Muh fellow Americuns, resistance is fewtile. You will be assimilated, emphasis on the ass.
Posted on 07/28/2003 2:23:20 PM PDT by amigatec
Edited on 04/13/2004 2:58:59 AM PDT by Jim Robinson. [history]
Many Linux customers have no intention of paying The SCO Group for a UnixWare license that would indemnify them from legal liability for using the open-source operating system.
SCO, which is suing IBM over Unix for more than $1 billion and which claims that Linux is an illegal derivative of Unix, last week said Linux users are also violating SCO's Unix copyrights, particularly now that SCO has registered a U.S. copyright for its Unix System V source code.
(Excerpt) Read more at eweek.com ...
Good question, and though I am not an attorney my gut reaction is no, I do not believe the SEC would allow a buyout under those circumstances. SCO is out to make money, and making themselves appear attractive is one way to be bought. They may not be looking for a buyout as you say, and I think it's possible they're looking to establish some royalties through a court judgement or out-of-court settlement as revenue stream, and a buyout as a fall back plan.
I certianly don't know the minds of Caldera's management when they acquired Santa Cruz Operation, nor do I believe that any restrictions of IBM's rights to publish code under collabertative partnership agreements have been sufficiently determined to be able to say "IBM took code they promised not to disclose" and put it in Linux. Until some more concrete evidence comes out in trial, if it ever does, we are just going to have be content with speculation. You're certianly free to believe Linux is a communist plot, if that's what floats your boat. :)
All you can do is mouth Bill Gate's words.
How's that working out for ya?
Senior SCO executives have been dumping their personal holdings in the company since June, US Securities and Exchange Commission (SEC) filings have revealed.
Since SCO launched its legal action against IBM, claiming that Big Blue had violated trade secret laws by sharing proprietary code with open source projects, its share price has sky-rocketed.
The price rise has been enough to convince senior executives to dump their personal shares in the company over the last two months.
SCO's chief financial officer, Robert Bench, has sold 14,000 shares in the company since June.
Bench isn't alone. The company's vice president of worldwide marketing, Jeff Hunsaker, has sold nearly US$230,000 of his stock, reducing the number of shares he holds by 42 percent from 35,494 to 20,494 since early June.
Although the reduction may seem severe, Hunsaker, and several others, still have plenty of stock options left, thanks to the grants they received three weeks after the legal action against IBM began. Hunsaker was handed 100,000 options to buy the company's stock for US$2.07. SCO shared are currently trading at US$13.07.
The company's president and CEO, Darl McBride, was given 200,000 of the US$2.07 options. McBride had some other options up his sleeve, with an SEC filing revealing he purchased over 7,000 shares for a meagre US$7.
Some commentators have suggested the company made the legal claims against IBM in order to boost its share price so it could use the stock to acquire Vultus, a web services company.
Vultus received seed money from a private equity management company, the Canopy group, which is a personal investment fund founded by former Novell boss Ray Noorda. Canopy was also a founding investor of Caldera Systems, which later became the SCO Group. In fact, SCO and Vultus were even located in the same building before the acquisition took place.
SCO stock has been flying around all over the place. SCO issued around 300,000 shares at par value $US0.001 earlier this month, which was used to acquire Vultus. The stock went to Vultus, Canopy, Vultus chief executive Michael Meservy and others.
Meservy received over 27,000 of the SCO shares for US$27. However in the grand scheme of things, that's nothing. In a "Registration Statement on Form S-3" filed with the SEC, the company reveals how many new shares it can issue whenever it wants.
"We have an authorised capital of 45,000,000 shares of Common Stock, par value $0.001 per share... Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorised but unissued shares," the statement said. "Any such issuance will dilute the percentage ownership of shareholders and may dilute the book value of our common stock".
Considering the company has only 13.5 million shares floating around, it is conceivable that the issuance of 45 million shares at a tenth of a cent each may dilute the list price somewhat.
If that wasn't enough to make shareholders twitch, the registration statement contains other information that throws some light on SCO's position in regard to options.
"As of July 1, 2003, we have issued and outstanding options to purchase up to 4,011,975 shares of common stock with exercise prices ranging from US$0.66 to US$59.00 per share. The existence of such rights to acquire Common Stock at fixed prices may prove a hindrance to our future equity and debt financing and the exercise of such rights will dilute the percentage ownership interest of our stockholders and may dilute the value of their ownership," the statement said.
