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Final Judgment — SCO Loses, Owes $3,506,526
Posted by
timothy
on Fri Nov 21, 2008 02:15 PM
from the seems-charitable-to-sco dept.
from the seems-charitable-to-sco dept.
Xenographic writes "SCO has finally lost to Novell, now that Judge Kimball has entered final judgment against SCO. Of course, this is SCO we're talking about. There's still the litigation in bankruptcy court, which allowed this case to resume so that they could figure out just how much SCO owes, which is $3,506,526, if I calculated the interest properly, $625,486.90 of which will go into a constructive trust. And then there's the possibility that SCO could seek to have the judgment overturned in the appeals courts, or even the Supreme Court when that fails. Of course, they need money to do that and they don't really have much of that any more. Remember how Enderle, O'Gara and company told us that SCO was sure to win? I wonder how many people have emailed them to say, 'I told you so.'"
Related Stories
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Your Rights Online: SCO's Lawsuit Gets Even Crazier 179 comments
I Don't Believe in Imaginary Property writes "With SCO in Chapter 11 bankruptcy and there being little to read other than status reports and the boring financial details of how the company is wasting its last few dollars, one could be excused for thinking the SCO lawsuits had lost their zip. But things just got a bit more interesting. Jonathan Lee Riches has asked the court to take over. Yes, the man also known as inmate #40948-018 is now bringing his legal experience to the table, having previously filed pro se lawsuits against such entities as Michael Vick, Michael Jordan, Mickey Mantle, the Lincoln Memorial, the Thirteen Tribes of Israel, 'Various Buddhist Monks,' Mein Kampf, Denny's, George W. Bush, the Soviet Gulag Archipelago, Bellevue Hospital, Iran's Evin Prison, Auschwitz, and Plato. In his hand-written pro se motion (PDF), he asks to intervene as Plaintiff pursuant to FRCP 24(a)(2). As best anyone can read the motion, it appears that he offered Novell some 'royalty payments' and they refused them, so he wants to protect his UnixWare rights. He also claims to have proof of SCO's claims, but he wants take over part of the case via FRCP 24 because SCO isn't competent, and allegedly he could do a better job. To be fair, between him and Darl, it's something of a toss-up."
[+]
Your Rights Online: Grokking SCO's Demise 242 comments
An anonymous reader writes "You have already heard the news that the SCO Group's US$5 billion threat against Linux is effectively finished. It was the Web site Groklaw.net that broke the news and posted the complete 102-page ruling; after that, it was picked up by mainstream media and trade press.
In fact, it's Groklaw that has covered every aspect of SCO's legal fights with Linux vendors IBM , Novell and Red Hat and Linux users Daimler Chrysler and AutoZone ever since paralegal Pamela Jones started the site as a hobby in 2003. This feature does a great job of chronicling Groklaws' hand in the demise of SCO's case."
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Your Rights Online: SCO Proposes Sale of Assets To Continue Litigation 290 comments
gzipped_tar sends in this excerpt from the Salt Lake Tribune:
"The embattled SCO Group Inc. is proposing to auction off its core products and use proceeds to continue its controversial lawsuits over the alleged violations of its copyrights in Linux open-source software. The Lindon company has filed a new reorganization plan with the federal court in Delaware where it sought bankruptcy protection from creditors after an adverse ruling in the Linux litigation. If approved by a bankruptcy judge, the plan could mean SCO's server software and mobile products lines are owned by other parties while SCO itself remained largely to pursue the lawsuits under the leadership of CEO Darl McBride. 'One goal of this approach is to separate the legal defence of its intellectual property from its core product business,' McBride said in a letter to customers, partners and shareholders. Jeff Hunsaker, president and COO of The SCO Group, said the litigation had been distracting to the company's efforts to market its products. 'We believe there's value in these assets and in order for the business to move forward it's imperative we separate it from our legal claims and we allow our products business to move forward,' he said Friday."
