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SCO Loses 643

An anonymous reader writes "The one summary judgement that puts a stick into SCO's spokes has just come down. The judge in the epic SCO case has ruled that SCO doesn't own the Unix copyrights. With that one decision, a whole bunch of other decisions will fall like dominoes. As PJ says, 'That's Aaaaall, Folks! ... All right, all you Doubting Thomases. I double dog dare you to complain about the US court system now. I told you if you would just be patient, I had confidence in the system's ability to sort this out in the end. But we must say thank you to Novell and especially to its legal team for the incredible work they have done. I know it's not technically over and there will be more to slog through, but they won what matters most, and it's been a plum pleasin' pleasure watching you work. The entire FOSS community thanks you for your skill and all the hard work and thanks go to Novell for being willing to see this through."
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SCO Loses

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  • And yet... (Score:5, Informative)

    by LinuxGeek ( 6139 ) * <> on Friday August 10, 2007 @05:52PM (#20189339)
    SCOX is up 6 cents at the end of the trading day. I t boggles the mind how their stock has performed during all this bad news..
  • Re:And yet... (Score:5, Informative)

    by bmo ( 77928 ) on Friday August 10, 2007 @05:54PM (#20189373)
    That's because the ruling came out *after* trading hours.

  • Re:Hurrah! (Score:5, Informative)

    by Amiga Lover ( 708890 ) on Friday August 10, 2007 @06:08PM (#20189595)
    I think we need to mass mail to them and let them know this page of theirs [] is a lie.

    SCO owns the core UNIX operating system, originally developed by AT&T/Bell Labs and is the exclusive licensor to Unix-based system software providers.

  • LOL SCO (Score:1, Informative)

    by Anonymous Coward on Friday August 10, 2007 @06:10PM (#20189619)
    EPIC FAIL!!!
  • by Dadoo ( 899435 ) on Friday August 10, 2007 @06:22PM (#20189779) Journal
    explain to me how Linux was "slowed down" by this?

    I used to work for a VAR, and our customers were allowed to choose between several OSes: Windows, AIX, or Linux. Several of our potential customers refused to buy Linux systems and specifically mentioned the lawsuit as the reason. I'd call that slowing it down, a little.
  • by DickBreath ( 207180 ) on Friday August 10, 2007 @06:23PM (#20189811) Homepage
    SCO sued IBM in Mar 2003. It hoped to win $5 Billion and then charge Linux users $699 per cpu.

    What this decision in this SCO vs. Novell case does is show that SCO does not own Unix copyrights. Therefore, SCO does not have standing to sue.


    Example: Jane cannot sue Bill for sealing John's tires. Jane does not have standing. (although John has standing to sue Bill for stealing his tires.)

    Likewise, SCO does not have standing to sue IBM re: Linux. Novell may have standing. But in any event, Novell waived SCO's right for this suit against IBM.

    I'm sure IBM wants to win on the merits. Not just a technicality that SCO does not have standing to sue. But the standing issue is enough to dismiss the SCO vs. IBM (and the world) suit.

    On the other hand, IBM has counterclaims against SCO. Including Lanham Act claims. These have teeth. I hope to see SCO get their asses handed to them soon.

    Once this fiaSCO is over, I don't know what I'll do. I now read Groklaw as much as I once used to read Slashdot. I hope it is over soon.
  • by Ungrounded Lightning ( 62228 ) on Friday August 10, 2007 @06:32PM (#20189929) Journal
    It sounds like the courts said that Novell owns the Unix copyrights.
    If so, could (would?) Novell release the code so no one ever has to
    question whether Linux contains parts of Unix.

    If I understand this correctly:

    While Novell owns the copyrights they are still in that pesky exclusive contract for SCO to administer the licensing, for which SCO gets a big cut and for which SCO paid some big bux once upon a time. That contract is the bulk of SCO's remaining assets.

    If IBM finishes demolishing SCO and eats the corpse, they'll end up being the other party in that contract. THEN they can get together with Novell and open the source, PD the source, license it to all comers for $1, or whatever. Or just tear it up and free Novell to do whatever they want with the copyrights.
  • by Anonymous Coward on Friday August 10, 2007 @06:35PM (#20189959)
    One example, our company (an international US$14 billion company) issued an internal directive after the SCO situation forbdding the use of any FOSS, GPL or similar software without going through specially created red tape (to exec management and legal) which was tantaramount to a ban. That has not yet been lifted, although you might guess the reality is that the many IT groups have flaunted the ruling widely where we could, but it's not possible in situations where specific funding or contracts are required which would name 'offending' products.

