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The Davidson Email, Red Hat, and the Lanham Act
Tuesday, July 19 2005 @ 05:14 AM EDT

It's been fun watching SCO spin on the Davidson 2002 email/Swartz 1999 memo, don't you think? While a few in the media showed some confusion, and one joined SCO's frantic spin, most seemed to get one fundamental issue as clear as a bell, and you could almost hear a collective gasp and the world saying:

You mean it was all a bluff? Is this *all* SCO was holding when they said all those horrible things about Linux? Not just Linux, but Linus too?

The sheer gall of it is what resonated, even if many didn't quite catch why it mattered legally. Their jaws dropped, because even now, this late in the game, people still thought that SCO must have something, some basis, at least in their own minds, to embark on their swashbuckling slash-and-burn litigation attack on Linux.

I saw efforts to figure out the full significance of the study and the later email, where it fits in the IBM case, since that is primarily a contracts case. Well, *now* it is, after SCO's trade secrets and copyright infringement claims pretty much bit the dust. They were trying to figure out why this study, followed by the "we found absolutely nothing" email, would matter in an IBM context. If there never was any real evidence of infringement, what does that mean in the SCO v. IBM lawsuit? It does matter in that context, and IBM indeed has accused SCO of a number of things that the email and the ridiculous draft of a study may prove to have relevance to. For example, remember that IBM has accused SCO, in its counterclaims, of Lanham Act violations. You may remember this article:

As Red Hat did earlier in the week, IBM said SCO violated the Lanham Act, a law designed to help companies defend against allegations that may harm its business. IBM said SCO has made false claims regarding IBM's AIX and Linux-related products and services, "which affect a customer's decision whether to purchase these products or services."

Related to that, IBM is arguing that SCO engaged in unfair competition by seeking to deprive IBM of the use and sale of its Linux products and services to benefit its own Unix licensing business. In a separate counterclaim, IBM said SCO's legal actions have marred its business relationships with other companies.

But the big issue isn't IBM, in my opinion. Don't forget Red Hat. That was the first thing I thought of when the Davidson email surfaced.

When SCO began its trash talk, Red Hat wrote to them and asked them to provide the basis for their public claims, and got nothing, so they sued saying that SCO had no basis. The study seems to confirm that Red Hat was on the money, unless SCO has something to show us now or at trial that would justify the things they said back then. They specifically accused SCO of making false statements to the press, false advertising, and said that SCO had made vague statements without presenting any evidence to back them up. That, to me, is the issue. Did SCO have any evidence to back up their verbal attacks on Linux and on the open source method of development? If not, Red Hat may eat them alive.

Let's go back and take a look at what Red Hat is claiming in its lawsuit against The SCO Group. I think it will help you to understand why SCO is trying to spin, spin, spin so hard and what they are probably really afraid of. At least, I'd be scared, if I were them.

Do you remember why Red Hat said it filed its lawsuit against SCO in August of 2003?

"We filed this complaint to stop SCO from making unsubstantiated and untrue public statements attacking Red Hat Linux and the integrity of the open-source software development process," Mark Webbink, Red Hat's general counsel, said in a statement.

Bryan Sims, Red Hat's vice president of business affairs and general counsel, said the Raleigh, N.C.-based company has asked the court to determine that it hasn't infringed on SCO's copyright or misappropriated any of SCO's trade secrets.

"We also brought a claim under the Lanham Act for false advertising and unfair competition under federal law that the statements that SCO was making are deceptive and untrue," he said.

Sims said Red Hat also filed a complaint under the state of Delaware's deceptive trade practices act.

"We also filed three other claims [under state law], one for unfair competition, one for trade libel, meaning they disparaged our trademark by making these untrue and unfair statements, and one saying they intentionally and wrongfully interfered with our business relationships," Sims said.

Red Hat is also seeking a preliminary injunction barring SCO from continuing its claims that Red Hat's Linux violates SCO's intellectual property, he said.

In Red Hat's complaint, they accused SCO of the following:

The Plaintiff, Red Hat, Inc. ("Red Hat"), has commenced this action in response to the unfair, untrue and deceptive campaign now being waged by the defendant, The SCO Group, Inc. ("SCO"), to harm the market for Red Hat's highly successful operating system based on the open source LINUX kernel. As described below, SCO's tactics have centered on the use of highly publicized, but vague, general and unsupported claims that portions of the LINUX kernel and operating system contain intellectual property allegedly owned by SCO, in hopes that such unfair, untrue and deceptive statements will cause users and potential users of LINUX to re-evaluate their plans to deploy LINUX as a primary component of their Information Technnology infrastructure.

SCO's claims are not true, and are solely designed to create an atmosphere of fear, uncertainty and doubt about LINUX. . . .

Again, although the LINUX source code is publicly available, SCO repeatedly has refused to identify publicly even one line of SCO source code that was copied.

SCO's tactics are as obvious as they are unlawful. SCO makes grand public claims about the potential liability of anyone using LINUX because of alleged violations of SCO's purported intellectual property, but then refuses to support those claims with the detail that would exist if SCO's claims were true. . . .

Additionally, SCO's campaign is designed to further what, upon information and belief, has been referred to as the "LINUX Lottery" -- the ability to reap personal profit by carefully timed purchases and sales of SCO stock.

