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The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

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Were there disclaimers?
Tuesday, August 21 2007 @ 03:29 AM EDT

Mark Webbink in his new blog pointed out something I had never noticed:
If you go back to the press conferences that SCO repeatedly called back in 2003 and 2004, they never began those press conferences by making the standard disclaimers cautioning investors to take what they were saying with a grain of salt. As a consequence, investors had every right to take what Darl McBride and Chris Sontag were saying in public back then as the gospel truth.

Of course, lawyers do notice things the rest of us don't. I put some links to transcripts of some of those calls in News Picks the other day to verify, but it was brought to my attention that some of the links to the audio that matches the transcripts are now broken on our Audio Transcripts page. So, I tracked them down for you on Internet Archive, so we can all verify what Webbink wrote.

Be aware that if you click on the links, the audio files will begin to download. Here's the first link, an Ogg file, from the May 30, 2003 teleconference, and here's Groklaw's transcript, so you can match them up and verify for yourself that there was no disclaimer in evidence. Here's the mp3 of the SCO teleconference dated July 21, 2003, the one in which David Boies participated and they all threatened the Linux world with copyrights they had just registered. You can listen for yourself with the transcript in hand, and you'll see that there is no disclaimer in the audio. And here's their conference from August 5, 2003, another MP3, which was the one about Red Hat, and I hear no disclaimer. It matches up with our transcript in that respect. Of course, if you do find any errors, please let me know. But we tried to be very, very careful with the transcripts, to make sure they were accurate.

In October or 2003, there was yet another teleconference where the transcript shows no disclaimer. This was the one about the BayStar investment. I can't yet locate the audio for that one. If any of you have this or any other audio files, you might send me an email, and I'll search through my old collection as well.

Note that Webbink wrote with the precision of a lawyer. He mentioned press conferences, not earnings calls. And if you go down the list on our transcripts page, you will find both. In the earnings calls, SCO did have disclaimers, but in the early press conferences in contrast, I don't find any disclaimers, except for the one about the Boies Schiller financial arrangement with SCO, held on November 18, 2003. Here's the transcript on that one.

Matthew Aslett, in his article "If this is true SCO’s execs are in BIG trouble," quoted Webbink, and he tried to verify:

This would be easy to verify if the audio files were still on http://ir.sco.com/ but a quick look didn’t show up anything.

Well, it's Groklaw to the rescue.


  


Were there disclaimers? | 331 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Off topic
Authored by: jrvalverde on Tuesday, August 21 2007 @ 03:33 AM EDT
ANd make links clickable, please

---
Jose R. Valverde
EMBnet/CNB

[ Reply to This | # ]

Corrections Here
Authored by: FrankH on Tuesday, August 21 2007 @ 03:35 AM EDT
Non anonymous corrections thread.

Please put corrections here.

---
Freedom's just another word for nothing left to lose,
Nothing ain't worth nothing, but it's free" Kris Kristofferson

[ Reply to This | # ]

Not in the UK
Authored by: elderlycynic on Tuesday, August 21 2007 @ 03:38 AM EDT
Those disclaimers are so much hot air in the UK - only wording
that is explicitly part of a contract or equivalent matters.
Companies have defended themselves against false (and I mean
FALSE) advertising using that defence.

[ Yes, that is an over-simplification, and there are almost
certainly some exceptions. ]

However, that is only in the UK, and the same may well not be
true everywhere (or anywhere?) in the USA. Still, SCO needs
all of the good news it can get, so I am sure that they are
glad that those statements are not actionable in the UK.

[ Reply to This | # ]

News Picks
Authored by: Simon G Best on Tuesday, August 21 2007 @ 03:45 AM EDT

News picks stuff here, please.

---
"Public relations" is a public relations term for propaganda.

[ Reply to This | # ]

No claim to copyright ownership back in May 2003!
Authored by: jmc on Tuesday, August 21 2007 @ 03:59 AM EDT

Seems that Darl was actually well aware of the copyright issue and skirted around it back then with a whole load of padding as per the transcript.

Thus spake Darl:

Some of you may be familiar with the text of the 1995 SCO-Novell agreement, since it was contained in a prior SEC filing. To underscore to you the broad set of rights we hold, let me summarize a few of these provisions. Firstly, we own, this is SCO, SCO owns all rights in ownership in Unix and UnixWare. All versions, and all copies, all updates, including Unix and UnixWare source code. SCO owns all claims arising against any parties relating to any rights, property, or assets in the business of Unix and UnixWare. SCO owns all software and sublicensing agreements, including the source code, and sublicensing agreements with OEMs, end-users, and educational customers.

The curious phrase about "owning ownership" that they've recently changed their company profile to say link appears here.

