A Year of Groklaw: SCO On The Ropes?

Sunday, May 16 2004 @ 07:46 AM EDT

Contributed by: PJ

Today is Groklaw's one-year anniversary. Happy anniversary, everyone.

What a difference a year makes. When we started, all the headlines were saying that SCO was going to destroy Linux or at least make it cry. Now, looking around today, I see almost everyone predicting SCO's imminent doom instead. I think the truth, as usual, isn't in the headlines, and that it's somewhere in between those two extremes.

It seems appropriate to take a moment and look at a selection of current articles, to see how the mood has shifted. Lee Gomes, whom you may remember as being the first journalist who seemed to catch on to SCO, has just written an article for "California Lawyer" called "Desperate Measures -- A trade secrets case challenging open-source technology seems increasingly desperate". It's online but only for subscribers, but Denise Howell was kind enough to let me know about it. (You might also want to check out this article on the DMCA, mentioned on Howell's blog. The author predicts an increasing use by companies beyond just the entertainment industry of the DMCA's anticircumvention provisions as an anticompetition tool.) Gomes writes:

"One lawyer's barratry is another lawyer's strategy. But attorneys contemplating a legal assault based on dubious facts would be wise to learn a lesson from The SCO Group's litigation against users of the Linux operating system: Be careful who you pick a fight with. The Lindon, Utah, software company couldn't have chosen a tougher target-or one with a more dedicated group of allies."

He mentions Groklaw too, which felt good on our anniversary.

Here's what he said about us:

"Almost as one, Linux users engaged SCO the same way they do everything else-collaboratively, on the Internet. Typical is Pamela Jones, a paralegal who tracks the SCO litigation in a blog, or Web log, called Groklaw (groklaw.net). It's a must read for anyone following the case, containing running commentary and links to all relevant court and SEC filings. Jones, who writes as 'P. J.,' gives a complete exegesis of the case, even to procedural rulings by U.S. District Judge Brooke C. Wells that are usually ignored by the press.

"The ferocity of SCO's opponents seems to be just one of its miscalculations. . . .

"But SCO's suit against IBM may produce unintended consequences. Linux has long been nagged by insinuations from competitors-Microsoft among them-that its open-source foundations are legally suspect. Now, with the Linux IP challenged in court, the open-source community is attempting to document its heritage. The result could be a clean bill of health for Linux-and a major headache for its giant rival to the north. And that's not exactly what SCO was hoping for."

Maybe that article is why Groklaw picked up a bunch of new users recently. If so, they are likely all lawyers. California lawyers. We have about 6,000 registered members now, in case you are counting, and many, many more who visit but don't have a user account.

Gomes isn't the only journalist who sees dark clouds on SCO's horizon. Robert X. Cringely®, who has trademarked that name, I notice, making me wonder if I should trademark PJ -- joke, joke -- weighs in on the RBC pullout and what it means for SCO:

"Last week the Royal Bank of Canada sold two-thirds of its shares in the world’s Most Despised Technology Company (that’s SCO, to you) to BayStar Capital. When the Canadians lose faith, you know you’re in trouble (unless you’re SCO and wouldn’t recognize trouble if it bit you in the Yukon). That leaves BayStar as the last wooden leg propping up SCO’s mega-billion-dollar lawsuits. Considering that the venture capital firm has publicly expressed concerns about SCO’s management team, I can’t imagine CEO Darl McBride is feeling too cozy right now."

Others concur, that RBC's action indicates a lack of faith in SCO's chances, but notice what an RBC spokesman says here, indicating to me that they are keeping one foot in the door:

"Chris Pepper, a spokesman for RBC Financial Group, told vnunet.com that the move was a 'business decision', but that the common stock investment meant that RBC was keeping its options open 'to see what is best'. . . .

"'This move by RBC does not change the $50m cash funding that SCO received as a result of the RBC and BayStar investments from last October,' said Stowell.

"But Gary Barnett, principal analyst at Ovum, stated: 'It does not bode well for SCO's lawsuit. If RBC thought SCO would win - so that shares would double in value - it wouldn't be seeking to back out, would it?'"