That is just how it opens. Red Hat is asking for a declaratory judgment that Red Hat is not infringing any copyrights of SCO's but it is also asking for treble damages, attorneys fees and costs "for harm caused by SCO's unfair competition and false advertising in violation of Section 43(a) of the Lanham Act...., unfair and deceptive acts or practices in violation of the Delaware Deceptive Trade Practices Act..., as well as for violations of common law, including trade libel, unfair competition, and tortious interference with prospective economic advantage."

If you wish to read about "SCO's Wrongful Actions" in detail, it begins on page 10. One of them listed was the letter SCO sent to the 1500 businesses, claiming that the Linux development process was flawed, leaving them liable for infringement as end users, but again without any specifics, a strategy that Red Hat said was designed to make it impossible for the Linux community to defend itself or demonstrate the falsity of SCO claims.

Paragraph 59 made me think of the study:

SCO's illicit strategy is transparent -- make loud public claims about alleged intellectual property rights, provide no detail (since it does not exist), and hope to use the time-honored technique of creating fear, uncertainty and doubt to slow the growth and use of LINUX, damage the business of LINUX providers such as Red Hat, coerce unwarranted fees from LINUX users by threats of litigation, and, upon information and belief, even create enough nuisance value to be acquired while running up the price of SCO's stock in the short term, thereby creating various financial opportunities to wrongfully enrich the originators of this scheme.

When I saw the Davidson email, and particulary the memo from 1999, the thought came into my mind, Has this all been just another "Get the Facts" style sleight of hand?

So, Lanham Act claims. What's that? First, here is the statute, the relevant part being this:

§1125. False designations of origin and false descriptions forbidden

(a)

Civil action.

(1)

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--

(A)

is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B)

in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

Here's an article that nicely explains false advertising under the Lanham Act, what you have to prove to prevail on such a claim. What exactly are the elements of a claim of false advertising?

Courts have formulated the following elements for a claim under § 43(a):
  • The defendant must have made a false or misleading statement of fact in advertising.
  • That statement must have actually deceived or had the capacity to deceive a substantial segment of the audience.
  • The deception must have been material, in that it was likely to influence the purchasing decision.
  • The defendant must have caused its goods to enter interstate commerce.
  • The plaintiff must have been or is likely to be injured as a result.
United Industries Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998).

To obtain monetary damages - as opposed to simply injunctive relief - a Lanham Act plaintiff must also demonstrate actual consumer reliance on the false advertisement and a resulting economic impact on its own business.

Think Red Hat might be able to prove all the elements if this lame study, with SCO's own employee discrediting it, is all they had? SCO told the media, and I saw it quoted in several accounts, that the study said there were issues that needed investigating further. That's what they are doing in AutoZone and IBM in discovery they said. But this is two years' later. What factual basis did they have in March of 2003 when they began trash talking Linux?

You can't just make up bad things to say about a competitor's products for the fun of it. Well, you can, but not legally. The Lanham Act says you can't. No wonder SCO asked for every scrap of code ever written by IBM. (By the way, check out yesterday's UserFriendly. He has a solution for the SCO problem: give them more code.)

They desperately have got to find something, to justify all those claims of having mountains of infringing code, line-by-line identical code. Remember all that? What proof did they have *at the time that they made those claims* that any of it was true? Surely not just that study? They sued on a hunch? Very, very dangerous to malign a competitor's product on a hunch. What if you never find anything in discovery?

I've heard from a number of readers over the years we've done Groklaw who have told me that their company decided not to switch to Linux for fear of the SCO litigation. There was a tremendous effect, at first, that without a doubt impacted on the marketplace, and indeed that seemed to be the purpose of all the PR from SCO.

Now, in both the IBM and the Red Hat cases, at least, SCO faces charges of deception, deception material enough that it was "likely to influence the purchasing decision." The law divides false advertising, the article explains, into three categories, implied falsity, literal falsity and "mere puffery." The last isn't something the court cares about, but the other two are actionable. It's much easier to prove implied falsity, they explain, but if the study, the draft of the study, is all they had, considering the qualifying email, would it be impossible to prove literal falsity? Implied falsity is where you say something that is literally true, but it misleads materially. Remember the claim that SCO had already so much proof of infringement it didn't even need to do discovery?

What about the claim that the Linux development process was fundamentally broken, that it was a "free-for-all" and that the only choices left for Linux users in the enterprise were to stop using Linux or to drop down to an earlier kernel or pay SCO money to leave them alone and in peace? Money. Hard earned money. For what? Mr. Davidson's email, saying that they looked for infringement but that the study found absolutely nothing indicates that 8 years into development, the process worked perfectly, and SCO had reason to know it.

To prove an implied falsity claim, you have to do the following, the article continues:

If the claim is an express tests-prove claim, then the plaintiff must show the tests or surveys relied on are unreliable or do not in fact support the advertising claim. But where there is a bald or non-establishment claim, which does not expressly rest on a test or study, then the Lanham Act plaintiff must show the claim is actually false and cannot merely attack any tests or peer-reviewed studies that support the claim. In essence, the plaintiff must generate affirmative proof that the statement is literally false, rather than simply take potshots at the defendant's tests or studies on which the advertisement does not expressly rely.

Think Red Hat or IBM would find it difficult to prove that study was insufficient to support SCO's public claims, now that you've seen all of SCO's evidence, or most of it, in two years of observing day in and day out? Think about Dr. Randall Davis or Dr. Brian Kernighan's declarations, for starters. What about SCO's representations about the study to the press recently? SCO was quoted by the media as saying that the study shows there are possible problems with Linux. But that isn't what they claimed. They didn't claim there were possible issues. The consultant who did the study wrote that he wanted oldSCO employee Michael Davidson to review those possible issues, because he was the expert on the history of the company, not the study's author.

