1. Massachusetts has decided to switch to open source software (more precisely open standards, including Linux), the first US state to do so. This is a very important moment in history, so I wanted Groklaw to include it.

InformationWeek has the AP story by Justin Pope, AP Business Writer:

Massachusetts, the lone holdout state still suing Microsoft Corp. for antitrust violations, will become the first state to adopt a broad-based strategy of moving its computer systems toward open standards, including Linux, the rival operating system to Microsoft's Windows.

State Administration and Finance Secretary Eric Kriss said Thursday that the decision, adopted at a meeting of state information officers, was made on "technical grounds" and had nothing to do with Attorney General Thomas Reilly's pursuit of Microsoft.

In the technology industry, the term "open standards" refers to nonproprietary software. Microsoft's software is considered "closed" because application developers and other programmers don't have free access to the blueprints.

Kriss said the state's decision was driven by a desire to reduce licensing fees but also "by a philosophy that what the state has is a public good and should be open to all," Kriss told The Associated Press. He characterized the decision as the "most visible concrete action by a state government" to move toward open standards.

2. This article points out that Linux is used in an important way not even I knew about:

Linux, a variant of Unix which can be copied and modified freely, emerged a decade ago and is being used to run the Internet, handle financial transactions and even manage the U.S. nuclear arsenal.

. . .the concept needs all three components to be in place. 1) the promise or obligation 2) the reliance by others upon that promise or obligation and 3) the unfairness that would result if SCO can just wiggle out and claim what they said or did in the past does not matter. You need all three. And, it is even more difficult to understand than that in practice. You also need to convince a judge that the concept should and must apply to avoid an unfair result. . . .

The question before the court will be whether it would be unfair for IBM to have contributed its code under the GPL, permit SCO to re-distribute that code, permit SCO to add additional services and support based upon that code, all under the same GPL agreement and then permit SCO to simply disavow any and all obligations back to IBM in regard to the work contributed by IBM. In order words, would it be unfair to IBM not to honor the GPL? The answer of course is 'certainly'.

Once you get the concept, next check out the wording in this Caldera July 2001 Form S-3 in the risks section:

OUR BUSINESS MODEL, WHICH RELIES ON A COMBINATION OF OPEN SOURCE SOFTWARE AND PROPRIETARY TECHNOLOGY, IS UNPROVEN.

Our business model incorporates as integral elements of our product offerings both commercial products and open source software. . . .

Our business model also depends upon incorporating contributions from the open source community into our products. The viability of our product offerings depends in large measure upon the efforts of the open source community in enhancing products and making them compatible for use across multiple software and hardware platforms. There are no guarantees that these products will be embraced by the open source community such that programmers will contribute sufficient resources for their development. If the open source community does not embrace products that we view as integral to providing eBusiness solutions, we will be required to devote significant resources to develop these products on our own. . . .

WE RELY ON INDEPENDENT DEVELOPERS IN THE OPEN SOURCE COMMUNITY, SUCH AS LINUS TORVALDS, IN ORDER TO RELEASE UPGRADES OF OUR LINUX-BASED PRODUCTS.

Many of the components of our software products, including the Linux kernel, the core of the Linux operating system, are developed by independent developers in the open source community and are available for inclusion in our products without cost. Linus Torvalds, the original developer of the Linux kernel, and a small group of independent engineers have in the past developed and upgraded the Linux kernel. Neither Mr. Torvalds nor any significant contributor to the Linux kernel is an employee of ours, and none of these individuals are required to further update the Linux kernel. If these independent developers and others in the open source community do not further develop the Linux kernel and other open source software included in our products on a timely basis, or at all, our ability to enhance our product offerings will suffer. As a consequence, we will be forced to rely to a greater extent on our own development efforts or license commercial software products as replacements, which would increase our expenses and delay enhancements to our products.

In their October 31, 2000 10K, Caldera used even more clear and glowing language to describe their Linux-based business, and stated that they fully embraced the open source model:

Historically, business users have lacked a Linux solution that suits their needs. For Linux to fully support eBusiness, a solution must consist not only of advanced technology but also should be enhanced and tailored for business. This solution must promote the benefits of Linux for eBusiness and provide the proper education and training to facilitate adoption. Proper distribution channels are required to facilitate access to the business user. The Linux for eBusiness solution must be able to accommodate business applications and be able to interoperate properly with the diverse environment of internal corporate information systems and the internet. It must have the flexibility to be maintained centrally or managed remotely. Finally, a solution must adhere and conform to commercial standards to incorporate the latest technological advancement and ensure wide acceptance.

