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IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims - Updated
Sunday, October 08 2006 @ 03:35 AM EDT

Would you like to hear the rest of the BayStar story? Then pull up a chair, my friends.

On page 21 in IBM's Amended Redacted Memorandum in Support of its Motion for Summary Judgment on SCO's Interference Claims (SCO's Seventh, Eighth and Ninth Causes of Action [PDF], IBM reveals that SCO alleged that it was IBM that got BayStar to threaten litigation against SCO and to terminate its business relationship. BayStar denies it, as does IBM. If you noticed a Declaration by Larry Goldfarb on the list of exhibits [PDF], this is what it's about. He provided a declaration for IBM stating that SCO's allegations aren't true. A lot of folks have done so too, and so IBM is now asking the court to toss out these three SCO claims.

BayStar, Goldfarb testifies, dumped SCO because its stock price, financial performance and the viability of its UNIX products all appeared to be in decline, and he "was also very concerned about SCO's high cash burn rate." Pure financial animals get nervous when that happens. But the kicker was he began to realize that Microsoft, whose senior VP of corporate development and strategy had promised that Microsoft would in some way guarantee the SCO investment, started showing signs it might not do that after all:

"Mr. Emerson and I discussed a variety of investment structures wherein Microsoft would 'backstop,' or guarantee in some way, BayStar's investment.... Microsoft assured me that it would in some way guarantee BayStar's investment in SCO."

Let me interrupt my narrative to quickly ask, Why ever would Microsoft guarantee BayStar's investment in SCO? What would be the business purpose here? What would Microsoft's benefit or payback be? What were they hoping for as the return on the investment? And why didn't they wish to invest directly? Pray do explain. Joke. Joke. Anyhow, after the investment was made, Goldfarb says, "Microsoft stopped returning my phone calls and emails, and to the best of my knowledge, Mr. Emerson was fired from Microsoft."

Ah! The well-known Microsoft 180. Kiss kiss, let's do a deal. Drop dead. Well, not to try to teach Mr. Goldfarb anything, since he's the businessman, not I, but isn't life's highway littered with companies who thought it'd be remunerative to be a Microsoft partner, only to end up as roadkill? That's what I've been reading, anyway. In any case, now we know the rest of the story about BayStar. Good for Mr. Goldfarb, for providing this declaration. He didn't have to do that.

But that's not the only crazy SCO allegation.

After SCO filed its Final Disclosures, SCO served on IBM a revised interrogatory response regarding its claims of interference. It identified, among other things, 6 companies or entities IBM allegedly interfered with by direct contacts, namely BayStar, HP, Computer Associates, Oracle and Intel and an "OpenSource conference in Scottsdale, Arizona."

Say, what was that last one, again? It seems John Terpstra was hosting a conference in the spring of 2004. SCO's story is that Darl had an oral agreement with Terpstra to speak at the conference, but it claims IBM allegedly told Terpstra it didn't want Darl to speak at the conference and would withdraw its support if he did.

How would one quantify the damages due to SCO from that missed opportunity for Darl to speak at an Open Source conference? One can't help but wonder. Did he think he'd rake in some business at an Open Source conference, after going for Linux's throat with his fangs? Apparently so, because IBM is alleged to have interfered with SCO's ability to "generate potential new business and establish goodwill in the open source community."

Say, what? Goodwill? In the Open Source community? These SCOfolk have no shame. In 2004, do you remember SCO trying to establish goodwill in the community? It was actively suing DaimlerChrysler and AutoZone, opposing Red Hat's request to the judge to reconsider and let the case go forward, threatening legal activity in Spain, Germany, and the UK against Linux users, issuing a subpoena to FSF, all the while FUDing away to such a degree Red Hat brought it to the court's attention. None of that was endearing to the Open Source community. Yet he actually thought he'd get business from speaking at an Open Source conference? I don't really think so. Darl attended the Novell BrainShare conference that spring, but secretly, under cover, in disguise. If he wanted goodwill, why would he do that?

Sometimes I wonder if news can't make it over the Wasatch Mountains. SCO seems so cut off from reality. If you don't remember all that history, just go to our Archives and look by dates at that time period. I think it would be hard to find conduct more offensive to the Open Source community than what we watched back then. About the only thing worse would be SCO's conduct the year before.

This filing is an hilarious account of all IBM went through to try to figure out what SCO's claims regarding interference really are. What SCO wrote in its Second Amended Complaint doesn't altogether match what SCO later came up with. BayStar, for example, isn't even mentioned in the complaint. Here's the short version of SCO's claims, the heart of what IBM is responding to, the pertinent causes of action in the complaint. For the long version you can read the complaint itself, but it hardly seems worth it, since SCO's claims morph and grow and then contract, and serious study of the original claims probably won't help you figure out what SCO is complaining about now, but here's the essence of the claims as they started:

  • 7th, Interference with Contract -- "IBM, directly and through its Linux distribution partners, has intentionally and without justification induced SCO’s customers and licensees to breach their corporate licensing agreements, including but not limited to, inducing the customers to reverse engineer, decompile, translate, create derivative works, modify or otherwise use the UNIX software in ways in violation of the license agreements. These customers include Sherwin Williams, Auto Zone, among others."

  • 8th, Interference with Contract -- "Specifically, commencing on or about May 2003, Novell began falsely claiming that Novell, not SCO, owned the copyrights relating to UNIX System V. On information and belief, IBM had induced or otherwise caused Novell to take the position that Novell owned the copyrights -- a position that is flatly contradicted by the Asset Purchase Agreement. Since that time, Novell has improperly registered the same copyrights that it sold to SCO and that SCO had previously registered.

    "In addition, IBM intentionally and improperly interfered with the Asset Purchase Agreement by inducing or otherwise causing Novell to violate the Asset Purchase Agreement by claiming Novell could waive and was waiving breaches of license agreements by various licensees, including IBM. ...Again, Novell's position, improperly encouraged and induced by IBM, is flatly contrary to the terms of the Asset Purchase Agreement.

  • 9th, Interference with Business Relationships -- "SCO had existing or potential economic relationships with a variety of companies in the computer industry, including but not limited to Hewlett Packard. IBM has intentionally interfered with plaintiff's existing or potential economic relations. For example, at Linux World in January, 2003 IBM representatives contacted various companies with whom SCO had existing or potential economic relations. These IBM representatives said that IBM was discontinuing doing business with SCO and that these other companies, some of whom are business partners with IBM, also should discontinue doing business with SCO."

Essentially, then, SCO alleged that IBM somehow induced Novell to get copyrights on Unix, to waive any alleged breach on IBM's part, all in violation of the APA, and SCO also says that IBM told HP and other companies at Linuxworld in 2003 that IBM wasn't going to do any business with SCO and neither should they.

That's in the complaint. But IBM goes on to recount how SCO's claims kept changing, without IBM ever being able to find out exactly what SCO was alleging IBM had done. In interrogatories and depositions and various communications, the story kept changing, and IBM details for the court how hard it has tried to find out what its "crimes" actually amounted to, and now it asks the court to deep six these three claims. In IBM's Preliminary Statement, IBM writes:

SCO's Seventh, Eighth and Ninth Causes of Action allege that IBM has interfered with SCO's contracts and business relationships with customers, business partners and other entities. As shown in detail below, SCO's description of these claims has shifted throughout the pretrial proceedings, expanding, contracting, and again expanding (at times wildly), with the only constant thing being SCO's failure to provide any clear identification of the specific contracts or business relationships that were supposedly injured or the acts of IBM that allegedly caused such injury. Although it appeared that SCO was attempting simply to avoid disclosing its evidence (at least until trial), it is now clear that what SCO has been seeking to disguise is the lack of any support for these claims at all.