Mr. Davidson did review the study's findings, and he told SCO executives that the study found absolutely nothing, no copyright infringement at all, that any seeming issues turned out to be code legally used. Mr. Davidson read the report, and whatever information Mr. Swartz characterized in his 1999 memo, the fragments, etc., Mr. Davidson considered it all, and he says the study found "absolutely nothing". He acknowledges some similarities, but with his expertise, he concludes that while there is "a lot of code that is common between UNIX and Linux", upon investigation "invariably it turned out that the common code was something that both we (SCO) and the Linux community had obtained (legitimately) from some third party." If SCO has evidence to the contrary, where is it?

And to repeat a point made in the article when the email surfaced, but some may have missed, since I tacked it on as an update, there is the issue of the files the study listed as possibly infringing:

But what about the ABI files -- errno.h, the ELF headers and so forth? As I understand it from Dr. Stupid, they are essentially unchanged in today's kernel from how they looked in 1999. A naive automated code comparison between Linux and SysV does turn up matches in these files, he says. It thus seems hard to believe that Swartz would not have come across these similarities. Yet Davidson concluded they were "absolutely nothing." Would not that statement directly contradict SCO's public claims regarding the ABI files? . . .

And then there is the later study in 2004 by the world-renowned Dr. Randall Davis, who concluded in his 2nd Declaration:

"Despite an extensive review, I could find no source code in any of the IBM Code that incorporates any portion of the source code contained in the Unix System V Code or is in any other manner similar to such source code."

SCO said back then -- nay, it broadcast it from the rooftops -- that Linux had in it mountains of copyright infringement, so much infringing code they told us there was no practical way to remove it and still run Linux. In the Red Hat case particularly, they simply must show they had a factual basis for making those claims.

Either they will have to take those MIT deep divers out of storage pronto and produce their alleged findings at last to justify their talk, I think, or find something, or they would seem to be vulnerable to losing the Lanham Act claims. I don't see how the study, on its own, can save them, because of the later Davidson email. Frankly, my jaw dropped too, when I read the memo and the email, and as familiar as I am with the SCO saga, I too said to myself, Is that all there is?

I can't help but wonder about shareholders, too. If they thought SCO was holding stronger cards than it turns out they actually had, and bought stock based on that impression, then what? Like, oh, BayStar, for example.


  


The Davidson Email, Red Hat, and the Lanham Act | 654 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections go here.
Authored by: Anonymous on Tuesday, July 19 2005 @ 05:23 AM EDT
Following Groklaw tradition, so that PJ can find them easily.

-RL.

[ Reply to This | # ]

The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 05:29 AM EDT
Yes, it's been fun watching, PJ.
It was a great present you offered IBM there.

[ Reply to This | # ]

OT Goes Here
Authored by: mondo on Tuesday, July 19 2005 @ 05:29 AM EDT
To make links clickable, change mode to "HTML Formatted" and do <a
href="http://www.example.com>THIS</a>

[ Reply to This | # ]

corrections go here (non-anonymous thread)
Authored by: xtifr on Tuesday, July 19 2005 @ 05:30 AM EDT
Please place corrections here, not in the thread started by
"anonymous", as per PJ's oft-repeated request.

---
Do not meddle in the affairs of Wizards, for it makes them soggy and hard to
light.

[ Reply to This | # ]

The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 05:47 AM EDT
This is going to make a great TV documentary or film one day :)

[ Reply to This | # ]

The Red Hat Complaint
Authored by: eskild on Tuesday, July 19 2005 @ 05:56 AM EDT
I know the Red Hat complaint is temporaryly stayed, but how far into the process
did it go before it got stayed?

Was any discovery ever done?

---
Eskild
Denmark

[ Reply to This | # ]

Swartz is one of the MIT 'deep divers' ??
Authored by: belzecue on Tuesday, July 19 2005 @ 06:22 AM EDT
"Either they will have to take those MIT deep divers out of storage pronto..."

As I mentioned in the earlier Davidson memo article, I believe Robert Swartz is one of the 'MIT experts' SCO claims -- he's listed here on this MIT page as a consultant, and we all know that is enough for SCO to pronounce him a rocket scientist...

[ Reply to This | # ]

Injuries to RedHat
Authored by: Duane on Tuesday, July 19 2005 @ 07:05 AM EDT
Maybe you've already done this, but it would probably be useful to start
collecting specific instances where companies decided to defer or cancel using
Linux due to SCO's claims. Having a list of companies that are prepared to
attest that their purchasing decisions were influenced should make things a bit
easier for RedHat or whoever else to prove actual injury.


---
"I never could learn to drink that blood and call it wine" - Bob Dylan

[ Reply to This | # ]

Responsibility
Authored by: Anonymous on Tuesday, July 19 2005 @ 07:34 AM EDT
What really bothers me about this is that assuming everything PJ said is correct
and that it comes to a trial I still don't see the outcome I want. I am afraid
the Corporate Veil will protect the perpetrators so the net result will be big
legal bills all around, SCO bankrupt, and the perpetrators walking away with
nice chunks of cash squirreled away. I would feel much better if the top
management that hatched this plot and their attorneys if they can be shown they
should have known it was a scam, all did hard time in a real prison. That is
the only deterrent that really counts. All the rest is "just money"
or "just business" to those folks no matter how many working folks
they screw in the process.

