SCO Targets Torvalds, Stallman

NEW YORK - The legal battle between SCO Group and IBM is taking another ugly lurch forward.

On Nov. 11, the same day that Forbes reported that IBM (nyse: IBM - news - people ) had sent subpoenas to investors and analysts who supported SCO (nasdaq: SCOX - news - people )--and a day in which SCO shares suffered a 10% drop--SCO fired back, telling the court it would issue subpoenas to Linus Torvalds, creator of the Linux free operating system kernel, and Richard Stallman, president of the Free Software Foundation.

SCO won't say what it hopes to accomplish with the subpoenas. A SCO spokesman says he doesn't even know which subpoenas, if any, have been served. Torvalds says he got his Wednesday evening. Stallman says he hasn't received one yet.

In addition to Torvalds and Stallman, SCO told the U.S. District Court in Utah it would issue subpoenas to Transmeta (nasdaq: TMTA - news - people ), a chip-design company that employs Torvalds; the Open Source Development Lab, where Torvalds currently works, on leave from Transmeta; software maker Novell (nasdaq: NOVL - news - people ); and Digeo, maker of Linux-based TV set-top boxes.

SCO's move comes as part of the lawsuit it filed last March, claiming IBM put derivative code from Unix System V, an operating system for which SCO holds copyrights, into Linux, the free operating system kernel developed collaboratively by programmers around the world. SCO is seeking $3 billion in damages from IBM and hopes to collect license fees from companies that use Linux.

Denying SCO's charges, IBM has filed counterclaims and launched an aggressive attack on SCO, a company based in Lindon, Utah, that had 2002 sales of $64 million.

Oddly enough, on Nov. 11, SCO Executive Vice President Christopher Sontag complained to Forbes about IBM's decision to send subpoenas to investors and analysts who supported SCO. Sontag called the move "an attempt to bully and intimidate" and said IBM was engaged in "legal gamesmanship."

So why didn't Sontag mention that, uh, SCO itself was about to target Torvalds and Stallman with subpoenas? SCO's spokesman says Sontag and Darl McBride, SCO's chief executive, did not know that SCO's lawyers were planning the move.

But the "Who's on first?" act is tough to swallow since it turns out SCO notified IBM of its plans to seek discovery from these parties more than a month ago, on Oct. 5. And SCO told the court about its plans at 4:34 P.M. on Nov. 11, only hours after Sontag spoke to Forbes.

"I have to think that SCO's management knew they were going to subpoena the biggest names in the free software and open-source movement. Torvalds and Stallman? Come on, they knew," says Brian Ferguson, an intellectual property attorney at McDermott, Will & Emery, a Washington, D.C., law firm, who has been following the case.

Ferguson says it's no surprise that SCO wants to talk to Torvalds. He's the Finnish programmer who created the Linux operating system kernel 12 years ago and who oversees the process by which new features are added to Linux. Torvalds received a subpoena during dinner Wednesday night and says now he'll need to hire a lawyer. "Do you know any good lawyers in this area?" he asked via e-mail. "Just kidding."

Stallman is another obvious candidate for SCO's legal hit men. Not only did he write much of the code that makes up the GNU/Linux operating system, but in 1989 he created the GNU General Public License under which Linux and many other free software programs are distributed. SCO has challenged the validity of the GPL.

Stallman says the Boston-based Free Software Foundation, which he founded in 1985, has nothing to do with SCO's lawsuit. "SCO is suing IBM for violating a contract. We don't even know what the contract said. In terms of the resolution of that lawsuit, the Free Software Foundation is entirely uninvolved," he says.

Stallman's GNU/Linux operating system is not the target of SCO's suit. Linux, the program SCO is targeting, is not an operating system, but only the kernel of the GNU/Linux operating system, which could run using a different kernel.

"I am concerned about long-term entrenched confusions such as referring to a version of our GNU OS as 'Linux' and thinking that our work on free software was motivated by the ideas associated with 'open source.' These confusions lead users away from the basic issue: their freedom. By comparison, the events involving SCO are transitory and almost trivial," Stallman says.