Yes, it isn't just code that SCO isn't providing specifics about. It's the alleged interference too. Which businesses did IBM interfere with? IBM asked SCO to tell it in interrogatories. SCO kept changing the list, and there were no specifics provided, despite several court orders. So, having failed to get answers from interrogatories, IBM tried deposing folks that SCO provided to testify about the alleged interference with 14 companies IBM listed in its notice. IBM deposed Jeff Hunsaker and Ryan Tibbits. However, IBM found Hunsaker "not prepared" to answer its questions with the kind of detailed and specific information IBM was asking for. SCO handed over two more documents listing 13 companies, and IBM deposed Darl McBride and asked him if the 13 companies in the documents were the only companies with which IBM was alleged to have interfered. McBride ended up listing 10 "acts" involving 43 entities, and while the section is heavily redacted, it ends by telling that at the deposition, "Mr. McBride could not identify all of the members of these groups." IBM wrote to SCO to object to McBride's apparent attempt to expand the claims in his testimony, noting he didn't testify from first-hand experience, and SCO seemed to back off and said Mr. Tibbits would testify on those matters and they'd be consistent with the numbers on the IBM interrogatories, the depositions, and the two documents SCO provided the day before McBride's deposition.

But then, at the Tibbits deposition, SCO produced a spreadsheet, listing interferences SCO was alleging "and currently investigating" and there were some 250 entities in at least 7 countries listed, but again, no meaningful details about exactly how IBM was alleged to have interfered or how SCO was harmed. Mr. Tibbits essentially just read from the spreadsheet, IBM claims, or speculated in his answers. So after interrogatories and now three depositions, IBM was still in the dark as to what it had allegedly done, except that they now knew that SCO was alleging that IBM's sales force was allegedly persuading SCO's customers that "SCO has no viability" and that there was IBM direct pressure to stop dealing with SCO. But again, no specifics.

So here's IBM, wondering how many entities is it? It spoke with SCO's counsel, who said they'd decided to limit it to maybe ten, possibly five. SCO would give IBM an updated interrogatory response reflecting this soon. IBM warned SCO that if it failed to do so, IBM would bring the matter to the judge. But when SCO next filed its Final Disclosures, it didn't include the updated interrogatory response. The next day, SCO told IBM the final number would be six, BayStar, HP, Oracle, AutoZone, Intel and Novell.

The next month, after the Final Disclosures, SCO served on IBM the revised interrogatory response, in which it identified 150 entities allegedly interfered with, and the 6 companies or entities IBM allegedly interfered with by direct contacts. SCO says that it and HP still have a "good business relationship" but HP provides a lot less support than in 2002, and it blames IBM for that.

The essence of SCO's interference gripe, though, is that IBM encouraged companies to migrate to Linux rather than use SCO's Unix products. High crimes and misdemeanors indeed. IBM "enabled" them to switch. Dear SCO: That's called competing in business. There's no law against that that I know of. SCO provided IBM a list of some 19 customers SCO said it lost because they moved to Linux, including KMart, Safeway, Shaw's Supermarkets, Target, and AutoZone.

IBM next tried to depose Tibbits a second time, as recently as June 30, 2006. Tibbits narrowed SCO's claims, saying it was dropping its tortious interference claims with respect to five of the 19 "former SCO customers" in its last supplement response to the interrogatory. The five dropped would be Avnet, Frazee Paints, Save Mart, Snyder Drug Stores and Target -- "because these companies had not switched to a Linux platform at all."

You know SCO. Claim first, research later.

So that left 14 vague interference claims entities, the seven identified entities that IBM allegedly directly contacted or SCO alleges specific interfering conduct, BayStar, HP, Computer Associates, Oracle, Intel, Novell, and that conference, and some 156 "other Linux users" who were somehow influenced by the marketplace to switch, or maybe they did. SCO says they make the claim only on information and belief. I'll mention that you can't prevail against a summary judgment motion with "information and belief" materials. It has to be actual facts. SCO has to raise a genuine issue of fact to survive this motion, and supposings and maybes and probably won't cut it, as IBM carefully shows, with cases to back up the position.

OK, so now IBM knows the list of entities, but where's the evidence? "SCO has not identified any evidence of improper conduct by IBM that interfered with any of its contracts or business relationships and it cannot do so, for at least the reasons explained below," IBM tells the court. Aside from the BayStar incident, IBM provides rebuttal declarations on every accusation:

Computer Associates, Oracle and Intel: IBM never stated to them at Linuxworld 2003 it was cutting off its ties with SCO or that they should do the same, they all testify. All of them have provided declarations so stating, and so has Karen Smith, the former IBM respresentative accused of having said it. Does SCO just make stuff up? Or are there paranoid tendencies here?

There's more. It turns out that it was SCO itself that "supported the migration of Computer Associates, Oracle and Intel products to Linux, partnering with each of these companies to provide Linux solutions to their end users." A former SCO employee, Gregory Anderson, states that any change in those relationships had to do with SCO's [alleged] decision not to continue to distribute Linux products." That word in brackets tells a story.

HP: HP provides a declaration as well, by the way. And any of us who despised them for continuing to partner with SCO needs to repent in sackcloth and ashes, because as a result of not breaking off the relationship, HP can now provide IBM a strong defense from the charge of interfering with SCO's relationship with HP.

Terpstra: As for the Arizona conference, Terpstra rescinded the invitation because of complaints from other participants, not IBM, who wasn't involved in that conference in any way. IBM was invited, Terpstra states in a declaration, but they didn't want to participate, but they never said anything about McBride. Others surely did though, threatening not to participate if McBride was a speaker, so he called McBride and took back the invitation. Why it was ever offered in the first place is a mystery.

Novell: As for Novell, there's a declaration from Novell's lawyer, Joseph LaSala, saying that IBM didn't induce anything. Novell got the copyrights, because Novell owns them. It waived because it has the right to and it was in Novell's interest to do so. IBM didn't ask for that or ever "express a desire that Novell breach, or take any action contrary to, the APA, Amendment X, or any other agreement between Novell and Santa Cruz or Novell and SCO." Careful language.

Why IBM supported Linux: As to why IBM supported Linux, its purpose had nothing to do with ill will to SCO. It wanted to make money, and it supported Linux for competitive reasons. As for SCO's amorphous claims, IBM notes that not one of SCO's experts "attempts to quantify or even address the alleged damages allegedly caused by IBM." There were factors adversely affecting Santa Cruz's business since 1999, at least, that had nothing to do with IBM. SCO couldn't get new customers even when Linux was new, didn't have credentials and was relatively unproven. After the Caldera acquisition, Caldera was basically trying to keep the customers it had as opposed to getting new ones for UnixWare and OpenServer. As for its Linux products, they were more expensive than the competition's. The company did that, kept Linux at a comparative price with the Unix products, because otherwise it would "devalue our UNIX business." This is a quotation from Exhibit 308, the sealed transcript of a November 2004 deposition of Philip E. Langer.

IBM says it is entitled to summary judgment for three independent reasons:

1) Of the companies SCO mentioned specifically by name, the companies or entities all deny any such interference and there's absolutely no evidence on SCO's side to support its allegations. And as for the alleged interference with the Unix on Intel market, Utah law doesn't recognize activities regarding an entire market as a basis for recovery for "intentional" interference;

2) Utah law, which IBM says applies to the interference claims because if there had been any injury, it would have been there that it would have been felt, requires SCO to prove that IBM's allegedly tortious acts were undertaken with an improper purpose or by improper means, which is not the case, IBM sums up. In fact, SCO's own experts have acknowledged that IBM's support for Linux was motivated by "compelling competitive reasons and undertaken for the purpose of protecting IBM's legitimate, long-range economic interests";

3) There's no causal link shown by SCO between anything IBM has done and any specific injury to SCO. If SCO is experiencing a deteriorating business, its own witnesses and documents show it's because of a variety of factors having nothing to do with IBM, including "decisions made by SCO management."