[ Reply to This | # ]

Enderle seems to have done similar
Authored by: Anonymous on Tuesday, July 19 2005 @ 07:49 AM EDT
Enderle Group also made many of the same false and misleading allegations which
influenced some of our company's management to pretty much kill off our linux
initiatives. How many of these came lies from SCO or other clients of his I'll
never know; but these Microsoft-PR-groups-pretending-to-be-analysts caused far
more damage within our company than SCO themselves did.

Can guys like that get in trouble too?

[ Reply to This | # ]

The Davidson Email, Red Hat, and the Lanham Act
Authored by: Steve Martin on Tuesday, July 19 2005 @ 07:59 AM EDT

That statement must have actually deceived or had the capacity to deceive a substantial segment of the audience.

Well, this is easily proven... after all, their claims certainly deceived many in the media (such as Laura DiDio, Rob Enderle, Dan Lyons, and Maureen O'Gara), who reported such information to millions of faithful readers.

:)

---
"When I say something, I put my name next to it." -- Isaac Jaffee, "Sports Night"

[ Reply to This | # ]

They haven't claimed literal copying for a while.
Authored by: Anonymous on Tuesday, July 19 2005 @ 08:09 AM EDT
SCO has demanded all IBM code back to when von Neumann was in diapers. They
hope (they say) to prove that IBM started with their copyrighted code and then
morphed it so that it was no longer recognizable. Thus, the lack of matching
code means nothing.

As PJ has pointed out, they have been very creative in finding ways to keep this
case alive. In fact, their ability to do that is a scandal. Red Hat should
have been granted their injunction. People should go to jail.

[ Reply to This | # ]

From "When I'm Old and Wise" by the Alan Parsons Project
Authored by: cybervegan on Tuesday, July 19 2005 @ 08:15 AM EDT
"As far as my eyes can see
There are shadows surrounding me
And to those I leave behind
I want you all to know
You've always shared my darkest hours
I'll miss you when I go"

Just seemed poetically apt right now. No need to paraphrase or satirize :-D

regards,
-cybervegan

---
Software source code is a bit like underwear - you only want to show it off in
public if it's clean and tidy. Refusal could be due to embarrassment or shame...

[ Reply to This | # ]

Back To Baystar
Authored by: Anonymous on Tuesday, July 19 2005 @ 09:06 AM EDT
So here's a silly thought for you.

Baystar bought in to the fiaSCO early on and wound up with a lot of shares. Then
with slightly less fanfare but a large amount of publicity they dumped them.

Is it possible that, as a shareholder in SCO, that BayStar could have gone to
SCO and said, "As a major shareholder in your company, we'd like to see
this alleged evidence you have, for us to understand the value of our
investment". SCO may have wriggled for a while [they are good at that, I've
noticed] but if Baystar threatened to drop their stock, SCO might have crumbled.


So let's postulate that Baystar saw the evidence, decided that the case was
meritless, and then decided to back out. OK, so you and I would probably not
have made the investment in the first place without validation of the evidence
[assuming it was a critical factor in the purchase decision], but clearly this
didn't happen here.

Once Baystar sees the code, they walk. That might explain the sequence of events
quite nicely.

Now to be silly: if Baystar saw the code, and Baystar discussed with SCO,
resulting in their decision to withdraw, could IBM subpoena someone from Baystar
to discuss the grounds and timing of Baystar's decision to drop their SCO
investment?

If my highly theoretical rant, above, is close to the truth, we could have the
spectacle of watching SCO sunk by the one company that SCO were earlier
championing as validation of their litigation strategy and investment worth.

Oh the irony!

;o)

[ Reply to This | # ]

What about fraud charges???
Authored by: imperial on Tuesday, July 19 2005 @ 09:07 AM EDT
I may be wrong here, but since SCOX has taken maoney from different companies
under the SCOsource program, perhaps fraud charges may be appropriate.

If they knew, and they apparently should have known, that their claims on the
Linux code were essentually zero, then threatening companies and persons with
legal action action and accepting money from some of them constitutes a criminal
act?

I dont know what laws would apply or in what jurisdictions, but here at least
(Oz) I would tend to think the Fraud Squad would be involved about now. Then
again we do things differently here.

A case in point is a large corporation sued some conservation organisations for
slander etc and the judge, after reading their 330 page statement of claims,
tossed it out because it was too vague and did not define what the actual
accusations were with any level of specifity. They now have until mid August to
get specific (with evidence) or they get chucked out completely.

Perhaps if either MJ Wells or Judge Kimball had taken a similar approach, this
could have been done and dusted 2 years ago.

Another point, I wonder if Red Hat can get the stay lifted now, Im sure that
Judge would be more than somewhat perturbed by this email....one would hope so
anyway.

If Im wrong, tell me, but this looks like fraud to me.

[ Reply to This | # ]

The Lanham Act and Microsoft Advertising
Authored by: NZheretic on Tuesday, July 19 2005 @ 09:31 AM EDT
When it comes to false advertising Microsoft is a Cereal Offender. The resulting lawsuit against Microsoft also mentioned the Lanham Act – False Advertising and Product Disparagement.

Since 2001 Microsoft and agents of Microsoft have continued an unabated campaign against Linux using a litany of false and deceptive claims. When do we get relief?

[ Reply to This | # ]

What's the end game?
Authored by: BigBadBob on Tuesday, July 19 2005 @ 09:50 AM EDT
PJ says: "If not, Red Hat may eat them alive."