A spokesman for OSDL in Beaverton, Ore., said the organization received a subpoena on Wednesday. OSDL, which employs Torvalds, is a nerve center for Linux development, where programmers are developing new versions of Linux aimed at high-end computers.

As of late Wednesday, Novell, in Provo, Utah, had not been served with a subpoena, but a spokesman said the company would not be surprised to get one. Novell once owned the copyrights to Unix System V and last week announced an agreement to acquire SuSE Linux, a top Linux distributor.

Transmeta and Digeo spokespeople said they didn't know if their companies have received subpoenas or why SCO would target them. What's the point of hassling people who make chips and set-top boxes? Don't ask SCO's top execs. They don't know anything about this stuff, remember?

Here's a good article about the implication of the subpoenas - http://www.technewsworld.com/perl/story/32154.html

Excerpt...

One thing that is perfectly clear is that -- in a future open-source software world -- attorneys will flourish, especially if the recent spate of subpoenas is any indication. SCO has served Linus Torvalds, Richard Stallman, Stuart Cohen of the Open Source Development Labs, Transmeta legal counsel John Horsley and Novell.

I'm guessing the Transmeta subpoena is for documentation during the time Linus worked there. Win or lose, Transmeta definitely doesn't need that distraction right now. With the exception of Transmeta, the subpoenas seem to be a result of the normal course of building a foundation of testimony and evidence -- with the likely hostile witnesses -- before the trial actually begins and helping to prepare for the pretrial phase of the action.

IBM, on the other hand, has served BayStar Capital (which invested US$50 million in SCO), Deutsche Bank Group (which issued a favorable financial report on SCO), the Yankee Group (which suggested IBM might lose the fight) and Renaissance Ventures (which invested in SCO). This series of subpoenas looks punitive to me because I can't figure out how any of these parties are directly pertinent to the case.

None of them appears to be an expert on the code in question. They weren't involved with the contract in any way that I can see, and appear to have simply done things that might have helped SCO get funding or positive press. IBM could be trying to better understand the why behind these companies' positions, but one would think that would be better done in a more casual way rather than with attorneys present.

Depositions can be incredibly time-consuming and painful, and if this is an effort to silence those that believe SCO has a case, it could be effective. I find it interesting that if Microsoft had used a similar tactic, we'd have cried foul very loudly.

I think this is another example of that pesky "free speech" thing that often only seems important when someone is trying to silence a voice you agree with. I do think, however, that the risk to IBM is very high and says something about what the company, internally, thinks of its chances of winning.

The Impact on IBM

Why this is interesting is that SCO appears to be attempting to prepare for trial, while IBM appears to be trying to destroy SCO's ability to sustain the fight. With SCO's legal team still on contingency, it still looks to me like SCO is more confident of winning in court than IBM is.

What is also interesting is that IBM appears to be taking an excessive amount of risk with these actions. There is a rule that says you shouldn't attack anyone who buys ink by the barrel. The Yankee Group, which is owned by Reuters, has several analysts who are broadly used by the press.

Deutsche Bank was the pivotal firm during the HP merger approval process, and the company is considered one of the powers in the financial industry. For some time, there has been a debate among financial analysts about whether IBM's valuation should be adjusted to better reflect its increasing reliance on its services business. Linux is clearly a services business.

Analysts as a group -- whether industry or financial -- don't like to feel that any company can threaten their objectivity. Of late, they are particularly sensitive to this issue -- and for good reason. There is a good chance, depending on how IBM handles the SCO issue, that one of the firms could take extreme exception to this approach and change its position relative to IBM's valuation or product set.

