SCO Scoop.

When you want to know more
about the story
but don't know where to look.

IANAL. I am a paralegal, so if you have a legal problem
and want advice, this isn't the place. Hire an attorney
instead. Research is, however, what paras do, so here
I am sharing things I have found in my research.

Subscribe to "GROKLAW" in Radio UserLand.

Click to see the XML version of this web page.

Click here to send an email to the editor of this weblog. Dictionary

Monday, August 4, 2003

More, More, More
How Do You Like It?

First, here is SCO's press release in response. They just can't quit with the threats. Dear Darl's letter to Red Hat says the lawsuit surprised him and warns:

"Be advised that our response will likely include counterclaims for copyright infringement and conspiracy."

That's not much of a threat, since Red Hat has already asked the court to rule on the copyright issue. Remember the nasty guy at Forbes who wrote the article, "What SCO Wants SCO Gets?" It's the one SCO plastered up on its web site. Well, he's beside himself being scornful about Red Hat seeking a declaratory judgment. He sneeringly compares it to asking a judge to say you aren't a bank robber before you've been charged with a crime. But he's soooo off-base.

There are advantages to asking for a declaratory judgment, if you anticipate that you are going to get sued. If you file first, you have the advantage of picking the place where the case will be tried. Think: not Utah.

Red Hat's complaint makes frequent reference to the July 21 teleconference, so if you haven't heard it yet, it is
here, as an mp3. The link to it is on this page. It may still be available via SCO, but it gives me the creeps to visit their web site, so if you feel the same, now you have an alternative.

I have read the complaint. They tell the court all about SCO's stock leaping into the stratosphere and everything else you, or Groklaw, has thought of. They use Gartner Group pronouncements against SCO. I enjoyed that part. Speaking of analysts, even some of them now say SCO's license plan will fail. Here's what the Butler folks said today:

"SCO ... appears to have forgotten about the real power of Linux: the 'community' of developers, both employed and otherwise, who are passionate about the GNU Public Licence software, said the analyst group.

"Even if SCO's claims are proven to be true that the 2.4 kernel and later does contain Unix code, the kernel will be rewritten.

"If the people that are in the community can produce a security patch for Linux six to 10 times faster than an equivalent from Microsoft for Windows, then a new kernel will not be long in coming and SCO can wave goodbye to its expected royalties."

Amen, brother. Maybe triple damages instead of royalties. Am I dreaming? Or did I die and go to heaven? heh heh. I know, I know.

comment [] 9:04:22 PM    

More on Red Hat Lawsuit

I checked Pacer for DE, and the complaint isn't up yet. I'll keep checking. Meanwhile, more details here:

"We just want to make sure we protect the franchise ... and get the facts so we can fix anything if there is anything to fix [in the Linux code]."

And more here:

"'We're seeking a resolution ... to all the rhetoric as fast as possible,' said Matthew Szulik, Red Hat's chief executive officer."

Their other claims are these:

"'We also brought a claim under the Lanham Act for false advertising and unfair competition under federal law that the statements that SCO was making are deceptive and untrue,' he said.

"Sims said Red Hat also filed a complaint under the state of Delaware's deceptive trade practices act.

"'We also filed three other claims [under state law], one for unfair competition, one for trade libel, meaning they disparaged our trademark by making these untrue and unfair statements, and one saying they intentionally and wrongfully interfered with our business relationships," Sims said.

You can read the Deceptive Trade Practices Act here.Sims is Bryan Sims, Red Hat's VP of business affairs and general counsel.

You can read about trade libel here and here. The Lanham Act is here. Check the Legal Links page for more.

Here is the relevant part of the act, in case it's hard to reach:

"§ 2532. Deceptive trade practices.

"(a) A person engages in a deceptive trade practice when, in the course of a business, vocation, or occupation, that person:

"(1) Passes off goods or services as those of another;

"(2) Causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services;

"(3) Causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another;

"(4) Uses deceptive representations or designations of geographic origin in connection with goods or services;

"(5) Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have, or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;

"(6) Represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand;

"(7) Represents that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;

"(8) Disparages the goods, services, or business of another by false or misleading representation of fact;

"(9) Advertises goods or services with intent not to sell them as advertised;

"(10) Advertises goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity;

"(11) Makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of, price reductions; or

"(12) Engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.

"(b) In order to prevail in an action under this chapter, a complainant need not prove competition between the parties or actual confusion or misunderstanding.

"(c) This section does not affect unfair trade practices otherwise actionable at common law or under other statutes of this State. (6 Del. C. 1953, § 2532; 55 Del. Laws, c. 36; 70 Del. Laws, c. 186, § 1.)

"§ 2533. Remedies.