There isn't much left of SCO and what there is seems to be putrefying. It will
be good for IBM and RedHat and others to clear their name, and for the cloud (if
it even qualifies as that) over Linux to be lifted. But how much realistically
can the parties get in damages out of SCO? Won't SCO's lawyers get pretty much
everything?

[ Reply to This | # ]

Discovery questions
Authored by: overshoot on Tuesday, July 19 2005 @ 09:50 AM EDT
"On $DATE, your CEO Mr. McBride made the following public statement {insert quote}. What basis did he have for that statement?"

Repeated for each quote in the GrokLaw quote database. I'd be quite surprised if IBM's law team hasn't already asked those questions. The absense of answers would, I suspect, have made the Lanham Act counterclaims pretty much a slam-dunk. For the more egregious "millions of lines" stuff, quite possibly an open-and-closed summary judgment.

[ Reply to This | # ]

Darl's descision...
Authored by: Anonymous on Tuesday, July 19 2005 @ 10:21 AM EDT
I am still confounded by one question, and I know it is the question that
everyone has been asking since day one, where is the code?

This question arose in reading PJ's comments here where she linked to a CNet
article that quotes Darl as saying "The Linux community would have me
publish it now, (so they can have it) laundered by the time we can get to a
court hearing. That's not the way we're going to go."

I'm still confused. Let's say SCO really had 10 instances of places where Linux
was copied *illegally*, line-for-line, from SCO's code. What would the harm
have been to publish 1 of those 10, even if the Linux community would have it
laundered by the time it got to trial? For that matter what if they showed all
10, and all 10 were laundered by the....

ahhh forget about it, Darl is just a loser. I keep trying to ask these
questions in my mind and keep coming back to this whole thing does not make
sense at all.

[ Reply to This | # ]

Re: Mountains
Authored by: Anonymous on Tuesday, July 19 2005 @ 10:36 AM EDT

I could almost believe

``SCO said back then -- nay, it broadcast it from the rooftops -- that Linux had in it mountains of copyright infringement...''

if SCO was headquartered here in Illinois. We have no mountains (as a teenager, learning how to park your car on a hill was a challenge: no hills to speak of). But they're in Utah. They know full well what mountains look like.

Do you think what they meant to say was that what they'd found was the tip of the iceberg? You know, most of it's not visible? :-)

--

[ Reply to This | # ]

The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 10:37 AM EDT

The following is my speculation.

  • SCO is the sacraficial lamb of Microsoft.
  • 'Longhorn' is late by years.
  • Longhorn might take some wind out of the Linux sails.
  • Microsoft needed to stall Linux deployment.
  • Microsoft bought SCO's management via undisclosed agreements.
  • The game is to let all the litigants ultimately have SCO.
  • Preserve whatever market share for Longhorn that is possible.

In the aftermath of the lawsuits, IBM and others should go after the personal assets of the SCO officers and directors, really anyone defined as 'Key Employee'. Go for ALL the assets of these individuals. Then, offer to settle if they give up the true reason for the lawsuits.

I really would like to see 'Microsoft, a subsidiary of IBM' on software packaging in the future.

JMHO.

[ Reply to This | # ]

The Singing Defense
Authored by: lsmft on Tuesday, July 19 2005 @ 10:47 AM EDT
A large company can afford to defend against this type of nonsense stated above,
but what about when a individual/small company is caught up in a justice system
that allows these types of games to be played? We can be destroyed. And if SCO
had built a strategy to only come after the millions of little companies/people
instead of the big ones they probably would be doing very well today indeed. Our
justice system is anything but. Yesterday I was at the American Museum of
Natural history and saw a exhibit about an african tribe where you sang to
defend yourself. If the judges liked your singing you would get off guilty or
not. My first thought was this is nuts then I thought given the crapshoot that
our justice system is (remember US vs Microsoft, OJ, Durst, M Jackson)what's the
difference and a system like this would at least save a lot of money and
even the playing field.

[ Reply to This | # ]

This whole cluster of cases...
Authored by: Anonymous on Tuesday, July 19 2005 @ 11:10 AM EDT
Must've been good for business at Reynolds' Metals. They're a huge purveyor of
aluminum (or as a friend calls it for this purpose "loonium" ) foil.

(Actual "Tinfoil" is nearly impossible to find these days. :-) )

...D

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  • shortage of.. - Authored by: Anonymous on Wednesday, July 20 2005 @ 04:36 AM EDT
    • shortage of.. - Authored by: Anonymous on Wednesday, July 20 2005 @ 02:25 PM EDT
How is 'advertising' defined?
Authored by: kawabago on Tuesday, July 19 2005 @ 11:36 AM EDT
SCO made all it's statements to the press who reported them to us but did they
put false claims in their advertising? Does the law give them enough wriggle
room to say they never made false claims in their advertising?

---
TTFN

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The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 11:40 AM EDT
Why does SCO seem to be the rencaration of Joseph Mccarthy?

"I have the names of 50 known communists here in my briefcase "...
"And I won't let anyone see it"....

Just replace communists with Linux code. "I have hundreds of lines of
code copied from Unix in my briefcase, and I won't let you see it"

Eventually Joe was found to be a fraud, and so will SCO....

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The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 11:43 AM EDT
I've felt from the beginning that SCO original objective was to be bought out by
IBM. All the false claims they had was a rue to initiate a buyout by IBM.

