsuit; but it'll stay in some uncontested limbo forever.

Other reasons why I think it'll be Sun: Some of sun's management like to see themselves as an operating-systems-IP company. They want to own the part of SCO that IBM licensed to be better positioned in their "IP sharing partnership" with Microsoft. etc.

Brief synopsis

[UnknowingFool]

Groklaw [groklaw.net] has more indepth analysis on what was reported.

Basically when Santa Cruz and IBM worked on the project known as Monterey in the late 90s, it was understood that both companies would use code developed from the joint venture in their products. SCO claims that IBM used the jointly developed code on Power based machines when the original agreement only specified that IBM could use it on Intel machines. They filed in October 2004 to change the claim to add this to the current suit. They wanted more discovery and time to pursue this new claim.

In the current lawsuit, the deadline for changing the claim was February 2004. Under certain circumstances, a party can go beyond deadlines but only for "compelling reasons." SCO's compelling reason was (1) they "just discovered" this fact and (2) IBM filed a counterclaim (9th) that requires them to research it.

IBM's answer to the court was convincing and many fold. They produce documents, emails, presentations, public announcements from Santa Cruz as far back as 1998 that describe how IBM was to use code from the joint project in Power. They also produce IBM public presentations, software documentation, and public announcements about the same thing. Finally they presented industry reports and discussions from tech magazines both online and offline from 2000 that discusses IBM's use of the code. IBM ironically points out that SCO provided some of this source material to IBM in the lawsuit filings.

IBM's message is simple: (1) Santa Cruz knew. If SCO is the legal and corporate successor to Santa Cruz, then it is SCO's duty to know everything that Santa Cruz did. (2) Since SCO provided some of the material, SCO had to know since 2003 when they filed the lawsuit. (3) Even if SCO was totally clueless about Santa Cruz's materials and it's own filings, a simple search online up to 4 years ago would have uncovered the fact that IBM was going to use the code in Power.

As far IBM's 9th Counterclaim, IBM chose to reduce/clarify the scope so that it was not as broad and SCO's new claim would have no relevance.

On a side note, one of IBM's statements is interesting:

Tellingly, in support of its contention that the addition of this new copyright infringement claim would not require extensive additional discovery, SCO purports in its current motion (and in its proposed complaint) to have already analyzed its own UnixWare/SVR4 code and IBM's AIX code and identified 245,026 specific lines of "copied and derived code" from UnixWare/SVR4 in IBM's AIX for Power Version 5.1.0 and 260,785 specific lines of "copied and derived code" from UnixWare/SVR4 in IBM's AIX for Power Version 5.2.0. At the same time, of course, SCO continues to maintain -- both in opposition to IBM's pending motion for summary judgment on IBM's Tenth Counterclaim and in support of SCO's discovery motions pending before Magistrate Judge Wells -- that SCO is unable, without significant additional discovery from IBM and potentially thousands of additional man-years of expert work, to identify the specific lines of "copied and derived code" from UNIX that it claims is present in Linux. Indeed, SCO argued before this Court and Judge Wells that it could not capably perform any code comparisons between UNIX and Linux in a reasonable time frame without access to more discovery from IBM (concerning AIX no less).

SCO wanted to convince the judge that no more discovery would be necessary to add this new claim saying that they had already done a lot of work. But IBM asks the question: If they have compared our closed source AIX with their Unix, why do they claim they couldn't compare open source Linux with their Unix without our AIX source code?

Re:It appears the judge is no longer neutral.

[Anonymous Coward]

Well, if you've ever watched parlement in Canada, the UK or anywhere else, the word "honourable" takes on an entirely different meaning.

Re:Why is their stock nonzero?

[evilquaker]

Problem is, if you are caught holding the stock today, you are going to be hard pressed to find anyone who will buy it.

A third of the float is sold short [yahoo.com] (Note "Short % of Float" under Share Statistics). Those shorts will have to buy eventually. So I wouldn't be surprised if a lot of traders are holding hoping for a quick double. Once the shorts start covering, it might shoot up quite quickly as they all try to lock in their profits.

Then please explain.

[gumpish]

But the other "bad news" that is linked is GOOD for SCO. (Novels motion for dismissal in SCO's slander suit against them is denied.)

Re:Compare and contrast

[OohAhh]

There is another possibility. The press know they have been duped and don't dare admit it publically.

Re:Compare and contrast

[KwKSilver]

Maybe the so-called IT "press" was in on it. Most of the alleged IT "press" seems to be nothing more than MS sock puppets, ad-servers, lapdogs, and "yes men" and no more. Care to bet your mortgage payment they're not getting payola?

Huh?

[lheal]

That was great, but how does it contradict what I said?

Now, quit laughing. I know that judges are impartial (or "apartial", which is a distinction without a difference). But once the trial starts, they know who's got it and who doesn't. They intentionally keep their minds open - judicial think, you called it.

A mind isn't open if it isn't processing what it's being given. They don't give a ruling before all the evidence is in, but much of the time the ruling would be no different if they did.

Re:About time

[rm69990]

If SCO did win, it would most likely be on the contract claims, not the copyright ones. Since IBM owns the copyrights on their own code, they wouldn't be violating SCO copyrights, but just be in breach of contract. IBM would be liable for damages, but none of us would.