The Lawsuit Ain't Over Til the Fat Lady Sings

By James Turner
November 30, 2008 | Comments: 1

Last week, the final judgment was issued in the SCO v. Novell lawsuit.  No big surprise, Novell took the day, with SCO ordered to fork over around 3.5 million dollars. This lead many to declare SCO dead, that truth and justice had won the day, and go dancing around the virtual streets of the Internet.  Alas, the law is rarely that simple, and there's still a ton of legal proceedings alive and well that bear SCO's name.  Even SCO v. Novell isn't over, since later in the week SCO filed notice of intent to appeal.  With all that in mind, we thought it might be a good time to check in with the chronicler of all things SCO, Pamela Jones of Groklaw, and see just where things stand.

O'Reilly: It seems that there are countless actions in the courts now regarding SCO.  Can you summarize what's still alive, what's settled, who the players are, and what the future timeline looks like?

Pamela Jones:  What's still alive:

Everything except SCO v. Novell at the trial court level. The trial is over in that one subsection of the larger SCO saga.  However, the decision by the judge in SCO v. Novell impacts everything else to one degree or another.

SCO has repeatedly expressed an interest in appealing the Utah court's decisions in SCO v. Novell.  [Editor's Note: This reply was made before SCO filed the appeal later in the week] I expect to see that appeal filed within the next month.  Novell may also file an appeal, or a cross-appeal, depending on who files first, if anyone actually does.  Certainly SCO wants to, or it has repeatedly said it wants to, so I expect that to happen, if there is sufficient money to fund it.  SCO just voluntarily waived certain claims with prejudice so as to have a faster route to appeal, so I assume that means they intend to do that.

When SCO filed for Chapter 11 bankruptcy protection in September of 2007, it meant there was an automatic stay of any litigation against SCO. This month, the stay was lifted so that the IPO class action against SCO can go forward, subject to the stipulation that any damages awarded them will come from the insurance company, not from the bankruptcy estate. That is the case that relates to the Caldera IPO,  In RE Initial Public Offering Securities Litigation.

What's left?  The biggest one of all, SCO v. IBM.  All of SCO's claims there look to be dead because of the decisions in SCO v. Novell, but IBM's counterclaims are still very much alive. Presumably SCO will eventually want to appeal that too, if and when that trial is done, if it eventually goes forward, which I expect it will, once the automatic stay is lifted for one and all.

Also, there is an ongoing arbitration in Switzerland still happening  in SCO v. Novell. Some claims were separated from the others and sent there, the ones that are related to the United Linux project and SUSE. Once that arbitration is decided, it all comes back to Utah.

Then there is the Red Hat v. SCO litigation, which the judge in Delaware put on hold, waiting for SCO v. IBM to be done first. Also, you'll remember that there is a case SCO brought against AutoZone, which also was put on hold.  Also, in the more theoretical category, the SCO v. DaimlerChrysler case was thrown out except for the issue of whether DaimlerChrysler responded quickly enough to SCO's letter requiring "certification".  SCO has the technical right to reopen that issue after IBM is done.

The bankruptcy isn't finished yet either. There is a deadline for SCO to file a reorganization plan by the end of December.  And so by then we ought to find out if SCO has found anyone willing to loan money to them or buy part of SCO's business.

Do you believe this mess?  And, except for the Red Hat case, it was all initiated by SCO.  Groklaw has a page trying to trace all the main events in all the law suits, with the goal of making it simpler and more comprehensible, but even that page is like a maze at Versailles.  You know there's a way to find your way through it, but it's so complicated, it's not immediately obvious how.

http://www.groklaw.net/staticpages/index.php?page=20080803065719599

Summing up, it looks bleak for SCO at the moment, but let's enter the alternate realm of SCO's best-case scenario in its dreams: in that realm, SCO wins on appeal, which one of SCO's lawyers indicated might take a year and a half or five years, and the case is sent back to Utah for trial by jury, which is what SCO wanted (as opposed to trial by judge, which is what it got), then everything listed above (except for the IPO class action) comes alive again, presumably, depending on what the appellate court decides. Then SCO is in position once again to go after Linux end users, as well as IBM, et al.    One of the things Novell might appeal is the part of the ruling that held that SCO didn't have to ask Novell's permission to enter into the SCOsource licenses with end users, since the court held that they were not SVRX licenses. Novell is interested in making it very clear that Linux is perfectly safe to use in the enterprise, after all.

And don't forget that an appeals court isn't the final stop in any litigation. It's like third base. The final court is the US Supreme Court, if they are willing to hear a case. The appeals court has to listen to SCO's appeal. The Supreme Court has a choice.

