SCO’s legal strategy

SCO had a great opportunity to partner with Linux and ride the opensource wave the way RedHat did. If they had done that, perhaps IBM or someone else would have bought them and shareholders would have benefited. Instead they focused on promoting a closed proprietary plaform (Unixware) and law suits to create value — never the right approach to creating shareholder value.

Thanks for the explanation. Caused me to read your earlier writings. I have a couple of questions that maybe someone can answer. In their Press Release in May (I think) of 2003 Novell indicated that Amendment 2 appeared to transfer some copyrights to SCO and they also said it raised several questions. Much later Novell claims that amendment 2 simply and clearly confirms a license to SCO even though no license is mentioned in the document or any other papers including the lengthy APA. The judge agreed with them. Why would the judge think that is clear in favor of Novell? Is it? How can Novell now deny their own press release?

The judge says that in the excluded assets “all” can only mean all, but in the included assets “all” as is “all rights of ownership of UNIX and Unixware” means something not even close to all. Can you reconcile that?

Why does the judge not mention the procedure and rules for a summary judgement? That the court is supposed to look at the evidence and facts in a way most favorable to SCO. Can any one identify any positive inferences that the court gave SCO as opposed to Novell–which seems to be backwards according to the rules?

Novell stated that they kept the copyrights to allow them to conduct buyouts of the old royalty stream, but a few months later when they got into a dispute with SCO over the IBM buyout–a dispute that apparently dragged on for months with much back and forth between all concerned, Novell according to the court filed papers NEVER asserted they held back the copyrights for this very reason? Does that make any sense?

I am still not understanding how judge kimball can rule so decisively on a case this complicated. I have read the agreement, and the addendum to the agreeement and have decided that ALL the lawyers involved in that agreement should be shot dead. That is the biggest load of legal crap I have ever seen. Novells legal team should be executed for dishonesty and SCOs legal team should be buried for stupidity. If kimballs ruling is the result of an accurate interpretation of the agreement then SCO was never really allowed to sell UNIX license. They were nothing more than a reseller. I simply can’t beleive that any company would pay $100M to be a reseller. And I can’t beleive that Novell would have enough balls to charge them $100M to be a reseller. I think kimball has got it wrong and I think SCO should fight to get this in front of a jury so they can find justice. SCO has the right of a jury trial, it not for kimball to decide that they do not. If they can’t get their true day in court then they should sue the lawyers responsible for the piece of tripe called an agreement. That was out and out dishonesty and I can’t believe that everyone is siding with those crooks at Novell. It seems to be that everyone is saying “Caveat Emptor” or let the buyer beware, SCO was stupid to believe Novell and deserved to get burned by this. I can’t believe that this is how our supposedly civilized society treats someone who got screwed over by Novell. They remind me of the shady used car salesman that screws over little old ladies and steals candy from babies. It’s despicable.

What’s to appeal? The contract reads pretty clearly as to what SCO’s obligations are. The judge was more than fair and gave SCO just enough rope to hang themselves.

It’s sad; SCO begged for so long to get their day in court, and then ran away like a screaming child at the prospect of being shut down due to their own foolishness. People in the real world know the history of UNIX and of SCO/Caldera. What Darl & Co have been trying to do is get their unsupported claims in front of a jury that could be easily snowed into believing they might have a case. It’s a very good thing they didn’t get that chance.

The only basis for showing that SCOG is a going concern is based on income from the two SVRx licenses to Sun and MS. They’ve never shown a profit otherwise. They did this with ‘converted’ funds Novell held equity over. Their only continuing business is their lawsuits against Novell, Redhat and IBM, and collecting license fees for Novell, they can’t possibly emerge from Bankruptcy.
Stiffing Novell doesn’t change SCOGs or its managements futures, it simply places more money in the pockets of lawyers.

So,

you seem to take an interest in roadkill. Might I suggest a trip to Texas There are a lot of animals that can be found on the side of our highways to pick up and report on as well. They are obviously as much movers and shakers in the industry as SCOX. Why does a dying company need so much useless coverage? Weren’t there any innovative companies to cover Roger?

It helps them by giving them the opportunity to appeal.

I fail to see how this “strategy” helps SCO in any way. At best, they can hurt Novell by denying them their rightful remittances, but if there is a large enough judgment, regardless of any constructive trust, they are finished. They will have to be liquidated through Chapter 7. Novell may get paid pennies on the dollar, but SCO is dead either way. They have only managed to stave off the inevitable by a few more weeks.

Ok, so I have a silly series of questions:
Why does this matter? Is this really an issue on the minds of businesses everywhere? Did Fortune need to waste the space to print this, and did Roger Parloff need to waste the time to write this? In the end, what the judge decides may interest people (If he falls for SCO’s story, how this money isn’t the money the took from Sun and MS, but other money) many businesses may use this as a strategy going forward. But to write about this theroy now, to detail the strategy, especially without even commenting on it (This isn’t a press release, Roger, it’s your editorial space). Whether you feel one way or the other about this isn’t offer to the readers. Their is no real “legal” analysis. You just state the obvious. Where is your commentary? To quote the “About this blog” section:
“This blog is about legal issues that matter to business people”. How does this article do that? Can you please explain that to me? (In a non-lawyer fashion, I’m just an IT director).

Thank you for summarizing the strategy selected by SCOX’s lawyers to protect their fees.

You neglected to summarize SCOX’s New Corporate Strategy . SCOX paid it General Counsel a $50,000 bonus and a $50,000 raise the day it filed for bankruptcy.

That delectable malfeasance torpedoes any skillful lawyering about SCOX being a responsible corporate body. They are a zombie.

Given the Sun and MS money were specifically called “UNIX license fees” by SCOX at the time, I’d think it’s a little hard for them to now claim they were for something else, especially as neither company markets SCOX’ product built on top of that UNIX base. That said, the recent judgment in Utah says that Novell is owed some to-be-determined part of those monies, up to the 95% specified in the contract. Any significant percentage would force SCOX into Ch. 7 liquidation vs. their attempt at Ch. 11 reorganization. This pending ruling is the only cause for their filing; their balance sheet is otherwise positive if steeply declining.

So, by SCO’s theory, it’s okay to take some money that belongs to someone else, then spend the hell out of it until it’s gone. It’s further okay to claim that since their remaining money can’t be traced to the source of the stolen, spent funds, Novell can’t take that in compensation.

What a crock of excrement. I’m certain that by that logic, I can rob a bank tomorrow, blow the money on drugs, alcohol, and hookers for all of my friends, and remain solvent and out of jail, right?

Yeah, that makes sense.

Granted that direct path to the funds from Sun and MS might be a bit disputable, however, would SCOX have been able to continue to exist without those funds. It clearly appears that if SCOX had not taken the money for those licenses, and claimed it as their own, we would not be having this discussion right now. SCOX would have ran out of money YEARS ago, and not been able to continue their litgious conduct, nor continue to operate. They would have ran out of money many years ago.