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Linux: Predicting SCO's Actions Post Bankruptcy 102 comments
eldavojohn writes "SCO lost last year and began the bankruptcy filings a long time ago but PJ has some speculative bad news on what they retain through the bankruptcy proceedings. SCO proposes to sell a number of assets to an outfit called UnXis, which PJ characterizes this way: 'It starts to hint that this is more a renaming, taking in some new management who seem to have financial expertise, and SCO keeps skipping along as unXis, with the dangerous litigation spun off safely into a litigation troll.' In their filings SCO says they retain 'their litigation and related claims against International Business Machines Corporation, Novell, Inc., AutoZone Corporation, Red Hat and certain Linux users which are not material customers of UnXis (excluding certain large-scale users of Linux servers) that are claimed to have infringed against UNIX copyrights.' So that's still a possibility they could go after anyone who is a 'certain Linux user.' And what's even worse is that they'll retain a patent for running multiple Java applications on a single Java virtual machine. We may not be out of the SCO litigation woods yet."
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You LOSE! (Score:5, Funny)
Re:You LOSE! (Score:5, Funny)
Mod parent: +1, Willy Wonka
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Re:You LOSE! (Score:5, Funny)
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Re:You LOSE! (Score:5, Funny)
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Re:You LOSE! (Score:5, Funny)
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Speaking of losers... (Score:5, Interesting)
One might also ask, whither Microsoft, now that their $86 million investment in Baystar has turned out to be a complete waste. Shouldn't some executive's head roll for this? God, if someone can waste that much money at Microsoft and get away with it, they must be either Steve Ballmer or Bill Gates, either of whom is too powerful to reprimand.
I will say, SCO in its day was very intimidating, with Darl Bride as an eloquent and persuasive spokesman. His pronouncements sounded factual and reasonable, until people like Groklaw looked behind the curtain and showed us the truth. Well, it's just a testament to the power and resiliency of the open source community that Linux and friends will be around long after the world has forgotten what SCO was.
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"a complete waste" (Score:5, Insightful)
whither Microsoft, now that their $86 million investment in Baystar has turned out to be a complete waste.
Ummmm, that $86 million was the best money MSFT spent since the $50,000 for QDOS. The chilling effect that the SCO suit produced for the Linux community was huge, and bought MSFT a lot of extra time. And you can't even begin to imagine the degree to which it has slowed innovation in IBM Software Group. IBM engineers can't post without 10 person-months of review from Legal.
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Re:Speaking of losers... (Score:5, Insightful)
SCO in its day was very intimidating, with Darl Bride as an eloquent and persuasive spokesman. His pronouncements sounded factual and reasonable, until people like Groklaw looked behind the curtain and showed us the truth.
Sorry, but I think you and I have very different recollections of what happened.
Darl may have been eloquent - right up until he had to answer questions. But once he did, it was quite obvious that it was a scam.
For example, when he said that every Linux user owed him $699, the immediate question was "why? Where is the code?" His response was always "I can't show it to you."
You don't have to be a genius to understand that was an outright lie. If he can't show it to you, then you don't have to pay him. The excuse that they had NDAs that prohibited it was laughable. Any attorney who signed a deal saying that said that the company wasn't allowed to identify their own code, even if someone else made it publically available would be disbarred. It's just absurd.
Darl came across as a sleazy con-man. Persuasive he was not.
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Re:You LOSE! (Score:5, Interesting)
Not so sure
Is Novell a good guy today
or
a less bad guy
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Re:3.5M? Oh noes... (Score:5, Insightful)
I am sure it does sting, considering they have spent quite a bit of that money on lawyers, corporate executive benefits, etc.
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Re:3.5M? Oh noes... (Score:5, Funny)
Back then, 50M bucks was a lot of money.
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Re:3.5M? Oh noes... (Score:5, Interesting)
McBride and his cronies my be at the moment... but SCO the organization is not. SCO has been bleeding worse than a freshly-amputated pig, with no signs of slowing down its losses. Nobody (especially in this economy) would want to buy such a toxic and radioactive property.
I also suspect that whoever is left holding the by-now worthless SCO stock would have little trouble in finding a contingency lawyer willing to sue McBride (and his buddies) personally for fiscal irresponsibility.
There is also the chance that the SEC may get in on the act as well.
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RIGHT :P (Score:5, Funny)
Re:RIGHT :P (Score:4, Funny)
what happens after try and catch then?
