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Ah! The Joys of Answering SCO's FUD
Wednesday, May 17 2006 @ 11:54 PM EDT

You know how things look very different at 3 AM than they do later in the cold light of dawn? I think that must be the explanation for poor "Paul Murphy" -- né Rudy de Haas, author of "The Unix Guide to Defenestration," who has been known to be critical of IBM and who once tried to assert in public, ADTI-like, that Linux was a derivative of Minix, until Linus, Minix author Andrew Tanenbaum, Eric Raymond and others shut their mouths -- posting at 3:22 AM an article on "The Joys of SCO." It probably seemed like a good idea at the time. There are two other possible explanations I can imagine:
1. he wants lots of hits so he can show his boss (and advertisers) that he is a popular blogger, which I don't believe is the case; or

2. maybe he's actually a SCOfolk guy, and this is a way to send a message to IBM, with plausible deniability that it comes from SCO, and see if, when they run it up the flagpole, anybody salutes. The message? "Please settle. If you buy our Unix "rights" from us, you can claim victory, release it for Linux use, and we still get some of your money."

If that's SCO's message, here's IBM's probable answer: Hahahahaha.

I hope you don't click on his article, because I'd hate to mislead his boss. And with his background, I think he already has to know that what he wrote in this article is downright silly. So why bother to "educate" him? But for the rest of you, who may have read it already and have questions, I'll untie his knotted shoelaces.

Here is his article, in colored text, with my educational additions and fact corrections interspersed:

SCO's basic case started out simple.

Hardly. Here's their first complaint. They wrote this in summary:
4. As set forth in more detail below, IBM has breached its own obligations to SCO, induced and encouraged others to breach their obligations to SCO, interfered with SCO’s business, and engaged in unfair competition with SCO, including by a) misusing and misappropriating SCO’s proprietary software; b) inducing, encouraging, and enabling others to misuse and misappropriate SCO’s proprietary software; and c) incorporating (and inducing, encouraging, and enabling others to incorporate) SCO’s proprietary software into open source software offerings.

SCO charged IBM with unfair competition, of deliberately trying to destroy the Unix market. Take a look, please, at recent Unix marketshare figures and you'll find IBM is still very much in the Unix business itself, (and note an upward trend was very evident in early 2004, so if destroying the market for Unix was IBM's game plan, it surely failed), so SCO's theory would require IBM to have deliberately planned to cut off its nose to spite its face. Not that logic was ever much in evidence in SCO's case.

In public, SCO executives said IBM has misappropriated a mountain of System V code and plugged it wholesale into Linux -- so much code that if you tried to take it out, you could barely use Linux any more. In the complaint, SCO claimed this:

96. Again, “IBM’s AIX contributions” consisted of the improper extraction, use, and dissemination of SCO’S UNIX source code and libraries, and unauthorized misuse of UNIX methods, concepts, and know-how.

As you can see, "methods and concepts" -- whatever that means -- first poked its head over the battlement in SCO's initial complaint. May I please turn your attention to the February 1, 1985 Side Letter Agreement between AT&T and IBM, clarifying the parties understanding regarding methods and concepts language in the Software Agreement of that same date, February 1, 1985:

This letter states understandings between our companies relating to the referenced agreements and amends certain sections in such agreements concerning SOFTWARE PRODUCTS subject to the referenced Software Agreement....

7.06(a) LICENSEE agrees that it shall hold SOFTWARE PRODUCTS subject to this Agreement in confidence for AT&T. LICENSEE further agrees that it shall not make any disclosure of such SOFTWARE PRODUCTS to anyone, except to employees of LICENSEE to whom such disclosure is necessary to the use for which rights are granted hereunder. LICENSEE shall appropriately notify each employee to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by such employee. Nothing in this agreement shall prevent LICENSEE from developing or marketing products or services employing ideas, concepts, know-how or techniques relating to data processing embodied in SOFTWARE PRODUCTS subject to this Agreement, provided that LICENSEE shall not copy any code from such SOFTWARE PRODUCTS into any such product or in connection with any such service and employees of LICENSEE shall not refer to the physical documents and materials comprising SOFTWARE PRODUCTS subject to this Agreement when they are developing any such products or service or providing any such service. If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, LICENSEE's obligations under this section shall not apply to such information after such time.