I'll say. You can't sue your own customers and expect business to pick up. Business 101. And when Caldera/SCO decided, allegedly, not to distribute Linux any more, it was simply sure to lose both customers and partners. It had been first a Linux vendor. And you aren't likely to win on interference claims for your declining business after you've shot your own business in the foot.

IBM asks that the court dismiss these three SCO claims with prejudice "and as a matter of law."

Update: The story has now hit The Wall Street Journal [sub req'd], as well as Slashdot, and Ars Technica. The Journal has some interesting details. I gather they have the Goldfarb declaration already in hand:

Mr. Goldfarb testifies that Richard Emerson, a Microsoft senior vice president, approached him "sometime in 2003" about investing in SCO. Mr. Emerson, who is no longer with Microsoft, "stated that Microsoft wished to promote SCO and its pending lawsuit against IBM and the Linux operating system. But Microsoft did not want to be seen as attacking IBM or Linux," Mr. Goldfarb testified.

Update 2: It's now picked up by IDG News Service, as you can see on LinuxWorld and InfoWorld also.


  


IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims - Updated | 406 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections thread
Authored by: darksepulcher on Sunday, October 08 2006 @ 03:42 AM EDT
Just in case PJ made an oopsie.

---
Had I but time--As this fell Sergeant, Death
Is strict in his arrest--O, I could tell you--
But let it be.
(Hamlet, Act V Scene 2)

[ Reply to This | # ]

Off topic thread here
Authored by: Totosplatz on Sunday, October 08 2006 @ 03:48 AM EDT
Please make links clicky.

---
All the best to one and all.

[ Reply to This | # ]

Darl and goodwill ;)
Authored by: farhill on Sunday, October 08 2006 @ 04:14 AM EDT
Say, what was that last one, again? It seems John Terpstra was hosting a conference in the spring of 2004. SCO's story is that Darl had an oral agreement with Terpstra to speak at the conference, but it claims IBM allegedly told Terpstra it didn't want Darl to speak at the conference and would withdraw its support if he did.

How would one quantify the damages due to SCO from that missed opportunity for Darl to speak at an Open Source conference? One can't help but wonder. Did he think he'd rake in some business at an Open Source conference, after going for Linux's throat with his fangs? Apparently so, because IBM is alleged to have interfered with SCO's ability to "generate potential new business and establish goodwill in the open source community."

Based on past performance, Darl speaking at a linux conference would clearly have generated negative goodwill. If IBM actually *did* get his invitation revoked, this would have been a net postive for SCO, since they would have had one less Darl foot shooting incident. So clearly, any damages owed by IBM for preventing this would also be negative.

;)

[ Reply to This | # ]

Empty Vessels Make Most Noise
Authored by: Ian Al on Sunday, October 08 2006 @ 05:10 AM EDT
SCOG appear to be all buns and no beef with all their claims. I thought I was
immune to their nonsense, but, once again, I am appalled by the baselessness of
their allegations.

IBM have had to work very hard and inconvenience many people to counter these
empty claims. I pray that there is no loophole by which SCOG can avoid this
comprehensive debunking. They should have declared everything they had by now
and I cannot see how Judge Kimball could defer judgement because no new facts
can now be produced in support of this stuff and there are no old facts.

If he finds, it has to be in IBM's favour. There will be no Perry Mason moment,
but I can't stop fearing a 'Perils of Pauline' moment; 'in a single bound SCOG
were free'.

---
Regards
Ian Al

[ Reply to This | # ]

Transcription Efforts
Authored by: rm6990 on Sunday, October 08 2006 @ 05:21 AM EDT
Hey all.

Just wondering where we all are on the transcription efforts, and what still
needs to be done for the flood of documents that have come onto Groklaw
recently. I just replaced my 15" with a 20.1" monitor, so transcribing
has just become a lot easier and quicker for me, and I'm interested in helping.

So everyone should post in this thread to let everyone else know what has been
done and what still needs to be done.

[ Reply to This | # ]

I think it's more elementary than that
Authored by: Anonymous on Sunday, October 08 2006 @ 06:24 AM EDT

You can't sue your own customers and expect business to pick up. Business 101.

Well, I never had much respect for "business" degrees, but I think you are doing these programs an injustice. It's obvious to any sentient being with more intelligence than an amoeba that suing your customers is not going to draw in more customers. I don't think business schools feel they have to teach it to anybody.

[ Reply to This | # ]

Looks like a case of pencilling in the heading ...
Authored by: devil's advocate on Sunday, October 08 2006 @ 06:27 AM EDT

... and then looking for evidence later. The summary of the history of the allegations was hilarious: SCO repeatedly changed the names of the entities with whom they alleged IBM interfered. Although the obvious response from SCO would be to provide actual evidence of "tortuous interference" something tells me that tortuous allegations are more likely.

[ Reply to This | # ]

Is this the right Mr Emerson?
Authored by: Chris Lingard on Sunday, October 08 2006 @ 06:50 AM EDT

A Microsoft press release shows Richard Emerson joining them on 30 November 2000

REDMOND, Wash., Nov. 30, 2000 ? Microsoft Corp. today announced that Richard Emerson, former managing director and co-head of technology and telecommunications advisory services at international investment bank Lazard Fr è res & Co. LLC, has joined Microsoft as senior vice president of corporate development and strategy.

"As one of the top deal-makers on Wall Street, Richard's wide-ranging experience in the technology and telecommunications spheres makes him a strong addition to Microsoft's leadership team," said Steve Ballmer, president and chief executive officer of Microsoft.

In his new role, Emerson will lead Microsoft's corporate development activities, including mergers, acquisitions and partnerships.

So was it a merger, acquisition or partnership with Baystar. None of these are likely given the circumstances. Why did he offer support to buy SCO shares?

But no announcement of his leaving/being fired, and where has he gone. Obviously Steve Ballmer would know, since he praises him so highly.

[ Reply to This | # ]

Sometimes I wonder if news can't make it over the Wasatch Mountains
Authored by: Anonymous on Sunday, October 08 2006 @ 06:53 AM EDT
I do remember when the Utah highway Dept. WAS able to get some info over the Wasatch. Unfortunately they missed SCO World Headquarters by (only) a few miles.

A 105mm howitzer shell fired near Sundance in Provo Canyon overshot its mark and landed with a bang in the Conners' back yard. The boom was heard over several blocks.

That's right, gentle reader, the Department of Transportation has escalated action from simply making you wait in jarringly long lines to actual bombardment.

Utah Department of Transportation officials, who have taken responsibility for the errant mortar, say the event is a rarity, even though they set off 560 rounds of explosive material every year in an attempt to control avalanche danger in the Provo, American Fork, Big and Little Cottonwood canyons.

Check out the map here:

http://deseretnews.com/dn/view/0,1249,600121107,00.html

[ Reply to This | # ]

"Not switched"? Hm.
Authored by: Steve Martin on Sunday, October 08 2006 @ 07:35 AM EDT

The five dropped would be Avnet, Frazee Paints, Save Mart, Snyder Drug Stores and Target -- "because these companies had not switched to a Linux platform at all."

(Warning: pure speculation follows)

I can't help but wonder if perhaps these five had maybe announced that they were switching to Linux (perhaps in a press release), and that TSG's "information and belief" might have come from such releases, but that their switch in fact was held up (or cancelled) due to fears from TSG suing IBM.

Lanham Act, anyone?

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

[ Reply to This | # ]

paraphrasal for a paralegal.
Authored by: Anonymous on Sunday, October 08 2006 @ 08:47 AM EDT
'it is naive to think that by attacking our customers we increased our
competition' - paraphrased from recent headlines

'the beatings will continue until morale improves, or someone beats us up.' -
paraphrased from my boss' boss.

'god helps those who help themselves to other people's property' - paraphrased
from Benjamin Franklin

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: Anonymous on Sunday, October 08 2006 @ 09:21 AM EDT
Typo in subparagraph:

"explanding, contracting, and again expanding" should be
"expanding, contracting, and again expanding".

