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Wednesday, August 13, 2003
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As the Media Turns
Even ZDNet has seen the light, at last. They have an article by an attorney, Thomas C. Carey, a partner at Bromberg & Sunstein, who was a programmer before he became a lawyer, which outlines some reasons he thinks SCO is in trouble. He outlines all the factors to consider by those thinking of getting a license. This article might come in handy when talking to PHBs. He makes one point that I'd never thought of:
"SCO may have set a ceiling on recovery. SCO has already announced a licensing program with specific licence rates. In the worst case, and unless and until SCO makes a much clearer and more public case that its code has been stolen, SCO is not likely to recover from individual users more than it has announced its licence fees to be. Why pay now when you can pay later or quite possibly not at all?"
A number of articles are beginning to appear where the reporter actually does some digging and evaluating. There is an outstanding example in the story here, "Novell letters throw new light on IBM case" by Sam Varghese. He's been a fair guy for some time, but take a look at this opening section:
"Two letters written by Novell chairman and CEO, Jack Messman, to SCO president and CEO, Darl McBride, in June throw an entirely different light on the lawsuit between SCO and IBM, which the former initiated in March.
"Both letters were cited by IBM as exhibits last week when it counter-sued SCO, on a range of issues.
"The letters indicate that SCO has no contractual right to terminate IBM's AIX licence. The agreement under which IBM acquired these rights appears to have been a three-way contract under which Novell retained certain rights, one being the right to compel SCO to waive or revoke any of its (SCO's) rights under the contract."
He then proceeds to show what it all means. It's so refreshing to see reporters start to get it. It does look like the media tide is turning. SCO's PR team must be up nights.
Here's another one from Linux World, "Is SCO Perfecting the Art of the Big Lie?" by James Turner, senior editor of LinuxWorld Magazine and president of Black Bear Software as well as director of software development of Benefit Systems, Inc. He has a suggestion for SCO, one we've seen before, but I like his spin:
"Maybe they should hire the former Iraqi information minister. 'Thousands of companies have bought our licenses! I will show you the list this afternoon! The blood of the open source infidels will run through the streets of Salt Lake!'"
I'm thinking some Groklaw readers will top him, though. They're a very creative bunch.
Here is another, "SCO Group mines PR of Linux claims, but offers few specifics":
"SCO's poisonous tactics have made it a pariah. The prevailing view in the tech world, as far as I can tell, is the hope that IBM will squash SCO like a bug. "
Here's one that carefully first explains who SCO thinks needs a license, called "Damned if you do and damned if you don't", but it ends like this:
"But when you look at the entire trail of events, one can't help but wonder--is this just a clumsy execution of an 11th hour plan or perhaps a smokescreen for a hidden SCO agenda?"
On the MS Front
Well, they just were found guilty of violating someone's IP. It is a patent case, and they say they will appeal, natch. Eventually, even the large corporations will logically notice that these types of lawsuits are more than annoying. But notice the link to SCO that popped into the reporter's head:
"Microsoft--a stalwart supporter of SCO's IP infringement claims against IBM--has vowed to fight the verdict of a US federal jury that affirmed that the company's Internet Explorer browser violated the IP rights of a smaller ISV. On Monday, a US federal jury in Chicago agreed that IE violated an existing patent and awarded $US521 million to the University of California and Chicago-based Eolas Technologies, which originally asked for $US1.2 billion in damages. . . .
"Microsoft stands by its products and will continue to develop innovative technologies that benefit consumers. Regardless of the ultimate outcome of this case, Microsoft will work hard to ensure that there is very little if any impact on our customers."
"Very little, if any." Say, is that the same as indemnification? Kidding.
Speaking of kidding, or is it you must be kidding:
"Scott Charney, chief security strategist at Microsoft, told developers at the TechEd 2003 conference in Brisbane, that information collected by Dr Watson, the company's reporting tool, revealed that 'half of all crashes in Windows are caused not by Microsoft code, but third-party code'".
I knew there must be a "reason" that keeps happening to Windowsfolk.
2:11:13 PM 
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I'll Huff and I'll Puff and I'll Huff and I'll Puff Some More -- If That Doesn't Work, Then I'll Hold My Breath
SCO has "terminated" Sequent's UNIX System V software contract. This may be setting the stage for some legal action on SCO's part down the road, or just dotting an i (Sequent is already named in the case, but they were added later, in the Amended Complaint, so SCO had to wait the contractually required number of days to "terminate" Sequent after that), or it could be just another puff of FUD smoke, or two of the three. Hopefully, IBM will be able to resist the urge to go off into the woods and slit its wrists.
SCO's press release says it was "terminated" for the following reason:
" . . .for improper transfer of Sequent's UNIX source code and development methods into Linux. As a result, IBM no longer has the right to use or license the Sequent UNIX product known as 'Dynix/ptx'. Customers may not acquire a license in Dynix/ptx from today's date forward."
The press release also enumerates Sequent's sins in greater detail than SCO normally does, and we can probably assume this is the legal theory they will be following:
"SCO's System V UNIX contract allowed Sequent to prepare derivative works and modifications of System V software 'provided the resulting materials were treated as part of the Original [System V] Software.' Restrictions on use of the Original System V Software include the requirement of confidentiality, a prohibition against transfer of ownership, and a restriction against use for the benefit of third parties. Sequent-IBM has nevertheless contributed approximately 148 files of direct Sequent UNIX code to the Linux 2.4 and 2.5 kernels, containing 168,276 lines of code. This Sequent code is critical NUMA and RCU multi-processor code previously lacking in Linux. Sequent-IBM has also contributed significant UNIX-based development methods to Linux in addition to the direct lines of code specified above. Through these Linux contributions, Sequent-IBM failed to treat Dynix as part of the original System V software, and exceeded the scope of permitted use under its UNIX System V contract with SCO."
In Other News of Interest
Here's something interesting, because it shows what the penalties for false and misleading statements can be, something I've gotten emails about. Here is a CEO who faces up to 30 years in a criminal case for issuing false press releases (he separately is facing civil charges):
"The former CEO of technology firm eConnect pleaded guilty to overseeing a scheme to artificially inflate the company's stock price by issuing false financial information, federal prosecutors said.
"Thomas Hughes, 55, was charged with three counts of securities fraud for distributing false press releases and making misleading statements on the company's Web site, the U.S. Attorney's Office said Monday in a statement. . . .
"Hughes was scheduled for sentencing Dec. 1 by U.S. district judge Nora Manella. He faces up to 30 years in prison for the securities fraud charges and an indefinite maximum sentence for the contempt count.
'Manipulation of the markets will not be tolerated,' U.S. attorney Debra Yang said in the statement. . . .
"Prosecutors say Hughes helped send out press releases claiming eConnect had obtained a $20 million investment in quality asset-backed bonds, started a stock repurchase program, and received a purchase order of nearly $1 million for one its products. In reality, the bonds had little value and no stock buyback program existed, prosecutors said."
So, now you know the worst case scenario for such behavior. Whether IBM's accusations against SCO in its Amended Complaint will end up being pursued by regulators and also be proven true, I don't know, but even raising the charge is something any company would need to take seriously. I expect they are carefully looking at what they say and do before they speak, and wouldn't that be a refreshing change?
1:44:15 PM
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