SCO's Finances, Legal Case Take Hits

geomon writes "This afternoon, SCO will host a conference call where they will present '04 third quarter financial data. The news isn't expected to be comforting to SCO investors as they are coming up a bit short; earnings and dividends will take a substantial hit. The only bright spot for the company is the settlement with BayStar, a deal that will leave most of the cash they received from the investment house in the hands of SCO management, if only for a short time." Reader ak_hepcat writes "Groklaw has posted the text for the latest IBM memorandum in its case against SCO. In a nutshell, IBM accuses SCO of not only wrangling the legal process to keep delaying the eventual resolution of this case, but they go so far as to pull the curtain away and show that this table never had any legs to begin with. I'm no marksman, but I can tell when something is full of holes."

No Legs? Full of Holes?

[ackthpt]

Watch those methaphors, eh!

In a nutshell, IBM accuses SCO of not only wrangling the legal process to keep delaying the eventual resolution of this case, but they go so far as to pull the curtain away and show that this table never had any legs to begin with.

Seems William Shatner should have been their spokesman, IIRC as a kid he cut the legs off his parents dining table and should have some experience here...

"It's more doomed than we thought, Scotty, beam us up NOW!"

Heh. Example from the Motion:

[SatanicPuppy]

"In response to IBM's discovery requests and the Court's orders, SCO did not [give] (and still has not [given]) any competent evidence that IBM's Linux activities infringe SCO's alleged copyrights (or even that SCO owns valid copyrights)"

Its a fun read. I'll be really suprised if they don't get a summary judgement in their favor.

It really underlines the brilliance of IBMs legal team, because now they can point back to all the shit SCO said, show clearly that they are either unable or unwilling to back it up with fact, and hit them with big ugly damages just for saying it.

Re:Heh. Example from the Motion:

[ackthpt]

and hit them with big ugly damages just for saying it.

It would be rather amusing if IBM ended up owning SCO and whatever IP they have as a result of SCO being unable to pay the damages and going into default. I suppose it's possible, but who could rule out Microsoft (who certainly may see some stake in this, lord knows they've thrown tons of money at more absurd things) picking up the remains, after all, with 5K patents and planning to have 5K more.

Showdown - Sept. 15th.

[Xenographic]

If you mosey on over to this Groklaw article [groklaw.net], you'll see that Judge Kimball appears to be fixin' to have a three-way showdown--IBM & Novell vs. SCO.

If you've read the legal briefs, you should know by now that both Novell & IBM have hammered on SCO's counsel for asserting some rather convenient but inconsistant things before the judge. In other words, they assert whatever is most beneficial to their case--leaving SCO with a few more arguements, but no consistant case. While they might be able to make that slide a bit better when they're talking as two separate cases, saying different things about the two different cases while discussing them in front of the same judge can't help them any--they'll have pick a side of some of those fences they're sitting on and stick with it.

Problem is, IBM & Novell have them trapped in a narrow pass, effectively, due to some good lawyering on both of their sides. They're going to have to face the music one way or another--if they take one way out of that pass they're in, IBM will get them, whereas Novell is coming down the other side. In other words, SCO is being attacked on two fronts with no retreat, and IBM is now a bit pissed off with SCO's lawyers after the last few tricks (such as citing a Westlaw headnote without attribution, using a priviledge IBM document as an exhibit in clear violation of one of the discovery agreements with IBM, and a few other things I can't remember right now...). Marbux [groklaw.net] and AllParadox [groklaw.net] on Groklaw posted on SCO's malfeasance [groklaw.net] better than I can, and both of those two are lawyers, though they still put up a few disclaimers about not taking what they say as legal advice.

Anyhow, unless this is a mistake by the court in having them all meet up at the same in front of the same judge (possible, but doubtful), you can expect SCO to be routed--their lawyers seem harried, disorganized and ready to have their asses handed to them just as soon as IBM & Novell are done with them.

Mark your calendars, folks--if this is what it looks like, SCO is going to have one hell of a time getting out of this with anything but a ruling which further weakens them. Even if SCO has an ace up their sleeves, I'm not sure they can be holding any better than aces & eights--the dead man's hand.

Re:Heh. Example from the Motion:

[jhylkema]

Quoth the poster:

Its a fun read. I'll be really suprised if they don't get a summary judgement in their favor.

Don't forget that Microsoft has been bankrolling this Bataan Death March of litigation from the very beginning. Any non-M$-bankrolled attorney would have had a "come to Jesus" talk with these clowns long ago. I hope IBM does get summary judgment and I hope SCO gets sanctioned under FRCP 11 [cornell.edu] for bringing this load of crap and for filing the inevitable frivolous appeals. Won't make a difference, though, since SCO will have long since filed for Chapter 11 bankruptcy^Wprotection from creditors while Darl and the gang skip the country with all that money stashed in their Swiss bank accounts.

However, don't make the mistake of thinking IBM's eventually prevailing on summary judgment will be the end. No, to quote Churchill, that will be "at most, the end of the beginning." An appeal will surely follow. All the while, M$ gets to spread FUD about how Linux infringes IP rights. The PHBs will buy it and will stay with the "safe" choice. All the while, M$ will be regrouping. What's next, a BIOS that locks out "non-approved" (read: non-Microsoft) software?

Evidence

[MarkusQ]

Evidence? Proof?

I've seen a lot of people say that as if it were accepted fact, but I don't recall ever seeing any proof.

SCO license purchases don't count.

I realise that Microsoft can't be unhappy about SCO's actions, but surely they have more productive things they could spend money on than funding a competitor's doomed legal adventures...

I've no idea why you think license purhaces don't count, since it's a pretty standard money laundering technique. But we've also learned that Microsoft initiated the Baystar inventment [businessweek.com] and while they claimed that there was no financial involvement from Microsoft, a white paper on Baystar's own website lists Micosoft and Vulcan ventures [baystarcapital.com] as two of their major investors. It has also come out that two of the other "licensees" (SUN & EV1) were influenced by Microsoft in their descision to purchase licenses (CA, the other major licensee, was given the license as part of a settlement agreement).