Robert McMillan also says the SCO lawsuit hasn't achieved any slowdown of Linux in his article, "SCO changing industry, not slowing Linux -- Company not successfully shaking Linux; seen as overextended", which is accompanied by a sidebar of stats:

"Although some open source advocates claim SCO’s strategy was designed to slow down the rate of Linux adoption, today that scenario does not seem to have panned out.

"Linux server shipments jumped by 52 percent in the fourth quarter of 2003, according to research company IDC, which expects Linux to almost double its market share from 16 percent in 2003 to 30 percent by 2008. . . .

"Charles King, an analyst at Sageza Group agreed, saying that if SCO’s strategy was to create uncertainty about Linux, the company has not been successful. With the number of lawsuits ballooning and one of SCO’s major investors, Baystar Capital, asking for its money back, SCO may be in real trouble. 'It’s got all the makings of a company that’s very badly overextended,' King said."

McMillan did something interesting. He reinterviewed a man who had attended the SCOForum in Las Vegas last August, where SCO showed code that turned out not to be their property, but which wowed this man, John Moore, on that day. Here is what Moore said when he was interviewed at SCOForum last year:

"The company's arguments seemed to hold weight with the SCO faithful. 'I think (they've) got a strong case,' said SCO reseller John Moore, the president of Moore Computer Consultants, based in Pembroke Pines, Florida.

"'I didn't really take into account the derivative works aspect of it. That's the nail in the coffin,' he noted. 'Not everybody was convinced they had a case. This removes all doubt.'"

Moore was interviewed by ComputerWorld back then as well:

"John Moore, president of Moore Computer Consultants in Pembroke Pines, Fla., said Lindon, Utah-based SCO renewed his faith at the show.

"'If I had any doubts before yesterday, as far as I'm concerned, they erased them,' he said. 'The real question is what happens next.'

"'I like the direction they're going in,' Moore said. 'We want to grow, too. We don't want to stay small forever.'"

And how about today? How is this SCO loyalist viewing matters?

"Still, SCO faithful, such as John Moore, president of Moore ComputerConsultants, give the Unix vendor credit for remaining a viable company.

“'Linux is going to find its place. If it lowers the cost of doing business, that’s the bottom line, and that’s what’s going to make it fly,' Moore said."

Like I said, a year can make a big difference. One thing that has not changed is Groklaw's view. From day one, I wrote that the case was flimsy, and that the GPL would stand effectively through the storm. I don't think the legal fight is done. Or the FUD fight. But that is still true. I was reading yesterday about the history of UNIX, in connection with the UNIX timeline project, and I came across a 1999 article comparing "Microsoft Windows NT Server 4.0 versus UNIX", and how extraordinary it was to see, particularly in the list of referenced articles at the end, that Microsoft FUD against Linux was largely the same years ago. Folks with a lot of money can be very annoying. Without the money, their arguments would have withered and died by now, because they make no actual sense.

To illustrate what I mean about the legal fight not being over, eWeek has a very interesting interview with an IP lawyer, Glenn Peterson, who thinks SCO has more than a chance of winning on both motions, something I haven't been able to call. Of course, winning the remand to state court doesn't mean winning the slander of title action, by any means. Before you leap to the conclusion that he might be a SCO toady, note his name. It is the same attorney who represented nycfashiongirl in the RIAA-Verizon lawsuit. He prevailed and forced the RIAA to change their way of subpoenaeing their targets. You can read about that case in this PDF of the article, "Local Lawyers Putting Privacy Back Into Entertainment". You can find all the court documents on EFF's website, including the RIAA's failed Request for a Rehearing, a document that lays out their point of view, and EPIC has the decision. EPIC submitted an amicus brief in that case also. I take seriously what Peterson said, therefore. Here is some of what he had to say about the Novell-SCO conflict:

"Glenn Peterson, intellectual property attorney and shareholder with the Sacramento-based law firm McDonough Holland & Allen, summed up the status of the case: . . .