So, speaking now theoretically, a plaintiff that wanted to keep a negative cloud over Linux and/or IBM could drag it out for many years, should any such plaintiff ever be located that wished to play such a game.

In fairness, Boies Schiller is a law firm known for its persistence. And sometimes that kind of never-say-die law firm can do very well on appeal. They have a history of winning long shots, after all.

http://www.law.com/jsp/llf/PubArticleLLF.jsp?id=1199986621331

Don't forget, Boies Schiller is already paid through the appeals process, with a contingency balloon if they were to win on top of that payment. There are expenses involved in an appeal in addition to any attorneys' fees, of course.

So while I see headlines saying SCO is dead, I don't assume any such thing. Predicting what might happen in a court case is something I rarely do, because there are too many factors that simply can't be known in advance with certainty.  And one thing is already clear: this isn't a normal case, and anything you predicted would be  based on what usually happens in normal cases, so I gave up predicting anything much with regard to SCO long ago.

I think it depends on how much whoever planned this cares about prolonging it and to what degree the general financial meltdown affects SCO's ability to attract more money. That's a new and very huge factor that no one expected when all this began.

I forgot one detail about AutoZone. The judge in that case has issued an order that SCO is to go forward after December:

"IT IS ORDERED the stay in this case shall expire on 12/31/08 at which time the parties will be required to proceed with the prosecution of this case."

At that point, it's go forward or presumably the case will be dropped.

O'Reilly: From a practical standpoint, what happens to all this legal mess if SCO just plain runs out of money.  Even in bankruptcy, they can run out of gas, can't they?  Because the appeals are pre-funded, does that mean they go on even if SCO sinks under the waves?

Pamela Jones: Yes, the litigation continues no matter what. It could be, if SCO ended up in Ch. 7, for example, that the trustee would continue, or more likely try to settle, but once you are in court, it is mighty hard to get out, particularly if you are the one accused, which SCO is, by IBM and Red Hat.

O'Reilly: You've been following SCO practically since day one, and ended up getting pretty intimately entangled in the entire affair.  How hard is it to maintain a sense of journalistic detachment from the process when you're getting hauled into court proceedings and harrassed?

Pamela Jones: As a paralegal, I'm accustomed to legal proceedings, so it's probably easier for me than for someone without that background. But Groklaw from day one has been trying to be a voice for the Linux and FOSS communities in the matter, the one group most directly affected by the allegations against the code they wrote.  And yet that was the one group not directly represented in the case or in the media until we came along. Also, we're trying to put lawyers and geeks together, so they can help each other with their skill sets. So we're not trying to be the New York Times. We are doing group legal research, because who would know the code better than the folks who wrote it or in the case of UNIX  who either helped write it or used it and remember the history because they lived it?

O'Reilly: Groklaw covers a range of technology intersects with the law these days.  It seems to be becoming increasingly difficult to talk about technology without also talking about intellectual property, for example.  But beyond patent and file sharing issues, where do you see the upcoming friction points being between high tech and the law?

Pamela Jones: I had to think about that a bit, because so much has been going right lately.

Even the patent situation has improved, thanks to the recent decision in In Re Bilski. However, there is a major question remaining with respect to software patents, namely whether or not software that is tied to a simple desktop computer qualifies software for patentability.

A lot depends on the answer to that question, particularly Microsoft's patent threats against Linux.

But the biggest issue, in my view, is misusing the courts for anticompetitive purposes. I see more and more cases that seem, frankly, bizarre, but that still cost the victim company time, money and effort to flick away.  It's a cynical thing that worries me a great deal.  It's almost like the whole tech world decided trolling the court system would be a moneymaker.

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1 Comment

These are cases that almost have to happen in a world where the whole concept of stand-alone operating system is eroding.
What happens to all these suits and counter-suits when the majority start using cloud computing metaphors rather than stand-alone metaphors? Microsoft is not the only software company that stands to lose a lot. SCO, seeing their operating system business eroding, decided that though they might not get back the customers by this anti-social attack on Novell and Auto Zone, they can spread fear uncertainty and doubt in the OS that is eating their market share, GNU/Linux.
Microsoft's extremely vague claim of MS code in Linux distributions was very plain in the spreading of FUD. The whole brawling bunch are at the end of their reign in the stand-alone OS paradigm. Sun opening the source for Solaris 10 is the action of a company that sees where the market is going next, and which may bring them to profitability, just because the end-users who buy the hardware and software are fed up with being scared for (manufacturers') fun and profit.
It will be fun to see where these contentions will lead in the next few years.

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