SCO also claimed in its complaint that IBM was guilty of trade secrets violations, only to later drop that cause of action. And it accused IBM of misappropriating Project Monterey "proprietary information", later finding out from Judge Kimball that the statute of limitations to complain about that contract ran out long ago. The initial March 2003 complaint had four causes of action: misappropriation of trade secrets, unfair competition, interference with contract, and breach of contract.1

This case was never simple, unless "Stick 'em up" is your idea of simple.

SCO said that IBM had infringed on the terms of its AT&T source code licenses for Unix by allowing derivative works to enter the public domain via Linux, that they had drawn the problem to IBM's attention as part of the license renewal process, and that IBM had refused to recognize the problem or alter its behavior.

Sigh. Linux is not in the public domain. It never has been. It's all copyrighted code belonging to the good-hearted volunteers who wrote it and released it to the world under the GPL license, which you violate to your legal detriment, as SCO is about to find out the hard way. IBM refused to pay SCO off to go away is the way I heard it. Here's how IBM described SCO's strategy way back in August of 2003 in IBM's Amended Counterclaims. It may give Mr. "Murphy" some insight into IBM's refusal to do a deal:
I. SCO's Scheme

50. SCO devised a scheme to profit from the Unix assets that it acquired from Original SCO, though those assets were in no way developed by SCO. Although most, if not all, of the AT&T Unix technology that SCO purports to own is generally known, available without restriction to the general public or readily ascertainable by proper means, SCO undertook to create fear, uncertainty and doubt in the marketplace in regard to SCO's rights in and to that technology.

51. Recognizing that there is little value in its Unix rights, SCO did not limit its scheme to that technology. Rather, SCO devised and executed a plan to create the false perception that SCO holds rights to Unix that permit it to control not only all Unix technology, but also Linux -- including those aspects generated through the independent hard work and creativity of thousands of other developers and long distributed by SCO itself under the GPL.

52. SCO undertook to carry out its scheme by, among other things, (a) bringing baseless legal claims against IBM and threatening to sue other companies and individuals, (b) conducting a far-reaching publicity campaign to create the false and/or unsubstantiated impression that SCO has rights to Unix and Linux that it does not have and that IBM and others have violated SCO's rights and (c) otherwise seeking to condition the market to believe that SCO has rights to Unix and Linux that it does not have and cannot properly enforce.

Get it? IBM doesn't think SCO's Unix "rights" have any value, even if it has any, and that its claims are baseless and that's why IBM is not interested in buying them off. Period.

In response SCO terminated the contract,

Nope. SCO sued and gave notice that it was going to terminate the contract on the same day, March 6, 2003, in violation, IBM pointed out, of the contract term that required SCO to first give IBM 100 days to fix any alleged breach. Here's the day it sued, and here's the letter [PDF] SCO sent to IBM. Note the dates. What does that tell you about SCO's motive? Its desire to resolve the issue without litigation?

thereby forcing IBM to stop selling AIX and other Unix derived products, and asked a court first to enforce that order and secondly to consider fair compensation.

Based on what? I see two daydreams here. On planet earth, please find me a lawyer (other than the ones paid to represent SCO) who thinks the court will do this. For one thing, Novell ix-nayed the "termination," based on Amendment X's terms and Section 4.16(b) of the Asset Purchase Agreement between Novell and original SCO dated September 19, 1995. Novell directed SCO to "waive any purported right SCO may claim to terminate IBM's licenses enumerated in Amendment X or to revoke any rights thereunder, including any purported rights to terminate asserted in SCO's letter of March 6, 2003 to IBM". And Novell claims it retained copyrights on Unix and that they were never transferred to SCO, so on what basis would a court enforce a termination based on copyrights that are in dispute?