[ Reply to This | # ]

Life Imitates Art (Yes, I Know, Again....)
Authored by: TheBlueSkyRanger on Sunday, October 08 2006 @ 09:27 AM EDT
Hey, everybody!

Movie geek that I am, I'm drawing a blank here.

I'm trying to remember the gangster movie from a relatively short time ago (I
keep thinking Donny Darko, but I'm having my doubts).

This restaraunt found out that a mob boss wanted to become a partner in his
business. He signed the papers and couldn't wait, thinking it was guaranteed
business.

Shortly after the papers were signed, the mob boss had his goons break in and
steal a whole bunch of wine.

The insurance policy sent the money to the mob boss, who then resold the wine.
The restaraunt guy was left holding the bag, having to make up for the cost of
the wine, and he went under.

That played through my head in a continuous loop when I read about MicroSoft
bailing on BayStar.

Dobre utka,
The Blue Sky Ranger
who supposes M$ could also be Vinny from "Scarface"--"I want
what's coming to me...."

[ Reply to This | # ]

Throw the Flag, Ref!!
Authored by: webster on Sunday, October 08 2006 @ 09:47 AM EDT
.

1. SCO picked their Linux target for litigation, IBM, without specific tortious
reasons to do so. They made these interference claims based on their business
losses and setbacks and pinned them on IBM. It fit with the FUD, but it does
not fly in Court.

2. PJ, this is not the rest of the BayStar story. But it is a lot more.
BayStar threatened litigation. Wouldn't that have been interesting! How many
contacts with M$? What exactly did they say? Who did Mr. Emerson know from
SCO? Who did Mr. Emerson work with on this at M$? Are there any
"documents" left? Did IBM depose Emerson? Did anyone at M$ tell
Emerson to drop this hot potato? (You bet!). What else did Mr. Emerson work on
for M$? Was he pulled back and then let go for ethical reasons or publicity?
What else did Mr. Goldfarb say about M$ communicating a guarantee? It seemed to
be worth a few million? Did they guarantee a return or just no loss? Where did
the money come from to get them out of the deal? What evidence of infringement
did he rely on? Did he do due diligence? Did he have approval? Is this part
of his job? Not even governments can restrain M$. Why would they restrain
Emerson or themselves? [Don't bother with a GL search for Emerson. This is his
first reference.]

3. How could SCO lawyers put this stuff in without specific allegations? Do
they just accept whatever their client SCOfolk tell them willy-nilly? It
appears that they do and their pleadings are part of the FUD. SCO ascribes
their business misfortunes to IBM without specififying any acts. The acts and
the parties change. No one has investigated anything before they put them in
pleadings. They don't answer the interrogatories! SCO has been unreasonable,
paranoid, and manifestly frivolous. They can't come up with anything now
because it makes them liars in their previous response and non-responses. To
come up with anything now would be telling the Judge that all this work so far
has been a waste of time. PJ wrote:

-----Sometimes I wonder if news can't make it over the Wasatch Mountains. SCO
seems so cut off from reality.-----

They are mad hermits of the Wasatch brooding and scratching in their caves.
They don't come out lest they be called over to the cauldron of Kool-Aid.
Whether or not they come up with any response to this, there is risk of
sanctions. SCO needed a witness. [Hey, SCO! There's a guy that works nights at
the loading dock at Oracle who will say sometimes IBM loads him up with junk
mail. We'll need an interpreter.]

4. -----"SCO's own experts have acknowledged that IBM's support for Linux
was motivated by "compelling competitive reasons and undertaken for the
purpose of protecting IBM's legitimate, long-range economic
interests"-----

This is skill. IBM is using SCO's own experts against them. They are experts;
they are knowledgeable; they have pride; and they will answer correctly to the
obvious. They may have been testifying about something else and IBM had the
discipline to ask them about this and other matters unrelated to the reason that
SCO propounded them. SCO can do it too, but reality has not been their strong
point.

5. Deciding this without a hearing would be a mercy to SCO. Their response may
be to blame IBM for intimidating all their potential witnesses.

6. PJ's commentaries are of immense value. Her knowledge of the law and
history of the case are almost exhaustive. Add to that the speed and accuracy
of her research. All of this with wit and humour. This is a nice place. Allow
us to take it for granted. Thanks.



---
webster

[ Reply to This | # ]

If Shakespeare wrote about SCO, would it be Much Ado about Nothing, or the Comedy of Errors?
Authored by: Anonymous on Sunday, October 08 2006 @ 10:26 AM EDT
To SUE, or not to SUE: that is the question:
Whether 'tis nobler in the mind to pursue
The slings and arrows of OUTRAGEOUS LAWSUITS

For who would bear the whips and SCOrns of time,
The OPPRESSOR's wrong, the proud man's contumely,
The pangs of despised love, the LAW's delay

Alas, poor Yarro. I knew him well.

Or perhaps a play called McBride? With characters like MacFUD, Banquo, Seyton
and Fleance.

[ Reply to This | # ]

SCO's Changing Claims
Authored by: sk43 on Sunday, October 08 2006 @ 10:33 AM EDT
In Ryan Tibbitts Oct. 2000 article in the Utah Bar Journal "Top Ten
Lessons from Caldera, Inc. v. Microsoft Corp"
http://www.utahbar.org/barjournal2000/html/october_00_bar_journal_article_5.html

lesson 4 is:

"4. Choose the Battlefield (and stay on it)."

It would seem that, once again, SCO is having difficulty
figuring out where the battlefield is located, much less
staying on it. What grade would Mr. Tibbitts assign himself
for his current efforts?

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: Anonymous on Sunday, October 08 2006 @ 10:56 AM EDT
The court should not only finish quickly the SCO process,
in order to free the world-wide community from that
theater. It also should send the process acts to the
public persecter for open a criminal process against the
directly (and all indirectly) responsibles of/for SCO.

1) Claims, even in justice, are limited by the good faith.
The extrajuridical advices and juridical claims by SCO
seems to be not only outside any good faith, but even
fraude.

2) The question dont belong essentially to the civil
right, but to the public and administrative right -- a
reason for itself that the tribunal should reject the SCO
process for that matter depends on prejudgements by an
administrative tribunal. Because in fact, the
informatics - and anyway the access to informatics for ALL
parts of the population, children, education,
administration - is under ressalvations or even
reservations by the constitutional and public law, part of
the right of development of each nation, of its freedom
and defense. Moreover, Linux is to big parts elaborated
by world-wide employes of universities, institutes. Thus,
from all sides, to can use or not this system - inclusive
by all, rich or poor persons, is an essential, public
service, and the right to use and to develop it by the
states and its administrations, is igually part of their
souvereignity right. Thus, any commercial exploration
connected, is a concessionary of a public service,
depending on a positive concession by the government. And
that, SCO certainly dont have. Its crazy that Microsoft
claimed already the public and constitutional ressalvation
of informatics -- but theyselve have no concession
according the public right. On the other hand, Linux is
free, and no-commercial use and distribution of public
services is permitted (like, give a drop someone is not a
violation to transport laws; bring self own or friend's
letters to the destinatory dont violate the post laws,
etc) Other countries can start penal persection against
SCO (and perhaps even Microsoft) for usurpation of a
concessioned public service, inclusive to claim as 'its
own' the operational system and work co-elaborated at
their universities and science institutes

[ Reply to This | # ]

Informatics as a publical service
Authored by: Anonymous on Sunday, October 08 2006 @ 11:51 AM EDT
Interesting is to think about the circumference of
consequences of that action for thirds - not only
commercial questions, but human rights. This confirms the
question as essentially belonging to the public right
(inclusive its competence by an administrative tribunal),
no matter if SCO and IBM are interested only on their
commercial benefits.