[ Reply to This | # ]

SCO also often claimed to "own UNIX"
Authored by: Anonymous on Tuesday, August 21 2007 @ 04:58 AM EDT
Many of SCOs press-releases had a kind of preamble, googling for SCO and the phrase "the owner of the UNIX operating system" will give you a nice selection of them. Here they still claim to own UNIX.

This was always a problematic statement to make, not only since the dispute about the copyrights started in SCO vs. Novell but even before that since SCO never had the UNIX trademark. Some of the press-releases have a footer noting that the UNIX-trademark is held by the Open Group and SCO at some time tried to get the UNIX-Trademark or at least something with a similar ring. So SCO-Management knew they didn't have the trademark and later they even learned that also the copyrights were in dispute, yet they still continued to claim "ownership" of UNIX as if that were an undisputed fact.

[ Reply to This | # ]

Public Claims?
Authored by: Anonymous on Tuesday, August 21 2007 @ 05:01 AM EDT
Matthew Aslett said "It’s no coincidence that the public claims stopped
once the legal nitty-gritty got started."

I thought they didn't stop until they were told by the court to stop - and even
then, IBM were silent but SCO continued the rumours.

[ Reply to This | # ]

keepings up with the Jones
Authored by: LaurenceTux on Tuesday, August 21 2007 @ 06:23 AM EDT
You know with all this history being found by you/your team we should start
calling you DR Jones. We seem to be doing the Jones Tour with The BleepCase
filing in for the Lost Ark, the CourtHouse filling in for the Temple of Doom and
oh maybe Darl and friends doing the Last Crusade (to stay out of jail!!).

[ Reply to This | # ]

I don't get it: what's going to happen to them ...
Authored by: Anonymous on Tuesday, August 21 2007 @ 06:35 AM EDT
.. that hasn't happened already? Someone's going to have to bring a lawsuit
against them, if there is any SCO by that time, of course. More than likely
the directors will set up another company and let SCO go into receivership.

[ Reply to This | # ]

Were there disclaimers? and redhat?
Authored by: Anonymous on Tuesday, August 21 2007 @ 07:22 AM EDT
I think this goes to the heart of the redhat case and Lehman claims. Redhat,
where are you? :)

[ Reply to This | # ]

Were there disclaimers?
Authored by: Anonymous on Tuesday, August 21 2007 @ 07:59 AM EDT
>>> As a consequence, investors had every right to take what Darl
McBride and Chris Sontag were saying in public back then as the gospel truth.
<<<

They also have every right to believe what they were saying was false. I can
show you a web site largely full of people who thought so. (cough cough)

Why is this relevant? I'm confused. I'm not trolling here. I really am confused
about this.

[ Reply to This | # ]

We Own
Authored by: Anonymous on Tuesday, August 21 2007 @ 08:08 AM EDT
We Own Ford.

errr... We own a ford.

[ Reply to This | # ]

  • We Own - Authored by: GuyllFyre on Tuesday, August 21 2007 @ 09:01 AM EDT
  • We Own - Authored by: jfw25 on Tuesday, August 21 2007 @ 10:11 AM EDT
    • Cascade! - Authored by: Anonymous on Tuesday, August 21 2007 @ 10:29 AM EDT
    • The theory - Authored by: Anonymous on Tuesday, August 21 2007 @ 10:26 AM EDT
    • We Own - Authored by: Anonymous on Tuesday, August 21 2007 @ 10:56 AM EDT
    • We Own - Authored by: Anonymous on Tuesday, August 21 2007 @ 02:14 PM EDT
    • We Own - Authored by: Anonymous on Tuesday, August 21 2007 @ 03:04 PM EDT
    • We Own - Authored by: Anonymous on Tuesday, August 21 2007 @ 03:30 PM EDT
    • You Own - Authored by: Anonymous on Tuesday, August 21 2007 @ 04:39 PM EDT
      • Droit du Seigneur - Authored by: Anonymous on Wednesday, August 22 2007 @ 03:50 PM EDT
    there is a disclaimer on the Q2 2005 conference call
    Authored by: mossc on Tuesday, August 21 2007 @ 08:49 AM EDT
    There is a disclaimer on Q2 2005. I guess they realized their exposure by that
    time.

    It is about 2 minutes long.

    That is the only one I have locally.

    [ Reply to This | # ]

    Could MS and Sun claim their license fee? (Unrelated but not off-topic)
    Authored by: crs17 on Tuesday, August 21 2007 @ 09:53 AM EDT
    I've been thinking - slowly as normal. Judge Kimball ruled that SCO couldn't
    have sold an SVRx license without Novell's approval and without forwarding them
    their share of the fee.

    Could Microsoft, Sun, and the other SCOsource licensees then come back and claim
    that if the licenses weren't proper then _they_ were defrauded and should have
    their fees refunded and the money be returned to them - MS, Sun, and the others,
    and not given to Novell?