At the time this looked like a negotiating tactic: using the court to get IBM's senior people to pay attention to an internal problem. To my astonishment, however, IBM choose to deny SCO's claim, embarking on a costly, and high risk, legal process rather than settlement negotiations.

This tells us how much Mr. "Murphy" knows about the law. I have little doubt that his astonishment was shared by SCO executives and their die-hard financial supporters too. Nevertheless, anyone who knows anything about the law knows that giving in to dubious claims has a way of putting a sign on your back that says, "Sue me please. I have tons of money, and you just might get some." Look at Blackberry. Did settling solve RIM's legal problems? So IBM turned out not to be such an easy mark after all. Go figure. It's called the School of Hard Knocks.

I don't pretend to understand American civil law,

Heh heh. Is that so?

...but it seems to me that the basic SCO claim is an absolute no brainer: one line of AT&T code in Linux makes the case

It wouldn't prove damages, however. As David Marriott stated at the last hearing, paraphrasing, if SCO's business failed in 2000, let's say, a donation of code in 2005 can't be the reason. One line of code would likely be viewed as de minimis anyway, even if there was any such line of code. It might even be viewed as fair use. It could have been put there by someone other than IBM. Like a SCO employee, for example, with his boss's knowledge and approval. We know there were such contributions. Or it could be standards-derived or the only way to do something right or revealed in a book on Unix years before. Or IBM can prove the code is its own property and that its contracts allow it to donate any code it wishes. There are lots of possibilities. What isn't possible is for SCO to win billions based on one line of code. So it just isn't true to say that one line of code makes SCO's case.

...and the original 390 port done in Germany and released through SuSe was chock full of things that seem to have benefited rather directly from work done under the AT&T shelter by engineers from Sun, NCR, Motorola, and AT&T when the BSD/SysV union that gave rise to Solaris was co-developed for PowerPC.

This appears to be Mr. "Murphy's" personal theory. First of all, Caldera joined with SuSE to release code as UnitedLinux, under the GPL, I might add, in April of 2003, a month after the SCO v. IBM lawsuit began. (If you don't know what 390 means, here are some resources to get you started. And please note that Gregory Blepp was with SuSE back in the early UnitedLinux days.) If your contract says you can do something, you can do it. That is what IBM says. As for engineers from Sun, NCR, and Motorola, SCO doesn't represent their interests. Anyway, BSD code is free to be used. Solaris is now Open Sourced, so any "methods and concepts" in Solaris are now free to be used by the world and its uncle. Long before, though, the code was out there, methods and concepts with it. In any case, Sun isn't suing IBM, not that they might not enjoy it, or might not have been cheering SCO on back in 2003. But if they were trying to help SCO, then they'd never have Open Sourced Solaris, because it let the dogs out. Oops. Forevah. This doesn't even point out that Amendment X and the $echo newsletters clarified that IBM (and Sequent) had the right to do whatever it wished with methods and concepts.

Unfortunately IBM's decision to circle the wagons led to a rapid escalation in claims on both sides.

Actually, it led to a steady diminution in SCO's claims, which is hardly unfortunate from IBM's point of view. The numbers went up, but the heart of the SCO case shrank. First, they scrupulously avoided suing for copyright infringement, despite the claims to the media, other than for continuing to distribute AIX after the "termination," which Novell overturned [PDF], by the way, immediately (Novell overruled [PDF] SCO's "termination" of Sequent regarding Dynix also). Judge Dale Kimball looked at SCO's copyright evidence and was "astonished" at its lack2 (an issue that came up only because SCO brought a motion to dismiss IBM's Tenth Counterclaim, seeking a judgment that it had not violated SCO's copyrights by its Linux activities). SCO also dropped its initial trade secrets claims. Then it dropped its "the GPL is unconstitutional" nonsense. And when you look at the tiny little list of SCO's claims regarding allegedly misused materials as filed by the final deadline in December, there is so little to it, the magistrate judge asked the SCO lawyer at the last hearing, "Is this all you've got?" Eventually, IBM dropped some patent counterclaims, because SCO has so little money, it wasn't worth the cost to pursue them legally and IBM was interested in getting the case to trial. In short, this case just keeps getting smaller and smaller. But what is he saying, in the overview? That SCO seriously miscalculated.

