In his speech, he said some peculiar things about security:

"Ballmer ... disputed the notion that open-source code is more secure than Windows. 'The data doesn't jibe with that. In the first 150 days after the release of Windows 2000, there were 17 critical vulnerabilities. For Windows Server 2003 there were four. For Red Hat (Linux) 6, they were five to ten times higher,' he said.

"'The vulnerabilities are there. The fact that someone in China in the middle of the night patched it--there is nothing that says integrity will come out of that process. We have a process that will lead to sustainable level of quality. Not saying we are the cat's meow here--I'm saying it is absolutely not good reasoning to think you will get better quality out of Linux.'"

Ballmer's being a naughty boy again. China indeed. "In the middle of the night." Trying to frighten the children with overtones. And playing with numbers. What year is it again? Red Hat 6? Pardon me for pointing it out, but they are up to 9 now. He's choosing a 150-day period from back in the day -- and I wonder how long it took to pick the best segment of time to use -- and using that for comparison? There is a lot that can be said about this, but it's not really necessary to do any research on this sad subject, I don't think. Everyone on a Windows box just went through the worst summer and fall of security issues of all time. They already know he's just ...well, what would be the precise word here? You hate to say lying. It's so cold.

However, let's do a little research, just for fun.

"'We're trying to execute on this licensing plan (by) really starting to deal with the very top players and working our way down,' said Blake Stowell, a SCO spokesman. 'After the company has rolled this out to the Fortune 1000 and we're satisfied with how the program is going ... we'll then roll it down to small to medium businesses.' . . .

"SCO has admitted in recent weeks to having difficulties rolling out the licensing plan. Last Thursday it revealed that it had delayed until Nov. 1 a plan to double the price of the license in order to give users more time to buy licenses at the lower rate.

"Stowell advised small and medium-sized businesses interested in the Linux license to wait for SCO to contact them. However, customers that contact SCO before the Nov. 1 deadline will be eligible for the $699 per processor rate even if they can't actually purchase the license by that date, he said."

So now you know why you were getting the runaround. Wait. Maybe there is more to the story than the PR spin? Why, yes. Yes, there is. Here is analyst Dan Kusnetzky's thought:

"'As soon as they sell the first one, litigation will be started from all quarters,' he predicted. 'I think the people from The SCO Group realized that if they opened that box, they'd never be able to close it again.'"

Newhouse News has a What If SCO Wins article which includes this somber thought:

"Eben Moglen, a Columbia University law professor who represents the Free Software Foundation, says an SCO victory would further consolidate the software industry, raising possibilities for electronic surveillance of citizens.

"'The ability to modify technology in the 21st century is power,' Moglen says. 'And it either belongs to a few, or to everybody. ... Those who control the behavior of technology control lives.'"

They have retained Jack B. Blumenfeld of Morris, Nichols, a Delaware firm that seems to have a solid IP record, particularly in patent and trade secret cases. The attorney substitution document was signed by the old attorney and Mr. Blumenfeld on October 15.

I'm guessing we may not see a motion to move this case to Utah after all. Mr. Blumenfeld "serves on the Third Circuit Lawyers Advisory Committee. He has also been a member of the District Court Advisory Committee for the United States District Court for the District of Delaware, the Civil Justice Reform Act Advisory Group for that Court, and the Intellectual Property Advisory Committee of that Court." You can read about him here (just click on his name on the list on the right of the page, and there is a picture of him there too) and about the firm on this page:

"At the core of our patent litigation practice is, and always will be, the venue of our home state of Delaware, where for years we have appeared in nearly 40% of the IP cases. In some of those cases, we have served as local counsel, where lead counsel or a corporate client has selected us because of the considerable assistance our experience can provide. In others, we have served as lead counsel, most recently in cases involving our clients, Pharmacia, Dowa, Sony, Merck, Igen International, Advanced Energy and Corn Products International.