    Even at my local level in a subsidiary company I can't offer a GPL product to my regional director - I just get the speech which starts with "Freeware isn't legal so we can't expose ourselves" and for a guy who I know to be totally out of touch with pretty much the last 15 years of technology, I know this stance is purely based on that post-SCO directive.

  • Utter destruction (Score:5, Informative)

    by Panoramix ( 31263 ) on Friday August 10, 2007 @06:36PM (#20189981) Homepage
    "To our utter destruction," remember that one? That was how far dear Ralphie Yarro was ready to go, to "take on" Linux. So nice to see his plan working out just right.
  • Conversion (Score:5, Informative)

    by DickBreath ( 207180 ) on Friday August 10, 2007 @06:38PM (#20189997) Homepage
    Conversion is a legal word for Stealing.

    Judge Kimball writes...

    The court further concludes that because a portion of SCO's 2003 Sun and Microsoft Agreements indisputably licenses SVRX products listed under Item VI of Schedule 1.1(a) to the APA, even if only indidental to a license for UnixWare, SCO is obligated under the APA to account for and pass through to Novell the appropriate portion relating to the license of SVRX products. Because SCO failed to do so, it breached its fiduciary duty to Novell under the APA and is liable for conversion.

    So, when Microsoft and Sun gave SCO millions of dollars for a "unix license" back in 2003, according to SCO's APA agreement with Novell, SCO was supposed to pass 100% of that money to Novell, who would then pass back 5% of it as SCO's administrative fee. SCO kept it all. Just as Microsoft and Sun intended. After all, that money was intended to finance SCO's litigation. SCO now owes Novell more than SCO is worth.

    Aside: Sun did not need a Unix license from SCO. It already had a license from AT&T. Microsoft surely did not need a Unix license from SCO back in 2003. For what? Oh, yeah, to help finance a baseless lawsuit against a potential competitor (IBM and Linux).

    I love the smell of SCO bankruptcy on a Monday morning.

    The judge used the word "conversion". Does this mean that it may become a criminal matter?

    Still reading the 102 page decision by Judge Kimball.
  • by Anonymous Coward on Friday August 10, 2007 @06:42PM (#20190037)

    The judge ruled that

          1. both the Microsoft and Sun licenses were covered by the APA (That's 16 million)

    No. His actual ruling left open how much money was involved. There's some liability there but not necessarily anything like 16 million:

    The court further concludes that because a portion of SCO's 2003 Sun and Microsoft Agreements indisputably licenses SVRX products listed under Item VI of Schedule 1.1(a) to the APA, even if only incidental to a license for UnixWare, SCO is obligated under the APA to account for and pass through to Novell the appropriate portion relating to the license of SVRX products. Because SCO failed to do so, it breached its fiduciary duty to Novell under the APA and is liable for conversion.

    The court, however, is precluded from granting a constructive trust with respect to the payments SCO received under the 2003 Sun and Microsoft Agreements because there is a question of fact as to the appropriate amount of SVRX Royalties SCO owes to Novell based on the portion of SVRX products contained in each agreement.
  • by Nick Barnes ( 11927 ) on Friday August 10, 2007 @06:43PM (#20190049)
    This was SCO v Novell, not SCO v IBM. The IBM case is going to be a doozy now, with SCO's side in tatters.
  • by KillerBees ( 36367 ) on Friday August 10, 2007 @07:06PM (#20190319)
    Why? Those dippy SCO folks said something to Apple early on about coming after them...then Apple reminded them that they used BSD code. That lawsuit was settled in the 80s.

    NIce try...
  • From TFA:

    "[T]he court concludes that Novell is the owner of the UNIX and UnixWare Copyrights."
  • Re:HA! (Score:4, Informative)

    by gerrysteele ( 927030 ) on Friday August 10, 2007 @07:18PM (#20190437)
    You can invest in derivatives and futures to cover losses on anything. For instance, many companies whos profits might be affected by bad weather take out weather derivatives so that if their profits are hit by weather, they claw back some of the losses through the weather derivatives. Used to be a big favourite of Enron.

