[vox] SCO suing IBM over their Linux activity

[Mike Simons]

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On Thu, May 29, 2003 at 05:13:32PM -0400, Rob Rogers wrote:
> On Thu, May 29, 2003 at 13:17:06PM -0700, Ricardo Anguiano wrote:
> >=20
> > SCO claims it's efforts to collect Unix licencing fees have made it
> > profitable for the first time ever.

=46rom reading through SCO filings today...

  June 2002, Random Love (founder of Caldera) was replaced by Darl
McBride as CEO and president. =20

  January 22 2003, Caldera created a group called 'SCOsource' designed=20
to collect licensing fees from the UNIX source code base.  The company
also created a 100,000 share option grant for some "consultant" at the
during that month.
  Sometime=20

  On February 21 seven of the board members purchased a large number of
shares for .1 cent a share (about 213,000 shares, about 2% of the
company, bought with only $213).

  March 6th, Caldera filed suit... their share price was around
$2 a share, the price jumped to about $4.  May 19th they started press=20
releases that Microsoft was licensing UNIX from them, and the price
jumped from $4.75 to $6.80.  It jumped up above $9 and then back down
to about $6.


  May 12th, Caldera sent out warning letters to 1500 of the largest
companies saying that their use of Linux may be violating Caldera's
IP... http://www.sco.com/scosource/letter_to_linux_customers.html
=3D=3D=3D
  SCO holds the rights to the UNIX operating system software originally
  licensed by AT&T to approximately 6,000 companies [...]

  Like you, we have an obligation to our shareholders to protect our
  intellectual property and other valuable rights. [...]

  We believe that Linux is, in material part, an unauthorized derivative
  of UNIX.[...]
 =20
  We have evidence that portions of UNIX System V software code have been
  copied into Linux and that additional other portions of UNIX System V
  software code have been modified and copied into Linux, seemingly for
  the purposes of obfuscating their original source.
 =20
  As a consequence of Linux?s unrestricted authoring process, it is not
  surprising that Linux distributors do not warrant the legal integrity of
  the Linux code provided to customers. Therefore legal liability that may
  arise from the Linux development process may also rest with the end
  user.
 =20
  We believe that Linux infringes on our UNIX intellectual property and
  other rights. We intend to aggressively protect and enforce these
  rights.
=3D=3D=3D

  May 20th, Caldera formally changed it name to SCO.


> > http://www.nytimes.com/2003/05/29/technology/29UNIX.html
> > >From NYTimes:
> >      There was good news yesterday for SCO, as well. The company
> >      reported a quarterly profit of $4.5 million on revenue of $21.4
> >      million. SCO said it collected $8.8 million in cash from its new
> >      division set up to enforce the company's rights to Unix.
>=20
> How much exactly was that payment Microsoft just made? (/me smells
> something fishy here)

  No article I've seen has the price mentioned... but there are only two
companies that have signed up, Microsoft and just one other company
which SCO refuses to name.  This would indicate to me that Microsoft
was probably the big money behind 8.2 million that quarter.

  Caldera had 600+ people and dropped half of them to now about 300.
I think that is where the "profit" is coming from.  The new CEO has
a major incentive to have profitable quarters... he gets 50,000 shares=20
for free if he turns a profit by Q4 2003, and 150,000 more shares
after 3 more quarters of profits.

  Here is an article with an interview of the CEO...=20

http://yahoo.businessweek.com/technology/content/may2003/tc20030523_2790_tc=
121.htm

=3D=3D=3D
  Q: What was it that pushed you to the point of filing suit?
  A: The tipping point for us was at Linux World this year, when an IBM
  executive stood up in front of a large crowd and essentially said,
  "We're moving our AIX expertise into Linux, and we're going to destroy
  the value of Unix."

  Those comments alone would have been a direct violation of our AIX
  contract with IBM, under which they license our Unix intellectual
  property. That's what caused us to start digging [to] find out what was
  going on. And the deeper we dug, the more we found. When we tried to
  resolve things with them, we reached an impasse. This lawsuit is the
  final extension of the negotiating process.=20
=3D=3D=3D


http://www.sco.com/scosource/

  Contains SCO's spin on the issue.


  I still don't understand what SCO is licensing, or thinks they own
that is present in Linux... most times they refer to shared libraries
and a few places they say code was cut and paste copied at the function=20
level... but it seems that they claim ownership to the API ... similar=20
to POSIX.
  If this is what they are thinking, then SCO leadership is on crack.

  This is a company who has 12 million shares valued at 2 to 8 dollars
a share, suing for at more than 1 billion dollars.  It is *crazy* to settle
a suit like this, it would seem like someone with a 100 million or
so could buy a controlling interest shut this non-sense down.
  ... also if you could imagine winning a suit like this, the money
won would be above $83 *per share*... no wonder the stock price swung
up after the suit was announced, people speculating on any winning
would drive the price up alot.

  I wonder if the large purchase of shares by the board back in Feb=20
could have illegal trading on insider information.

--=20
GPG key: http://simons-clan.com/~msimons/gpg/msimons.asc
Fingerprint: 524D A726 77CB 62C9 4D56  8109 E10C 249F B7FA ACBE

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