That pretty much covers all of SCO's funding in this venture. If you run down the standard checklist:

• Microsoft has the means to fund SCO's FUD
• Microsoft has the motive to fund SCO's FUD
• Microsoft has the oportunity to fund SCO's FUD
• To the extent that there is any evidence at all about the source of SCO's funding, in each case the ultimate source appears to be Microsoft.

That's why people seem to state it as an accepted fact; while it may not be proven it would certainly be the smart way to bet.

-- MarkusQ

Re:Heh. Example from the Motion:

[bleckywelcky]

It would be interesting if IBM could show that SCO had absolutely no case whatsoever from the beginning and that the key driver in all of this commotion was SCO's legal department and their hired lawyers. And, if they were able to do this, if they could hold the lawyers responsible for all of the commotion by showing that they were moving things along just to collect legal fees. Then, if they could move to hold the lawyers responsible for all of the crap they stirred up and fine them or garnish their wages

Re:No Legs? Full of Holes?

[Ohreally_factor]

Well the deal here is that IBM has SCO between a rock and a hard place. If SCO tries to show code at this point, IBM asks why haven't they shown the code earlier, after numerous court ordered discovery attempts? If they show code now, they will be demonstrating that they haven't complied with the court's orders.

IBM is also foreclosing on their defense of saying that the case isn't about copyright, and therefore IBM shouldn't be allowed to bring this "alien" motion. IBM is doing this by pointing out how SCO has done nothing but characterize their complaint as copyright infringement outside of the courtroom.

IBM has efffectively and devastatingly weakened the overall case while utterly destroying SCO's SCOsource program. And they've made it look easy.

Re:No Legs? Full of Holes?

[black mariah]

SCO's situation is worse than that when it comes to the GPL. Either they say the GPL is invalid, at which point they lose any and all right to distribute the code in the Linux kernel (and other Linux software), or the GPL is valid and they have knowingly and willingly contributed their code to a GPL project (by releasing SCOSource and Caldera... and whatever other Linux-based projects they have). I don't even have an opinion on this case and I can see SCO is fucked.

Re:No Legs? Full of Holes?

[pjrc]

If they show code now, they will be demonstrating that they haven't complied with the court's orders.

If you read the (very long) IBM memo, SCO tried this (Sandeep Gupta deposition), and IBM said that and much, much more. Here's basically what IBM said:

• SCO's memo was not in format required by law
• Gupta's evidence was not filed when required (2 court orders) and now it can't be introduced
• Evidence is not from Gupta's personal knowledge
• Gupta is not an expert witness
• Gupta did not follow required legal required procedure for comparing code
• Similarities are only unprotected expression, not copyrightable.
• Some code claimed to be similar is not at all alike, even to a untrained viewer (apparantly exhibits attached).
• Gupta quoted tiny bits out of context and rearranged them to deceptively make linux and sysv look similar, when the sections quoted aren't similar at all.
• Some of the compared code is in the public domain
• Much is "scenes a faire" (dictated by compatibility standards and thus not protected by copyright)
• Some code Gupta compared is not even part of linux kernel
• Gupta only testifies to 300 lines of code, which is not a substantial part of the millions of lines in linux or unix sysv.

If even some of these are true, this last-minute "evidence" doesn't seem like it'll do SCO any good. Then again, we'll know for sure in a couple weeks.

Falsifying evidence?

[walterbyrd]

>>Gupta quoted tiny bits out of context and rearranged them to deceptively make linux and sysv look similar, when the sections quoted aren't similar at all.

Would that be falsifying evidence? Isn't that a very serious crime?

Re:No Legs? Full of Holes?

[Jaywalk]

but am I to understand that SCO still hasn't ponied up any evidence in the way of source code to show where code was copied?

They tried, but it got shredded [groklaw.net] by IBM's legal team. Basically, they had one of their own employees say that he thought this and that chunk of code was copied, but he bungled his testimony. He should have first removed the "non-copyrightable elements" -- like everything in the public domain or that's part of an open standard. But he cited both public domain and open standard code as if it was all proprietary.

He also got caught out in something in activity that borders on perjury. Consider this quote:

As Dr. Kernighan [IBM's expert] notes, "Mr. Gupta's conclusions of similarity depend on his selecting isolated lines of code from disparate places and putting them together as if contiguous blocks of code were involved (which they are not) and important differences did not exist (which they do)."

I'm not sure that this stuff hits the non-technical eye as hard as it does an old geek like myself, but to me the critcism is damning. If the judge looks at the exhibits and comes to the same conclusion IBM did, SCO is in serious trouble.

Re:No Legs? Full of Holes?

[On Lawn]

Okay, I'm just going to ask. That is Dr. Kernighan as in "Kernighan and Ritchie"? That is IBM's expert?

To me it is not a very smart investor who bet against IBM in this matter.

Yes. THAT Dr. Kernighan. (n/t)

[MenTaLguY]

Lameness filter go away, come again another day.

Re:Yes. THAT Dr. Kernighan. (n/t)

[Fenris Ulf]

That's something like being in a religious argument and having Moses show up to argue your point, isn't it?

Re:

[account_deleted]

Comment removed based on user account deletion

Re:No Legs? Full of Holes?

[Flower]

It gets better. The other expert IBM has is Prof. Randall Davis. He goes over the methodology SCO used to determine copied code and tears apart SCO's claims that they need more code from IBM. When I read it I felt like I was witnessing a clusterbomb being dropped on SCO's entire case. It really is a beautiful piece of work and by the end leaves no doubt that the man is worth every penny of the $550/hour fee he charged IBM.

Re:No Legs? Full of Holes?

[mikelmoore]

And considering that he was the expert in the case that established the abstraction, filtration and comparison that this court will use to determine copyright infringement, he testimony is a nuke to SCO's 'case'.

Re:No Legs? Full of Holes?

[metlin]

Damn! For a moment there, I read that as Randall Waterhouse :)

Re:No Legs? Full of Holes?