"(a) A person likely to be damaged by a deceptive trade practice of another may be granted an injunction against it under the principles of equity and on terms that the court considers reasonable. Proof of monetary damage, loss of profits, or intent to deceive, is not required. Relief granted for the copying of an article shall be limited to the prevention of confusion or misunderstanding as to source.

"(b) The court in exceptional cases may award reasonable attorneys' fees to the prevailing party. Costs or attorneys' fees may be assessed against a defendant only if the court finds that defendant has wilfully engaged in a deceptive trade practice.

"(c) The relief provided in this section is in addition to remedies otherwise available against the same conduct under the common law or other statutes of this State. If damages are awarded to the aggrieved party under the common law or other statutes of this State, such damages awarded shall be treble the amount of the actual damages proved.

"(d) The Attorney General shall have standing to seek, on behalf of the State, any remedy enumerated in this section for any violation of § 2532 of this title that is likely to harm any person, including but not limited to individual retail purchasers and consumers of goods, services or merchandise.

"(e) If a court of competent jurisdiction finds that any person has willfully violated this subchapter, upon petition to the court by the Attorney General in the original complaint or at any time following the court's finding of a willful violation, the person shall forfeit and pay to the State a civil penalty of not more than $10,000 for each violation. For purposes of this subchapter, a willful violation occurs when the person committing the violation knew or should have known that the conduct was of the nature prohibited by this subchapter. (6 Del. C. 1953, § 2533; 55 Del. Laws, c. 36; 57 Del. Laws, c. 499; 69 Del. Laws, c. 203, § 22; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 470, § 16.)

Emphasis added by me. Other parts may turn out to be relevant, but I marked only the parts that match what has been reported so far.

comment [] 5:31:25 PM    

Red Hat Sues SCO

Here's the press release. I'm on the phone trying to get more. Meanwhile, enjoy the glow.

OK, they filed in the U.S. District Court of Delaware. They are asking for a permanent injunction. They are asking that SCO be made to stop asserting that Red Hat's Linux violates SCO's IP. They are also asking for a declaratory judgment, which you can read about here.

They are also asking for damages, triple the financial damages caused to Red Hat "for harm caused by SCO's unfair competition and false advertising...unfair and deceptive (trade) well as for violations of common law, including trade libel, unfair competition and tortious interference with prospective economic advantage."

Red Hat is setting up a legal fund to help cover legal expenses associated with infringement claims against any company "developing software under the GPL and non-profit organizations supporting the efforts of companies developing software under a GPL license":

"The company also stated that it has set up a fund, the Open Source Now Fund, to defray any legal costs that may be incurred by the Linux community. It is pledging $1 million to the fund, which will help cover the legal costs of open-source developers performing work under the GPL (General Public License) and nonprofit institutions that become involved in the SCO actions."

They have put $1 million in the fund. If you want to get more information, email More details here and here

Note the url to get the pdf of the complaint is in MathFox's unbelievably fast comment, if you are a subscriber to LWN. I'm looking for a better link for the rest of us.

comment [] 4:21:51 PM    

A Criminal Lawyer's Take on SCO:
They Not Only May Lose, Sanctions Possible

I had a long email conversation with Webster Knight, a lawyer who does criminal law. Of course, I wanted to pick his brain on the SCO thing. He gave me permission to share with you his personal views on the SCO case. As always, when lawyers write for Groklaw, I preface it by saying that he isn't working on this case, and he hasn't researched it the way he would if he were, and this isn't legal advice, and not all the facts are yet known, and this was originally a personal email, written to me, not the public, but with that disclaimer, here are his personal opinions and thoughts on what he has seen so far:

"SCO has already given away what they now seek to protect. They are telling the court 'oops, excuse me, we did not mean to give up our control of that code. We did not realize Caldera gave it away. We also didn't realize that when we sold our Linux we were using the GPL on our own stuff. Since we didn't realize this, let us take it back. All of the people that benefitted from our errors or were accidently misled, must now pay.' [I guess they are subject to a counter claim for negligence. They should not be able to benefit by their own negligence.]

"Further by their actions they are saying: 'We want people to pay. We don't want them to correct our error by telling what is the violated code so they can stop using it. We will not give them an opportunity to mitigate damages any sooner than necessary.' In the old terms of equity court, they do not have 'clean hands.'. . .

"Your site alone has given him [Boies] some nearly impossible facts to choke down. Namely the SCO-GPL and the Caldera voluntary contributions. They may well lead to a quick summary judgment . . . .

"Indeed SCO and their attorneys may have to confront the possibility of Rule 11 sanctions, such as legal fees. Certainly due to your and IBM's digging, they have less than they started with. They may be paying to get out of the suit if it becomes glaringly apparent that it has no merit. Further discovery and more Hellwig-like disclosures might render all claims frivolous. . . .

