SCO News Roundup

Bootsy Collins managed to combine all of today's SCO stories. He writes "The firm of David Boies, SCO's attorney in charge of their Linux IP cases, has announced their compensation (so far) from SCO: $1 million USD in cash, and $8 million in SCO stock. Keeping that stock price high until they can sell is clearly of some importance to Boies, Schiller and Flexner LLP. Given the cost of selling a $50 million convertible note to fund their legal actions, the actual cost to SCO is more like $17 million USD. Meanwhile, SCO CEO Darl McBride is saying that Novell's purchase of SuSE violates a non-competition agreement reached when SCO bought the Unix source, and thus is legally actionable by SCO. Over at the Register, they've noticed that SCO's latest SEC filings indicate how firmly they're putting all their eggs in the legal basket: the filings effectively say that 'SCO has already lost business from its loyal customer base, and it expects to lose more.' And finally, in response to a poor response to SCO's attempts to get Fortune 1000 companies to pay $699/server for 'Linux licenses' before the fee jumped to $1399, SCO has announced that the $699 discount rate will apply to the end of 2003. Hurry before time runs out again."

A sad, sad tale that's far from over...

[TopShelf]

The air must be getting stuffy in Darl's bunker. Apparently, he'll be suing Sun and China [slashdot.org] next!

Although if you think about it, a potential 1 billion users popping for Linux licenses at $699 apiece (but only if they act NOW!)... Gotta get me somma that SCOX!

Comments on today's SCO conference call

[FunWithHeadlines]

I found these comments from the excellent GrokLaw site [groklaw.net] by someone who was able to get in on this morning's teleconference call set up by SCO. See here [groklaw.net] for where I got the comments from, as well as PJ's commentary on recent events in SCOville:

Authored by: radicimo on Tuesday, November 18 2003 @ 12:40 PM EST

Conference call just ended. I had a *1 for questions, but they just cut off the conference before things got too hairy, with a "We have no more callers". LIARS. Also, interesting how Dion Cornett was unable to ask his question. Makes me wonder out loud.

1. They referred to SCOsource licensing as one of the contingencies that created the payment for Boies (really cagey about it too). However they also said that Microsoft in no way was funding the lawsuit. That is a patently untrue then, as MSFT has funded the SCOsource licensing.

I think this one is really important to note. IF there ever is a securities fraud investigation of TSG, some of their comments in the call are patently self-contradictory, and if I was "allowed" to ask my questions these would have come out.

2. Still seems that there are no other licensees besides MSFT and SUNW. I was going to force them to get specific about this and find out when Sun payment will be recorded, and if there were any future contingencies which would lead to additional payments by either.

3. I wanted Boies to explain how the USL v. BSDI lawsuit gave them any legal standing. It doesn't, and seems to weaken it (IANAL).

4. Compete versus non-compete wrt Novell. First UNIX is not Linux, so how are they competing with the letter of the agreement? Second, SCO legacy revenue is decreasing whereas this new partnership (word they used again and again) with a law firm suggests that their core business is now lawsuits. How is Novell competing with that (tongue in cheek)?

5. Has OSDL contacted them about their use of the trademark UNIX, and why do they continue to use this trademark without proper attribution?

The reason why SCO is able to perpetrate the FUD they do is because the press and financial community are not doing their research and asking the hardball questions. Things only got a bit tight when they got called to task on the issue of Boies payment and whether it was a contingency based on past or future actions."

News?

[stephenry]

Put it this way: SCOX stock had been in free-fall for days (opened today around $13.5); after a phone-in, that was announced at 10:30pm last night, they declare that they will sue Novell; stock rises (now over $14.5).

And this has been going on for months.

Strange.

Darl Named a top 25 CEO

[jaymzter]

CRN in a grand exhibition of both lack of research and insight has Darl McBride listed as one of the top 25 CEOs this year [crn.com]. My favorite quote is about us Open Source Communists:

"It's like back on the farm where we had to break a new colt and try and tame them," McBride says.

Now you know why Wall Street loves this guy. This is a glowing review of the man and his mission for Team Capitalism.

It doesn't cover Netware or Linux.

[roystgnr]

Depending on how broadly the no-compete clause was written, if it covers linux, there's a chance the same would apply to NetWare as well, cause NetWare isn't Unix either.

It doesn't cover either. The relevant line in the contract (as posted on Groklaw if anyone wants to read the whole thing) is:

Seller agrees that it shall use the Licensed Technology only (i) for internal purposes without restriction or (ii) for resale in bundled or integrated products sold by Seller which are not directly competitive with the core products of Buyer and in which the Licensed Technology does not constitute a primary portion of the value of the total bundled or integrated product.

In other words, SCO doesn't just have to prove that Linux competes with their Unices (which is probably true, at least on those computers which don't rely on new-fangled things like "USB" that SCO is still working on support for), they have to prove that the source code they bought from Novell constitutes a primary portion of the value of SuSE Linux!

This is just more BS intended to prop up their stock price; don't bother paying attention until they actually start trying to pull this stuff on a judge, instead of their current backpedaling official stance of "We only have a contract dispute with IBM, and we've never threatened Red Hat with anything more."

What competition?

[Professor D]

Nice try, Duh-rl.

Last time I checked, Novell was in the business of making a profit by selling and supporting products they own to customers.