[Anonymous Coward]

I'm not sure that this stuff hits the non-technical eye as hard as it does an old geek like myself

You can compare that to a literature copyright infringement: Stephen King's lawyer can cut out the words from "The adventures of Tom Sawyer", mix them up to resemble a page from "The Shining" and accuse Mark Twain of plagiarisation.

Wait a minute...

Re:No Legs? Full of Holes?

[Angst Badger]

As Dr. Kernighan [IBM's expert] notes [...]

There are two kinds of fucked. In the first, lesser kind of fucked, Brian Kernighan is testifying against you. In the second, more serious kind of fucked, he is testifying against you as Dr. Kernighan, a title which he normally doesn't even use on research papers.

It's been a long time since I read the Book of Revelation, but I'm pretty sure the Four Horsemen of the Apocalypse appear right after the Defense of the Dissertations.

Re:No Legs? Full of Holes?

[UnknowingFool]

Let's see:
In one corner, SCO has Sontag and Gupta, two of their employees. One of them is unknown in his credentials.

In the other corner, IBM has Dr. Brian Kernighan (Princeton) who with Dennis Ritchie wrote the first C programming book. Kernighan has also written seminal books in many other programming guides and languages.

IBM also has Dr. Randall Davis (MIT) whose expert testimony was used in not one but two of the benchmarks that are cited as case law in all software copyright infringement cases (CAI v. Altai and Gates Rubber v. Bando).

I wouldn't say it looks bad for SCO but I would bet a blind money could hammer away at a typewriter and finish writing Hamlet before I would bet SCO would win.

Re:No Legs? Full of Holes?

[UnknowingFool]

They tried, but it got shredded by IBM's legal team.

It's worse than that. It would be shredded IF SCO can get it admitted into evidence. They made so many mistaked with the Gupta Declaration.
(1) They didn't propery certify Gupta as an expert by establishing his credentials.
(2) They didn't give IBM the Declaration until after IBM asked for Summary Judgement (read: evidence must be presented in a timely manner)
(3) Gupta didn't use the abstraction-comparison-filtration test that the Tenth Circuit has adopted for matters of copyright cases in software. The filtration part of this test is where you have to remove code that cannot be copyrighted (public domain, standards, ideas, etc).
(4) Even if you ignore all that, the code he says is similiar isn't remotely close to being similiar. It's so obvious a nonprogrammer could tell.

There are six pieces that Gupta mentions: (1) "the Read-Copy-Update [(RCU)] routine"; (2) "the user level synchronizations (ULS) routines"; (3) "IPC code"; (4) certain "header and interfaces"; (5) "System V init code"; and (6) "Executable and Linking Format (ELF) code"

IBM points out that for the first two:

To the extent he identifies any similarity at all, Mr. Gupta's analysis is focused almost entirely on unprotectable ideas and concepts. (See Kernighan Decl. 20-21.) Indeed, Mr. Gupta himself claims to identify similar "routines" and "method[s]" that "perform the same ... acts". (Gupta Decl. 3, 5, 7, 10, 11 (describing RCU) and 30, 31, 32, 34, 36 (describing ULS).). Such elements are plainly unprotectable and cannot serve as the basis for a determination of "substantial similarity"

In a nutshell, Gupta says these two pieces of code infringe because they perform the same function to some code in SCO's Unix. IBM validly argues that the function of code is not copyrightable.

For the IPC code (3), SCO is trying to fool the court by making code look similiar by selectively deleting code in between lines of other code. This was noted by Kernighan above.

The "header and interfaces" and "System V init code" aren't even in Linux and are irrelevant according to IBM.

ELF is a specification and a standard and thus falls under the filtration test as not copyrightable.

Re:No Legs? Full of Holes?

[dbIII]

Public domain means no copyright

SCO are looking at it in terms of property and not copyright - a common confusion with software which has given us both a patent mess and a copyright mess. Look at it in context - public domain for property, the original meaning, is different to copyright terms (which are going to mean different things in every country anyway). SCO saw linux sitting there waiting for them to download it as unclaimed property, and have since tried to claim it in exactly the same way you can

bright spots

[GillBates0]

The only bright spot for the company is the settlement with BayStar...

that and Darryl's shiny metal ass.

Looney Tunes

[sethadam1]

Reading SCO news is like watching someone fall out of a tree and hitting every branch on the way down.

It used to amuse me, now it annoys me. I'm just waiting for them to shrivel up and go away.

Re:Looney Tunes

[Anonymous Coward]

yeah and each time they hit a branch you can hear a bone cracking and SCO saying "I am fine... I am fine...".

Re:Looney Tunes

[trentblase]

"I'm still alive, only I'm very badly burned"

Re:Looney Tunes

[name773]

Hello up there! Anyone! Can someone call an ambulance? I'm in quite a lot of pain.
If somebody can open the retrieval hatch down here, I could get out. See, I designed this device myself and...oh, hi! Good, I'm glad you found me. Listen, I'm very badly burned, so if you could just--*gunshot* Ow! You shot me!
Dr. Evil: Right. Okay. Moving on.
You shot me right in the arm! Why did--*gunshot*

Re:Looney Tunes

[ColaMan]

Why does SCO remind me of the Black Knight?

Pythonised legal summary:

SCO: None shall pass.
IBM: What?
SCO: None shall pass.
IBM: I have no quarrel with you, good SCO, but I must cross this bridge.
SCO: Then you shall die.
IBM: I command you as King of the Mainframes to stand aside!
SCO: I move for no man.
IBM: So be it!
*IBM cuts off SCO's left arm.*
IBM: Now stand aside, worthy adversary.
SCO: 'Tis but a scratch.
IBM: A scratch? Your arm's off!
SCO: No, it isn't.
IBM: Well, what's that then?
SCO: I've had worse.
IBM: You liar!
SCO: Come on you pansy!
*IBM cuts off SCO's right arm.*
IBM: Victory is mine! We thank thee Linux, that in thy mercy...
SCO: Come on then.
IBM: What?
SCO: Have at you!
IBM: You are indeed brave, SCO, but the fight is mine.
SCO: Oh, had enough, eh?
IBM: Look, you stupid bastard, you've got no arms left.
SCO: Yes I have.
IBM: Look!
SCO: Just a flesh wound.
IBM: Look, stop that.
SCO: Chicken! Chicken!
IBM: Look, I'll have your leg. Right!
*IBM cuts off SCO's leg.*
SCO: Right, I'll do you for that!
IBM: You'll what?
SCO: Come 'ere!
IBM: What are you going to do, bleed on me?
SCO: I'm invincible!
IBM: You're a loony.
SCO: SCO always triumphs! Have at you! Come on then.
*IBM cuts off SCO's other leg.*
SCO: All right; we'll call it a draw.
IBM: (prepares to leave the scene) Come, Novell.
SCO: Oh, oh, I see, running away then. You yellow bastard! Come back here and take what's coming to you. I'll bite your legs off!