"'The law is fairly clear that the judge must rule on the motion to remand first, because if remand to the state court is appropriate, it is the policy of law to let the state court determine whether dismissal is appropriate,' he said. That being the case, Peterson predicted, 'the motion to remand will be granted by Judge Kimball. It has long been a policy in common law that the "plaintiff is the master of its claims," meaning essentially that the plaintiff can tacitly shape its claims to suit its choice of forum.'"

On page two of the article, he elaborates on the slander of title action and why they might have brought that instead of a breach of contract claim:

"'SCO's "slander of title" claim muddies the waters a bit. No doubt, they didn't sue for breach of contract because they were not a party to the asset purchase agreement—SCO's predecessor in interest was the contracting party. But to have your title slandered, you must first have title; i.e., ownership on paper.'

"And that is something SCO doesn't have, according to Peterson. 'SCO tacitly admits that it didn't get the "ownership on paper" or "instrument of conveyance." In its prayer for relief, it specifically asks the court to order that Novell convey ownership to SCO.'

"This means, according to Peterson, 'the heart of the case is clearly about determining contractual rights, and state courts have jurisdiction to determine copyright ownership issues in a contractual context.'

"Whether SCO can win Unix's copyright in the state court remains to be seen but, Peterson said, 'the law generally favors SCO on these two motions,' so SCO is likely to get its day in the Utah court."

So, they may win the two motions but then lose the war anyway, because they lack title and they goofed and asked the court to convey ownership to SCO, which is a way of admitting they don't presently have ownership. I fail to see how you can prove slander of title if you don't have title, but I'm wondering if they can lose that one and still get the relief they want, turning over the copyrights. Naturally, I hope Mr. Peterson is wrong, because I'd like to wrap this SCO story up and throw it in the garbage, but it's good to have a clear connection to reality at all times, and it is important to consider all possibilities.

And, once again, while it would definitely kill SCO's hopes of terrorizing the planet with lawsuits if it fails in the Novell case, it isn't a disaster if they prevail. IBM's case, for example, doesn't at all depend on whether or not Novell owns the copyrights or SCO does.

Because it's our anniversary, I thought it'd be fun to take a look back at Groklaw's first article about SCO. If you like statistics, we have had 919 articles in the last year. As you will see, Groklaw's position hasn't changed much. The IBM case is clearer than it was a year ago, but I am standing right where I started on the rest. Of course, the link to SCO is now broken. So much of what SCO used to have on their site has disappeared in the last year, along with their deep-divin' MIT analysts, but, despite all their effort, it hasn't done them much good. So, to commemorate our year together, and put it in perspective, here is the first Groklaw article on SCO:

As you likely have heard, SCO has hit IBM with a lawsuit, alleging misappropriation of trade secrets, unfair competition, breach of contract and tortious interference with SCO's business.

Why anyone cares, outside of IBM, is because SCO has now sent letters to commercial users of Linux, warning them that they may be liable for IP infringement, and it looks like it intends to go after RedHat and SUSE as well as IBM. Some have said that if SCO is successful in its litigation, "it could undermine one of the basic tenets of the open software movement, of which Linux has been the most successful example. Linux is a Unix derivative..."

Pardon my curled lip.

Regarding SCO's claims: First, Linux , the kernel, is not a "Unix derivative". It was written from scratch. Second, the Free Software Foundation's software is also all written from scratch, and they have a policy of replacing any contested code, as Gartner's has pointed out. Inexplicably, SCO has posted this Gartner's report on their web site, evidently not realizing that it points out the simple solution to any IP claims they may have against Linux, or GNU/Linux. Gartner says if you're worried about your code due diligence would include just checking with the Free Software Foundation.

Here is what Richard Stallman said about the SCO claims in a very interesting series of articles on MozillaQuest Magazine, where he offers a simple fix -- just show the code SCO thinks is copied, and it'll be taken out and replaced:

"If any AT&T-copyrighted code was copied into GNU, this occurred despite our continued efforts to prevent such copying. Our intention was to write code from scratch, and we have surely done so 99% of the time or more. If SCO can find code that was copied and is not fair use, they merely have to show it to us. We will take out the AT&T code and replace it."