"Over the years, the Delaware District Court has acquired a well-deserved reputation as the premier venue for patent litigation. Morris Nichols in that time has likewise acquired the reputation as the premier patent litigation firm in Delaware. Indeed, the breadth and depth of the Morris Nichols IP experience is such that in recent national surveys of patent litigation firms, Morris Nichols can be found in the top five in cases filed, defended, or both."

The firm's client list is here and the home page is here.

Any time you are going to go to court, you want a lawyer the judge knows well, assuming that the impression formed was favorable, and if there is no son of the state's US Senator available to retain. It's a definite advantage to have an attorney who is well known in his field and who knows the judges there well, too and knows what they like and don't like. So, here SCO is spending its money wisely, it would appear, to try for that advantage. Of course, when you get a new lawyer, you usually are granted some delay time, for the new lawyer to get up to speed, which probably doesn't bother SCO much.

Obviously, I have no inside information on why this is happening, because I am not a SCO confidante and all I know is what I see in the attorney substitution document, but looking at the web site of the firm that is being replaced, it does appear that it is more a general practice litigation and corporate law firm, as opposed to concentrating on IP the way the new firm says it does. And that is the other thing you want in an attorney, a specialist in your problem. Of course, you can only get what you can afford.

Quote Database has a search function now. Enjoy.

In SCO's Motion asking for more time to respond to the Motion to Compel, they tell the judge that IBM didn't dot its I's and cross its T's properly in the Motion to Compel according to some local Utah court rule, DUCivR 37-1(b), they have dug up and that anyway, they are working as fast as they can, and so no such motion is needed. In the course of working things out between the lawyers, they say, they volunteered to provide IBM with supplemental responses to some of the interrogatories, but IBM filed its Motion to Compel instead of agreeing to SCO's offer. SCO then was served by a second set of interrogatories and request for documents by IBM, and answering the second set "intertwines" with the first set of answers, SCO says, and so they can't finish in time on the first. They don't like the intro to IBM's Motion to Compel and they are informing the judge, on the basis of the local Utah rule, that they believe it is moot, but they will answer the Motion to Compel but need more time.

IBM says the real problem is that SCO doesn't want to show the code and is stalling to avoid it. All they have to say is that they will provide everything IBM has asked for. How long does it take to say that? SCO, they say, is dancing around and won't commit to providing everything IBM asked for. They're showing their code to anyone else who rolls into Lindon and is willing to sign an NDA, IBM points out, but they haven't provided it to us, and they won't commit to doing so. The material is already ready to be provided without requiring more time to prepare it, because they are showing it to others. IBM says it offered to withdraw its motion to compel if SCO would just agree that it would provide all the materials and information requested in IBM's first set of interrogatories and request for documents, and SCO then would have had one more week. But SCO's refusal to agree to do that and instead file for more time indicates to IBM, they say, that the real problem is SCO doesn't want to comply fully and is just looking for a delay. The case has been going on for 7 months already and discovery for 15 weeks, with SCO showing its "evidence" right and left and making public statements about IBM having behaved improperly, so, now it's time to provide the materials requested, IBM argues.

On the Utah law SCO is trying to use, IBM says they can hardly give detailed explanations of exactly what is missing from SCO's answers when they haven't provided anything meaningful in the way of answers. The problem isn't refinement, in other words. It's getting them to respond meaningfully and completely. Anyway, they say, they did provide an addendum detailing what they want, and, IBM says, curled lip showing, this formatting issue hardly makes it impossible for SCO to know what they are supposed to cough up because of the list being in one place instead of another in the document. IBM is mocking their "inability" to know what is being requested. We've been in discussions for a long time now, IBM points out. They know already. Using a procedural issue like this is exactly what judges usually don't like, by the way, if it's obviously just a tactic, and that is the way IBM is viewing it.

They don't mind, they tell the judge, giving SCO a little more time on the interrogatories, but they do object to giving them more time to respond to the Motion to Compel. It doesn't take two weeks to respond by saying, Yes, we will provide everything IBM has asked for in one week. And that is all they have to say in response, if they plan on doing just that, IBM argues.

