SCO... Not Dead Yet... Appeals Court Reverses Novell Ruling; Trial Likely

from the not-dead-yet dept

And you thought the insane nightmare was over. Two years ago it seemed like the long national nightmare that was SCO's claims of copyright infringement in Linux were over. A judge ruled that SCO did not actually own the copyrights it claimed it did, and that they still belonged to Novell. While SCO received a slap on the wrist ($2.5 million) for this, it basically wiped out the key part of SCO's lawsuit against IBM, and led SCO to file for bankruptcy. Some investors supposedly pumped some money into SCO to keep it breathing, but later details on that made the whole deal seem very, very sketchy. However, now SCO might have a very slight chance to turn things around.

A judge has overturned part of the lower court's original ruling on who owns the copyrights to Unix, and ordered a full jury trial take place to determine who actually owns the copyright. Oddly, the court did not overturn the part where SCO has to pay Novell $2.5 million -- which could push the company over the final edge. If, however, SCO can stay alive, and it does go to trial, the company could (and likely will) still lose that trial (and, we're still twiddling our thumbs and waiting for any evidence from SCO that IBM actually infringed on the UNIX copyrights... but that's another story and another lawsuit). SCO's Darl McBride (how he's still running the show is beyond me) is claiming this is a validation for SCO, but that's not even close to true. All the court is saying is that there wasn't enough for the summary judgment on the copyright ownership, and the issue should be taken up in a full jury trial. That's not a "validation" of SCO's position -- it's a small, and likely temporary, lifeline.

8 Comments | Leave a Comment..

When Microsoft Sends Its Legal Dept. To Give Quotes On Product Launches, Something Is Wrong

from the that's-not-development-any-more dept

We've noted the very clear shift in patent strategies at Microsoft over the years -- from a company that hated patents to one that now views them as central to its mission, and often uses them to threaten competitors. However, you want to know when things have really gone too far? It's when the company is sending out the legal department to provide press quotes on a "product launch" that is tied to a technology licensing deal. As Matt Asay points out in the link here, in a story about Novell launching Linux on a Windows virtualization offering, there are two quotes from Microsoft employees -- and both appear to come from the legal department rather than a product role. What used to be an innovative company working on new stuff is apparently turning into a legal firm trying to put tollbooths on innovation. It's sad.

10 Comments | Leave a Comment..

SCO Gets Wrist Slapped Over Novell Unix Copyrights

from the this-ain't-over-yet dept

More than five years after SCO went on its quixotic quest to try to sue Linux out of existence, it's finally had to pay at least some of the price. As you probably know, soon after SCO sued IBM, Novell pointed out that it was pretty sure SCO was wrong in claiming to hold copyrights over Unix code. In fact, Novell was pretty sure that it still owned those copyrights. SCO then took Novell to court over the issue -- making that the main arena for SCO's claims. It took plenty of time, but the judge ruled that, indeed, Novell owned the copyrights, basically derailing SCO's entire basis for its lawsuits. At first it appeared as if SCO was just going to give up. It declared bankruptcy and many hoped it would just go away. Unfortunately, it received a lifeline in the form of a $100 million line of credit, allowing it to keep on suing.

As for the Novell case, a judge has finally come down with the final ruling on a fine, and it's basically a slap on the wrist to SCO. Rather than buying Novell's argument that 95% of SCO's licensing revenue actually belongs to Novell, the judge took a much more limited approach saying SCO only owes $2.5 million. It's not peanuts, but it's a lot less than many had hoped. It certainly will allow SCO to keep going (and potentially appeal this ruling) which is why many are labeling this as a mixed bag sort of ruling. Still, as has been pointed out, SCO is the one that kicked this off, suing IBM and then Novell... and the end result is that SCO is paying out $2.5 million. That's probably not what the company's execs expected when they started down this path.