And here is what he said regarding FSF policy for programmers regarding Unix source code:

"We made deliberate efforts to prevent copying of any Unix source code into the GNU system. We have had written recommendations for GNU developers since the 80s, telling them not to even look at Unix source code while writing GNU programs. I don't know whether the developers of Linux, the kernel, have stated such policies, but at least the GNU part of GNU/Linux should be safe."

Folks, GNU stands for "GNU's not Unix".

For that matter, IBM has policies too. While I can't speak to the contract dispute between them and SCO, because all the facts regarding their dealings are not on the table yet, some of IBM's Linux kernel developers were interviewed on Slashdot, and they were specifically asked if they got to see the AIX source code, the code SCO claims was copied. Their answer makes it clear that IBM took steps to prevent it. Here's how they answered:

"First of all, before any of us were allowed to contribute to Linux, we were required to take an 'Open Source Developers' class. This class give us the guidelines we need to participate effectively in the open source community -- both IBM guidelines and lessons learned about open source from others in IBM. We are definitely not allowed to cut and paste proprietary code into any open source projects (or vice versa!)"

What is so weird about the SCO position is it has avoided specifying exactly what code they claim is allegedly copied. They say they'll show it at trial, which is obviously a long way off. Meanwhile, they are causing a lot of PR damage."

The Only Thing We Have to Fear Is...

Hmm... you don't suppose? ...

How weirdly coincidental: Recently Microsoft Chief Executive Steve Ballmer said Linux "customers will never really know who stands behind this product."

Why, that's exactly what SCO is saying in its complaint. It is known that SCO is having money troubles. Could it be... ??

Here's Linus Torvalds' reaction:

"I don't personally think they have any IP rights on Linux, and I agree, it looks more like a suit over the contract rather than over Linux itself. I don't think they are going to win it (very very weak arguments, since at least from a technical perspective I don't think the IBM involvement has been that significant, and SCO was losing out _long_ before IBM started pushing Linux). However, my personal (maybe overly cynical) suspicion is that even _they_ don't think they'll win the suit, and it may be nothing more than a way to force IBM back into license discussions over UNIX itself.

"So I think that 100-day license revocation thing may actually be the most important part of the whole suit, and that the rest might be just the excuse. If I was SCO and looking at IBM, I'd have long since noticed that IBM has been talking about Linux taking over more and more of their current AIX usage, to potentially eventually replace it altogether.

"So SCO sees IBM largely going away as a licensee in a few years - and while I certainly don't have any knowledge of how much that means for SCO, I would not be surprised if IBM licenses are quite a noticeable part of SCOs receivables. And what would you do? You want to get IBM back to the discussion table over licensing _before_ IBM starts to consider the UNIX licenses for AIX to be no longer worth it."

Here's Bruce Perens:

""He's saying this stuff exists, but he's not willing to reveal it. Well, maybe we'll hear about this in court, but frankly, maybe we won't, because they'll try to seal it all....It sounds like he's trying to FUD Linux in general.... They should just show us what code they have problems with. We'll take a look at it or we'll just replace it. Keeping us in the dark is just silly."

Red Hat:

"Given that we have extensive legal resources put forth into making sure we respect the valid intellectual property rights of companies, we are not concerned with the statements that have been made...."

Some more reactions and some more stories. The community has reacted point by point also. The consensus is that, while no one but the parties can yet know the true facts as to the contract dispute between IBM and SCO, as far as the Linux kernel is concerned, there probably isn't anything to fear but fear itself.

And that, in a phrase, may be exactly what this is all about. Good Olde FUD takes another turn around the block.

David Boies has agreed to represent SCO. I am trying to remind myself that our legal system is predicated on lawyers sometimes representing people they don't personally admire, and the system really does depend on someone being willing to take on unpopular clients. I know Boies doesn't use email, or at least he didn't the last time I checked. So maybe he doesn't quite get the tech ... ah, hang it all, there's no way around it: I feel bad he's chosen to represent them, especially after I posted an Ode singing his praises, and I hope he loses.