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Re:RIGHT :P (Score:5, Funny)
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I for one (Score:5, Insightful)
Can't wait to hear the last SCO story. Barring appeals, I really hope this is it.
Re:I for one (Score:5, Informative)
This ain't it.
Novell is done (modulo appeals and the arbitration -- see below).
Still pending
* Bankruptcy
* SuSE UnitedLinux arbitration (stayed pending resolution of BK)
* IBM's counterclaims (stayed pending resolution of BK)
* RedHat (stayed pending IBM)
* AutoZone (technically still alive, don't believe anyone's ever going to finish it. Stayed pending IBM, I believe).
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Re:Chapter 7? (Score:5, Informative)
This is close to being it...they're guilty of conversion. That transforms them into a priority creditor with a 3.5 million dollar claim to things before anything else.
I doubt SCOX could mount an appeal effort. If they could, it's going to have to be something where they had some tidbit of the law overlooked where they didn't get a fair trial, because there's nothing else for them to actually appeal otherwise.
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Re:I for one (Score:5, Informative)
In 2002, SCO had a new CEO, Darl McBride. SCO wasn't doing so well; their primary product was a version of Unix that ran on Intel machines, but they were competing with Linux for that same market. And Linux is free, and the new hotness in Unix-style operating systems.
Somehow Darl learned that SCO owned Unix, i.e. the copyrights to the source. And he was led to believe that the code in Unix had leaked into Linux. So he came up with a new money making plan:
This wouldn't work very well for most customers, since SCO's market was mostly small businesses.
But there was a big fish he could go after: IBM. You see, IBM was a licensee of the AT&T Unix that SCO owned. IBM derived its own versions of Unix from it. And as part of that, IBM enhanced its own Unix with new technologies. And IBM also contributed those same new technologies, which IBM had developed on its own, to Linux.
So Darl's theory was that SCO not only owned the rights to its own Unix, and to the AT&T Unix that it had acquired, but also to every version of Unix that was derived from them by a licensee. So, he could sue IBM for leaking SCO's property to Linux, and he could sue any company that used Linux (unless they paid SCO an extortion fee not to).
The SCO Group sued IBM for $1 billion dollars!
(A common theory is that SCO expected IBM to just buy SCO to make the problem go away, thus enabling Darl and the other SCO executives to cash in their SCOX shares at a profit.)
We'll skip all the counter lawsuits, ridiculous claims by SCO, Microsoft's part in it, the suits by SCO against other customers, and get to the best part:
Remember that it all started because the SCO Group's predecessor (The Santa Cruz Operation) had purchased the AT&T Unix copyrights from Novell. Well it turns out that they didn't. What they purchased was the right to market and license it. And to collect licensing fees, for which they had to pay Novell a portion. They did not actually own the copyrights or any substantial amount of intellectual property.
So Novell sued SCO, claiming that a) SCO didn't own anything, and b) SCO owed Novell money, because the SCO Group hadn't been paying Novell their share of the licensing fees.
Novell won, and SCO went bankrupt.
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Is this truly the end? (Score:5, Funny)
Re:Is this truly the end? (Score:5, Funny)
It's like "LotR: The Return of the King". Just when you thought it was over, there's 24 more endings to get through.
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Bailout (Score:5, Funny)
Of course, they need money to do that and they don't really have much of that any more.
They could always apply for a government bailout package.
Re:Bailout (Score:4, Interesting)
You meant annoying, right? Like that fly that just doesn't get out of your face with it buzzing. Well, maybe entertaining to a third party, but not anyone affected by them.
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This is great news (Score:5, Funny)
Now can we dismember the corpse, seal it in a hardwood box, put the box 12 feet under ground, cover it with at least a couple of tons of concrete, and then build a parking lot over the spot?
I don't want any chance of this zombie coming back again and demanding royalties.
Zombie? More like vampire.... (Score:5, Funny)
Don't forget the garlic you need to put in the coffin.
And make sure and kill any ghoul servants. They're always trying to resurrect their masters.
I suggest you start by a scheme of napalm applied liberally to the offices of their legal representation.
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Re:This is great news (Score:5, Funny)
And knowing my luck I would park on that lot and would have them send me a letter saying I owe them royalties for parking over there grave as its a privilege to do so.