But IBM didn't blink.

When this is all over, IBM (other than lost sales) will get all of SCO for just
legal fees.

But the SCO management team who didn't think this far ahead will be in deep
legal do-do.

It's sad. Because except for the entertainment value, we all suffered. But of
course, Linux will be better prepared for the next legal FUD attack.

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IBM's response
Authored by: Anonymous on Tuesday, July 19 2005 @ 12:22 PM EDT
While many here have hoped for a UF response to the discovery order it is
interesting to note IBM's response. They did not send CDs, tapes, zillions of
pages etc. They sent a complete system set up, ready to use. I can see only one
reason to make it so simple. They had already done the deep dive themselves and
were confident there was nothing.

Tufty

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The Elephant in the Living Room
Authored by: AllParadox on Tuesday, July 19 2005 @ 12:37 PM EDT
As an old trial lawyer, I tend toward deconstructionism. I analyze what people
have said, the way they have said it, and what they have not said, all in
relation to the context. I am well aware of the drawbacks of the technique.
Frequently the results are mere silliness, but all too often the analysis seems
prescient, so I continue.

In a lawsuit, one gets the opportunity to peer behind the curtain. (Movie:
Wizard of Oz; "Pay no attention to that man behind the curtain". Not
a reference to "piercing the corporate veil".)

"What did 'The SCO Group' know, and when did they know it" is the
question. Let us do a little "deconstruction" here; assemble what is
seen, and what is not.

"The SCO Group" is a party to the lawsuit "SCO v. IBM",
nominally the plaintiffs, though they are defending counter-claims that may
easily overshadow their initial complaints. Their opponent, IBM, has taken
advantage of the rules of court, as codified in the Fed.R.Civ.Proc. IBM has
sent requests for production of documents to "The SCO Group", among
other discovery steps. These requests for production of documents require the
recipients to deliver back whatever documents match the request. Failure to
produce may result in several kinds of sanctions: citations for contempt of
court, verbal abuse from the judge that is not necessarily in open court, and
most importantly; exclusion of the hidden documents from any trial. Kimball has
already demonstrated that he will not allow late amendments based on previously
known information. Gregory Blepp may think hiding the evidence is the smart way
to try a trial, but experienced trial lawyers consider it a Fool's Gambit.

What we know there is: the Davidson email/Schwarz Memo. If "The SCO
Group" were to try hiding anything, this is the thing they would want
hidden. This is a clear statement that management at "The SCO Group"
was directly informed by at least one competent analyst that there was no
"there" there. Not only was management informed, but this email/memo
was released as part of discovery. The attorneys are aware of the sensitivity
of these documents: they were initially sealed. A reasonable inference is that,
in general, they are releasing information down to this level of pain.

What we know there isn't: any expert analysis or expert study supporting
"The SCO Group's" position. We have two indirect but reliable sources
for this conclusion. First, in the motion for summary judgment on IBM's
counter-claim 10, "The SCO Group" did not submit *any* direct evidence
of copied code, and Judge Kimball pointedly said so. Second, the attorneys for
IBM have meticulously dissected everything filed by "The SCO Group".
Wherever "The SCO Group" made a claim or argument, IBM has directly
rebutted it. IBM has nowhere made a rebuttal of any filing by "The SCO
Group" that refers to any other expert study or expert analysis.

Certainly, "The SCO Group" attorneys could commission an expert study
to analyze the code from the two systems. They could do it today, and may have
already started such a study recently. Such studies would be "attorney
work-product", and would be immune from routine discovery requests, with
the usual caveat: failure to disclose means exclusion from trial. They could,
for example, commission four studies, suppress three, and promptly disclose the
single study that best supports their position. Critically important, none of
those studies can be back-dated to show that "The SCO Group" had sound
basis for filing the suit initially.

The best that "The SCO Group" has been able to produce is Sandeep
Gupta's affidavit. Again, the reasonable inference is that "The SCO
Group" had Gupta, with or without help from a few staff members, revisit
the analysis performed by Davidson/Schwartz. The sole purpose was to prop up
the version of events put forward by "The SCO Group".

Lastly, let us go back to the central actor in all of this: the puppeteer,
president Darl McBride. President McBride's experiences may have critically
misled him about how courts and the trial process work. Previously, he made
serious claims against former employers. On their face, these claims seem
overstated to me. President McBride's attorneys then may have overplayed their
cases for the P.R. value, in anticipation that their victims would cave before
the ugliness of a public trial. In that narrow context, the attorneys were both
correct and successful.

The error for president McBride may have been in applying the strategy of an
annoying-but-ultimately-irrelevant-gadfly to an all-or-nothing high stakes
slugfest with the world's top intellectual-property and technical-litigation
company: IBM. He may have confused "nuisance value" with merit, only
because he was so unreasonably successful in his first forays into the legal
system. A very strong hint that this is correct is the odd suggestion from
"The SCO Group" representatives that they expected to be bought out,
for big money, by IBM. That expectation is foolish on its face. A
former-employee lawsuit with a few hundreds of thousands of dollars in damages
is simply not comparable.

To conclude: president McBride may have believed that he could start a major
lawsuit like "SCO v. IBM", and have it settled for nuisance value.

If so, he may have taken a very serious gamble by ignoring the Davidson
email/Schwartz memo, papered over the problem by having Gupta do another,
non-expert, analysis, and then proceeding with a meritless nuisance lawsuit.

When IBM flatly refused to entertain his offers to settle by buyout, he had no
way to back out.