According to UNO laws, its a right of each and every
person to participate on the dignity and to the tecnical
development and modernity; to get a modern basical ensign
gratuitly; and -- worser even -- according to art. 35 of
Res, 30 of the OAS and others each [natural and
juridical] persons have to participate on the collective
and societies obligation to assistance.

Worser even, its a principle of the peoples right that any
people can claim only an right to souvereignity and state
when it respects and fullfill widely the International
Right.

Thus, its part of the public/souvereignity function of
each state to warrant the accessibility of each and all
(inclusive poor) persons to ensign, use etc. of
informatics and other modernities; and its an
inconditional right of each person to use these services.
On the same time, its the co-obligation (by them own bill
and not paied by the government or by someone else) of the
concessionaries or explorers of these services to deliver
that access to each poor children and other person.

Thus, the informatics - ensign and access - belongs
essentially to the area of publical services, which -
even when often concessed to private's - is under full
legal disponibility of each people, state, privat person
what concerns its own use.

This means, that - in principle - the administration, but
also each person, have the right to receive, develop, and
distribute no-comercially operational systems as they
want, inclusive gratuitly. Principally, each government
have the right to establish within possible concessions
all rules - like gratuitness for the use in the
administration or for (at least) ensign and home use.

Any privat process - like the current among IBM and SCO -
is irrelevant for third persons or for the administration
especially of other countries, and them souvereignity and
public or human rights. Directly or indirectly --
inclusive, in the sense that many gouvernments could not
(nor need to) buy operational systems and thus their
population could not use their human rights to a dign live
accordingly to modernity and using the benefits of the
general tecnical development.

Nobody force nor permits M$, SCO or whomever to act on
that area of operational sistem - much less exists
any 'natural' right for this like on purely privat
[no-essential, no-human-rights-relevant] services, so that
principally nobody (like SCO) could claim 'losses' against
whomever, too.

[ Reply to This | # ]

Prejudice?
Authored by: Anonymous on Sunday, October 08 2006 @ 12:17 PM EDT
After reading this WOW. It's actually a tremendous amount of fun to read these.
I'm dreading the no doubt very vague and arm-wavy response from SCO on this.

I did have a question though.

I notice that IBM only mentions ruling with prejudice in its opening statements?
Why doesn't something like with prejudice show up at the end? Is it something
you have to request? Or is the judge supposed to make up their own mind on that
kind of issue.

Also, with prejudice, doesn't simply ruling and giving a PSJ avoid the need for
with prejudice, given that even refiling the issue doesn't change the fact that
the issue has been decided?

These SCO claims seem very frivolous, as if they sued for $3 billion without
actually knowing what they were suing about. How does this work with legal fees
etc? I mean, can they be hit back in any way for just filing total garbage on
some of these claims?

[ Reply to This | # ]

  • Prejudice? - Authored by: Anonymous on Sunday, October 08 2006 @ 01:57 PM EDT
  • Prejudice? - Authored by: PJ on Sunday, October 08 2006 @ 02:28 PM EDT
IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: ExcludedMiddle on Sunday, October 08 2006 @ 12:52 PM EDT
After reading this, it has become clear that these were never more than
throwaway claims by SCO. Possibly to bolster their press campaign, and to
further induce IBM to settle these claims out of court.

I could see how they might be able to make some of their contract claims survive
Summary Judgement, but not these. They were barely trying. And with Utah's law
being clear that you must be doing something illicit or illegal such as threats
of violence, even if they had proof that IBM had tried to persuade people to
stop doing business with SCO.

I would think that it's pretty clear that most people wanted to stop doing
business with SCO on their own.

[ Reply to This | # ]

Re: "Mr. Emerson was fired from Microsoft." Emerson was an AGENT of Microsoft!
Authored by: Anonymous on Sunday, October 08 2006 @ 01:08 PM EDT
RE: "Mr. Emerson was fired from Microsoft."

Emerson was an AGENT of Microsoft!

I wonder if the EU Microsoft Anti_trust folks/commission, OR the US court that
oversees the Microsoft Anti-Trust Settlement would enjoy looking into THAT any
further?

[ Reply to This | # ]

But M$ probably did invest in SCO directly, too
Authored by: Anonymous on Sunday, October 08 2006 @ 01:08 PM EDT
Remember RBC was acting on behalf of some unidentified client who "whishedd
to hedge an economic exposure"? Without Goldfarb's testimony, alleging that
client would have been M$ was highly speculative. With Goldfarb's testimony, it
seems the only reasonable assumption, there are at least two good motives there.
Plus, the unidentified client backed out at some point without any clear reason.
If the person at M$ responsible for the deal was fired around that point, this
could have been why [why he as fired AND why they backed out]

[ Reply to This | # ]

Baystar got compensated by MS
Authored by: Winter on Sunday, October 08 2006 @ 01:40 PM EDT
I remember a news story just after Baystar got rid of their SCO stock. The story
went along the lines that an Xbox video supplier was forced to give Baystar a
sweet deal of several 10s of millions of dollars for getting their contract from
MS.

I have never been able to find that article back.

Rob

---
Revenge, Justice, Security, and Revenge, chose any two.

[ Reply to This | # ]

Didn't all of these things happen long after SCO filed its alleged case?
Authored by: skidrash on Sunday, October 08 2006 @ 02:58 PM EDT
So how could SCO have alleged interference in 2003 - everything listed here
happened long after.

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: gbl on Sunday, October 08 2006 @ 03:36 PM EDT
If anybody is interested in the history between Santa Cruz, Microsoft and Unix, this is a pretty comprehensive document...

XENIX -- Microsoft Short-lived Love Affair with Unix

Just a few years later we have this document,

Inn ovation and Competition : A View from the European Commission

where we read...

... these contract clauses, on which we objected, expressly required Santa Cruz to continue to use old and possibly outdated I.P. in producing its operating system products and make them compatible with equally old and possibly outdated application programmes.

The Commission sent a formal Statement of Objections to Microsoft arguing that these restrictions were in breach of European competition law. Microsoft was given, and took, the opportunity to make written comments on this statement. An oral hearing of Microsoft was set for 13 November. On 4 November Microsoft wrote to Santa Cruz unilaterally and irrevocably waiving the rights under the clauses at issue to which the Commission had objected. Santa Cruz withdrew its complaint, and the Commission case was closed.

Santa Cruz is now free to compete with Microsoft in this important market, and has been able to continue with its planned development and launch of an entirely new and advanced version of UNIX for microcomputers.

Today few people are aware that at the time, every copy of Unix licensed resulted in a payment to Microsoft because IP which orginated in Xenix and owned by Microsoft was included in Unix. Until just a few years ago one could find Microsoft copyright statements within a few Solaris binaries (all gone now.)

---
If you love some code, set it free.

[ Reply to This | # ]

Firing Mr. Emerson
Authored by: overshoot on Sunday, October 08 2006 @ 06:12 PM EDT
Mr. Emerson's "firing" certainly seems interesting. Look at it: he was with Microsoft for only a bit over two years, 2001-2003, during which MSFT was in general down. Yet, at the time of his leaving, he apparently had vested options worth millions.

Now, far be it from me to suggest that there was anything funky with those options. However, all of the options I've ever been granted wouldn't even have vested by the time he left. Unless, of course, they were backdated to a time several years prior to his joining Microsoft when the stock was a lot lower. Of course, that would also have vested a lot sooner.

So, let's sum up: Mr. Emerson left Microsoft after only a couple of years under terms that allowed him to pocket several million from some extremely favorable options deals and even ended up with some further favorable finances to let him make the most of those options.

Dang. How do I get my management mad enough at me to "fire" me that way?

[ Reply to This | # ]

Reality shield
Authored by: TheGayBlade on Sunday, October 08 2006 @ 06:35 PM EDT
I don't think SCO has the market on surrounding themselves with a private
reality zone but they certainly have perfected it to an art rarely seen outside
the White House.