Thus SCO hired a well known east coast law firm on contingency plus fees and expenses, and the subsequent filings raised the stakes considerably by alleging that IBM's senior management was complicit in this process, issuing uninformed commentaries on Unix history, and then demanding licensing fees from the general Linux community in a rather naive attempt to establish a fair market value for the formerly protected code and ideas.

SCO hired Boies, Schiller in January of 2003 long before all the above happened. It sued IBM in March. It "terminated" AIX 100 days after that March 6 notice. "Murphy" has it backwards. Well. Heh heh. What can I say?

Those mistakes allowed IBM to rally the Linux community against SCO, empowered anti-SCO sites like groklaw, and created an intensely negative emotional atmosphere in which hardly anyone noticed that IBM's actual legal strategy consists of a large red herring (the dynix file system code; something SCO's lawyers bought hook, line, and sinker) coupled with alternately stonewalling, nitpicking, and drowning SCO in paper.

IBM didn't rally anything or anybody. This lie has been kept in the air for a long time. Neither did Boies Schiller. IBM didn't need to rally "the Linux community". Darl McBride did that single-handedly with his trash talk and public threats. Blake Stowell and Chris Sontag and SCO-Microsoft's media buddies helped, I guess. And may they be fully rewarded. When SCO sent letters to commercial users of Linux, warning them that they could be liable for IP infringement if they continued to use Linux, I think SCO knew they'd get the attention of the Linux community. And they did. IBM didn't have to lift a finger.

Groklaw wasn't established as an anti-SCO site, for that matter. I just cover the news about the case, explaining what is happening, and what has been happening is that SCO has been falling downstairs in slow motion, hitting its head on every step. It's not my fault SCO never had a case that anyone but folks like Mr. "Murphy" thought had legs. SCO's doom was so utterly predictable, just knowing, as I did, how the GPL works and how honorable Linus is as a person, that I called the first article I wrote about SCO that exactly. It was not the first Groklaw article, though. And Groklaw's power doesn't come from SCO. They have pulled every underhanded trick in the book to undermine Groklaw and destroy its earned reputation for fairness and honesty, as far as I'm concerned. Their inability to succeed in that ignoble mission in no way resulted from a lack of trying.

Now, about Dynix. It wasn't IBM that brought Dynix into this picture. It was on May 29, 2003 that SCO sent a letter to Sequent, purporting to "terminate" its right to distribute Dynix, which you can read about in this letter from Novell to SCO dated February of 2004 [PDF], the first step in Novell's process of overturning that "termination." And if you read SCO's July 2003 amended complaint, you will find it was SCO that brought it up there too, adding Dynix claims. The 6 claims of action in this complaint were "Breach of IBM Software Agreement," "Breach of Sequent Software Agreement," and "Breach of IBM Sublicensing Agreement," "Unfair Competition," "Interference with Contract," and "Misappropriation of Trade Secrets."1

As for drowning people in paper, if you track the SCO v IBM case and read all the filings, you will find out for yourself just who has been stonewalling, nitpicking and drowning whom in paper. Take stonewalling. As IBM's attorney, David Marriott, asked the magistrate judge at the last hearing in April, when does SCO have to finally tell IBM what this case is about? It's been three years, and we still don't know what code SCO is even talking about. Talk about stonewalling skills. I know of no other case in history where the plaintiff filed a claim, went through all of discovery over an agonizing three years, and never once told the defendant what it allegedly had done wrong with specificity.

Four years later some clarity is emerging.

Three, actually. But heaven only knows, it *feels* like four.

SCO's lawyers are responding to IBM's strategy by broadening their case from code to the ideas embedded in that code.

That's not what they just told the judge at the April hearing. They told her that methods and concepts were always in SCO's case. And I'm sure they wouldn't lie to the judge. And I already showed you SCO's first complaint, which spoke about method and concepts. I think it would be more accurate to say that SCO started out charging all kinds of wild things, and it has now been reduced to methods and concepts.