The "things that could be true" are not "charges." Early on, there appears to have been a fair number of trade journalists and analysts who — without thinking very hard, or perhaps out of ignorance — accepted SCO's assertion that if identical lines appear, that must mean that the lines in question were pilfered from System V code belonging to SCO.
That's "not necessarily so." When we look at the actual claim that SCO has filed with the court, "not necessarily so" becomes "almost certainly not." That's because the history of these items is known. The items that SCO names are simply not the products of SCO creativity. Nor were they in the properties that SCO acquired when it bought the UNIX business from the Santa Cruz Operation (now Tarantella).
These items were added to the SCO code base by others during various joint development projects. In the specific case of the items mentioned in the IBM suit, they were added by IBM. They are IBM's intellectual properties. IBM has patents on some of these things. SCO's entire claim to these items rests on an expansive definition of "derivative work" that — if upheld — would mean that anything built on top of an operating system is the property of whoever owns the operating system. That's insane. It would make SCO the owner of Oracle and PeopleSoft. It would make Microsoft the owner of Photoshop and Quicken. It would remove all incentive for anyone to ever write anything on top of an operating system, ever again. Could one dufus judge in Utah rule such a thing? Dumber things have happened (e.g. the Compton's New Media patent), but rulings that turn the world upside-down and bankrupt hundreds of companies at a stroke are not upheld on appeal.
Look beyond the "identical lines" story and you'll find that not even SCO claims they wrote any of these things.
There is a tremendous amount of ignorant nonsense out there in the press. It's the same sort of thing we see every day in the "news." Reporters are in a hurry; they're lazy; or they're just too stupid to understand what they are writing about. If you would like to argue that SCO's lawsuit is about IBM infringing SCO's "UNIX patent," you can find a link to some article that will say that, even though SCO has no patents relating to UNIX and does not claim they do.
More recently, SCO has claimed that there are other, non-IBM related occurrences of identical code. But they refuse to name these, and they have not filed a lawsuit against anyone where they would be required to do so. So no one can tell whether such lines exist, or if they do, that they are not things that go back to AT&T days and the BSD settlement. Given the pump-and-dump that is quite obviously going on with the stock, it's not unreasonable to suspect that this is all a bunch of arm-waving intended to suggest that there are big pots of revenue just over the horizon. Real Soon Now. Any Day. Just you watch.
Likely or not, the limits of a "derivative work" are not clear and the scope of IBM's AIX contract could determine just how expansive it is in this particular case. Unless you've got that agreement in front on you (I don't), then we are dealing with competing claims. I think it is unlikely that SCO will prevail but I think one can certainly speculate about what would happen if SCO did prevail. And, frankly, the knee jerk reaction that apparently I shouldn't even be allowed to think or say such things is getting a little absurd. Indeed, the loudest voices in this debate on both sides seem more interested in shutting down any debate, insisting that there is only one right answer, than having any reasoned debate.
This whole issue of indemnification is legitimate because even if IBM is innocent, it is within the realm of possibilities that someone somewhere will slip copyrighted or patented material into GPLed software, especially if Linus honestly believes that it isn't his responsiblity to worry about the legitimacy of the code being folded into the Linux kernel. I wish it weren't a problem. I wish it were easier to create and maintain free software without threat of lawsuit but, alas, there isn't. Copyright laws (and IP laws, in general) are a real mess. Maybe someday, sanity will prevail. Until then, IP cases (especially concerning technology) are like playing roulette and, to me, it makes sense to consider every contingency, even the contingencies that I don't like, if they are possible.
Here is a cite from the complaint:
108. IBM has breached §2.05 of the Software Agreement by, inter alia, actively promoting and allowing use of the Software Products and development methods related thereto in an open and hostile attempt to destroy the entire economic value of the Software Products and plaintiff?s rights to protect the proprietary nature of the Software Products. By way of example and not limitation, IBM has used protected UNIX methods for others in accelerating development of the 2.4.x kernel and 2.5.x Linux kernel in, among others, the following areas: (a) scalability improvements, (b) performance measurement and improvements, (c) serviceability and error logging improvements, (d) NUMA scheduler and other scheduler improvements, (e) Linux PPC 32- and 64-bit support, (f) AIX Journaling File System, (g) enterprise volume management system to other Linux components, (h) clusters and cluster installation, including distributed lock manager and other lock management technologies, (i) threading, (j) general systems management functions, and (k) other areas. But for the use by IBM of these protected UNIX methods in Linux development, the Linux 2.4.x kernel and 2.5.x kernel capacity to perform high-end enterprise computing functions would be severely limited.