And MSFT...tisk, tisk. Like being caught in the back seat of a car with a cheap
hooker. A bad decision being there and the whole thing backfired. No one
wonders if there are liability issues using Linux anymore. Dell is running
commercials touting themselves as the largest Linux server distributor. Careful
not to imply they're helping companies replace NT 4 and 2000 servers with
Linux...until you talk to the rep privately. One went on expansively with me
about how many NT 4.0 boxes they've replaced with Linux servers.

No one wants to dis MSFT to their face, so they do it behind their back. I'm
not sure which behavior is more pathetic.

I run my business(es) on Linux and it's wonderfully liberating. True, I have to
spend a little time selecting hardware that's compatible, but what I get in
return in peace of mind is priceless.

[ Reply to This | # ]

Ignoring Ransom Love's idea
Authored by: brian on Sunday, October 08 2006 @ 08:11 PM EDT
"As for SCO's amorphous claims, IBM notes that not one of
SCO's experts "attempts to quantify or even address the
alleged damages allegedly caused by IBM." There were
factors adversely affecting Santa Cruz's business since
1999, at least, that had nothing to do with IBM. SCO
couldn't get new customers even when Linux was new, didn't
have credentials and was relatively unproven. After the
Caldera acquisition, Caldera was basically trying to keep
the customers it had as opposed to getting new ones for
UnixWare and OpenServer. As for its Linux products, they
were more expensive than the competition's. The company
did that, kept Linux at a comparative price with the Unix
products, because otherwise it would "devalue our UNIX
business." This is a quotation from Exhibit 308, the
sealed transcript of a November 2004 deposition of Philip
E. Langer."

This is contradictory to one of the stated goals of
obtaining SCOWare, that of "unifying Unix and Linux" that
Ransom Love proposed. If your loudly stated intention is
to unify Unix & Linux then by definition you are devaluing
the Unix business. That Ransom couldn't do it because of
other reasons isn't important in this context since the
fact that that was one of their stated goals would drive
down interest in SCO's Unix and drive up interest in
Linux. The fault is still SCO's.

B.

---
#ifndef IANAL
#define IANAL
#endif

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: Anonymous on Sunday, October 08 2006 @ 09:07 PM EDT
Here is in a news story on cnet.com where blake stowell said that the baystar
investment had nothing to do with ms.

http://news.com.com/2100-7344-5170181.html?part=dht&tag=ntop

of particular interest i think is this piece:

We now know that Microsoft raised at least $86 million for SCO, but according to
the SCO conference call (on Wednesday) their cash reserves were $68.5 million.
If not for Microsoft, SCO would be at least $15 million in debt today.

(i know, i need to learn to make lickables :P)


On this one, you will find a list of assets owned, as well as investments made,
its a huge list.

http://www.answers.com/topic/list-of-assets-owned-by-microsoft-corporation

i have looked all over for baystar investments, but could find nothign at all,
and links to baystars webpage lead to a 404 error.





[ Reply to This | # ]

Pondering......Why did they let them out?
Authored by: webster on Monday, October 09 2006 @ 12:56 AM EDT
.
I was reading comments here and also saw the link back from Slashdot and their
comment.

BayStar gets out of their deal with SCO because M$ would not commit to backstop
it.

Why didn't SCO say it is too late? You're in, you're stuck. You have to ride
it out with us. By the terms of the deal you can't get your money back.

BayStar threatened litigation that would reveal M$ involvement. SCO backed
down. Why did SCO back down?

To preserve the FUD?

Pressure from M$?

Alternative funding or guarantees from M$?

Where did the funds come from to allow BayStar to escape?

Did they conspire to get this funding and then conspire to let BayStar out when
things started going badly?

---
webster

[ Reply to This | # ]

BAYSTAR follow up
Authored by: dodger on Monday, October 09 2006 @ 12:57 AM EDT
It is very neat and tidy to say that Microsoft renigged on their guarantee to
back up Baystar's investment. HOWEVER, IT AIN'T NECESSARILY SO. It is very
convenient (for Microsoft) to SAY that Microsoft is no longer involved and that
they failed to follow through with Baystar. Their public image needs to stay
clean due to all the litigation world wide. Is Baystar out of business? If not,
are they still putting together PIPEs for Microsoft?.....

[ Reply to This | # ]

WSJ noticed Baystar - MS link
Authored by: Anonymous on Monday, October 09 2006 @ 08:34 AM EDT
The Wall Street Journal noticed the the Baystar deposition and it's Microsoft link. So the business world is getting some info on the FUD machine. They also talked about the $16.6 million MS gave SCO for it's license. If you have an (expensive) subscription here is the Link, if not, they did not say anything we didn't know.

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims
Authored by: blacklight on Monday, October 09 2006 @ 08:46 AM EDT
"Darl attended the Novell BrainShare conference that spring, but secretly,
under cover, in disguise." PJ

Maybe the US government should send Agent Darl the Snarl on a secret mission to
infiltrate Al-Qaeda in Iraq. The facts that he speaks only English (his Japanese
is irrelevant), is highly visible (shall we say, large bulk?) and his mouth runs
on an engine that never stops - these facts should reinforce his cover as a
bumbing US agent.

And now for the CYA disclaimer (or fine print written in your favorite Microsoft
font): "in the event of your death or capture, the Secretary of State will
disavow any knowledge of your existence". In other words, we'll stand by
you in Iraq, Darl. Trust us. Ha, ha, ha ....

---
Know your enemies well, because that's the only way you are going to defeat
them. And know your friends even better, just in case they become your enemies.

[ Reply to This | # ]

Sauce for the goose
Authored by: kehall on Monday, October 09 2006 @ 09:21 AM EDT
I used to be an SCO Reseller, way back before this whole mess started (late
1990's through 2001 or so). I only had a handful of customers anyway, but by
2002, I had none left. They didn't go to Linux, they went to Windows. Does
this mean SCO will sue Microsoft for the same thing they're suing IBM for?

[ Reply to This | # ]

Well, well, well. There's a surprise.
Authored by: cybervegan on Monday, October 09 2006 @ 10:39 AM EDT
[Emerson] "stated that Microsoft wished to promote SCO and its pending
lawsuit against IBM and the Linux operating system. But Microsoft did not want
to be seen as attacking IBM or Linux"

We all love a good conspiricy theory, but when you get proof like that, it takes
all fun out of it! But seriously, is that what you call "piercing the
veil" ? :-D

Now let's wait for the denials and finger-pointing to start!

-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 | # ]

I have always wondered...
Authored by: Anonymous on Monday, October 09 2006 @ 12:26 PM EDT
If by making 100 claims which are blatantly ridiculous you can escape SJ on one
claim which is less ridiculous.

That claim alone would not have survived SJ. But when you have seen 99
ridiculous claims from SCO earlier it is human nature to relax the requirements
from SCO. So that one claim would go through now.

This has perhaps been SCO's strategy all the way. Theoretically I know that each
claim should be held in its own right and examined if they meet the standard
required. But it never works this way in practice.

I speak from my experience as a teacher. When I grade exams (even when I try
very hard) I end up awarding more points for an answer from a student who has
done miserably in all other answers.

On reading all of IBMs motions it does look like they should get a SJ on
everything. But something tells me that this wont happen. These ridiculous
claims from SCO seemingly make other claims look stronger :(

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims - Updated
Authored by: PolR on Monday, October 09 2006 @ 12:44 PM EDT
Interesting coverage by ZDNet.

They raise a good point about the Anderer memo. SCOG at the time denied any Microsoft involvement and claimed it was a misunderstanding. Now we have proof the memo was right. It raises all sort of questions on what was actually going on. The Anderer incident will make any denial by Microsoft much harder to believe because of the repeat pattern.

There are two scenarios I can think of:

Scenario 1: Microsoft was into it up through the ears and fired Emerson for plausible deniability.