"SCO is presumed to know what they did with their own code. They gave it to Linux; they gave it to IBM; they then distributed Linux themselves under the GPL. They are now saying they erred, and that they were negligent but that also IBM snuck it past them what they gave away. They are trying to regain their virginity. It is inconceivable that SCO can benefit from its own ignorance (of the GPL and their own contracts) and their own negligence. They are a corporation with perfect, superhuman memory. They can't say I was too busy and didn't understand. What their employees did, short of a crime, they did.

"[SCO to Court or Jury: 'Your honor, please make these people pay us. We didn't realize we had let the cat out of the bag! If we had asserted our rights, they wouldn't have used our stuff and violated anything. Because we were asleeep at the switch, they have used our stuff. Through our error we have tricked the world. Give us a windfall, deserved or not!]'

"If they knew all this when they started, then they may face some stiff civil liability. I guess it could rise to criminal intent. Certainly if it could be found that MS or some other force put them up to this, knowing the frivolity of abandoning their own GPL; the frivolity of denying their voluntary contribution of the code to Linux; and the frivolity of denying their contractual grant to IBM, then we may have a conspiracy. One of the above may be enough, particularly if there is a quick summary judgment."

When he says frivolity, he doesn't mean ha ha party time. He means it as in frivolous lawsuit. That's what you can get fined for, if you bring a meritless lawsuit. Here is a Utah case (a different circuit, but the idea is the same) where a judge ordered sanctions against the party bringing the lawsuit. It's near the end. Meritless claims are an abuse of the process, and both the party and the lawyer can be sanctioned. So, let's keep digging, until we win. He's saying we're making a difference. I was sure you'd want to know this, outside of Utah, that is.

It's DiDiotic Time

Here's my all-time favorite quotation from our favorite "analyst":

"'Linux says it is free and it is open, but it has not stepped up to the plate and said how much it costs,' says Laura DiDio, an analyst with The Yankee Group.

"She says her research shows that one-tenth of one percent in difference on reliability from one operating system platform to another can result in an additional 63 hours of downtime and generate US$700,000 to $3.5 million in additional support and administration costs depending on the size of an organization."

Heh heh. She's a riot, Ms. DiDio. How much it costs? Downtime? If MS now plans to argue that we should use their products instead of GNU/Linux to avoid downtime costs, the end of the world must be nigh, for sure. At least lightning from heaven ought to strike them. Of course, standing so close to MS as she does, the lovely and tireless Ms. DiDio might be struck, too... hmm, we can't have that. She's so funny, I'd actually miss her.

Downtime costs, of all things to choose to research -- the single least likely to convince of all the topics in the universe in any discussion about the comparative merits of Windows and GNU/Linux. Are analysts not allowed to try GNU/Linux, I wonder? They're allowed to read freely, though, aren't they, to find out what's going on and all? Maybe she didn't get to read about the two Windows security flaws just this week, speaking of down time. She actually gets paid for this research. And I'm doing all of mine for free. Hmmm. There does seem to be an imbalance in the universe.

Gartner is my second favorite, and here's their latest, which certainly deserves an Honorable Mention in funny:

"LINUX penetration within Australian enterprises may reach 90 per cent within three years, but it will remain a niche technology, with only 10 to 15 per cent of IT infrastructure running on the open source software, according to Gartner.

"According to a survey of 121 large Australian companies, about 52 per cent of businesses now use Linux in their server environment - up from 39 per cent last year. Australian companies follow Taiwan in being the Asia Pacific region's highest adopters of the technology."

Now, when I read that, after I wipe away the tears of laughter so I can see, I read that Linux is growing in Australia, compared with last year. The headline? "Linux to Remain Niche: Gartner". It's to laugh. I've written headlines in my time, and I'd never have come up with that one from that story.

Meanwhile, an IBM spokesman compares open source to a tidal wave and says they have customers flocking to them:

"'The tsunami of open source, it's definitely coming now,' he said. 'It's no longer a glimmer in someone's eye as it was 10 years ago. It's real, and it's real for business.'"

Of course, that's PR, but it tells me that the legal team isn't concerned, and the word now is Go. Their legal analysis is complete. And they are not backing down. Remember how SCO's complaint quotes IBM people? The fact that they are silent no more tells me they aren't worried. I am really starting to look forward to their legal filing, probably some time this week.


I just learned that Sun's Jonathan Schwartz, of all people, is going to speak there. So, if you're goin' to San Francisco, ask him about Linux being "irrelevant" and let me know what he says, will you?

comment [] 3:07:24 AM    

Click here to visit the Radio UserLand website. © Copyright 2003 PJ.
Last update: 9/1/03; 3:18:34 AM. Creative Commons License
This work is licensed under a Creative Commons License.

August 2003
Sun Mon Tue Wed Thu Fri Sat
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
Jul   Sep