    Perhaps DMB has money on SCO stocks delisting and dying. Who the hell knows what was going through their brains.
  • Re:HA! (Score:5, Informative)

    by nuzak ( 959558 ) on Friday August 10, 2007 @07:19PM (#20190469) Journal
    It's called short selling, but it's incredibly hard to find ANY shares of SCOX stock to trade (their daily volume in dollars is about what a busy drugstore pulls in), and downright impossible to find anyone lending shares for shorts.

    However, the short sellers certainly got in on SCO when they could -- it has the highest short ratio of any stock on the exchange.

    Wikipedia does a pretty good job of explaining shorts: []

  • Re:HA! (Score:3, Informative)

    by pthisis ( 27352 ) on Friday August 10, 2007 @07:26PM (#20190531) Homepage Journal
    It's called selling short. You borrow shares from a broker, sell them, and then later on the broker can come back at any time and you have to buy shares at the current price and return them to him.

    So if you borrow 100 shares at $20 and sell them, you have $2000 in pocket. If the shares decline to $5, you can cover the short (buy 100 shares for $500 and return to the broker) and make $1500.

    Unlike long positions, though, there's unlimited downside. If you hold $2000 in stock normally, the worst case is the company vanishes and you're out $2000. If you short Google at $10 a share for 200 shares when they IPO ($2000), and then they spike to $200 and your broker calls in the cover, you have to come up with $40000. You lose $38000 on what was originally $2000 worth of stock.
  • Re:HA! (Score:4, Informative)

    by feepness ( 543479 ) on Friday August 10, 2007 @07:46PM (#20190709) Homepage

    Unlike long positions, though, there's unlimited downside.
    You can however, hedge your position with a far out of the money call. So you short at $20, but purchase a "call" (the "right to buy") at $30. This would be cheap if the stock was at $30, but limits your downside to the stock going to $30.

    You can also buy a "put" (the "right to sell") at a specific price (say $20). They are more volatile though.
  • by conlaw ( 983784 ) on Friday August 10, 2007 @07:47PM (#20190711)
    But the SCO v. IBM case has also been decided here. From the court's conclusion:

    Therefore, Novell is entitled to a declaration of rights under its Fourth Claim for Relief that it was and is entitled, at its sole discretion, to direct SCO to waive its claims against IBM and Sequent, and SCO is obligated to recognize Novell's waiver of SCO's claims against IBM and Sequent.
  • by SplatMan_DK ( 1035528 ) on Friday August 10, 2007 @08:12PM (#20190965) Homepage Journal
    Could somebody please update the Wiki article? English is not my first language, so I don't think I should touch it ;-) [] :-)

    - Jesper
  • Re:Conversion (Score:1, Informative)

    by juniorkindergarten ( 662101 ) on Friday August 10, 2007 @08:18PM (#20191013)
    Actually legally speaking conversion means the exchange of one type of security or currency for another. What that means is that they must transfer assets equaling the money owed to Novell, be it cash, investments, or other property like real estate or intellectual property.
  • Tort of conversion (Score:3, Informative)

    by Anonymous Coward on Friday August 10, 2007 @08:40PM (#20191151)
    No, this [] is the kind of conversion the judge was talking about.

    It's basically the tort equivalent of "theft" in criminal law (but it has a slightly broader definition than theft -- conversion is an offense against someone's right of possession, not necessarily ownership).

  • Re:More (Score:3, Informative)

    by sconeu ( 64226 ) on Friday August 10, 2007 @09:22PM (#20191361) Homepage Journal
    RTFA. Judge Kimball specifically notified SCO and IBM (though I suppose SCO was just a formality), and told them to let him know how this would affect their case.
  • by Dhalka226 ( 559740 ) on Friday August 10, 2007 @09:35PM (#20191465)

    There's a reason the legal system was supposed to guarantee a quick and speedy trial.

    Blarg, you're the second person I've seen say that so far in this discussion.

    You are guaranteed the ability to get your trial in a speedy manner. There is no guarantee that the trial itself will be speedy.