Re:Looney Tunes

[ElForesto]

I've had the opposite reaction. They used to annoy me, now they amuse me. Normally you have to PAY for this kind of entertainment.

Home Simpson?

[ackthpt]

Reading SCO news is like watching someone fall out of a tree and hitting every branch on the way down.

I think that was actually Homer Simpson, but don't recall the episode or why, but the

"D'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- d'oh! -- etc."

should echo investor sentiments rather accurately.

"Me, I invest in beer at least I get something for my money."

Re:Home Simpson?

[dknight]

jumping the springfield gorge on bart's skateboard and missing... and then falling out of the ambulance, and falling down the gorge a second time...

its the Bart the Daredevil episode.

Yes, I have no life.

Re:Home Simpson?

[crotherm]

no no no... it is the April Fools Day one where Bart takes a Duff can to the local hardware store to shake it up in the paint mixer. When Homer opens it, it almost kills him. As Homer lies in the hospital bed, he remembers a long string of "D'oh"s clipped from previous episodes, which get him to snap out of the coma and start to strangle Bart.

Re:Home Simpson?

[CliffH]

"Me, I invest in beer at least I get something for my money."

Isn't this what SCO investors are doing, pissing away thier money?

Re:Looney Tunes

[mikael]

My favourite slashdot quote is the "Reading SCO news is like watching the crazy guy arguing with himself. Fun to watch, but only from a safe distance".

Re:Looney Tunes

[Don'tTreadOnMe]

I went back through a month or so of Business Week articles that mentioned Linux: None of them mentioned SCO, and when talking about the bright future for companies doing Linux related work, they never mentioned that these companies might have a problem with intellectual property or stolen code.

That right there says to me that no one in the business world is taking this seriously. So I suspect that it will shrivel up and blow away.

Yet Again

[Anonymous Coward]

Seems like slashdot pundits have been predicting the imminent death of SCO and it's legal claims for the past year. They keep coming up with cute analogies (i.e. table without legs) but I'm wondering if Slashdot is not really giving us an objective viewpoint here.

Re:Yet Again

[InfiniteWisdom]

He wonders if Slashdot gives us an objective viewpoint. Hahaha.

Re:Yet Again

[Nurseman]

but I'm wondering if Slashdot is not really giving us an objective viewpoint here.

I'm not crazy about IBM, or think they are some shining knight. As an outsider, who uses Linux for somethings, Windows for others, I just don't see anyway SCO can win. None of their arguements have any basis in logic, not that the Law is always logical. I think this whole thing was a scam, to make money and get bought. They seriously miscalculated, and I hope they go to jail for it.
Please play Devils Advocate and tell us w

Re:Yet Again

[pjrc]

Please play Devils Advocate

IBM there are no notes or emails relevant to the case from a couple high level executives who were supposedly involved in IBM's linux stratagies.

IBM doesn't want to disclose every tiny unreleased revision to every file in AIX and Dynix over the last 20 years

IBM doesn't have contact info for a bunch of people who aren't IBM employees anymore (including some SCO folks).

Comparing source code is too difficult

Too many third parties contributed to linux and IBM won't tell SCO

Re:Yet Again

[Samrobb]

... I'm wondering if Slashdot is not really giving us an objective viewpoint here.

You must be new here.

Re:Yet Again

[Solder Fumes]

I wonder if a first-post consisting only of "You must be new here." would still get modded to +5, Funny.

Re:Yet Again

[Xshare]

Slashdot pundits??? Anyone remember a few weeks back when we were talking about how there might be a astroturf campaign started on /. comments?

Re:Yet Again

[LWATCDR]

Most people consider and objective viewpoint to be the one they agree with.
Actually you will find a lot of pretty accurate info on slashdot about this. Truthfuly it is mainly links to groklaw.

Re:Yet Again

[georgewilliamherbert]

I'm wondering if Slashdot is not really giving us an objective viewpoint here.

As a rule, no, Slashdot readers are monumentally biased.

That doesn't mean that SCO is not in huge trouble. They have recently laid off a bunch of fairly key middle managers in the profitable SCO UNIX branch. The engineers are not yet on the chopping block, but the end is near when you let go the marketing and product management people on products. They're going to decline from there.

I also know a bunch of corporate and intellecutal property attorneys in real life, one of whom is my father. They're all wondering what the heck SCO has been thinking with the filings over the last year. Both factually and legally very weak filings.

Don't forget the GPL

[scruffyMark]

In one scenario - the judge sides with IBM that by refuting the GPL, SCO lost their right to distribute IBM's copyrighted code under it, so SCO are the ones violating copyright - their UNIX branch could be basically hosed very soon anyway.

So, they have to pull their Linux distro, which they've probably already done by now. No biggy to them (though they'd have to start negotiating royalties to be able to support their existing customers)

But, consider this - it's not just IBM's copyrighted works they lose the rights to. Based on that precedent, they could soon be hit with a massive class action lawsuit by thousands of people who have written software under the GPL, demanding that they stop distributing it with UnixWare, as they have no license (and possibly pay damages for copyright violation, if they have any money left by then). Imagine - a commercial UNIX, where if you want any GPL'ed software, you'll have to install it from source yourself, and track and deploy your own updates. Their UNIX would go from a more or less enterprise class OS, to something not quite as useful as DOS overnight.

