decoration decoration

When you want to know more...
For layout only
Site Map
About Groklaw
Legal Research
ApplevSamsung p.2
Cast: Lawyers
Comes v. MS
Gordon v MS
IV v. Google
Legal Docs
MS Litigations
News Picks
Novell v. MS
Novell-MS Deal
OOXML Appeals
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v Novell
Sean Daly
Software Patents
Switch to Linux
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.

Contact PJ

Click here to email PJ. You won't find me on Facebook Donate Paypal

User Functions



Don't have an account yet? Sign up as a New User

No Legal Advice

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.

Here's Groklaw's comments policy.

What's New

No new stories

COMMENTS last 48 hrs
No new comments


hosted by ibiblio

On servers donated to ibiblio by AMD.

ComputerWorld: The Real Story is SCO's Vultus Acquisition
Monday, July 28 2003 @ 04:33 PM EDT

We've been regularly posting insider trading news by SCO players. In fact here is another one. But ComputerWorld is today saying that the real story is SCO making money in what it calls a "shell game." They say SCO's legal and business tactics seem questionable, so what's the deal?
SCO is a software company that has slashed its R&D budget, alienated its customers and demolished the value of its brand. That's not the way you build a business.

So, what do you do when you have no real business but your stock price keeps going up? We all learned that lesson during the dot-com bubble: You use that stock as currency.

That brings us back to Vultus, which was majority-owned by The Canopy Group, former Novell boss Ray Noorda's personal investment fund. And Canopy -- surprise! -- also controls SCO, as well as some 30 other small companies. Last week, SCO didn't disclose much information about the deal. But in fact, the details were already on the record in SCO's recent filings with the SEC. It turns out SCO didn't simply use stock to buy another company. SCO printed up about $3 million in new stock. Then, in the complicated deal in which SCO acquired Vultus, the stock was cashed out, with most of the proceeds going to Canopy.

Some went to Canopy as a Vultus shareholder; the rest went to Canopy as compensation for taking on Vultus' debt, some of which was presumably owed to Canopy.

Got all that? If it sounds like a shell game, well, that's the way Canopy likes to move its companies around. But in effect, Canopy used SCO's stock price, boosted by SCO's Linux threats, to rake in a couple of million dollars in cash behind the scenes.

Story about Vultus buy here and here. Vultus' press release here. Want to see a picture of the the SCO/Vultus sign outside the building where they both are officed? Here.

Note that Michael Meservy, mentioned in an SEC filing as one of the SCO shareholders planning to sell SCO shares is the President and CEO of Vultus. Ty Mattingly is also mentioned as a SCO shareholder about to sell and is also a Vultus executive. And Ralph J. Yarro, President and CEO of the Canopy Group is also on the board of Vultus. Pics and bios of all three here. Vultus, being privately owned, isn't in SEC records.

There is something in corporate law called "alter ego", which is when a corporation isn't really anything but a front for another entity, doing its bidding, not necessarily in the corporation's best interest. You might want to review thisas well. It has a link to the most recent 10Q SEC filing and some information on piercing the corporate veil, which is what alter ego makes possible, if proven. Obviously, I am personally making no assertions. Just providing info.

"Alter Ego" theory: Alter ego liability is "the judicial doctrine applied to corporations where a court may hold the individual shareholders liable where the business entity is merely the 'Alter Ego' of its shareholders."

Here's a clip from a case, Meyer v. Holley, 258 F.3d 1127, from an amicus brief offered by the government. It descibes the theory better than any other I could quickly find:

"The alter ego doctrine states that, when the corporation is the mere instrumentality or business conduit of another corporation or person, the corporate form may be disregarded." 1 Fletcher Cyclopedia, supra, 41.10, at 568; see Chicago, Milwaukee & St. Paul Ry. v. Minneapolis Civic & Commerce Ass'n, 247 U.S. 490, 500-501 (1918) (rule that one corporation's ownership of stock in another does not generally "create the relation of principal and agent or representative between the two" is inapplicable "where stock ownership has been resorted to . . . for the purpose . . . of controlling a subsidiary company so that it may be used as a mere agency or instrumentality of the owning company or companies"). As the Tenth Circuit has explained, the federal common law doctrine of piercing the corporate veil under an alter ego theory can best be described by the following two-part test: (i) was there such unity of interest and lack of respect given to the separate identity of the corporation by its shareholders that the personalities and assets of the corporation and the individual are indistinct, and (ii) would adherence to the corporate fiction sanction a fraud, promote injustice, or lead to an evasion of legal obligations. NLRB v. Greater Kansas City Roofing, 2 F.3d 1047, 1052 (10th Cir. 1993); accord 1 Fletcher Cyclopedia, supra, 41.30, at 619.