Note the complain specifically mentions memory management code as well as the journaling filesystem. Both NUMA and AIX JFS belong to IBM. However, SCO is now claiming that they have identified more passages of SVR4 in Linux, and that they're suit does not revolve around NUMA and JFS alone. The basis of their argument is that "improving" Linux is a violation of IBM's original agreement with AT&T because they're "diluting" the UNIX trademark. They are claiming that IBM is in violation of their UNIX license because they "improved" Linux and in so doing IBM is not keeping their derivative works confidential. NUMA and JFS have been incorporated into UNIX. I do not believe that SCO is making their case on ownership of NUMA and JFS because it's clear they do not own those. However, as NUMA is a derivative work of Dynix it is forever part of UNIX no matter what software vendor develops and improves it.
Does IBM's original agreement with AT&T Unix Systems Labs mandate confidentiality? How far do the rights owned by IBM extend over derivative works? Clearly, IBM has acted with the belief that they both own and have the right to publish NUMA and JFS. I will agree that it is possible somewhere in file-cabinets full of contracts IBM's rights to NUMA may have been restricted. Whether this is due to a partnership with Novell, or with the original agreement with USL remains to be seen.
Is IBM attempting to "destroy" the UNIX trademark, or is this just part of the growth of the industry?
Has the owners of the UNIX trademark waited too long to enforce these rights? The AT&T USL vs. BSDI suit was settled over ten years ago now. UNIX clones have had the presumption of legitimacy for longer than that. USL only demanded that BSDI remove files that were exact copies of AT&T code, and in fact, they were simply UNIX files that AT&T had forgotten to properly attribute. It very well could be that in some sense UNIX has already been diluted to allow UNIX clones. The best SCO may see is the removal of NUMA and JFS from Linux.
Muh fellow Americuns, resistance is fewtile. You will be assimilated, emphasis on the ass.
I agree. That's why a crucial piece of intelligence here is that a written agreement between AT&T and IBM states that "derivative works prepared by or for you are owned by you", where that is AT&T speaking to IBM. No matter what "derivative work" means, things prepared "by or for" IBM are owned by IBM, per terms of the contract. It literally says that, in so many words. It may not be clear what a "derivative work" is, but it perfectly clear who owns them if IBM writes them. It ain't SCO.
No one knows the future, or what some judge might rule. But to win this, SCO has to first establish that items which were written by others and ported to UNIX are "derivative works" of UNIX. That right there is a huge stretch, because of the sheer havoc such a ruling would have on the entire software industry. SCO is basically claiming that anything ported to UNIX belongs to them.
The accepted definition of "derivative work" is that if IBM ports, say, JFS to AIX (which is based on UNIX) then AIX-with-JFS is a derivative work of UNIX, i.e. IBM couldn't claim that the product "AIX" is no longer governed by its UNIX license just because IBM put some bell or whistle on top of it.
SCO is claiming that the bell or whistle itself becomes subject to the UNIX license. That is a major stretch with huge implications. The court can expect 5,000 "friend of the court" briefs from various parties in the industry explaining to the judge just what that would mean.
But let's say they win that. The items are derivative works. Now they have to convince the judge that the contract between AT&T and IBM does not mean what it says. It says that IBM owns derivative works that it writes. Can anyone be 100% certain that a judge will not rule "It doesn't really mean that?" No, but there is no reason to believe that such a thing has a snowball's chance in Hell of happening.
SCO has to get by two incredibly difficult tests, one that would bankrupt hundreds of companies and turn the software industry inside-out if they won, and a second that relies on a judge turning a very simple sentence on its head. Lawyers get paid to argue any damned thing their client wants argued, but the rest of us don't have to act like we believe there is anything serious going on here. It's just some guys who want to get their names in the paper making a bunch of noise.