Re:Remember, they're not trying to make a legal ca

[Eggplant62]

Also note that there have been no insider trades since this past April, when the stock started it's nosedive to it's current bargain-basement levels. Here's the proof [yahoo.com]. Prior to April 7, Thomas Raimondi sold off $1,196,507 of stock. Another insider, Reginald Charles Broughton, during the period between 20 Jun 03 and 17 Sep 03, while the stock was on the rise and nearing the top of the bubble, sold off $3,425,458 worth of stock, most of it trading at in excess of $12/share and even as high as $20/share. P

Re:Yet Again

[Gilmoure]

If you want fair, objective reporting, try fark.com or somethingawful.com

Re:Objective viewpoint

[Monsieur le Nerd]

Almost without exception, the lead stories have links. These links are mostly to Groklaw, who themselves give links to all the relevant info. Thus, the info is there. As for the tone, I hardly think you could expect *any* publication to be without bias. For example, Forbes.com always reports in favour of Microsoft and SCO - no-one seems to be doing anything about that. What is worse, is that they don't even link data that could be useful to dissenters! Furthermore, ./ is more about the comments. This is

Sources have just confirmed...

[ravenspear]

that at the upcoming press conference SCO will announce that IBM does not exist.

This will dissipate any investors' fears pertaining to the validity of the lawsuit.

Re:Sources have just confirmed...

[ronaldb64]

KING ARNULF: Stay calm! This is NOT happening. Now, I know what some of you must be thinking... the day has come.... we're all going down, etc. etc. But let's get away from the fantasy and look at the FACTS.

FACT ONE - The threat of total destruction has kept the peace for one thousand years.

FACT TWO - The chances of it failing now are therefore one in three hundred and sixty-five thousand.

FACT THREE - Our safety regulations are the most rigorous in the world. We are all nice to each other, we nev

There's a better Groklaw article.

[Jaywalk]

I think the more important Groklaw story is this one [groklaw.net]. The part I found telling was:

Pacer indicates that the SCO-Novell hearing on Novell's motion to dismiss is going to be held on September 15 at 2 PM before Judge Kimball . . . That's not only the same day as the SCO v. IBM hearing on IBM's 10th Counterclaim, it's the same time.

Since the same judge is handling both cases, I can't conceive of a situation where he would want to claim the Novell suit should not be dismissed and that the IBM counter-claim should be denied. Continuing the Novell suit would complicate the IBM suit, so trying to handle them both in the same afternoon would be a potload of work. If, on the other hand, he plans to grant the Novell dismissal on the grounds that the copyrights were never transferred, it would allow him to grant IBM's PSJ on the same grounds.

I'm just guessing here, but if I'm right his is very bad for SCO. It would mean that Novell keeps the UNIX copyrights, the IBM case is limited to the Monterey contract and the Red Hat case can proceed with a finding on record that SCO has been blowing smoke about its UNIX IP.

Re:There's a better Groklaw article.

[neurojab]

>If, on the other hand, he plans to grant the Novell dismissal on the grounds that the copyrights were never transferred, it would allow him to grant IBM's PSJ on the same grounds.

The Novell suit is a "slander of title". Given that the copyrights are in dispute, it will be quite easy for the judge to grant Novell's dismissal. The Judge would not have to go as far as to say that Novell owns the copyrights, only that there is a genuine dispute over them.

IBM's PSJ, on the other hand, is more about SCO's claims in he media that IBM is stealing UNIX to put into Linux. It's not about the direct claims SCO has made in court.

In order for the two judgements both be granted for the same grounds, the Judge would have to one-up Novell's claim and say that Novell owns the copyrights.

That would be very interesting indeed, and would pretty much wrap it up for SCO. I'm hoping for that, but IMHO it's likely that the Judge will grant both requests, but on different grounds. Novell will be granted because the wrong kind of suit was filed. IBM will be granted on the Lanham act. SCO will continue to persue their other claims and spin the losses as though they had won something.

IANAL.

If there is dispute over the ownership ...

[burgburgburg]

of the copyrights, the legal presumption is that the copyrights still reside with the original owner: in this case, Novell.

Re:If there is dispute over the ownership ...

[Dastardly]

the legal presumption is that the copyrights still reside with the original owner: in this case, Novell.

Yes, but I don't think judges often go beyond the minimum needed to decide a case. And, in order to decide the slander of title all the judge needs to rule is that it is questionable whether SCO owns the copyrights, and therefore reasonable and without malice that Novell made the statements that they made.

IANAL

The just thought of a problem though. SCO could now file a contract case regarding who owns the SVR4 copyrights. This could have bad repercussions, in the sense that SCO could get delays in other cases while the new one just gets started.

The problem is if the copyrights are in question. I don't think that decides the RedHat case, but might result in dismissal without prejudice or a continued stay with an injunction telling SCO they must discontinue interfering with RedHats business until the copyright case is decided.

Autozone woudl probably continue to be stayed. And, there may even be the possibility that IBM gets stayed. Although if IBM doesn't request the stay, I am not sure SCO could without severe embarassment.

SCO: "Sorry judge, we submitted this lawsuit too soon. We need to clear up who really owns the copyrights to SVR4. Could we get a stay until the Novell case is decided?"

Maybe they could get a stay on a couple of the counterclaims, and continue with the rest since they characterize their claims as contract claims. Either way whiel SCO submitting a copyright case against Novell would clear everything up eventually, (probably in Novell's favor). I could result in SCO getting more time to bluster.

Dastardly

Analysis at LamLaw

[bstadil]

Look at LamLaws [lamlaw.com] analysis of this.

The take is that IBM's request for Summary Judgement that no SCO copyrighted code exist in Linux will be granted.

Novel is invited so as to protect their interest in the Copyrighted material. Most likely Novel is the owner of any copyrighted material not SCO (OldSCO rather ie Caldera)since it was nver transfered in writing, as required.

blind

[jrossi02]

I'm no marksman, but I can tell when something is full of holes.