Scenario 2: Anderer and SCOG were baiting various sub-groups within Microsoft and a less than top level in the hierarchy. Emerson bite into it. When the most senior management found out, they were scared to death and cut all ties in an attempt to clean the mess.

In either scenario, Mirosoft email retention policy will play a role if an inquiry is launched. We will find out if deleting all emails systematically it is an effective shield, or if it will be treated as a cover up attempt. The problem with such policy is it works both ways. If you need proof you didn't do something wrong, or that things are not like other evidence make it seem so, then some of your best weapons are down the drain.

[ Reply to This | # ]

Eighth claim might be risky
Authored by: Anonymous on Monday, October 09 2006 @ 12:52 PM EDT
Specifically, commencing on or about May 2003, Novell began falsely claiming
that Novell, not SCO, owned the copyrights relating to UNIX System V."

If Judge K. disallows this claim because he believes Novell was correct in
stating they own the copyrights, what affect does that have on tSCOG vs. Novell?
Could it gut the slander of title claims?

[ Reply to This | # ]

IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims - Updated
Authored by: jsusanka on Monday, October 09 2006 @ 01:07 PM EDT
I wonder what the DOJ has to say about all this.

[ Reply to This | # ]

SCO vs IBM - a movie dramatization
Authored by: th80 on Monday, October 09 2006 @ 01:09 PM EDT
This whole thing would really make a good movie. I wonder if anyone in
Hollywood is working on a screenplay?

[ Reply to This | # ]

There is something very funny about the WSJ quote
Authored by: Anonymous on Monday, October 09 2006 @ 01:13 PM EDT
If you look at the WSJ quotes, that do NOT match the information or wording of
Goldfarb's testimony quoted in the redacted IBM memo (pages 25 to 27 of the
PDF).

However, the WSJ quote, is worded to imply all the things that it attributes to
Goldfarb are part of his testimony: It begins (1st paragraph) "he
testified", it continues "he said" (2nd paragraph), "Mr.
Goldfarb testified" (3rd paragraph).

This made me think, maybe the WSJ got some additional comments from Goldfarb or
Emerson. Except, the article itself rules out this possibility: "An SCO
spokesman declined to comment. Mr. Emerson couldn't be reached for comment, nor
could a spokeswoman for Mr. Boies's firm. Mr. Goldfarb couldn't be reached for
comment."

Now it's possible that SOME of the discrepencies could be explained if the WSJ
got access to exhibit 165 (the original declaration which is redacted), or even
the unredacted memo/declaration - but that would still only explain some - for
example, the wording attributed to Goldfarb by the WSJ, in places, simply
doesn't match the wording used in his testimony in the memo.

Now I know the original memo seems to be the smoking gun, that many have been
waiting for.

And that the WSJ seems to add some extra smoke to that gun. But, as far as I
can see, the WSJ quotation of testimony seems to inaccurate, perhaps even
embellished (unless somebody can explain all these discrepencies, given that the
WSJ says it's sources do NOT include other comments from Goldfarb).

(Of course, my pointing out of discrepencies in the WSJ does not affect the
value of the Goldfarb declaration or the IBM memo).



Some of the discrepencies:

1. Mr. Emerson, who is no longer with Microsoft, "stated that Microsoft
wished to promote SCO and its pending lawsuit against IBM and the Linux
operating system. But Microsoft did not want to be seen as attacking IBM or
Linux," Mr. Goldfarb testified.

-> As far as I can see this does NOT appear in the IBM redacted memo quoting
Goldfarb's testimony, but we get told not once, but twice in that paragraph, by
the WSJ, that it was part of Goldfarb's testimony.

2. He said he also discussed the issue with two other Microsoft executives.

-> This doesn't appear in the IBM memo.

3. "As part of these discussions, Microsoft assured me that it would in
some way guarantee BayStar's investment in SCO," Mr. Goldfarb testified.
"However, Microsoft would not agree to put anything in writing on this
point."

-> The first bit, given as a quote, almost but does NOT match what Goldfarb
says in 48(b)... yet it is given as a quote as if he said those exact words, in
his testimony.

-> The second bit about MS not being willing to put anything in writing,
doesn't appear in the IBM redacted memo.

4. BayStar proceeded to invest the $50 million in SCO, but Mr. Goldfarb said he
became "very concerned" about it.

-> $50 million does NOT appear in the IBM redacted memo

-> In any case case, Bay Star did NOT invest $50 million in SCO. They and
RBC, together, invested a total of $50 million. (One invested $20m, the other
invested $30m, if I recall correctly). Even when Bay Star, bought out RBC, they
paid less than the original price for them...

-> So I very much doubt Goldfarb testified that BayStar invested $50 million,
because they didn't.

-> The words "very concerned" appear in the IBM memo, but appear
in a slightly different context, see 6 (below). In the WSJ, Goldfarb is
"very concerned" about his $50 million investment - but in the IBM
memo, Goldfarb is quoted as being "very concerned about SCO's high cash
burn rate and whether its UNIX products were viable in the marketplace."

5. "Among other things, it became clear to me that the BayStar investment
was used primarily to pay David Boies's law firm," Mr. Goldfarb said.

-> This doesn't appear to be in the IBM memo. The exact words used are
completely different in the memo. "SCO's stock price declined... I was very
concerned about SCO's high cash burn rate and whether its UNIX products were
viable in the marketplace."


6. SCO's stock price declined, and Microsoft stopped returning his phone calls
and emails, he said. Later, Mr. Boies's firm also stopped returning phone calls,
he added.

-> The IBM memo says Microsoft stopped returning his calls (paragraph 48b),
but it never says anything at all, about Boies' firms and phone calls.


7. As a result, Mr. Goldfarb pushed for BayStar to get out of the investment.
BayStar agreed to sell preferred shares back to SCO for $13 million and shares
of SCO common stock, he said.

-> Goldfarb didn't say that in the IBM memo. He simply says the investment
was retired.

-> Of course, the $13 million, and shares of SCO common stock, are what the
deal to retire the investment was, we know that from SCO's SEC filings - but the
point is Goldfarb's quote testimony isn't that, so the WSJ's "he said"
appears to be inaccurate.


-----
The relevants bits from the WSJ are:

Mr. Goldfarb testifies that Richard Emerson, a Microsoft senior vice president,
approached him "sometime in 2003" about investing in SCO. Mr. Emerson,
who is no longer with Microsoft, "stated that Microsoft wished to promote
SCO and its pending lawsuit against IBM and the Linux operating system. But
Microsoft did not want to be seen as attacking IBM or Linux," Mr. Goldfarb
testified.

Mr. Goldfarb said he and Mr. Emerson discussed investment structures under which
Microsoft would guarantee in some way a BayStar investment in SCO. He said he
also discussed the issue with two other Microsoft executives.

"As part of these discussions, Microsoft assured me that it would in some
way guarantee BayStar's investment in SCO," Mr. Goldfarb testified.
"However, Microsoft would not agree to put anything in writing on this
point."

BayStar proceeded to invest the $50 million in SCO, but Mr. Goldfarb said he
became "very concerned" about it.

"Among other things, it became clear to me that the BayStar investment was
used primarily to pay David Boies's law firm," Mr. Goldfarb said. SCO's
stock price declined, and Microsoft stopped returning his phone calls and
emails, he said. Later, Mr. Boies's firm also stopped returning phone calls, he
added.

As a result, Mr. Goldfarb pushed for BayStar to get out of the investment.
BayStar agreed to sell preferred shares back to SCO for $13 million and shares
of SCO common stock, he said.

An SCO spokesman declined to comment. Mr. Emerson couldn't be reached for
comment, nor could a spokeswoman for Mr. Boies's firm. Mr. Goldfarb couldn't be
reached for comment.

---

Quatermass
IANAL IMHO etc.