6 Comments | Leave a Comment..

Details Needed On Novell's Allegedly Soaring Linux Sales

from the fuzzy-math dept

Slashdot is linking to a story supposedly showing that Novell's Linux business has seen amazing growth in the nine months since they signed a controversial patent deal with Microsoft. "The affect on sales year over year, for Novell's first three quarters of our fiscal year, which ends Oct. 31 -- our Linux business was up 243 percent year over year," said Novell exec Justin Steinman. But so far, at least, this growth doesn't appear to be reflected in Novell's financial results. If my math is right, Novell's revenue for "Linux platform products" totaled $32 million in the first three quarters of 2006, while the total for the first three quarters of 2007 is $53 million. That's a healthy 65 percent growth rate, but it's a long ways from 243 percent. (Novell's Open Enterprise Server is also based on a Linux kernel, but revenues from that product line have been flat at about $45 million a quarter, which would make Novell's overall Linux growth rate even smaller). What accounts for the growth we are seeing? Steinman says that customers are beating a path to his door because people want to "pick the Linux that works with Windows." But a more likely explanation is that customers are just redeeming the tens of millions of dollars in vouchers that Novell sold to Microsoft as part of last year's patent deal. Novell says it has gotten $100 million in business through its Microsoft partnership. That's more than twice as much revenue as Novell received from "Linux platform products" for all of 2006, suggesting that almost all the growth we've seen so far is probably a result of customers redeeming those vouchers—and it's not clear whether Microsoft is selling the vouchers at full price or at a steep discount. Maybe we'll finally see spectacular financial growth when Novell releases its its fourth quarter results later this year, but it would have been helpful if Novell or PC World had been clearer about how they're measuring that 243 percent sales increase.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

4 Comments | Leave a Comment..

SCO Files For Bankruptcy Protection

from the we-will-prevail,-huh? dept

From the beginning of SCO's rather odd strategy of claiming ownership of the intellectual property found in Linux, the company has (often pompously) declared that in the end it will be vindicated and that there was no way anyone could conclude that it wasn't the rightful owner. What was amazing was how the company continued to state the same thing in the face of increasing evidence that the claims could not be supported. Then, last month, a judge ruled that SCO didn't even own some of the copyrights it claimed to. Instead, those were possessed by Novell. Monday the two firms were supposed to be in court to figure out how much SCO now owed Novell, but that's going to take a back seat to the news that SCO has filed for Chapter 11 bankruptcy. The announcement uses the typical "hoping to reorganize" type language, but it seems pretty clear the company (which was already looking somewhat shaky in terms of its financials) would rather not have to pay Novell... or deal with the fact that it may owe quite a bit in the other lawsuits its involved in, which are likely to fall apart without these particular copyrights. It's a nice strategy, really. Claim ownership and sue lots of big companies. Hype up how sure you are that you're going to win. Watch your stock price rise... so you can sell shares and make some money. Then, as the whole house of cards collapses, just declare bankruptcy.

12 Comments | Leave a Comment..

Judge Rules That Novell, Not SCO, Owns Unix Copyrights

from the whoops dept

For years, ever since SCO first sued IBM for infringement found in Linux, SCO has had trouble proving any of its claims. SCO was still quite cocky about the idea that once the case (and the various associated cases) got to court, it would show that SCO had a smoking gun all along. However, even judges involved in the case are skeptical and point out the lack of evidence to support SCO's position. One offshoot case, you may recall, was that soon after the original SCO-IBM case was filed, Novell came out and announced that it still owned the copyrights on Unix, and SCO was incorrect in claiming the rights had been transferred. In fact, Novell pointed out that behind the scenes SCO had been quietly begging Novell to transfer the copyright to them. However, SCO continued its brash legal fight against reality and sued Novell. Late Friday the ruling came down, and once again, SCO was on the losing side. The judge found that Novell still owns the copyrights to Unix, meaning that the meat of SCO's case against IBM may have just disappeared. In retrospect, it's fairly amazing the lengths that SCO and its supporters have gone in trying to tar everyone who questioned their position. Don't expect an apology, though.

11 Comments | Leave a Comment..