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Re:This is great news (Score:5, Informative)
Many times when companies die (for legal reasons) the Management just creates a new company.
You mean like when SCO setup a company in the far-east and tried to transfer their assets to it?
Or like when SCO proposed splitting its company in two, with one part taking all the assets, and the other part taking the legal claims?
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Re:This is great news (Score:4, Insightful)
They're already trying. They're trying to switch to mobile phone apps, and unload the devastated and moribund server business. Darl seems to be trying to spin off the legal claims business into a separate patent troll or copyright troll company, to try and continue the FUD against Linux and open source that Microsoft kept them alive for.
Or did you think that $50 million from Microsoft that enabled them to continue the lawsuits was an investment in actual business?
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Enderle matters? (Score:5, Insightful)
Anyone that would write an article extolling his Ferrari branded laptop and how the prancing horse logo adds raw ultimate power should never be taken seriously.
I guess some people do listen to that hack.
Well, perhaps a few less are listening to him now.
*shrug*
Re:Enderle matters? (Score:5, Funny)
Um, I beg to differ. That Ferrari logo adds at least 220hp to my internet connection.
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Re:Enderle matters? (Score:5, Funny)
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Re:Enderle matters? (Score:5, Funny)
It stands for "hit points", though in some games like World of Warcraft this statistic is also called "health".
220 doesn't seem very good, though. In 3.x WoW that's not much of an improvement at all. Heck, I think his laptop would have better stats if it dropped Ferrari and took up mining for the Toughness bonus. Or perhaps it should take up blacksmithing, so it could add some gem sockets.
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Christmas is early this year (Score:5, Funny)
SCO gets a final judgement and loses $3.5m. Someone (Missouri) finally files a RICO suit against the RIAA. Our do-nothing Congress actually gets the balls enough to stand up to the automotive industry.
At this point I'm halfway expecting to see a copy of Duke Nukem Forever in my stocking.
Re:Christmas is early this year (Score:5, Interesting)
SCO gets a final judgement and loses $3.5m
meanwhile Darl McBride is still disgustingly filthty rich. Too bad instead of stealing millions of dollars from innocent rubes, he wasn't dog fighting [chicagotribune.com] instead, like Michael Vick [chicagotribune.com].
I want to see Brainwol and McBride (while we're at it, my mortgage company's President and oil company presidents as well) in a cell with Vick.
These people are the anti-Robin Hoods, stealing from the poor to give to the rich.
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Re:Christmas is early this year (Score:5, Funny)
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Re:Christmas is early this year (Score:5, Funny)
The only holdup on Duke Nukem Forever is the manual. And Harlan Ellison will get around to that just as soon as he finishes The Last Dangerous Visions.
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Will SCO do a clearance sale of Linux licenses? (Score:5, Funny)
I've been waiting such a long time to afford one of these to try that Linux thing legally.
What about the license fees? (Score:5, Interesting)
I wonder about those companies who paid the SCO license fees to use Linux? Are they free now to sue SCO for the license fees they have paid?
Re:What about the license fees? (Score:4, Informative)
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wht a mess our legal system is (Score:4, Insightful)
How much did it cost to defeat SCO and stop their nonsense? I'd be shocked if the legal bills on just the Novell/IBM side were under $10M.
The system worked once, at least in rendering the right decision. But few can afford to spend the amount of money this took.
gratification (Score:5, Funny)
How much do they have (Score:4, Informative)
So they now owe Novell $3.5 million or so. A look at their June '08 financials ( http://finance.google.com/finance?hl=en&fkt=917&fsdt=2133&q=SCOX&um=1&ie=UTF-8&sa=N&tab=we [google.com] ) makes it look like SCO is currently worth $8.96 million. Of course, then they have $5.85 million in current liabilities. Add in this $3.5 million and SCO's wallet runs dry (and then some). Of course, this doesn't take into account liabilities that they don't need to pay back immediately. Things like that will come up in any bankruptcy hearing.
The end result is that the amount of the award is basically meaningless. Novell may not see that entire figure (if anything) due to SCO going bankrupt. It's the ruling itself that is important. All of SCO's claims were knocked down. Novell's claims were either upheld, made moot by further developments, or voluntarily dismissed. SCO got beat down hard and I don't think they'll be getting back up anytime soon.