At the nit picking level, for example, if there are four equally good ways to handle a high/low switch and IBM's original code used the same one AT&T did, it may be reasonable to believe that the guy who nominally wrote the code asked the AIX maintainer in the next cubicle how AT&T handled it. At the more general level there may be a number of reasonable ways to do kernel table management, but if only the one invented at AT&T and uniquely embedded in the licensed AT&T code appears in IBM's product and results in other significant simplifications that also appear in the kernel, then the balance of probability falls on SCO's side. Indeed if SCO can find even a couple of compelling examples like this, particularly at the level of significant design and coding optimizations, the likelihood of independent invention starts to approach zero.

Here's the thing about court cases. Likelihoods and the balance of probabilities and reasonable guesses don't cut the mustard. That's only useful for message boards and silly blogs. You have to actually prove your claim with specificity in a court of law. And that, for poor SCO, is their dilemma. They made claims it appears they can't actually prove. If Mr. "Murphy" wishes to call that "clarity," we can agree on at least that one point. And here's the thing about AIX. It's IBM's homegrown code, which their contract (see Amendment X) lets them use any way they wish. If, for example, IBM coded JFS first and then put it in AIX and later donated it to Linux too, what is there to stop them?

The trap for IBM here is that SCO can argue that copying at the level of design ideas indicates management complicity because, at the very least, the product development managers would have had to sign off on both design and code. And if the court buys the argument, this means that IBM's loss will be far more consequential than was ever contemplated in the original filings.

I don't think so. If you take a look at Groklaw's new Unix methods and concepts database, you will find that there is already overwhelming evidence that Unix methods and concepts were let out of the barn a long time ago. And the contract states that no confidentiality is required once it is revealed by someone else. SCO's argument seems simply dead in the water, even if IBM doesn't win its current motion to limit SCO's claims and toss most of them clean overboard.

Speaking personally I see SCO as the aggrieved party here - but I think their real complaint today should be as much against their own lawyers as against IBM.

Ah. Here's a new theme: that it's all Boies Schiller's fault. I've been expecting this for some time. I notice he never mentions them by name, which is odd, unless he's worried about being sued for libel. I think SCO agreed not to ever sue them, in the engagement agreement, the one that capped the legal fees in October of 2004, which certainly showed foresight on Boies Schiller's part. The worst SCO can do is arbitrate. However, Lamlaw certainly thinks that they should never have brought this case in the first place. What I think is that Boies Schiller did not seem to have understood the GPL at the beginning, as I repeatedly tried to tell them, as you can see by my words way back in October of 2003. If they had listened to me, I feel sure they would have proceeded -- if at all -- in different ways. Here's what SCO wrote about the GPL in its first complaint:
The General Public License

77. Related to the development of the open source software development movement in the computing world, an organization was founded by former MIT professor Richard Stallman entitled “GNU.”

78. The primary purpose of the GNU organization is to create free software based on valuable commercial software. The primary operating system advanced by GNU is Linux.

79. In order to assure that the Linux operating system (and other software) would remain free of charge and not-for-profit, GNU created a licensing agreement entitled the General Public License (“GPL”).

80. Any software licensed under the GPL (including Linux) must, by its terms, not be held proprietary or confidential, and may not be claimed by any party as a trade secret or copyright property.

I'm sure you don't need me to point out that Stallman was never an MIT professor, that he has nothing to do with Open Source but rather with Free Software, that the GNU Project had no goals of using proprietary anything but instead writes everything from scratch, as Darl McBride later acknowledged, or that the GPL in no way means the code must be free of charge or not-for-profit (ask Red Hat or just look it up in the GPL FAQ, which clearly says you can charge for the code, just not for the license). I expect Boies Schiller wishes it never penned those words but then again, lawyers are not tech experts. SCO is the tech expert. As Caldera, they sold software under the GPL for years, so you'd expect them to be able to explain the GPL to their lawyers, who would naturally have every reason to believe the client.