THE CALDERA SYSTEMS SOLUTION

We develop and market software based on the Linux operating system and provide related services that enable the development, deployment and management of Linux specialized servers and internet access devices that simplify computing. We believe that our Linux solution is a comprehensive solution for eBusiness. Key benefits of our solution include:

Focused business framework. We believe we were the first to tailor Linux open source code from various sources into sound, discrete products that are usable, deployable and manageable for eBusiness. Our development team consists of experienced Linux engineers and business professionals. We develop our products by first carefully choosing the Linux features that are the most relevant and useful for eBusiness. Then we assemble the code so that it is logically arranged and works together as seamless applications in which source and binary code match for logic and order. Our products are then tested for quality and performance. This enhances reliability and reduces the need for technical support when used under strenuous business conditions. This process, known as self-hosting, is unique in the Linux community and accounts for the high levels of stability and performance of our products. Our products are also designed to be interoperable with multiple platforms to enable businesses to make efficient use of existing information technology investments.

. . . Business customers often rely on solution providers to recommend which technology to purchase. We provide solution providers with products, third-party applications, education, training and tools to effectively facilitate or offer a Linux solution for eBusiness. Solution providers benefit from the lower maintenance and support costs necessary to maintain our Linux solution. We offer our services to solution providers on a worldwide basis.

Comprehensive product offerings. We believe that our OpenLinux technology is the most advanced for eBusiness. OpenLinux is the technology foundation on which we are able to build multiple products that perform different tasks. Each product has specific components that can be modified. For example, our desktop product can be modified to perform client specific functions such as running business automation applications or accessing the internet as an email client on hand-held appliances. Our server product contains modular components that can be configured to run specialized servers such as an email server or a web site server. We continually enhance the OpenLinux technology through our development centers in Germany and the United States. As a result, we are able to incorporate the latest Linux enhancements or modifications into our products. Our business experience enables us to build relevant business enhancements to Linux through add-on segments of code that connect to the core source code. These enhancements include web administration applications, the Caldera Systems open administration system, and an easy-to-use Linux installation wizard. We also offer our products in multiple language versions.

"Complementary value-added services. In order for businesses to implement our product offerings, we provide a wide range of valuable services. We believe that our service offerings provide significant benefits for eBusiness. These service offerings include:

- Technical Support -- Our technical support provides assistance during installation and operation of OpenLinux;

- Consulting and Custom Development -- Our consultants have extensive technological and business knowledge, which allows us to assist our electronic solution provider customers in implementing Linux solutions;

- Hardware Optimization and Certification -- Our consultants can optimize OpenLinux for a specific hardware platform and provide a rigorous testing and certification process; and

" - Documentation -- We provide consistent and up-to-date documentation on Linux that is not readily available in the open source development community.

Comprehensive, distribution-neutral education and training. Many companies are delivering different versions of Linux called distributions. We provide a comprehensive distribution-neutral training program for Linux. Our courses focus on educating and training the business community on Linux's benefits for business use. We offer a comprehensive set of courses designed to prepare students to develop, deploy and manage Linux in a business environment, including system, network and internet administration and programming. A student who has successfully completed our courses will be proficient with the leading distributions of Linux. We offer high-quality instructor-led training through our own training center at our headquarters and also offer our educational programs indirectly through our Caldera Open Learning Providers around the world.

"Business community catalyst and open source advocate. We believe we were the first Linux provider to introduce an open source operating system designed for the business environment. By demonstrating to key information technology companies such as Corel and Netscape that open source systems can work well with proprietary systems, we believe that we have sparked the interest of more conservative technology adopters and accelerated acceptance of Linux for business use. We help port, or convert, business applications to the Linux platform and offer ways to incorporate those products into existing systems. We are a major driver of Linux standards based initiatives such as Linux Professional Institute, or LPI, an independent organization dedicated to the establishment of professional certification standards for Linux professionals, and Linux Standards Base, or LSB, an initiative that is designed to standardize application development for the Linux platform. An application that meets all the criteria for LSB should work on all compliant distributions of Linux. If LSB is widely adopted, we believe it will significantly reduce the fragmentation of Linux.

We fully embrace the open source model and continuously contribute tools and technology to the open source community. We give away CD ROMs containing our Linux operating system at trade shows and allow it to be freely downloaded from the internet to encourage interest. We foster multiple development projects over the internet and help each project progress smoothly.

So, they said they were a Linux company, not just a Linux company, but more than that, the first and the best in the ebusiness space, that Linux was an integral part of their business. Furthermore, they joined Linux groups and taught Linux and gave away CDs of it and promoted it in every way possible. IBM took them at their GPL word, and made certain business decisions itself, based on Caldera's public position, and now Caldera (SCO) is trying to shift into reverse. That would leave IBM financially damaged, IBM is arguing, so even if SCO could prove every single legal issue, ha ha, it'd be too unfair to let them do it and get away with it. Equitable relief is great, because you are letting the judge do the right thing, no matter what the strict letter of the law might say, or even if there is no law on the books for him to use. It's really up to him to figure out a solution he thinks is fair. Now try to imagine what SCO's equitable rejoinder could be: can't think of anything? Me neither.