    I don't know how they'd get their claims considered before Novell's, which has
    already been ruled on in court. But, looked at naively, without considering
    that MS and Sun were really financing the lawsuit, this claim could have
    validity.

    [ Reply to This | # ]

    Disclaimers aren't an absolute defence
    Authored by: dcf on Tuesday, August 21 2007 @ 10:00 AM EDT
    The real danger to the execs is whether they traded on the basis of insider
    information that they did not disclose to investors. If that is the case, the
    standard disclaimers about forward-looking statements don't help them.

    For example, wasn't there evidence that SCO execs knew about their earlier study
    of SVRX and linux which found no significant copying of code?

    [ Reply to This | # ]

    Wire Fraud
    Authored by: Quila on Tuesday, August 21 2007 @ 10:14 AM EDT
    Now that they've been ruled not the copyright owners, and they know it, doesn't that make this SCO Source page wire fraud?
    Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

    [ Reply to This | # ]

    That's just not true
    Authored by: Anonymous on Tuesday, August 21 2007 @ 10:27 AM EDT

    As a consequence, investors had every right to take what Darl McBride and Chris Sontag were saying in public back then as the gospel truth.

    An investor who makes a habit of taking every unqualified statement by a company director as "gospel truth" will soon cease to be an investor. Because he/she will quickly lose all his/her money.

    Seriously - and speaking as an investor: a prudent investor believes only what independent auditors have certified. And a really prudent investor takes even that with a grain of salt - depending on the reputation of the auditors.

    [ Reply to This | # ]

    Now if you want funny...
    Authored by: Anonymous on Tuesday, August 21 2007 @ 10:53 AM EDT
    Shame that no-one has a copy of CNN's Miles O'Brien vs Darl interview. The
    interview was conducted in the aftermath of the successful attack by the
    DDOS-worm for Windows, which targeted SCOX. Watching Darl blaming the Linux
    community and listening to Miles, who was trying to keep the technical level
    down to the average viewers' expectation, asking him to explain why "Linux
    hackers" would write a Windows' worm?" was absolutely hilarious. I
    shrug to say, I didn't Freevo it.

    JL'B - lurking now for over four years.

    [ Reply to This | # ]

    Lying On Prospectus IS A CRIMINAL OFFENSE
    Authored by: Anonymous on Tuesday, August 21 2007 @ 11:13 AM EDT
    Here's the scoop from SCO's Prospectus filed with the Securities and Exchange
    Commission. Notice, "ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
    OFFENSE.":




    "The SCO Group Logo
    Form 424B1
    Prospectus Filed Pursuant to Rule 424
    Filed Mar 21, 2000

    [Caldera Logo]

    5,000,000 SHARES

    COMMON STOCK

    Caldera Systems, Inc. is offering 5,000,000 shares of its common stock. This is
    our initial public offering and no public market currently exists for our
    shares. Our common stock has been approved for quotation on the Nasdaq National
    Market under the symbol "CALD." The initial public offering price is
    $14.00 per share.

    INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
    SEE "RISK FACTORS" BEGINNING ON PAGE 5.


    THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
    APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
    TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
    OFFENSE."

    http://ir.sco.com/secfiling.cfm?filingID=1035704-00-192

    [ Reply to This | # ]

    • Can you read? - Authored by: Anonymous on Tuesday, August 21 2007 @ 04:15 PM EDT
      • Can you read? YES - Authored by: Anonymous on Tuesday, August 21 2007 @ 08:47 PM EDT
    Yes, but by the operator?
    Authored by: Anonymous on Tuesday, August 21 2007 @ 12:08 PM EDT
    on one of the early conferences where Darl was going off, I dialed and listened
    in. I seem to remember the disclaimer stuff but it was said by the operator
    before the conference started. IIRC it was the usual boiler plate stuff,
    "this contains forward looking forcasts blah blah". And then you were
    connected to the conference. But then again (I have listened to many of these)
    and could be confused.

    Anyone else remeber the pre-conference operator?

    -jboss

    [ Reply to This | # ]

    CNN interview highlights
    Authored by: Anonymous on Tuesday, August 21 2007 @ 12:58 PM EDT
    Here are teh highlights of Darl's CNN PRopaganda offensive, from the lol link above:

    //

    Darl McBride is the president and CEO of SCO Group. He joins us to talk about the reward, which he's putting up here. And he's the company that owns the Unix code. Mr. McBride, Thank you for joining us. ... O'BRIEN: Rewards for people who put out viruses and worms, that's a relatively new concept, isn't it?

    MCBRIDE: It's actually a very old concept. You go back to the wild west days, when you had a hard time finding people, you put a bounty out and then people would bring them in. We're on a new digital frontier now. It's very difficult to track these people down. ...