Therefore SCO and Novell are not anywhere near the same business space and the non-compete clause doesn't apply.

Novell- Santa Cruz Operation Agreement

[LightSail]

Novell sold UnixWare to real SCO. Sales Contract stated that Novell and real SCO compete and that Novell would not use retained SysV rights to complete with real SCO. Novell was expected to compete with other products as long as they are not primarily based on SysV. SCOX is again blowing smoke, but what do you expect from Smoking Crack Outfit.

Novell's reply

[webwalker]

Essentially, they say SCO is smoking the good stuff and not sharing;

From the press release:
"There is no non-compete provision in those contracts, and the pending acquisition of SUSE LINUX does not violate any agreement between Novell and SCO."

They also mention that SCO hasn't bothered to call THEM.

http://www.novell.com/news/press/pressroom/news_ br ief/archive/2003/11/pr03042.html

From Inside McBride's Head...

[CandyMan]

I think you are missing Darl McBride's point because you are not in his frame of mind. Since he alleges Linux contains lots of SystemV code, it is clear that Novell buying Suse and distributing Linux violates the noncompete clause.

Not that I agree with the premise, but it does make sense from his point of view.

Re:Linux written to compete with SCO?

[PygmySurfer]

actually, NetWare is UNIX, in a way. [aaxnet.com]

"Novell began in 1983 intending to enable CP/M PCs to share an expensive hard disk.They soon realized disk costs were plunging, and files on the disk where needed to be shared. Not having the skills or time to write a network operating, Novell bought a license to a Unix kernel and based NetWare on that foundation. "

Re:Boycott SCO customers! Here are some tools!

[hydertech]

A boycott might actually have some positive effects. SCO, in a recent SEC filing, identified some of the "risks" involved in their operations. One specific risk mentioned was:

We rely on our indirect sales channel for distribution of our products, and any disruption of our channel at any level could adversely affect the sales of our products.

A first step toward a boycott would be to contact those distributors and let them know how you feel -- that you will not be doing business with them and will encourage your business associates to avoid them as well.

To that end SCO provides a list of their distributors. Here are their US distributors:

Avnet (formely Savoir)
(Offices located in Phoenix, Az; Campbell, CA; and Atlanta, GA area)
3950 Johns Creek Court, Suite 200
Suwanee, GA 30024
Phone: [phone]
URL: www.avnet.com
Email: [e-mail]
All SCO Lines Available

DTR Business Systems
1160 Centre Drive, Suite A
Walnut, CA 91789
Phone: [phone] or 909-598-5721
URL: www.dtrbus.com
Email: [e-mail]
All SCO Lines Available

Seneca Data
7401 Round Pond Road
North Syracuse, NY 13212
Phone: [phone]
URL: www.senecadata.com
Sales Contact: [e-mail]
All SCO Lines Available

Tech Data
5350 Tech Data Drive
Clearwater, FL 33760
800-237-8931, 75289 option 1
URL: www.techdata.com
Email:[e-mail]
All SCO Lines Available

Terian Solutions
7040 Empire Central Dr.
Houston, TX 77040-3214
Phone: [phone]
URL: www.terian.com
Email:[e-mail]
All SCO Lines Available

For those of you outside the US, you may find the distributors in your area by using SCO's list [sco.com].

Go get em!

Re:Good news for SCO

[Anonymous Coward]

It's possible they don't want their evidence tainted in 'the court of popular opinion' so they choose to wait until their day in court to reveal it.

That is not up to them to decide.

Re:Boycott SCO customers! Here are some tools!

[i_r_sensitive]

Well,

I guess since I threw the idea out there, I needed to take the next step.

As an aside, searching SCO for customers does a pretty good job of listing some of the higher profile case studies, which are of course the best targets.

Targets for what you may ask? try: Current SCO Customers Petition [petitiononline.com]

I'll also submit this as a new story, but just in case...

Another article to add to the corral

[sik0fewl]

SCO Targets Major Linux User [techweb.com]
The SCO Group Inc. said Tuesday it would sue a major user of Linux within 90 days, as the company prepared to launch a new legal assault in its claims that the open-source operating system contains the computer maker's copyrighted code.

Noncompete? Not likely.

[shystershep]

• (1) A promise is unenforceable on grounds of public policy if it is unreasonably in restraint of trade.
• (2) A promise is in restraint of trade if its performance would limit competition in any business or restrict the promisor in the exercise of a gainful occupation.

That's section 186 of the Restatement of the Law (Second), Contracts (a summary of U.S. contract law). In order to enforce it's noncompete agreement with Novell, SCO would have to show that there was direct competition, that the competition was of the type comtemplated by the noncompete agreement, and that their rights outweighed all the nasty effects of the agreement (harm to the public, etc.). Considering that SCO is hardly in the software business at all anymore and the agreement concerned Unix (not Linux, no matter how the IBM suit ends up), this is just more SCO FUD.

Yes, Darl, maybe Linux was intended to compete with your core products. But so what? Novell agreed not to compete with SCO's Unix business. What effect will Novell's buying SuSE have on SCO's Unix business? None.

But I do have to applaud Darl and crew for keeping so many attorneys gainfully employed. As long as there are businesses out there as short-sighted and unethical as SCO, I've got job security baby! Now if only I could get my hands on some of those millions in attorney's fees . . .