Thats good, because SCO investors must have the hole spotting ability of a depressed star-gazing lemming...

Re:blind

[flacco]

i spend most of my time on the internet spotting holes, come to think of it.

watch the future, not the past

[FrankHaynes]

My hard-earned experience with Wall Street is that it really doesn't give a rat's patootie about the past (earnings report), but rather pays attention to the forecast for the next quarter and year.

Watch what they hint at and see the reaction in their stock price next week after everyone gets back from Summer vacation and the real traders start to move things en masse.

Re:watch the future, not the past

[Xshare]

But doesn't the forecast for the next quarter and year depend on the past (earnings report), and those who create the forecast care about the past?

Re:watch the future, not the past

[geomon]

The past is often a guide to the future. Better phrased: "Those who refuse to learn from the past are doomed to repeat it".

Taking a look at the results from the previous year indicate a progressive decline in Net Income Applicable To Common Shares. This metric is not something that will give investors something to do handsprings over.

Watch the Wookie, not the financials

[overshoot]

Wall Street and financials have nothing to do with the price of this stock. Most of it is held by insiders, and of the public float much more than half is shorted.

The few institutional investors that got stuck with this turkey are so far underwater that they may as well pray for a miracle, because selling now they'll take a bath -- besides, there aren't any takers.

Stock near the 52 week low.......

[i_want_you_to_throw_]

and that doesn't inspire confidence either [yahoo.com]. It probably isn't reaching too far to say that SCO ain't long for this world.

Oblig. Monty Python quote...

[CaptainPinko]

No no no, it's just pining for the fjords. Just don't ask it for evidence... SCOs stun easily.

Re:Stock near the 52 week low.......

[gcaseye6677]

I find it interesting that the conference call was scheduled for 5 PM Eastern time, right after the stock market has closed for the day. Gee, why would they want to do that?

Want to listen ?

[Anonymous Coward]

here you go [yahoo.com]

ahh the beauty of the Internet
and the stock is currently trading at $3.80, 6mo performance is definatly a sell [yahoo.com]

Re:Want to listen ?

[Random BedHead Ed]

Wow, thanks! I'm online waiting for the conference now. Should be amusing, interesting or boring. Or maybe infuriating. Either way, Mod Parent Up. This is useful ...

Re:Want to listen ?

[Platinum Dragon]

Darl just described SCOX's 3rd quarter as "active & productive". Riiiiight.

They generated tons of bullshit, didn't they?

SCO isn't the only party that deserves to lose

[Quinn_Inuit]

Their lawyers can also be sanctioned for submitting arguments they knew had no chance at all* of winning. Rule 11 [cornell.edu], anyone?

*N.B.: Before you get worried about closing the courthouse doors to legitimate complaints, that rule is used even less than it probably should be, and only in cases where the lawyer submits a claim (s)he knows or should have known is either misleading, false, or ridiculously frivolous (fails the laugh test).

I wonder what Gene Amdahl thinks?

[e9th]

As much as I side with IBM here, it does seem a bit ironic to see IBM complaining about a competitor "perpetuating fear, uncertainty and doubt."

Re:I wonder what Gene Amdahl thinks?

[danb35]

As much as I side with IBM here, it does seem a bit ironic to see IBM complaining about a competitor "perpetuating fear, uncertainty and doubt."

Indeed, and SCO noted as much in their court filings. This led ESR to update the listing for FUD in the Jargon File [catb.org].

Re:I wonder what Gene Amdahl thinks?

[the_maddman]

Why's that ironic? They compete with Microsoft, don't they?
IBM Invented FUD in the 1980's. Gene Amdahl, would of course be the guy behind Amdahl computers, which made hardware compatible with IBM's mainframes, and was one the receiving end of a lot of FUD.
You can't even count FUD as a Microsoft innovation.

What do you expect?

[CrashPanic]

This is company that hasn't produced a competitive product in years. And now that everybody see's that there may not be much merit to their IP claims on linux, their license collections will die off too. Their only hope is for a Microsoft to keep funding them to wage this proxy war against linux. Just wait until their are no more good proxies for Microsoft to fund, that's when we'll likely see them jump in the ring flush with a new patent portfolio to swing around.

It's still intriguing...

[Skiron]

... all that time ago when SCO started this:

1. Did they really think they had something?

2. Was it a hope for IBM et al to buy them out and save a failing Company?

3. Did M$ really engineer all this anyway?

Whatever, but the last point is can a court, on whatever decision is reached now, actually stem the tide against this sort of action by large $$$$/££££ in the bank Companies deliberately trying to destroy a free (and perhaps better system), against an otherwise 'couldn't care less to who uses my code' attitude open source movement in the courts?

IBM has money to oppose. What if they didn't and couldn't fight back for OSS? Who could fight the monopolies then?

The next fight is these silly patents. I think that will be BIG trouble for all free people, let allow coders.

Re:It's still intriguing...

[ClosedSource]

IBM isn't fighting for OSS and they were second only to AT&T in the monopoly department. IBM is the SW patent leader and hasn't taken any steps to reduce their new patent filings or release they current ones into the public domain. IBM is looking out for number one just as it always has and will drop OSS like a bad habit if the winds change.

Re:It's still intriguing...

[ClosedSource]

I'm sure IBM does have a lot of HW patents as well, although that fact doesn't weaken my point in any way.

Yes, the technologies that IBM believes they can benefit more from by making free (as in beer and as in GPL) they make free. Those they believe they can make more profit from selling (like WebSphere) they keep closed.

Hmm intriguing. yet predicatable

[dr_labrat]

Why have I seen so few arguments along these lines...?

Any yes I *do* read slashdot. Check my ID.

(though its the only time that might have happened that I would have been grateful for a *lower* number).

The question being...

How many geeks work for SCO?

And how many moderate on Slashdot?

Illegal to discriminate against SCO employees?

[mcSey921]

Is it legal to look at a guy/gals resume, see that they worked for SCO after the 'suits started and exclude them from consideration for hire for that reason alone?