End Excerpt

Thanks for your post. One clarification: your article says:

IBM, on the other hand, has served BayStar Capital (which invested US$50 million in SCO), Deutsche Bank Group (which issued a favorable financial report on SCO), the Yankee Group (which suggested IBM might lose the fight) and Renaissance Ventures (which invested in SCO). This series of subpoenas looks punitive to me because I can't figure out how any of these parties are directly pertinent to the case. (WL-LAW: SEE MY COMMENTS FOLLOWING)

None of them appears to be an expert on the code in question. THAT'S NOT THE POINT OF THE INQUIRY -- IBM IS LOOKING FOR FALSE STATEMENTS/REPRESENTATIONS MADE BY SCO TO THESE ANALYSTS FOR EVIDENCE OF SCO'S SLANDEROUS/LIBELOUS CONDUCT, AND FURTHER CONDUCT BY SCO AMOUNTING TO TORTIOUS INTERFERENCE ACTIVITIES)They weren't involved with the contract in any way that I can see, and appear to have simply done things that might have helped SCO get funding or positive press.(FALSE STATEMENTS MADE IN FURTHERANCE OF AN OVERALL PATTERN OF FRAUDULENT BEHAVIOR AMOUNTS TO MORE THAN TRYING TO GET 'GOOD PRESS') IBM could be trying to better understand the why behind these companies' positions, but one would think that would be better done in a more casual way rather than with attorneys present.(AND HOW WOULD THAT HAPPEN? STRIKES ME A A BIT NAIVE, I MUST SAY!)

Depositions can be incredibly time-consuming and painful (AND THEY CAN UNEARTH IMPORTANT INFORMATION, WHICH IS THE PURPOSE OF DISCOVERY AFTER ALL), and if this is an effort to silence those that believe SCO has a case, it could be effective(NO, IT'S AN ATTEMPT TO UNDERSTAND WHAT SCO IS DOING AND HAS DONE VIA ANY FALSE STATEMENTS AND MISREPRESENTATION). I find it interesting that if Microsoft had used a similar tactic, we'd have cried foul very loudly.

I think this is another example of that pesky "free speech" thing that often only seems important when someone is trying to silence a voice you agree with.(YOU SHOULD KNOW BETTER. DISCOVERY IS LOOKING FOR THINGS THAT ALREADY HAPPENED, E.G., 'SPEECH', AND NO PRIOR RESTRAINT IS INVOLVED. SPEECH ISN'T 'FREE' (MEANING WITHOUT BAD CONSEQUENCES) IF IN THESE CIRCUMSTANCES IT IS SLANDEROUS, LIBELOUS, FRAUDULENT), I do think, however, that the risk to IBM is very high and says something about what the company, internally, thinks of its chances of winning.

By the way, I went to the link you provided, and there are some interesting reader responses to the article. Here's one that essentially makes the same point I made earlier:

Reader Comments
IBM and the investor/analist sunpoenas Posted by:cypherpunks 2003-11-17 reply to: Rob Enderle

Yes, Rob, it must be that IBM is trying to bully them, and it has nothing to do with IBM's counterclaims against SCO, which I will duplicate here.

IBM's Amended Counterclaims Against SCO
[...]
I. SCO's Scheme
50. SCO devised a scheme to profit from the Unix assets that it acquired from Original SCO, though those assets were in no way developed by SCO. Although most, if not all, of the AT&T Unix technology that SCO purports to own is generally known, available without restriction to the general public or readily ascertainable by proper means, SCO undertook to create fear, uncertainty and doubt in the marketplace in regard to SCO's rights in and to that technology.
51. Recognizing that there is little value in its Unix rights, SCO did not limit its scheme to that technology. Rather, SCO devised and executed a plan to create the false perception that SCO holds rights to Unix that permit it to control not only all Unix technology, but also Linux -- including those aspects generated through the independent hard work and creativity of thousands of other developers and long distributed by SCO itself under the GPL. 52. SCO undertook to carry out its scheme by, among other things, (a) bringing baseless legal claims against IBM and threatening to sue other companies and individuals, (b) conducting a far-reaching publicity campaign to create the false and/or unsubstantiated impression that SCO has rights to Unix and Linux that it does not have and that IBM and others have violated SCO's rights and (c) otherwise seeking to condition the market to believe that SCO has rights to Unix and Linux that it does not have and cannot properly enforce...."

Gosh, in that context, it looks like IBM might actually have a REASON to subpoena all those people. Part of their case might even hinge on the testimony these people could offer about SCO's conduct. But, no, what am I thinking, IBM is just a big bully to poor innocent SCO, who has never done anything wrong.