Once again, we owe Frank Sorenson a debt for getting all the court documents. He even made a text version for us of IBM's opposition document. The rest are pdfs. So here is SCO's Plaintiff's Motion for Enlargement of Time to Respond to Defendant IBM's Second Set of Interrogatories and Second Request for Production of Documents. Next, is SCO's Motion for Enlargement of Time to Respond to Defendant IBM's Motion to Compel Discovery here , and here is IBM's Memorandum in Opposition to Plaintiff's Motion for Enlargement of Time to Respond to IBM's Motion to Compel Discovery as a pdf. And saving the best for last, here it is as text. In short, things are not friendly:

[UPDATE: If you are interested in the rules relating to discovery, go here and read up on the Rule 26 of the Federal Rules of Procedure and here on sanctions.}

First, it is a cynical document. The overview is that they are asking the judge to either dismiss Red Hat's case or, failing that, either grant them a stay until the IBM case is settled or consolidate the two cases by sending the Red Hat case to Utah. They warn her they will submit a motion requesting that relief, if she fails to grant SCO's Motion to Dismiss. Both a stay and a consolidation would mean Red Hat'd have to wait years for any relief. In short, SCO doesn't want to talk about their proof this exact minute, so they would rather not have their day in court.

Oh, and SCO says the GPL is trying to destroy copyright law. And furthermore, the GPL forbids proprietary ownership, so that means no one can own it. They do know better, but that is what they wrote to Judge Robinson. I guess they hope that she doesn't know any better.

You have two choices wading through their spinach: either laugh or throw up. I leave it up to you. There is a third choice, I suppose, nod off. But when your enemy is talking, I think it's prudent to pay close attention. So, let's hold our noses and dig in, going through the document sequentially.

You might want to review the information on declaratory judgments on this page, beginning at the heading "3.The Declaratory Judgment Act." It will help you follow along, although its focus is patents, and it's harder to get a declaratory judgment in a patent case, and this case isn't about patents, so bear that in mind. Remember this all began with Red Hat filing for a declaratory judgment, followed by SCO's Motion to Dismiss, which Red Hat opposed, and now SCO is replying.

SCO's Reply is divided into three basic arguments:

1. The Court lacks subject matter jurisdiction

2. SCO's conduct does not violate the Lanham Act

3. Red Hat's Lanham Act claims are barred by the First Amendment

For example, perhaps you're Red Hat, and you'd like to know everything Darl McBride ever said about your company, you can find it here. Perhaps I should qualify that last statement to say that you can find everything he ever said that we have in our database.

Or maybe you read a quotation in a news story by, say, Laura DiDio, and you wonder what else she has said about this subject over the course of the SCO saga. Now you can readily find out, and I must say, the effect is cumulative.

The database has been donated to us by Groklaw reader and computer programmer LHJ, and we're very grateful to him for his wonderfully useful code. It's an ongoing database, obviously, so if you find bugs or have submissions to add to the database, just email me or leave a comment with your submission and we'll follow through.

The database includes some new copyright information on the SCO/Novell copyright mystery that LHJ collected in his research.

One of the first uses of the database was by LHJ himself, to figure out who is quoted most frequently in the mainstream media on the SCO story, and I'll bet you can guess who won, hands down, but I'll let him tell you about it:

"I have felt for a long time that SCO was executing a very well-planned media strategy, together with a serious, organized program to reach out to big investors. As bumbling as their legal strategy seems to us, they have been very effective at getting their message out and convincing investors to buy in.

"Like many others, I'm sure, I decided to track online media coverage of the SCO case by reading all the stories I could and collecting quotes. I wasn't serious about it for a while, because I kept feeling the story would climax and die any time now. No doubt tracking of media coverage is done routinely by company PR departments and political candidates using staffers and extensive filing and database systems, but when I did finally get serious, I realized I would have to do the same job in my spare time as a one-person operation. Fortunately, open source tools like MySQL, PHP, and Apache made it easy for me to design a system to enter and store article titles and urls as well as quotes, all with just a few clicks. The next step for the project would be to become a collaboration with many eyes sifting through all the data and proposing features.

