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Thursday, June 26, 2003
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Shop 'Til You Drop
If you would like to follow all the buying and selling of SCO stock by SCO execs, mostly selling, go here. I did, and here is what has happened in June:
Senior VP Reginald C. Broughton sold 5,000 shares at $11.08 per share, proceeds of $55,400 on June 20
Darl McBride bought 7003 shares at price 0.001 on June 13.
VP, Finance Michael P. Olson sold on 6/11/03 6,000 shares at around $8.60 a share
Jeff F. Hunsaker, VP, Int'l Marketing, sold on 6//6/03 5,000 shares at 8.9
Bawa Opinder, VP Global Services, sold on 6/3/03 all his stock, 15,000 shares, at 6. On 6/4 Opinder bought 15,000 shares at 1.2 and sold 15,000 shares at 6.6
On 6/9 CFO Robert K. Bench bought 4,000 shares at 9.16 and sold 200 at 9.19, 500 at 9.201, 400 at 9.2, and 1900 at 9.3.
I am showing all this info, because according to some Slashdotters, Yahoo and MSN aren't showing the complete list, even though they used to. I went to the sites to see for myself, and sure enough, it's true that not all the information is there. Whether it used to be there I was unable to verify. Compare and contrast the above info with Yahoo!, which shows only one trade and MSN's MoneyCentral, which is also incomplete.
5:34:02 PM 
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Attorney: SCO's Case Dubious; Proprietary Software the Villain Here
Anupam Chander, Professor of Law at the University of California, Davis, School of Law, a graduate of Yale Law School and Harvard College, who specializes in cyberlaw and international law, has a strong defense of open source software on FindLaw, cited on Slashdot, in which he confirms what I've been saying here. But because he is an attorney, he can speak with greater force. He says while SCO and MS allege that it's dangerous to use open source software because you never know where the code comes from, it's actually closed, proprietary software that is dangerous, because you never know who will decide to sue you:
"Proprietary interests, especially in intellectual property, tend to breed confidentiality - as anyone who ever signed a nondisclosure agreement with a fledgling dotcom with a "brilliant business idea" well knows. And confidentiality, in turn, breeds conspiracy theories, and allegations of theft - or unfair competition, or breach of contract, or the like. In contrast, if there is something amiss in open code, it will be more difficult to hide."
He also addresses the issue of SCO claiming derivative code rights:
"The final policy argument in favor of open source software is, of course, societal. At some point, information that is widely studied in universities, reprinted in college textbooks, and advanced through academic scholarship must be considered public domain.
"For this reason, SCO's claims that its intellectual property rights extend to basic computing features of large operating systems cannot be allowed to stand. Otherwise, there will be no such thing as truly open, free software - and as a consequence, there will effectively be an economy-dragging tax on information technology."
In short, society has an interest in seeing SCO lose. As Jon "Maddog" Hall said in a speech in England, open source software is an international treasure that mustn't be allowed to be destroyed by greedy individuals, and he compared SCO to looters stealing Iraq's cultural treasures for a quick buck.
11:29:01 AM
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Discovery Rules
A reader asks whether discovery, such as McBride says he will be seeking, would be allowed. While that is entirely up to the judge, and the skill of IBM lawyers in responding to discovery requests, you can read up on how discovery works, both on a federal level and under Utah code. At least then you'll understand what discovery is and how it is supposed to work. You don't necessarily get everything you ask for. You ask, the other side then says no to what it feels isn't discoverable under the pertinent rules, and then a judge decides. You are not supposed to use discovery to try to flesh out your case. You are supposed to know pretty much what you are asking to see. So-called "fishing expeditions", where you ask to see "everything" that might be related in any way to the case will generally be denied as overbroad.
Discovery has a fundamental purpose, and that is to compel both sides to present their evidence prior to trial. Real trials are not like Perry Mason, where big surprises occur as someone is testifying or a surprise witness is suddenly called. Both sides, at least in most cases, know pretty much what to expect before the trial opens. The reason this is a good thing is that is saves a lot of time. If a case is just a nuisance case, you surely want to know early on, so you can do something about it. And it's only fair to let each side prepare its best shot. That's the theory anyway. Sometimes when you hear that a lawsuit has been filed and then you hear it has settled prior to the trial beginning, it's because something was "discovered" that made it clear who would ultimately be the victor, and the likely loser decides it's cheaper to just try to negotiate a settlement.