    MCBRIDE: This is a new digital frontier. We came out, we found that key parts of our code -- we owned the Unix operating system -- was showing up in this new upstart program called Linux. These new programmers working with IBM. We found that things were violated against our copyrights. And so we filed a $3 billion lawsuit against IBM. We've been working through a judicial system here. But now you have people going outside the system, trying to attack us, to try and shut us down before we have a court verdict. ...

    MCBRIDE: I think that's exactly the case. With the new Linux system, it's very interesting, because it's very open, anybody around the world can participate, anybody can use it. But what happens when you have a problem inside the system? Because there are no boundaries and no control systems, the mechanism's built into Linux. Then you have this type of behavior when you have a problem actually pop up.

    O'BRIEN: Is Linux particularly susceptible?

    MCBRIDE: Well, we believe -- we have had four attacks on our company over the last year. At least one was claimed -- the Linux community claimed responsibility for the attack. We believe that there is a problem with Linux in terms of the code we see showing up inside of there. We don't know for sure if this attack is coming from Linux, but we have very strong suspicions that is the case.

    O'BRIEN: One final thought. You're talking about the ultimate hall of smoke and mirrors here. What are the chances you could be duped into giving the reward to a culprit?

    MCBRIDE: Well, the way it works here, Miles, is to pay the reward out means that that person will be in jail. So I guess conceivably they could turn themselves in, go to jail, sit around with their $250,000 and get out. So I guess maybe that's the way to make money. Since you can't make money with Linux because it's free, maybe that's the new monetization system.

    O'BRIEN: Well that's an important piece of fine print. But I suppose the point here is if you know somebody, you should contact whom?

    MCBRIDE: Please contact your local FBI office. And they're taking leads, we're getting leads right now. We're encouraged by some of them. Hopefully, we'll be able to track these people down.

    //

    There's so much wrong with this segment that it's hard to know where to begin. Perhaps I'll just leave it with this: Darl's law enforcement initiative brings to mind nothing so much as OJ Simpson's search for the 'real' killer.

    [ Reply to This | # ]

    Were there disclaimers?
    Authored by: Anonymous on Tuesday, August 21 2007 @ 02:56 PM EDT
    Who cares? Really.

    As far as I am concerned "investor" is merely a politically correct
    word for "gambler."

    The entire concept of a 'public traded company' is exactly one small step away
    from being a Ponzi scheme. It is a sham.

    krp

    [ Reply to This | # ]

    Is it possible?
    Authored by: rsteinmetz70112 on Tuesday, August 21 2007 @ 03:01 PM EDT
    That disclaimers were included in the sign up information and simply not read
    during the press conference calls?

    If so is that sufficient?

    Since the audience was the press and not the average investor. Does that matter?
    Presumably the press have some responsibility for informing themselves and being
    informed?

    Just wondering.

    I personally think that if Darl and company get in trouble it will more likely
    be for stock manipulation than failing to include disclaimer in press
    conferences.

    ---
    Rsteinmetz - IANAL therefore my opinions are illegal.

    "I could be wrong now, but I don't think so."
    Randy Newman - The Title Theme from Monk

    [ Reply to This | # ]

    Spoilation question
    Authored by: Filias Cupio on Tuesday, August 21 2007 @ 05:38 PM EDT
    Imagine I'm an angry SCO investor. I believe that SCO have audio records of
    these press conferences which will support me if I sue SCO and/or McBride et al.
    Further, I believe these might soon get erased, but SCO will later dodge a
    spoilation charge by claiming they didn't know these would be relevant to a
    possible future suit.

    Is there some way (short of filing suit) to put a company on notice that a law
    suit may be coming soon, and that certain evidence must not be destroyed in the
    meantime?

    (I'm interested in the general question, not what would happen in the specifics
    of the SCO example I gave.)

    [ Reply to This | # ]

    So, if I'm on the Board of Directors (slightly OT)
    Authored by: Anonymous on Tuesday, August 21 2007 @ 06:25 PM EDT
    Imagine I'm on the board of directors of some firm or other, and I begin to believe we're doing something morally wrong or legally wrong. What action on my part saves my butt?
    1. Resign immediately upon consideration of said action?
      1. What if the action is considered Company Confidential? Or more to the point, what if I can't explain why I resigned without revealing something considered Company Confidential? I might possibly save my own butt, but can't warn anybody else?
      2. What if I didn't realize the illegality of said action until weeks or months later because IANAL?
    2. Denounce it strongly and vote against it?
    3. Simply vote against it?
    4. Abstain?
    5. Vote in favor but send a strongly worded memo to the chair?
    6. Mention my discomfort to the guy next to me in the club box at the stadium?
    I get the sense that if the board you're on takes a very wrong turn, you're pretty much along for the ride. To apply it to our favorite case, what action could I, as a hypothetical member of the SCO board, have taken to mitigate or even eliminate my legal liability when I heard the chair make statements I had reason to believe were false (even though I didn't make them myself?)

    [ Reply to This | # ]
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