"The result now is a database of 668 articles and 846 quotes that is easy to search for all kinds of interesting tidbits. Have SCO executives made comments mentioning Red Hat? Search for it in a blink of an eye. Which journalists have been most prolific in covering the story? Another quick search.

"One interesting search I made was a check of who has been most quoted about the case. Then I checked how often these people were quoted week by week over the whole year so far. There are a number of factors that make the results less than definitive. For example, I have certainly not made an exhaustive collection of the articles and quotes out there. It's also possible that I did a more thorough job collecting quotes by some players over others. Moreover, the quote count below will put heavy weight on articles and interviews where someone is quoted multiple times, and this measure may not be appropriate for the comparison.

"Nevertheless, the list appears with the quoted parties ranked 1-9 then A-F. Below the ranking is a week-by-week list of all quotes labeled by the digit or letter rank of the quotee. The result is a crude bar graph that tells you who was talking to the media when.

"I caution you from over-interpreting. It's clear that SCO executives actively sought exposure and coverage during some periods. On the other hand Linus Torvalds (#5 at 21 quotes) only spoke out at a few key moments and kept to his development work the rest of the time. When Torvalds did choose to speak out, he didn't have trouble being heard.

With that caution, here are the results:"

I hope you enjoy Groklaw's new feature. I've certainly been having fun playing with it. Like everything else about Groklaw, though, it has a serious purpose as well, and we hope you will all help out by sending us quotes with urls and your ideas for new features, so we can make this over time a truly complete work.

10/17/04 Entered: 10/17/03 Add attorney for IBM David R. Marriott
10/17/03 Motion to extend time by SCO to 10/24/03 for pla to resp to mot/compel
10/17/03 Memorandum in opposition by Intl Bus Mach Inc in opposition to motion to extend time to 10/24/03 for pla to resp to mot/compel

Marriott appears to be a patent infringement guy for Cravath, judging from his involvement in this case. That's assuming this is the same individual, which I don't know to be the case.

Peter Galli of eweek really did ask BayStar and SCO about whether MS is behind the cash transfusion SCO just got. Everyone denies it. I think it's wonderful that Galli actually asked. That's what reporters are supposed to do. But there is one shadow in the picture:

"McGrath also pointed eWeek to a BayStar White Paper on PIPEs published in October 2002, which lists both Microsoft and Vulcan Ventures, Inc., the investment firm of Microsoft co-founder Paul G. Allen, as being among the top ten PIPE investors since 1995.

"That, McGrath said, could explain why people were assuming that Microsoft was an investment partner alongside BayStar, but he was unable to say if Vulcan was such a partner."

Here are reports from the teleconference to show you what I mean.

Peter Galli of EWeek reports this interesting bit. SCO says it didn't go looking for money. Several companies, according to McBride, approached them, looking to invest:

The ability to build up a "war chest" of cash was too compelling to pass up—and so The SCO Group agreed to a $50 million investment deal, announced yesterday, with investment fund BayStar Capital.

In a media and analyst teleconference Friday, CEO Darl McBride said he is pleased with the structure of the transaction, which is favorable to both the company and its shareholders. "They are non-voting convertible shares and, once converted, the investors will own 17.5 percent of the company's outstanding shares," he said.

SCO Chief Financial Officer Bob Bench said there is no timing on the conversion of the shares, which are immediately convertible and have to be redeemed in minimum batches of 100,000 common shares at a time. There is also mandatory redemption once the stock price reaches 150 percent of the transaction value or 20 consecutive trading days at that level.

"SCO also has redemption rights and after three years can redeem the stock with a liquidation preference. So we have a lot of freedom to redeem this stock if BayStar has not converted," Bench said.

No dividend will be payable on this stock for the first 12 months, but will then kick in at 8 percent and then rise by up by 2 percent for each of the next two years with a 12 percent cap. ...