Here's another important point made by a responder to your linked article:

All the recipients of the IBM subpoenas were presented with evidence under NDA by the SCO Group about the IBM case; SCO wanted to influence them either to invest or give favorable reviews of SCO. Unfortunately, this is evidence that SCO has not provided to IBM itself, even though the SCO-IBM lawsuit is well into its discovery phase. Since SCO has delayed presenting evidence to IBM for well over 4 months now, IBM is forced to seek other means to determine what material SCO is accusing them of misappropriating. It is unbelievable to me that SCO, which initiated the lawsuit, is now delaying the presentation of this material to IBM. SCO should have had this evidence ready to hand over well in advance of the lawsuit.

In my experience with NDA's there is always an exception clause that permits disclosure "as required by law", typically with an obligation that the original disclosee (analysts) notify the original discloser (SCO) to try and limit the disclosure.

So IBM is forcing SCO, by every means possible, to respond properly to IBM's discovery motions. That's entirely proper litigation behavior by IBM, IMHO.

Let me start by saying, since you obviously aren't aware, that posting in all caps, or even worse, bolded all caps, is considered rude and inconsiderate internet etiquette. I'd suggest toning that down considerably in your future posts, unless you prefer your responses to be immediately labeled the rantings of an enraged lunatic by the average internet poster or lurker.

That aside, I still fail to see the relevance of IBM's subpoenas other than an obvious "fishing expedition" on the hope that SCO may have incorrectly advertised the evidence of their lawsuit to unknowing and unrelated 3rd parties on the hope they might float some sort of damage complaint. More likely, it is simply a poorly veiled attempt to squash any independent analysts from publicly commenting on the matter in any way favorable to SCO. This is like OJ's defense team subpoenaing all the talking heads on TV who so commonly provided their analysis that he was likely guilty, and IBM should be chastised just like OJ would have been had he tried such as desperate and despicable act.

IBM is arguing against the obvious - that SCO can make it's case in the court of public opinion just like anyone else. They seem to be attempting to step on SCO's first amendment rights, especially since there is no evidence that SCO is misrepresenting the facts of the case as they see them. The argument that analysts at Dueche Bank are going to in any way be able to address IBM's discovery requests for more specific program code identification and location is absurd, especially if those analysts are protected by NDA from disclosing what little they might actually know. IBM will probably sue them directly next I guess, and you would fully support this too I assume.

That aside, I still fail to see the relevance of IBM's subpoenas other than an obvious "fishing expedition" on the hope that SCO may have incorrectly advertised the evidence of their lawsuit to unknowing and unrelated 3rd parties on the hope they might float some sort of damage complaint.

Sorry if the caps offended you -- my HTML skills are limited -- but my legal skills are not so limited.

You really didn't get the significance of my second post as regards to NDA (Confidentiality) Agreements -- and I suggest you re-read it, because it is a known fact that SCO disclosed to analysts the information that it refuses to provide to IBM. As such, IBM's actions are totally legitimate.

The argument that analysts at Dueche Bank are going to in any way be able to address IBM's discovery requests for more specific program code identification and location is absurd, especially if those analysts are protected by NDA from disclosing what little they might actually know.

Boy, you really don't know what you're talking about.

A contract (NDA) regarding confidentiality does NOT trump one's legal responsibility to abide by court-ordered discovery. Even the typical NDA itself contemplates that issue, by providing, i.e., notice duties on the disclosing party to the party who's confidential info is about to be disclosed.

They seem to be attempting to step on SCO's first amendment rights, especially since there is no evidence that SCO is misrepresenting the facts of the case as they see them.

Another really weak statement, I'm afraid.

First, the "First Amendment" doesn't arise here, this is not prior restraint by the govt, this is civil litigation. Speech isn't "free" when it's libelous and part of an attempted fraud.

Second, you state that since "there is no evidence" IBM's attempt to discover the evidence is bad faith -- I think you might want to consider that faulty bit of tautological reasoning -- because discovery is the correct process to OBTAIN the evidence

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