OT I know, but just wondering.

Re:Illegal to discriminate against SCO employees?

[gcaseye6677]

It wouldn't be illegal, but I don't think it would be smart to automatically exclude all former SCO employees from consideration. My bet is that most of their employees are just regular joes working a job to pay the bills. I'm betting only a small portion of them are actively involved in lawsuit planning, and an even smaller portion are actually making anything off the lawsuits. That being said, if Darl McBride's resume crossed my desk, it would go straight in the trash after being defaced in various ways. Many SCO insiders have a history of this kind of crap well before they came to SCO (see Darl McBride vs. Ikon).

Re:Illegal to discriminate against SCO employees?

[Frostalicious]

That being said, if Darl McBride's resume crossed my desk, it would go straight in the trash after being defaced in various ways.

And pass up the opportunity, after interviewing him, to offer him a position in the janitorial department? That would be a laugh of a lifetime.

You're Kidding, Right?

[endeavour31]

Please do not rely on a litigant's motion papers to prove a point. These are documents made to persuade a judge and as such are nearly advertisements. Wishful thinking aside, until the judge GRANTS IBM's motion nothing is settled. I am sure SCO's motions look pretty too - - it is not as if both sides lack for decent lawyers. In most cases anyway a judge will let the jury decide. Summary judgements are rarely granted unless discovery has proven a FACTUAL point which does not need to litigated. Defendents always file these motions which are sometimes useful in limiting the scope of the lawsuit but rarely result in a complete win.

Re:You're Kidding, Right?

[Random BedHead Ed]

Then again, this case is a bit different. SCO is fighting on multiple legal fronts, and the outcome of the Novell suit has a direct impact on whether SCO's claims in the IBM suit will hold water. If the Novell suit goes badly for SCO, some of SCO's IBM claims will vanish. So yes, you're right that a case like this would usually be put before a jury, but it's clear that what'll happen on the 15th could be this:

In all likelihood SCO's copyright claims will be dismissed due to (a) failure in the discovery

Re:You're Kidding, Right?

[MooseByte]

"Please do not rely on a litigant's motion papers to prove a point. [ ... ] I am sure SCO's motions look pretty too - - it is not as if both sides lack for decent lawyers. In most cases anyway a judge will let the jury decide"

Have you actually *read* each side's filings over the past year? I've read many of them, including the latest round. SCO's lawyers come off sounding like drunken frat boys on a dare. IBM's wrecking crew sound like The Terminator, unwavering, unimpressed, and about to crush you under metal alloy heel.

You really need to read the entire filing on this one. It's night and day.

Saying you can't judge the case based on filings is like saying you can't judge the likely outcome of a football match by looking at the players, where one team is a bunch of kids in nappies and the other are bouncing the ball around the circle with their heads.

Re:You're Kidding, Right?

[HiThere]

SCOX does appear to lack decent lawyers. They have many numerous mistakes in their filings, some of which "a second year law student would be ashamed of". (IANAL, so I'm relying on the expertise of others in that judgement.)

Some people have speculated, without other evidence, that the intention is to ask for an appeal on the basis that SCOX lacked competent representation. I consider that unlikely. I consider it far more likely that no competent lawyer wants to be associated with a case that's so bad. But I have no special knowledge, so this is an incompetent opinion.

Re:You're Kidding, Right?

[UnknowingFool]

In it's motion, IBM is pointing out all the inconsistencies in SCO's story. In one case, they argued this and said this, but in this case, they are saying the opposite. By pointing this out, they are forcing SCO into one corner or the other since most judges don't like these tricks. At the same time, they're painting SCO is a bad light.

While there is a lot of chest thumping in many motions, IBM presents some convincing legal arguments. For example the Gupta Declaration. To use an expert witness, you have to establish an expert's credentials. SCO did not do that. Also it must be presented in a timely fashion. SCO did not produce Gupta's Declaration until after IBM asked for Summary Judgement. It's a matter of procedure. Not following procedure alone is sometimes enough to get it thrown out.

Even if it that could be overcome, IBM points out that Gupta did not use the abstraction-comparison-filtration test that the Tenth Circuit has adopted in software copyright cases. This is sort of saying that to get a DNA match in a case, you didn't use one of the standard DNA testing methods but invented your own. That again is enough for it be thrown out.

Barring all that, IBM attacks the Gupta Declaration point by point with a properly certified expert. IBM didn't need to do this last step, but they're being very thorough. On a few examples, IBM points that certain pieces of code that Gupta says are similar are not remotely similiar even to someone who knows nothing about programming.

Re:You're Kidding, Right?

[CmdrGravy]

"I am sure SCO's motions look pretty too"

Well I haven't seen all the originals, maybe they are printed on nice colorful paper and written in beautiful colours, but the motions I have read of SCO have been largely nonsensical and it has been very hard to see what point - if any - they are trying to make.

IANAL but IBM's motions appear to make some very clear points which are then exhaustively backed up throughout the document which is a striking counterpoint to SCO's ramblings.

Obligatory

[mehaiku]

To the press SCO offered litter
While leaving the stockholders bitter
If Darl hasn't cooked
SCO's books
Their position must be in the shitter.

Aww come on, we can do better...

[SlowMovingTarget]

There was a small company named SCO,
Whose chief did kvetch and crow,
"My code they have stolen,"
"I've got proof in my colon!"
But such proof he never would show.

Re:Aww come on, we can do better...

[SlowMovingTarget]

[grin] That's it...

Quoth Darl, "They've infringed on our stuff!"
Opening lawsuits aplenty with fluff,
SCO borrowed some money,
From BayStar, how funny!
Who sued SCO stating, "'Not evil enough!'"

results are in and it's not good

[abrotman]

results [yahoo.com]

The ironing is delicious...

[Idarubicin]

From IBM's memorandum:

Even as SCO describes the case--by directly quoting (without attribution) a Westlaw headnote--...

Hm. SCO's respect for the fruits of others' intellectual labour continues undiminished. Now they're plagiarising their lawsuit?

Re:The ironing is delicious...