The GPL is the MVP of the SCO litigation, in my view, and it's such a deep problem for SCO that even if it could "win" on any level, IBM's counterclaims are going to cost SCO so much money in damages that it will likely wipe away anything SCO could win in any alternate universe I can think of.

The basic case, however, was and is a no brainer, and should have been settled without the damage to SCO's reputation and ability to do business we've seen so far. Thus the bottom line is simple: if SCO survives long enough to make it in court, IBM will lose.

My brain tells me the opposite, noting as it carefully does that so far, SCO is losing everything that matters, in court and out, including its reputation, but not because of anything IBM or Boies Schiller did. It lost its reputation by making dubious claims and acting like a bully about it. Nobody respects a bully. It was Darl McBride who said he didn't care what the Linux community thought of him. What he cared about, he told us, was the shareholders. SCO can hardly boo hoo now that it has a bad reputation in the tech community. The arguments Mr. "Murphy" makes here are not supportive of his conclusion.

As I've said before, there is a natural basis for a settlement here under which SCO would drop the case and IBM would pay SCO to release all of its remaining rights in Unix code to the public -allowing IBM to leave the field in triumph after having achieved something of value to the Linux community.

Here's the apparent offer. Settle, with IBM paying SCO to release its "rights" in Unix code. Here's the answer: SCO doesn't have anything anybody wants, even if it could demonstrate it had the "rights" it claims. We didn't even start to discuss Novell's claim that it holds the copyrights to Unix, not SCO, or Novell's claim that SCO has no legal right to sue anybody in the UnitedLinux deal, or any licensee of anyone in the UL deal, an assertion which is currently being brought to Europe for arbitration. I notice Mr. "Murphy" doesn't write about Novell at all. I wonder what that might signify?

Here's the deeper answer: there is nothing in System V that the Linux community wants. It's the other way around. Look at SCO's current product. It's their old, weather-beaten code juiced up with FOSS to make it marketable. Take out the FOSS, and nobody new wants it. Actually, thanks to SCO's remarkably offensive litigious behavior, nobody in the US wants it, period, from all I can discern from SCO's SEC filings. They are digging like mad in places like China and Russia and South America, trying to find some business where nobody knows them or their ways, and hoping that some cell phone-spamming software will turn their fortunes around. We certainly wish them all the luck in the world with that.

Most people, of course, deny SCO has a case and see no value in open sourcing the AT&T product set.

What might that tell you?

Now, if you're in that camp, let me ask you two questions: first, from whom are you getting your information? and, secondly, if you think open sourcing AT&T's code now would produce no change in Linux or any other major Unix variant, I'd guess that you'd be right; but have you considered that you're making SCO's case for them?

A cluebat for Mr. "Murphy": Linux doesn't need UNIX code. You may have observed how little the Linux community cared when Sun announced it was open sourcing Solaris. The methods and concepts were released to the world already, from all I can see. They teach them in schools. And by the way, for you GPL-challenged types, when Caldera released UnitedLinux, which it did *after* it sued IBM, it released all the code it is suing over into the wild, the methods and concepts and the code. And the thing about the GPL is this: it's like losing your virginity. Once you decide to release your code under the GPL, it can never go back to being closed source again. Their lawyers on the UL project should have told them that. Except that, of course, they knew that already, being back then a Linux company.

See, this is why I always say I want to be an analyst when I grow up. So what's the takeaway? Mr. "Murphy" has been urging IBM to settle since 2003. IBM apparently doesn't listen to him. SCO thought IBM would settle, and it lost that bet. And do I smell the odor of a client unhappy with its lawyer floating in the air?


1 SCO's final complaint lists 9 causes of action, but it's repetitive (2 Interference with Contract causes of action listed, for example), and a copyright infringement claim, related to continued AIX distribution, was added, replacing the dropped Misappropriation of Trade Secrets cause of action.

2 Kimball: "Viewed against the backdrop of SCO's plethora of public statements concerning IBM's and others' infringement of SCO's purported copyrights to the UNIX software, it is astonishing that SCO has not offered any competent evidence to create a disputed fact regarding whether IBM has infringed SCO's alleged copyrights through IBM's Linux activities."


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