McBride also pointed out that SCO did not solicit the investment deals, but was approached by several companies interested in taking an investment stake in the company.

Techweb has more details, saying SCO does intend to pursue "royalties" and will use the cash infusion to follow up, just not with invoices:

Part of the proceeds would also be used in bolstering its legal battle against IBM and Linux distributor RedHat Inc., and in trying to convince enterprises to pay royalties for the use of Linux, which SCO claims contains its intellectual property. However, SCO President and Chief Executive Darl McBride listed that as the third target for the additional funds.

While SCO's claims against Linux get all the media attention, only a "small percentage" of the company is working on collecting royalties. "But clearly, there are a lot of opportunities for the company as it relates to enforcing our intellectual property rights," McBride said. "The two major operating systems in the world -- Unix and Windows -- SCO owns one of those, and having the ownership around the Unix operating system is a gigantic marketplace opportunity for us" . . . .

SCO is in the process of following up on letters sent to 1,500 enterprises this year, advising them that they may be in violation of SCO's intellectual property rights in their use of Linux. "Our goal is not to go out and start suing companies," McBride said. "But, as we go down that path, if we have certain companies out there that are using Linux and we're unable to come to a resolution or reach an impasse, then we absolutely will reserve the option of (taking) the legal path as the remedy to go resolve that" . . . .

In its suit against IBM, SCO would not refuse to discuss a negotiated settlement, but that the suit was still very much in a litigation mode. "With respect with IBM, that one is in the claims, counterclaims response mode, and we expect that in the next week or so we'll have additional things coming out on that," McBride said.

In a Friday conference call outlining the announcement, an excited SCO president and CEO Darl McBride touted the financing deal as "monumental," and deflected all questions about pending litigation as "irrelevant" to the funding news. According to McBride, the financing and the lawsuits are two separate issues entirely, and with a partner such as BayStar in its corner, SCO is now prepared to tackle whatever comes its way.

"The momentum in the marketplace continues to shift in our direction," he said of his company, formerly named Caldera Systems. "We believe we have secured the capital necessary to fund all aspects of the long-term growth of this company" . . . .

With this in mind, Deutsche Bank praised SCO on Friday with a strong "buy" rating, the same rating the investment and securities firm had delivered in a report issued earlier this week. In a new report, Deutsche Bank analysts Brian Skiba and Matthew F. Kelly reiterated the $45 stock price they projected on Tuesday, adding that with $50 million from BayStar in the bank, SCO should have the resources to overcome any litigation.

"We view this financing as a positive sign the company is increasingly equipped to take on larger challenges ahead," the authors wrote in the new report. "The funding puts to rest any concerns about sufficient cash to pursue legal challenges and ongoing investment."

BayStar Capital, whose other investments include Sirius Satellite Radio, Commerce One and Evolve Software, will provide SCO with the $50 million in cash in exchange for an approximately 17 percent stake in the software company. ...

SCO also left open the possibility that it could make acquisitions or other moves, saying the cash could pave the way for "new strategic partnerships." The investment brings SCO's total cash on hand to about $61 million."

Here's something else of interest, a comparison line by line Dr. Stupid did for us (at work on his toy operating system) of the original S3 in September and the recent Amendment to the S3, which SCO just filed. Note the difference in the indemnification section, among other changes. Of course, toy OSs don't always get everything right, but it's still a very useful comparison.

Arrangement with Counsel

SCO announced that it is in the process of finalizing a modification of the engagement with the law firm representing SCO in the protection of SCO's intellectual property rights. As part of this modification, which is subject to a definitive agreement, the law firm would receive a contingent fee of 20 percent of the proceeds from certain events related to is protection of SCO's intellectual property rights, including certain licensing fees, settlements, judgments, equity financings or a sale of SCO during the pendancy of litigation or through settlement, subject to certain agreed upon credits for amounts received as discounted hourly fees or prior contingency payments. In addition, this modification may result in the payment to such law firm of up to $1,000,000 and the issuance of up to 400,000 shares of SCO's common stock.