That's FUD. The only people you hear talking about that are Bill Gates, Laura DiDio and a bunch of press shills and Internet Munchkins. Get real. How much are we talking about here? Suppose I have a thousand servers running linux, and by some amazing string of luck, SCO shows up in two or three years with a court ruling that says, "Yep. They own System V, and it's in linux, so you gotta pay 'em." And they want $700 each for my 1,000 servers. I got yer indemnification right here: I pick up the phone, I call the IBM salesman, and I tell him that if he wants to keep an account that runs 1,000 servers, he needs to cut a check for $700K. He tells me he's got an even better deal. IBM is making available licenses to run AIX 1.0, which might be old and obsolete, but contains all the System V code, for a dollar each. Not only that, but I get a coupon for a free one for each IBM server I own. How many do I want?
I'm sorry, but Laura DiDio is an academic. Real CIO's understand the idea that they call the shots, and the vendors jump. That's why you don't hear a bunch of CIO's jumping up and down over this. a) They don't believe this is ever gonna happen, it is merely the 5,280th lawsuit against a vendor they've seen, and b) if it ever does happen, the vendor will cover them before losing the account. All this press hoopla about "indemnification" is just a way to paint a bulleye on a vendor's back... make him a big target for trial lawyers. It's a press stunt. Microsoft is good at those, let them do it. They are welcome to all the attention they get from trial lawyers salivating over "unlimited liability." Real customers know that there isn't enough money at stake here to worry about that. Whether their vendor is IBM, or HP, or Dell... all of them will cover crap like this before losing an account.
Eric S. Raymond: Who is "viral" now?
Jul 3, 2001, 13 :39 UTC (45 Talkback[s]) (11539 reads)
A Microsoft drone writes: "We are sincerely concerned about the GPL, and its impacts upon the ecology of the developer community."
The gravamen of Microsoft's argument against the GPL is that it is "viral"; that it can somewhow infect other peoples' software, effectively nullifying their intellectual-property rights and removing their ability to profit from their work.
This charge is full of logical and factual errors. It confuses three different issues: mere use of software, aggregation of software, and derivation of software. The best possible ilustration of its falsity and fundamental hypocrisy is that Microsoft has been shipping GPLed software aggregated with its Interix (aka OpenNT) product for years. Because the Interix software is not a derivative work of the GPLed code they ship with it, not a single line of Microsoft code has ever been "infected" by the allegedly "viral" GPL.
But the most interesting irony here comes from considering the terms of Microsoft's so-called "shared source" program. Microsoft assures us that its shared-source program will be deliberately constructed so that Microsoft retains all intellectual-property rights in the code it allows developers to see.
What does this mean? Well...suppose you are a developer. You register with Microsoft to get access to "shared source", or you work at a development shop that registers (giving you presumptive access to Microsoft's source code).
Congratulations. Your brain is now infected with the "I have seen shared source" virus. Are you prepared to bet your career, or your company's existence, that Microsoft will never sue if you write code that (a) behaviorally resembles a Microsoft product, (b) competes with a Microsoft product, or (c) clashes with the color of Bill Gates's underwear this week?
Bear in mind that Microsoft doesn't have to win such a lawsuit. It doesn't even have to overtly threaten one. The mere threat of the threat of being sued by a multibillion-dollar company is enough to scare the bejezus out of any entrepreneur or corporate legal department, and more than enough to exert a massive chilling effect on software-industry competition. How convenient for Microsoft!
`Shared source' is the ultimate virus. The GPL, which leaves your brain alone and can't "infect" your code unless you deliberately shoose to incorporate GPLed code or link to it, is an innocent symbiote by comparison. It actually protects you, because it guarantees your right to redistribute and re-use the code you see.
So...who is "viral" now?
--
Eric S. Raymond
"Rightful liberty is unobstructed action, according to our will, within limits drawn around us by the equal rights of others." -- Thomas Jefferson
Whether that is, on balance, a good thing or bad thing is irrelevent. My point was specifically about IBM being unable to add proprietary code into the kernel while keeping it proprietary, which has nothing to do with the distribution of GNU programs alongside proprietary programs, the point of the article you cited.
If the suit against IBM is found to have little or no merit, this leads to some interesting possibilities. In that case, this action would look like insider stock manipulation through fraud.
Also, what appears like it may be the weakest part of the suit - the 1500 threatening letters sent to companies using Linux - could be construed as an attempt at extortion.
Multiple counts of fraud, extortion and conspiracy (assuming that more people were involved in the planning for the suit than just SCO's CEO) begins to look like a RICO case.
With stakes that high, either the people in charge of SCO are the stupidest creatures on Earth, OR they really believe they have a chance of winning.
But just in case, they're raking off what money they can now.
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