4. IPO Litigation: The same Form S-3 referenced above also explains the litigation surrounding their IPO, which I thought you might enjoy knowing about:

LITIGATION

Since July 11, 2001, three complaints have been filed in the United States District Court for the Southern District of New York alleging that our predecessor, Caldera Systems, Inc., various of our officers and directors and various of the underwriters involved in our initial public offering violated federal securities laws. The complaints allege, among other factual bases for the claims asserted, that a registration statement dated January 10, 2000 and a prospectus dated March 21, 2000 for the public offering of 5.0 million shares of Caldera Systems' common stock contained material misrepresentations or omissions or both. The complaints further allege that the misrepresentations and omissions consisted of, among other things, the failure by Caldera Systems to disclose in the registration statement and the prospectus that the defendant underwriters received compensation for the distribution of securities in the offering from parties other than Caldera Systems. The plaintiffs seek certification of the actions as class actions, an unspecified amount of damages suffered by the plaintiffs and the other members of the class, if any, rescission to the members of the class, if any, who do not continue to hold Caldera Systems common stock and attorneys' fees and costs. We have not been served with notice of the complaints. We intend to investigate the claims in the complaints and take action as we deem appropriate.

5. And then the document goes into some intriguing detail about indemnification of directors and executives , explaining that the SEC has told them that the DE indemnification clause is not enforceable in the SEC's opinion with regard to securities infractions, being against public policy; however, SCO plans to bring that issue to court to challenge the SEC's opinion should the need ever arise:

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant's amended and restated certificate of incorporation to be in effect upon the closing of this offering (the "Certificate") provides that, except to the extent prohibited by the Delaware General Corporation Law, as amended (the "DGCL"), the registrant's directors shall not be personally liable to the registrant or its stockholders for monetary damages for any breach of fiduciary duty as directors of the registrant. Under the DGCL, the directors have a fiduciary duty to the registrant that is not eliminated by this provision of the Certificate and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available. In addition, each director will continue to be subject to liability under the DGCL for breach of the director's duty of loyalty to the registrant, for acts or omissions which are found by a court of competent jurisdiction to be not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are prohibited by the DGCL. This provision also does not affect the directors' responsibilities under any other laws, such as the Federal securities laws or state or Federal environmental laws. The registrant intends to obtain liability insurance for its officers and directors prior to the closing of this offering.

Section 145 of the DGCL empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers, provided that this provision shall not eliminate or limit the liability of a director: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) arising under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. The DGCL provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation's bylaws, any agreement, a vote of stockholders or otherwise. The Certificate eliminates the personal liability of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL and provides that the registrant shall fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director or officer of the registrant, or is or was serving at the request of the registrant as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

Other than the litigation identified under "MATERIAL CHANGES -- LITIGATION" above, at present, there is no pending litigation or proceeding involving any director, officer, employee or agent as to which indemnification will be required or permitted under the Certificate. The registrant is not aware of any threatened litigation or proceeding that may result in a claim for such indemnification. . . .

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Now, through SCO Group's controversial claims on the freely distributed Linux operating system, Canopy finds itself in a three-way federal court battle. Claiming SCO's proprietary Unix code has shown up in Linux, Canopy's offspring seeks up to $50 billion from computer titan IBM -- even as it fights off a pre-emptive suit from leading Linux distributor Red Hat Inc.

Ralph J. Yarro, Canopy's president and chief executive, cannot help but relish his company's feisty, litigious reputation, even as he argues it is undeserved. Multimillion-dollar settlements from big-name companies make headlines, he says, but the dozens of tech companies and thousands of Utah jobs Canopy has helped create are its true legacy.

"I would prefer to be a peacemaker than to fight," Yarro says. "But I don't have the luxury to pick who steals from us, who attacks us. All I can do is decide whether or not we will defend ourselves."

Once that decision is made, the commitment is total. "We don't care how big you are. If you mess with us, we're going to take you on, even to our utter destruction, whatever occurs. We fear nobody, and we are respecters of no persons."

I was so surprised to see this interview at this point in time that it made me start to think. Are their lawyers unable to make these people be quiet? Does Canopy realize the jig is up and they might as well go down swinging? Or what is the card they think they are yet to play that makes them so reckless of obvious danger? I don't know, but I think it's time, threats or no threats, to start looking more closely at the Canopy Group and the Noorda connection. Are you in?