[Flower]

It's worse actually. As was pointed out [groklaw.net] at Groklaw by AllParadox, who actually practiced law instead of playing one on /. :

A headnote is a legal analysis by someone who is probably not connected to the case. ....

Headnotes can perfectly contradict the actual findings of the court. <emphasis mine>

And, iirc, SCO did nearly that. They quoted the headnote and got the caselaw wrong. AllParadox put it better than I ever could. This was definitely a "Stupid newbie stunt"

conference call excerpts

[mcguyver]

Alright, here are some brief summaries of conversations during the conference call. (I have too much free time but it's interesting to witness a train wreck).

Caller asks SCO what they can do to protect their shareholders from what may be bad legal advice.
Response is SCO obtained the best firm available for the best legal advice available.

Caller asks would you seek a second opinion from a new firm like you would seek a second opinion from a medical doctor?
Response is anyone with these questions likely has not read all material in front of the courts and they would be unable to generate a conclusion because the paperwork is confidential.

Caller asks what would it take to buy SCO with the poison pill?
The board would need to set a fair price.

Caller asks how many people are employed by SCO.
At the end of the quarter, SCO has 230 people.

Caller asks since beginning on this legal crusade, how much has been paid for legal representation?
Just over $15 million for all law firms for the prior 5 quarters.

SCO currently has $43M in cash. Plans on paying $31M in fees - not sure if this is some baystar thing or legal fee.

Can you summarize the responses from the court that have been positive?
March 6th, Judge said SCO has shown good faith in its discovery process. Ordered IBM to deliver executives emails.
April 19th, SCO received good information from IBM and has been working through that.
Despite judge orders, IBM has not completely fulfilled the order to deliver the information request on March 6th.
Novell case, motion filed to dismiss, motion was denied. A new motion to dismiss was issued and SCO looking forward to dealing with that.
Autozone case, case was stayed but you get 90 days of discovery. SCO is currently going through that process.
Character case that IBM is trying to do of SCO's legacy AT&T contracts is misguided.
Additional hearing will be held on September 14th and 15th.

Caller asks is SCO replacing cash payments to lawyers with sliding scale contingency payments?
Yes. In a certain sense, the long term obligation depends on judgment and settlement amounts.

Some favorite lines

[UnknowingFool]

Most of the memo is legalese but here are a few of my favorite lines:

SCO's opposition to IBM's summary judgment motion is nothing more than a smokescreen to cover the shortcomings of its claims and yet another attempt by SCO to delay (perhaps forever) the resolution of this litigation.
...
Indeed, SCO appears to have lost track of the representations it has made to avoid review of its assertions of copyright infringement in the several courts in which it is litigating.
...
SCO attempts in effect to portray IBM's Tenth Counterclaim -- which seeks a declaration that IBM's Linux activities do not infringe SCO's alleged copyrights -- as a surprise to SCO. SCO, however, has been claiming publicly for more than a year that anyone's -- which obviously includes IBM's -- use of Linux infringes SCO's alleged copyrights.
...
As reviewed here, SCO appears willing to adopt, in court and in the media, whatever position is most expedient under the circumstances, without regard either to consistency or the truth. SCO has spun, and continues to spin, a tangled web of inconsistencies to avoid resolution of the claims it has made against IBM's and others' use of the Linux kernel. SCO's opposition to IBM's motion is just more of the same gamesmanship -- intended solely to procure further delay so that SCO might profit from the fear, uncertainty and doubt that it has fostered regarding Linux.

While this just a motion, IBM seems confident and is calling it like it sees it. Most of /. would agree.

SCOX Conference Call Audio

[Mansing]

A recording of the conference call is available here:

http://www.users.cloud9.net/~terrapn/

Here's a link to the conference call audio...

[g_adams27]

For those who want to listen to the conference call recording, here it is...

RealPlayer:
http://play.rbn.com/?url=shareholder/shareholder/d emand/040831cald.ra&proto=rtsp [rbn.com]

Windows Media Player:
http://play.rbn.com/play.asx?url=shareholder/share holder/wmdemand/040831cald.asf&proto=mms?mswmext=. asx [rbn.com]

Best Paragraph Nominee

[theonetruekeebler]

Here's my vote:

"SCO's present assertion...that SCO has not had sufficient time to perform the requisite analyses of Linux and the UNIX code it claims to have copyrighted, and that such analyses could take 25,000 man-years, obviously rings hollow. It appears that SCO's litigation strategy now is simply to seek delay for delay's sake. SCO, by its own admission, has already performed the analyses it needed, but has not come forward with any evidence that would a create genuine issue of material fact as to copyright infringement in this case. In this situation, summary judgment is appropriate; SCO should not be given additional time to perform analyses it admits it has already performed and have apparently (despite SCO's public claims) turned up nothing" (emphasis added).

OTOH maybe the judge should grant a stay until SCO has completed the 25,000 man-years of analyses it says it needs. A staff of 100 could finish the job in 250 years; surely BayStar can keep pouring money in for that long?

Earnings report has been released

[Anonymous Coward]

Maybe they posted it ahead of time knowing someone would post the results in the comments, like this: http://biz.yahoo.com/prnews/040831/latu104_1.html [yahoo.com].

Summary: Revenue is $11,025,000 which is way down from 3Q03 revenues of $20,055,000. The SCOsource revenues are $667,000 vs. $7,280,000 in 3Q03. But, the SCOsource revenue was only $11,000 in 2Q04.

Strangely enough, the stock is up 6 cents in after hours trading.

Re:Hah! So much for the famewhore

[Animats]

Then again, we've been waiting 4 years for Enron to settle...

That's been grinding along. Ben Glisan (former Enron treasurer) is in prison. (Inmate #20293-179, Bastrop Federal Correctional Institution). He gave up the Fastows. Lea Fastow is in prison. (Inmate # 20290-179, Houston Federal Detention Center). Andrew Fastow (former Enron CFO) pled guilty and is going to jail soon. He gave up Skilling and Lay (former Enron CEOs). They've been indicted and are out on bail.

It's just like taking down an org