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Would you loan SCO money?
Authored by: ThatBobGuy on Monday, October 09 2006 @ 01:20 PM EDT
Just to make sure that they had enough to survive until the PSJ and/if it goes
to trial? I know I posted before but I do NOT want a trustee to settle all this
crap.
I admit, I'm torn as I would like to see SCO go down as soon as possible, but I
really want to see Judge Kimball and/or Wells issue the smackdown/s, not
attorneys/accountants in a back room.
Hardcore followers/groklawyers would know/already know the truth but not many
execs and what not that the FUD was aimed at will get it.
In short, I want the headlines to read, "In federal court
today......."

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IBM's Memo in Support of its Motion for SJ on SCO's Interference Claims - Updated
Authored by: Yossarian on Monday, October 09 2006 @ 01:37 PM EDT
>SCO alleged that IBM somehow induced Novell to get copyrights
>on Unix, to waive any alleged breach on IBM's part,

Assume that SCO is right, so what?

Novell's actions help Novell's business. Novell business
depends on good relationship with people who support Linux.
Using the UNIX copyrights to gut SCO's case will halp Novell
business. Suing any supporter of open source over UNIX
copyright will send Novell into the same basket where SCO is.

Why SCO, or anybody else, should have a standing to sue a
company that takes perfectly legal actions in order to
support its very own business?

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Remember the Halloween X memo?
Authored by: minkwe on Monday, October 09 2006 @ 02:16 PM EDT
--- From the mailbox of chris sontag

From: Mike Anderer
Sent: Sunday, October 12, 2003
To: csontag@sco.com
CC: Bob Bench
Subject: Conversation Friday

Chris:

I know you were going totalk to Bob later Friday, but I figured I would outline
the issues.

1) Baystar is easy as they were just a Microsoft referral and would be 2%
2) Any licensing deal would be at 5%
3) Much of the other work would go from 2% to 3% as I have engaged in direct,
but this would require according to Bob either Darl or you signing off on the
fact that this ane was not a referral.
4) On the patent side for IPX, where foes that fit it. I am working with the
lawyers to get these moved from provisional to more complete in the next week.
I think it will spawn at least 3 patents. Ed and I are the inventors on these.
What do we fo here
5) The RedHat, Acrylis examiniation, there is no upside here is this billable
seperatly. I bought a PC and loaded up RedHat and will take that over and work
through it with the Lawfirm. What do we do here?

I realize the last negotiations are not as much fun, but Microsoft will have
brough in $86 million for us including Baystar. The next deal we should be able
to get from $16-20, but it will be brutial as it is for go to makerket work and
some licences. I know we can do this , if
everyone stays on board and still wants to do a deal. I just want to get this
deal and move away from corp dev and out into the marketing andfield
dollars....In this market we can get $3-5 million in incremental deals and not
have to go through the gauntlet which will get tougher next week with the SR
VP's.

We should line up some small acquisitions here to jump start this if we do it.
We shoudl also do this ASAP. Microsoft also indicated there was a lot more
money out there and they would clearly rather use Baystar "like"
entities to help us get signifigantly more money if we want to grow further or
do acquisitions

This Microsoft deal is the Ante to the poker game...We should get this done and
go after several $2-3 Million deals from the expense side of their company.

The will help us a lot and if we execute we could exit and Unix componients we
have build potentially back to Microsoft or MCS.

I think they are on track and may not be able to push much more this
round, but there are other ways to get money from them, their partners,
investment bank referrals, etc..

Do kepp in mind that they have brough us between $82 million and $86 million if
this deal is between $4million per quarter where Rich is at, or it turns into %5
million wjich is the lowest number Chris had interest in.

There will be more, lons, partnerships, etc..but we need to just get this one
done. It is too high profile, it is also critical, but they are not the people
to pitch. We should get what we can from them ad then work the other and larger
areas of the company and groups where they have real budget and need for our
help.

Let me know your thoughts.

-Mike

---
"Corporate views on IP law might be described as similar to a 2-year-old's
concept of who gets to play with all the toys regardless of who brought them" --
PJ

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remind me
Authored by: Anonymous on Monday, October 09 2006 @ 02:48 PM EDT
Rob enderle, the analyst, didnt he speak up for sco at the start of all this?

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WSJ link - no subscription required
Authored by: DMF on Monday, October 09 2006 @ 03:01 PM EDT
Here.

Subscription isn't all that expensive, btw. $50/yr for print subscribers, $100/yr for everyone else.

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From the wall street article MS Denies
Authored by: Anonymous on Monday, October 09 2006 @ 03:02 PM EDT
Now that MS has denied, is it going to be he said she said? I gather that SCO
can get a memo saying the opposite of Baystar.

What next?

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Obvious Question
Authored by: sproggit on Monday, October 09 2006 @ 03:38 PM EDT
I'm not sure I should be asking this question - with so little evidence to go on
- but I'm curious.

There is a lot of discussion in these recent filings about activities such as
"tortuous interference" - i.e. the act or acts of working to thwart,
harm, or otherwise have a negative impact upon the activities of a competitor.

The SCO Group have made numerous allegations against IBM along these lines, and
in the document we're presently reviewing, IBM seek to dismiss these
allegations.

But I'm curious about the testimony of Mr Goldfarb, with respect to the alleged
involvement between a representative of Microsoft and BayStar Capital. We now
have someone who, at the face of it, seems willing to testify that Microsoft
encouraged an investment in The SCO Group, to the tune that Microsoft are
alleged to have offered to guarantee any potential loss of investment, up to the
tune of $50 million.

It's not good for us to speculate on the relative merits of that particular set
of activities, but my question is technical in nature:

Without exploring the relative merits of the accusation, if it could be proved
beyond reasonable doubt that Microsoft effectively offered to act as a
guarantee in any investment that Baystar made in The SCO Group, does that come
close to tortuous interference, in the legal definition? Can someone with a
legal understanding of the point of law explain what would have to be proven
before

1. IBM could file suit against Microsoft for some form of inappropriate or
illegal business practices

or

2. In the alternate, the US Government could file a suit against Microsoft for
this type of conduct?


I'd like to understand, if someone can explain to us, where the line is drawn.
What's allowed and what's illegal?

Thanks in Advance...

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Strike Safeway from the list
Authored by: RedBarchetta on Monday, October 09 2006 @ 05:28 PM EDT
SCO is claiming that IBM interfered with their relationship with Safeway. Those of us with a good memory recall vividly that Safeway's CIO at the time, Ric Francis, told SCO to "[..] stick it. [..]"

This directly contradicts any assertion by SCO that they had any chance of a working relationship with Safeway.

Here's the quote in full:
Someone who could well have fallen into this category this year but didn't make the list at all is SCO CEO Darl McBride. He has led his company's charge to get credit for what it claims is some of its code turning up in Linux. So far the row has taken the form of a lawsuit brought against IBM, headlines in the media and SCO invoicing some users for Linux roll outs.

However, when asked what happened when his company was served with a request to pay a SCO licence for Linux, panellist Ric Francis, Safeway's CIO, said: "I told them to stick it. At the end of the day it is never going to fly. It's the last dying breath of a company that is never going to make money."


Here's the link to the original article, but it seems to be dead:

http://www.siliconagendasetters.com/analysis2.html

I did manage to find a link buried in a linux discussion archive that quotes from this dead link, which infers that the link worked at one time:

http://lists.linux.org.au/archives/linux-aus/2004-March/msg00009. html


---
"I never have frustrations. The reason is to wit: Of at first I don't succeed, I quit!" ~ Fyodor Dostoevsky (1821-1881)

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20 million more from Microsoft?
Authored by: Anonymous on Friday, October 13 2006 @ 09:32 AM EDT
If the old memo/email is correct stating that Microsoft funneled 86 million USD
to SCO, and this is 50 the license for UNIX is 16 million, how where the
remaining 20 millions funnelled to SCO (if at all)?

[ Reply to This | # ]

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