Trial Set To Determine What SCO Owes Novell

BobB-nw writes with word that this April will be the trial date for SCO's financial reckoning. Novell will discover via the courts how much (if anything) SCO is going to be compelled to pay in compensation for the lengthy trial over Unix code rights. The NetworkWorld piece also offers an overview of the case. "In September, The Wall Street Journal described the ruling against SCO as 'a boon to the open source software movement.' But experts say Unix is filled with technology that carries copyrights tied to many different companies and that it would be a nightmare to open source the Unix code collectively. Instead, Novell would have to pick and choose pieces to open-source, a process that could begin once the trial has ended."

Re:Make the law firm pay Novell.

[Ngarrang]

In a 'corporation', though, the company is an entity unto itself. The stock holders are not liable for legal damages assessed, right? The personal assets of the employees, chiefs and boards would also safe, unless they were gained through illegal means.

Re:I hated SCO first

[Mr. Underbridge]

One thing that annoys me in these posts is all these Johnny Come Lately people who have just started to hate SCO as a result of their actions against Linux. I've been actively hating SCO ever since I had to use their piece of crap OS in 1993 on a 286 PC.

Then as you surely know, they aren't really the same SCO as that one.

Re:Quick question

[RichMan]

There are many types of IP.

Trademark - to brand a product in a particular category
Copyright - particular text experssion
Patent - invention

Novell used to own the UNIX trademark. They passed it to the OpenGroup when the sold the UNIX business to Santa Cruz Operating Systems. OpenGroup certifies systems as meeting the UNIX standard.

SCO has 2 versions of UNIX, I believe one is UNIX95(tm) compliant, the other UNIX98(tm) compliant.
IBM AIX UNIX is UNIX2003(tm) compliant.

http://en.wikipedia.org/wiki/Single_UNIX_Specification [wikipedia.org]

http://en.wikipedia.org/wiki/Intellectual_Property [wikipedia.org]

Re:I hated SCO first

[ashridah]

That would mean you probably hate Tarantella [wikipedia.org]. Hate to tell you, but they still exist.

Shake your fist in impotent rage!

Re:Make the law firm pay Novell.

[qbwiz]

The law firm is a partnership, but SCO is not: SCO is probably a limited liability corporation, which would limit any investors' liability.

Re:Make the law firm pay Novell.

[Anonymous Coward]

The stock holders are not liable for legal damages assessed, right?

Depends on the circumstances. With bankrupt companies, the trustee has a lot of leeway to recover funds that were paid inappropriately. I believe the phrase is "knew or should have known".

BS&F *knew or should have known* that their legal position was untenable. They also *knew or should have known* what the contracts said. The bottom line is that they got paid with money that they *knew or should have known* belonged to Novell.

Re:Make the law firm pay Novell.

[Anonymous Coward]

Also, there are such things as Limited Liability Partnerships in many jurisdictions. Even IF Novell's lawyers could pierce the corporate veil to the owners (assuming Boies had enough stock to be considered an owner) - which is a big if and extraordinarily unlikely - the Boies partners might be shielded from liability.

Most likely, Novell may become a creditor in bankruptcy. It wouldn't surprise me if part of the settlement ends up being a junior security interest in major assets and a first-in-line security interest in lien-free assets.

it's not compensation for the trial

[lophophore]

The description here is incorrect.

SCO does not owe Novell any compensation for the trial or lawsuit.

They owe them something like 95% of the Unix license fees they collected from Sun and Microsoft, as well as some others.

Re:Make the law firm pay Novell.

[RobertLTux]

point of interest Boies has redone that agreement to drop the stock part out. The Big Money in this is targetting various payments that TSCOG has done to various folks (including Darl and the rest of the CxO group)

Judge Gross does have the power to require a ROLLBACK of some of this money.

Oh and Novell would not be A Creditor since the funds have been ruled to be "converted" (humans would say STOLEN)
so Taxes and Novell get paid first then the creditors list rolls down.

Re:Just how much does SCO have?

[KokorHekkus]

I belive you are correct with the exception of using their market capitalisation as a benchmark since SCOX has a "stockholder rights plan" (a.k.a "poison pill") that basically allows the directors to set their price should anyone actually want to take over the whole company. From SCOX last years 10-K (under "Risk Factors):

We have adopted a stockholder rights plan. The power given to the Board of Directors by the stockholder rights plan may make it more difficult for a change of control of our company to occur or for our company to be acquired if the acquisition is opposed by our Board of Directors.

The board of directors are also allowed to play very fast and loose when it comes to issue new preferred stock:

Our Board of Directors currently has the right, with respect to the 5,000,000 shares of our preferred stock, to authorize the issuance of one or more additional series of our preferred stock with such voting, dividend and other rights as our directors determine. The Board of Directors can designate new series of preferred stock without the approval of the holders of our common stock. The rights of holders of our common stock may be adversely affected by the rights of any holders of additional shares of preferred stock that may be issued in the future, including without limitation, further dilution of the equity ownership percentage of our holders of common stock and their voting power if we issue preferred stock with voting rights. Additionally, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock.

(bold is my added emphasis)

The directors can pretty much dilute the value and rights of the common stock in any way they wish. So the value of the common stock does not mirror a take-over cost.

SCOX 10-K: http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0000891020-07-000020&Type=HTML [edgar-online.com]

That would not end it

[walterbyrd]

It is not as simple as that. The trials would go on, even if scox files chapter 7, and even if scox is no longer in business.