  • Re:Easy one! (Score:3, Informative)

    by illumin8 ( 148082 ) on Friday August 10, 2007 @09:54PM (#20191591) Journal

    Easy: How many years has this taken? What ever happened to our Constitutional guarantee of a speedy trial?
    This got +5 insightful? Your constitutional right to a speedy trial is only guaranteed in criminal cases. This was clearly a civil case, and the constitution provides no guarantees of a speedy trial.
  • by MikePlacid ( 512819 ) on Friday August 10, 2007 @10:04PM (#20191663)
    Judge sums it up as follows:

    On January 4, 2003, McBride received an email from Michael Anderer, a consultant for SCO retained to examine its intellectual property. Supp. Brakebill Decl. Ex. 12. Anderer stated that the APA "transferred substantially less" of Novell's intellectual property than Novell owned. Anderer noted that Santa Cruz's "asset purchase" from Novell "excludes all patents, copyrights, and just about everything else." Id. Anderer cautioned that "[w]e really need to be clear on what we can license. It may be a lot less than we think."

    On February 4, 2003, McBride contacted Christopher Stone, Vice Chairman of Novell, and stated that he wanted Novell to "amend" the APA to give SCO "the copyrights to UNIX." Supp. Brakebill Decl. Ex. 17; id. Ex. 18 ("Stone Dep." at 108-09). Then, on February 25, 2003, McBride twice called a Novell employee in business development, David Wright, and said, "SCO needs the copyrights." Wright passed on McBride's request to Novell's in-house legal department. Supp. Brakebill Decl. Ex. 13. McBride's request was memorialized in an email written that day by a Novell in-house attorney, Greg Jones. Id.

    Also early in 2003, McBride and Chris Sontag of SCO contacted Greg Jones regarding the UNIX copyrights. Id. Ex. 8 ("Decl. Greg Jones") at 13, 14; Decl. Christopher S. Sontag 6. McBride stated that "the asset purchase agreement excluded copyrights from being transferred" and that it was a "clerical error." Jones Dep. at 182. On February 20, 2003, Chris Sontag also sent a draft letter to Novell that sought to clarify the parties' rights under the APA. Decl. Christopher S. Sontag Ex.

    Again in March 2003, McBride called Stone to ask him if Novell would "give him some changes so he could have the copyrights." Christopher Stone Dep. at 248-49. Ralph Yarro, Chairman of SCO, requested an in-person meeting with Stone. In that meeting, on May 14, 2003, Yarro told Stone that he wanted Novell to amend the APA to give SCO the copyrights. Supp. Brakebill Decl. Ex. 17 at 4; Stone Dep. at 137-8. Stone refused. Id. On May 19, 2003, McBride called Stone and Joe LaSala, Novell's General Counsel, and again requested that Novell convey the copyrights to SCO. McBride said, "we only need you to amend the contract so that we can have the copyrights." Stone Dep. 249-250. Stone made notes in June 2003 memorializing both conversations. Supp. Brakebill Decl. Ex. 17. E. SCOsource Initiative

    In approximately this same time frame, in January 2003, SCO launched its SCOsource initiative, which was an effort to obtain license fees from Linux users based on claims to Unix System V intellectual property. McBride commented that "SCO owns much of the core UNIX intellectual property, and has full rights to license this technology and enforce the associated patents and copyrights."

  • Re:HA! (Score:4, Informative)

    by terrymr ( 316118 ) <terrymr&gmail,com> on Friday August 10, 2007 @11:13PM (#20192155)
    Thats part of what options are ... but not all of it.

    Options contracts are traded daily on most stocks that are currently listed. The most commonly traded types are Call Options which grant you the right to buy a stock at a given price any time prior to the expiration of the contract this is what you described above. The opposite bet is the Put Option which grants you the right to sell a stock at a given price prior to the expiration of the contract. Put's are what you buy if you think a stock's price is going to fall.

    Put Options are generally less risky than short sales because your maximum loss is limited to the purchase price of the contract. Short sales theoretically expose you to infinite risk as the stock price may keep going up.

    I'm not sure that options in a non-existant stock exist as you describe - the contract normally must involve an underlying security of some type - Even if its frozen concentrated orange juice.