Re:How much do they have (Score:5, Informative)
Novell may not see that entire figure (if anything) due to SCO going bankrupt.
Actually, my understanding is that Novell gets paid before anyone else, since the judge ruled that SCO is actually holding Novell's money improperly (converting it?). It's not like a normal debt where the judge says "you owe them this much money", but where the judge says "that stack of money right there belongs to Novell - hand it over."
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Market Cap... (Score:4, Interesting)
The $3.5M exceeds their current market cap. which appears to be only $2.81M. (pretty far fall from the $2.54B they had in 2000.)
Don't quite know what that means but I'm hoping it means the judgment effectively wipes them off the map entirely.
It's (apparently) easy to forget facts are facts (Score:5, Insightful)
Remember how Enderle, O'Gara and company told us that SCO was sure to win? I wonder how many people have emailed them to say, 'I told you so.'"
Agreed - these tech pundits were complete tools. O'Gara was shallow enough to stalk Pamela Jones of Groklaw in 2005 and publish alleged photos of her apartment. Only Daniel Lyons (he of the Fake Steve) later admitted he was wrong [slashdot.org].
But this gets into a bigger pet peeve of mine: the tendency of people to disregard details in pursuit of what they wish were true. These pundits really wanted Linux to fail massively, either because their bread and butter was covering the developments of Microsoft and other proprietary OS vendors or because they equated Linux and free software with anti-capitalism. This led a lot of these shrills to cling to a very silly, unsubstantiated lawsuit long after it became clear that SCO had no concrete evidence to present in court and clearly hadn't thought through licensing considerations (BSD-licensed code in both Linux and System V, for example).
Many people really don't like delving into the details before forming an opinion and sticking to it. See also: religion, politics.
YAAAAAAY! (Score:5, Funny)
And that pretty much wraps it up. Now I need a new name...
Constructive Trust (Score:5, Informative)
A constructive trust is a trust (a legal duty to a beneficiary by the person in possession of something) that has been created by a court. There are many types of trust, but they all essentially mean the same: There is something (in trust) that you never had the authority over in the first place because it belonged to someone else (the beneficiary).
As an example, in many places a constructive trust in bankruptcy exists over employee wages such that employees have a superpriority over other creditors (i.e. employees get all their money before creditors get any), but further a the thing held in trust (wages) that was previously given away (to pay creditors) can actually be taken back from subsequent possessors ("restitution"). In other words, anyone given anything by an insolvent (that state of not being able to pay bills that typically precedes a declaration of bankruptcy) company may have to give it up so that employees can get their wages held in trust. Employment law varies wildly- many jurisdictions don't enact a trust- but it's a decent example, easy to relate to.
In the SCO case the trust is over funds, meaning the court has said (by declaring the construction of a trust) that the beneficiary (Novell) of the trust can "follow the money" from SCO to whomever may now hold it because SCO never had a right to the funds in the first place. That may include wages to directors, bank transfers, rent, etc. Further, if SCO is unable to pay the money, and it cannot be traced, anyone that encouraged SCO to spend money that SCO didn't have a right to may have committed a wrong (intentionally, having been complicit or willfully blind) related to the breach of trust.
These are just common law principles for the edification of anyone interested, and the law may very well be quite different in Utah (or most anywhere else). But it's also an oculus into why a constructive may be relevant- and it's not well explained in the article.
All irrelevant (Score:5, Insightful)
None of this matters: Darl McBride et al were still personally enriched by all this shenanigans, and they are all still alive and able to run off somewhere else and pull yet more shenanigans.
The bad CORPORATION was slapped, but its ORGANS still won and will get "transplanted" somewhere else. Until we get rid of the ethical shield that corporate law provides, people like this will still rule the roost.
Re:Isn't this just Novell's suit against SCO? (Score:5, Informative)
Been living under a rock for the last year?
Novell was found to own the copyrights to Unix, not SCO [wikipedia.org]
Effectively, case dismissed.
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Re:Isn't this just Novell's suit against SCO? (Score:5, Insightful)
Darl belongs in jail... in addition to being stripped of his power.
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