The last two years have been difficult for those of us cheering for Linux.

The last two years have been one long unending nightmare for "The SCO
Group" president Darl McBride. His high-stakes trial strategy has failed,
and spectacularly. With the counter-claims filed by IBM, this gambit has every
chance of not only losing, but completely destroying everything that "The
SCO Group" posesses that has value: the Unix copyrights and licenses.
Under his stewardship, the whole of the assets of "The SCO Group" may
have been obliterated. He, personally, is still terribly exposed for the
conduct of this lawsuit.

There are nights when I do not sleep easily, but I would not trade the cash
assets of Microsoft for the troubles that president McBride faces.

---
PJ deletes insult posts, not differences of opinion.

AllParadox; retired lawyer and chief Groklaw iconoclast. No legal opinions,
just my opinion.

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Red Letters before the Red Dress?
Authored by: om1er on Tuesday, July 19 2005 @ 02:00 PM EDT
Man oh man - I like the big red letters at the top of the article!

Grabs the attention in a way that I don't recall being done on Groklaw before.

I take it that this is VERY significant?

Very well done for getting these documents out on the WWW.



---
Keeping an eye on the bouncing ball.

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Express Path for Red Hat?
Authored by: darkonc on Tuesday, July 19 2005 @ 03:09 PM EDT
If Red Hat wants to wants to force the issue in their case, What they could possibly do is: Abandon those issues which are heavily bound in the IBM and Novell cases ( Positive declaration of non-infringement, questions about whether or not SCOG even has the copyrights) and simply go against them on lantham act.

Focus on the SCO declaration that that had already found mountains of infringing code and didn't need disclosure and their 'MIT Rocket Scientists' were all but drowning in infringing code which was too much to be able to remove and still have Linux be runable.

Say that those statements were knowingly false and that SCO had no proof at the time that they claimed to have it, and that those claims materially and negatively affected the Red Hat Linux market.

Abandon the request for Declaration of non-infringement (IBM is going to effectively accomplish that) unless SCO wishes to positively claim that in a cross allegation. Presume, for the purposes of the allegation that SCO has, or could have, copyright and simply say that those issues don't need to be resolved to be able to go against SCO for lantham act violations.

Then rip them a new face.

I think that this could go very quickly. There would be, I think, minimum need for disclosure, and this might even be decidable on a PSJ.

---
Powerful, committed communication. Touching the jewel within each person and bringing it to life..

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The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Tuesday, July 19 2005 @ 06:11 PM EDT
<sarcasm>
PJ,
You have really got to get out of the habit of destroying the SCO case. It's
really getting boring.

Do you not have anything else you can do to their cases ?
</sarcasm>

I continually wonder if there is any way that the rest of us could start to
challenge SCO throught the courts ... to use their abuse of the system against
them...

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Compensation
Authored by: kh on Tuesday, July 19 2005 @ 07:05 PM EDT
The problem for Redhat is likely to be that by the time the case is unstayed
there may be no money left to pay RedHat because it's all gone to IBM. Perhaps
Redhat needs to ask for an injunction against all that money, shares etc.
especially in the dodgy director dealings. Perhaps they could ask for SCO
funds/options etc. to be held in escrow! Also that the directors and executives
who had such a heavy media presence like McBride, Sontag, Stowell to be made
financially liable.

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But wait what about RICO???? And The Blues Brothers, too!
Authored by: enigma_foundry on Tuesday, July 19 2005 @ 10:19 PM EDT
Would anyone with some legal background comment on the
possibility of criminal charges against the SCO gang?
Fraud charges, R.I.C.O., anyone?

I hope IBM, Red Hat and Novell should go for the jugular
here, after all the expense, pain and work of the lawsuit
and all the damage they have tried (even though they
failed) to do to linux.

We need precedents. We need to make an example of these
turkeys. Gates and MS need something to think about before
they start messing with the penguin.

REMEMBER: what happens to those who mess with penguins:

(After watch his brother fall down the stairs in a desk:
"Jeez, Jake, I told you not to talk to Nuns like that")

Now Daryl needs to fall down his stairs
(figuratively/allegorically of course--I never condone
violence)



---
--

Enigma-Foundry

If it ain't baroque, don't fix it.

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License, Insurance, or Fraud?
Authored by: GLJason on Tuesday, July 19 2005 @ 11:03 PM EDT
  1. If Company A sells a license to Company B for code that they have, that is a license.
  2. If Company A sells insurance to Company B to protect from litigation over IP issues, that is insurance.
  3. If Company A sells a "license" to Company B for something they don't need and can't use so that Company A itself will promise not to sue Company B for a nonexistent infraction, that is fraud (and extortion).
SCO had publicly stated they had ironclad proof of "mountains of code" that they owned that was present in Linux. They publicly stated that if you used Linux and didn't have a SCO license, you were violating their copyrights. They publicly stated they had teems of experts going over the code every which way but Tuesday and have found significant infractions. Yet when faced with interrogitories asking for them to list the problems, they don't respond, risking the judge's wrath.

I certainly hope IBM has done one of those depositions where they ask SCO to appoint someone with knowledge of any code comparisons that were done and ask them exactly what was done. My guess is that not much was done. Maybe they had a few people (like Sandeep Gupta) do comparisons and find similar code, but not copyrightable or from a third party. Would that be enough for them to claim that they believed it to be true and thus avoid fraud charges? I hope not.