  • Re:HA! (Score:2, Informative)

    by urbanski ( 63635 ) on Friday August 10, 2007 @11:28PM (#20192241)
    No, you can surely use stock options to profit from a stock declining in value - it's called buying a "PUT". Do some research. However, only if the stock has listed options and SCOX does not so the only way one could profit on SCOX is indeed selling short.
  • What do I expect? (Score:3, Informative)

    by codegen ( 103601 ) on Saturday August 11, 2007 @12:40AM (#20192675) Journal
    I would expect that SCO would have to put up some real evidence before
    being allowed to drag out discovery over 4 years. In the US it appears
    you can say "we really believe something to be true, let us do discovery
    to find (i.e. fish for) the evidence" without providing any concrete evidence
    to support the belief. In most other countries you actually have to provide
    some actual evidence of your allegations before the court will grant you discovery.

    In this case, SCO should have had to provide something to substantiate their
    claims long before this.
  • Re:Goodness (Score:2, Informative)

    by Moflamby-2042 ( 919990 ) on Saturday August 11, 2007 @02:21AM (#20193145)
    ... Meanwhile, I don't think Linux is as viable as a movement as it was at the beginning of this case. This for all I know has nothing to do with the SCO case itself, but it seems like five years ago people still thought Linux on the desktop had a future, now I don't hear anyone talking about that anymore.

    There have been been tremendous advances for Linux and the things mentioned in your message there don't seem to jibe with all of the news that I've been keeping track of over the last 5 years. The beginnings of major party support for the desktop, many more developers have been working for Linux targets, and by some reports Microsoft has lost quite a few. Desktop progress seems significant. Major new things are measured in days now. You've got Beryl, virtualization, better driver support, and that whole Ubuntu thing that's being installed by new people daily, Microsoft is paying out many hundreds of millions to try to control open source software and Linux. Many industry giants are embracing it. There's been phenomenal progress in many of the packages. There's simply no doubt to me that it's moving at an incredible rate, but you seem to claim the opposite. That it's stagnant and the zeal and purpose is gone... My question is why? What have you seen to conclude this? I'd probably agree if all I read were Microsoft press releases, but seriously...
  • Re:Hurrah! (Score:4, Informative)

    by Knuckles ( 8964 ) <> on Saturday August 11, 2007 @04:28AM (#20193637)
    There was good in Sauron?

    Read the Silmarillion.
  • by Anonymous Coward on Saturday August 11, 2007 @07:13AM (#20194231)
    No, they actually really, really knew there was no such code, period. inux+code/2100-7344_3-5789132.html []

    "The e-mail, which was sent to SCO Group CEO Darl McBride by a senior vice president at the company, forwards on an e-mail from a SCO engineer. In the Aug. 13, 2002, e-mail, engineer Michael Davidson said "At the end, we had found absolutely nothing ie (sic) no evidence of any copyright infringement whatsoever.""
  • by herodiade42 ( 974875 ) on Saturday August 11, 2007 @08:17AM (#20194487)
    So, do you really think that the FUD campaign to bring legal uncertainty upon Linux is now over ? Think about it twice.

    Microsoft (which has good lawyers, and was probably able to predict this SCO judgment) just alleged the "235 Microsoft owned patents' Linux infringement" just some month ago ! Coincidence ? Anyway we're still in the same situation as before (but without the SCO "proxy"): Linux (and it's users) are still tainted by muddled intellectual property claims, and is therefore victim of (bogus, but still) legal uncertainty.

    Coincidence ? Novell was the one large linux actor to buy Microsoft "virtual 235 infringed patents" licenses: now no one but Novell can claim IP virginity (having Unix property and MS "alleged patents" licenses) without FUD threat when using Linux, and can now, thanks to this judgment and they licenses with Microsoft, racket Linux users. No wonder why they're pushing so hard for MS technologies (Mono/C#, exchange-compatible server, ...) on the Linux desktop.
  • Re:Hurrah! (Score:4, Informative)

    by JesseMcDonald ( 536341 ) on Saturday August 11, 2007 @08:45PM (#20199157) Homepage

    There was good in Sauron?

    Read the Silmarillion.

    For that matter just read The Lord of the Rings itself. At the council in Rivendell Elrond states: "And that is another reason why the Ring should be destroyed: as long as it is in the world if will be a danger even to the Wise. For nothing is evil in the beginning. Even Sauron was not so." (FotR 2nd ed. pg. 281.)

Fear is the greatest salesman. -- Robert Klein