Now, because each side wants to know everything about the other side's case and wishes to reveal as little as possible about its own, there are rules about what you must reveal and what you don't have to reveal, so the same arguments don't have to happen over and over in each case.
The Federal Rule of Civil Procedure 26(a)(1)(B) requires a party to provide to other parties "a copy of, or a description by category and location of, all documents, data compilations, and tangible things that are in the possession, custody, or control of the party and the disclosing party may use to support its claims or defenses . . . [base "] (See this case.)
Notice it is talking about parties, not outsiders not party to the action. Even without a discovery request, you are supposed to do this.
But both sides will also serve a discovery request on the other, basically listing everything they want to see that they feel they are entitled to:
Rule 34(a) of F.R.C.P. states: (a) Scope. Any party may serve on any other party a request (1) to produce . . . to inspect and copy, any designated documents . .. . and other data compilations from which information can be obtained . . . or to inspect and copy, test, or sample any tangible things which constitute or contain matters within the scope of Rule 26(b). . .; or (2) to permit entry upon designated land or other property . . . inspection . . . testing, or sampling the property or any designated object or operation thereon, within the scope of Rule 26(b).
The party served then gets to claim that the request is overbroad, too expensive to comply with, not relevant, duplicative, etc. Or it just ignores the request and forces the other side to ask a judge to compel the discovery. Ultimately the judge decides.
Under Rule 26(b)(2) of the Federal Rules of Civil Procedure, the court can limit discovery if the discovery is "unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; or . . the burden or expense of the proposed discovery outweighs its likely benefit".
You can read the federal digital discovery rules here. And for a federal overview, you can read this page.
Now, if this case is heard in Utah, and IBM is asking that it be moved out of Utah, then Utah law comes into the picture too. Here's a snip from a Utah case that explains Utah's law:
Rule 26(b)(1) of the Utah Rules of Civil Procedure provides in relevant part:
Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party[.] Utah R. Civ. P. 26(b)(1). Rule 401 of the Utah Rules of Evidence defines "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Utah R. Evid. 401.
Rule 401 of Utah's Rules of Evidence could come into play also. It defines, for example, what is irrelevant. If it's found irrelevant to the lawsuit, it is not discoverable:
"Utah R. Civ. P. 26(b)(1). Rule 401 of the Utah Rules of Evidence defines "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Utah R. Evid. 401. "
In Utah, your case can be dismissed if you don't provide discovery validly requested by the other side under Rule 37(d). Here's a snip from another Utah case, where the judge explains it:
" . . .we first acknowledge that '[t]rial courts have broad discretion in managing the cases assigned to their courts.' Berrett v. Denver & Rio Grande W. R.R. Co. , 830 P.2d 291, 293 (Utah Ct. App. 1992); see also Bennion v. Utah State Bd. of Oil, Gas & Mining , 675 P.2d 1135, 1144 (Utah 1983) ('Time, place, and manner requirements relating to discovery are committed to the discretion of the tribunal.'). See generally Utah R. Civ. P. 16. Further, under Rule 37 of the Utah Rules of Civil Procedure , the trial court also has broad discretion in selecting and imposing sanctions for discovery violations, including dismissing the noncomplying party's action. See Utah R. Civ. P. 37(b)(2)(C); Morton v. Continental Baking Co. , 314 Utah Adv. Rep. 33, 35 (Utah 1997) (according trial court broad discretion because trial court deals firsthand with parties and discovery process); Utah Dep't of Transp. v. Osguthorpe , 892 P.2d 4, 6 (Utah 1995) (same)."
But the judge can also issue a protective order, forbidding certain discovery from taking place:
"The relevant section of Rule 26--(c)(4). . . gives the court discretion to issue, in the interests of justice, a protective order "that certain matters not be inquired into, or that the scope of the discovery be limited to certain matters."
If a Utah party wishes to depose someone who is out of state, Utah has a method to follow to do that, as explained in this Utah Bar Journal article.
This doesn't directlly answer the question asked, because I don't know the answer. McBride says he has a contractual right to inspect IBM's customers using AIX as to their use of code on their property. I wonder though, because he has publicly terminated that contract and they aren't parties to the lawsuit. I don't know what the judge will say about it, but I feel sure that it will become an issue in contention. The point is that discovery works both ways. IBM gets to ask to discover what it wants to see too.
3:03:22 AM
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