IBM will have to wait until the discovery deadlines which Judge Kimball thankfully imposed. After that we will have to wait for IBM to refile its dispositive motions which Judge Kimball unthankfully put off until the 'end of discovery'.

SCO has tried to deflect the Davidson email, but there's no real way around it. Swartz had found areas that seemed like copied code with his programmatic comparisons, but deferred to Davidson's judgement. Davidson decided that there were no true violations, just uncopyrightable stuff or stuff gotten from specifications or third parties that wasn't SCO's to begin with.

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Why the big surprise?
Authored by: Anonymous on Tuesday, July 19 2005 @ 11:52 PM EDT

Even before these documents were unsealed: scox twice failed to provide any
evidence of infringing code when ordered to do so by a federal judge. Scox also
made complete fools of themselves at the great "showing of the code"
at that scoforum. And, if it wasn't a scam from day one, then why would scox
only show the code to select journalists who signed an NDA?

And now journalists are acting shocked? Are they retarded or just ignorant?

- walterbyrd

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The Davidson Email, Red Hat, and the Lanham Act
Authored by: Anonymous on Wednesday, July 20 2005 @ 03:10 AM EDT
I'm not sure if I follow your logic PJ. From the article:
If the claim is an express tests-prove claim, then the plaintiff must show the tests or surveys relied on are unreliable or do not in fact support the advertising claim. But where there is a bald or non-establishment claim, which does not expressly rest on a test or study, then the Lanham Act plaintiff must show the claim is actually false and cannot merely attack any tests or peer-reviewed studies that support the claim. In essence, the plaintiff must generate affirmative proof that the statement is literally false, rather than simply take potshots at the defendant's tests or studies on which the advertisement does not expressly rely.

You followed that with "Think Red Hat or IBM would find it difficult to prove that study was insufficient to support SCO's public claims[?]". However, I think the test in this case with be about "bald" claims rather than the "tests have proved" type claims. This would meen that Red Hat et al will have to prove that the statements are false rather than proving the the studies/tests/research were insufficient.

While SCO made reference to "deep diving" MIT scientists, analyses and searching for and finding code, they didn't tie them directly to statements about "Mountains" of infringing code. they said things like "truck loads of infringing code" but never preceeded that with "our scientific test have clearly proven that there exists..."

By this measure, "taking potshots" at the study would not make the case for Red Had. Red Hat would have to do discovery and get every version of every piece of SCO code to compare to Linux (or just ask Randal Davis for his expert opinion).

$0.02

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big deal, nothing will happen
Authored by: Anonymous on Wednesday, July 20 2005 @ 08:12 AM EDT
SCO will go bankrupt, Darl et al will walk away with sacks
of money, IBM, Red Hat, Autozone, and Daimler-Chrysler
will have enriched many lawyers, and that will be the end
of it. No one who should be punished will be punished. PJ,
I love Groklaw and the wonderful work you have done here.
You've made a real difference. But that doesn't change the
fact that the courts are slow and ineffective, and that
this is business as usual for the good ole boy's club.

I've lost track of the number of times I've read "this
judge is really smart and saw through the baloney" or
"this document shoots down their whole case", and yet the
thing still drags on. It's a farce.

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Conspiracy theory!
Authored by: Anonymous on Wednesday, July 20 2005 @ 10:30 AM EDT
Well here's the deal: I'm definately just speculating and love the irony of this
case coming into a conclusional phase now. I'm not bashing or prejudiced but...

In my opinion this whole episode would seriously turn out to be a nice farce...
if IBM planned this all along. If you can get SCO to sue you based on absolutely
no evidence and nothing more then a *hunch*, there must have been some large
motivational force back when they started this.

Now the motivation is appearing: it looks like Red Hat is going to be the first
to pull open SCO's bank assets and file for claims. That's going to be a nice
sum of money once they get it.

Makes you wonder why IBM isn't countersueing themselves yet (they're just
denying, nothing more basically). Of course Red Hat was first and any court will
postpone any claim from IBM immediately based on the outcome of prior cases...
So basically IBM has just handed Red Hat the biggest prize of them all.

After Red Hat gets granted a claim, IBM will be happy since they can conduct
business as usual, and they can buy up SCO for peanuts and pretzels(free
perpetual unix license gifts included), and Red Hat gets a fully loaded cash
register to invest from (buy licenses from IBM? nahhh that's too far-fetched).

Of course, IBM isn't the bully since they got sued... Red Hat isn't the Bully
since everyone knows Red Hat is a dead rat without a viable linux market, so
nailing SCO to the cross is the perfect crime.

couldn't orchestrate that one any better myself.

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The Davidson Email, Red Hat, and the Lanham Act
Authored by: Sunny Penguin on Wednesday, July 20 2005 @ 11:00 AM EDT
If I was involved in SCO management
I would delay the end of discovery to postpone then sentencing phase of the next
trial...


---
Just Say No to Caldera/SCO/USL/?

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I hope EV1 is reading this
Authored by: Anonymous on Wednesday, July 20 2005 @ 01:15 PM EDT
If I was Robert Marsh, I'd hand a copy to my lawyers and tell them to go hence
and fetch my "six-figures" back.

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Business news... figures
Authored by: Anonymous on Wednesday, July 20 2005 @ 02:33 PM EDT

Well... a search on Google doesn't show the news showing up within business articles yet. No surprise there but still slightly disappointing. As near as I can figure, it's showing up in Tech articles with the odd blog or local news.

RAS

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