Here's a list of cases where one side or the other brought the issue up.

New SCO Financials Page

I have put up a permanent page with links to SEC filings and articles on SCO financials. The link is to the left. Similar information has been on the Legal Links page for a while, but it just got promoted to its own page. I am not personally a stock guru, but maybe you are, so this is provided as a starting-off point.

SCO's Quarterly 10Q for the quarter ending in April 2003 said they would pay their directors with stock:

Stock-Based Compensation

During the three and six months ended April 30, 2003, the Company granted 774,000 and 1,113,000 stock options with average exercise prices of $2.07 and $1.90, respectively, per share. None of these stock options were granted at prices that were below the quoted market price on the date of grant. During the three and six months ended April 30, 2003, 117,000 and 247,000 options to purchase shares of common stock were exercised with average exercise prices of $0.86 and $0.91, respectively, per share. As of April 30, 2003, there were 4,299,000 stock options outstanding with a weighted average exercise price of $2.10 per share.

Amortization of deferred compensation was $239,000 and $396,000, respectively, during the three and six months ended April 30, 2003 and $216,000 and $431,000, respectively, during the three and six months ended April 30, 2002.

During the quarter ended April 30, 2003, the Company's board of directors approved a resolution to receive remaining amounts owed to them for services provided during the 2002 fiscal year in the form of restricted stock awards. The Company issued 27,500 shares of restricted common stock with a fair value of $36,000. The fair value of the restricted stock was recorded as stock-based compensation for the three and six months ended April 30, 2003.

During the six months ended April 30, 2003, the Company issued 218,000 shares of restricted stock to certain key employees and 150,000 shares of restricted common stock to members of the Company[base ']s board of directors. The restricted common stock issued to the board of directors was in lieu of cash compensation for their services to the Company during the 2003 fiscal year and the restrictions lapse at October 31, 2003. The restrictions on the restricted stock awards granted to key employees lapse over a period of 24 months. The fair value of the restricted stock awards granted of $549,000 was recorded as a component of deferred compensation and is amortized to stock-based compensation as the restrictions lapse or as the services are performed.

During the six months ended April 30, 2003, the Company issued a ten-year option to acquire 100,000 shares of the Company's common stock at $1.52 per share to a consultant for services. The option vests as follows, (i) options to purchase 50,000 shares vest on a monthly basis over a 12-month period, and (ii) the remaining options to purchase 50,000 shares vest upon the achievement of certain milestones. The fair value of the options will be determined and recorded as expense in the periods the services are performed and the milestones are achieved. During the quarter ended April 30, 2003, the Company recorded $131,000 of expense related to this option. For the six months ended April 30, 2003, the Company recorded $186,000 of expense related to this option. Assumptions used in the Black-Scholes option-pricing model to determine the fair value of the options vested during the quarter ended April 30, 2003 were the following: estimated fair value of common stock of $2.66 per share; risk-free interest rate of three percent; expected dividend yield of 0 percent; volatility of 232 percent; and expected exercise life of ten years."

Canopy's self-description is here:

Canopy Group's management team shares the philosophy that synergies exist across the company's portfolio and should be optimized. Providing financial coaching, strategy assessment, business development, enhanced operational approaches, access to critical resources, and more are the hallmark characteristics of this management team.

The most recent 10K has information on earlier deals with other Canopy properties, like Lineo.

3 comments  View Printable Version
Most Recent Post: 07/29 03:59PM by Anonymous

Dell Steps Up to the Plate -- Ditto Canada, Japan, and a 2nd Aussie Cyberknight
Monday, July 28 2003 @ 01:24 AM EDT

Dell's CIO, Randy Mott, says he has been getting calls from other CIOs asking him what to do about SCO's copyright claim, according to InformationWeek, and here's what he says:
"What we try to do," Mott says, "is to have an expectation that the technology issues will be resolved." Dell sells Linux-based systems and uses the open-source operating system in its IT architecture. "Linux is a good strategy, it's a good technology," Mott says, and companies shouldn't let intellectual-property issues get in the way of an effective IT strategy. "You can stop and wait on everything that's in court, or you can go forward," he says. "You can't stand still."
How refreshing. It's certainly a fact, which I verified with an IP attorney and with the Copyright Office, that registering a copyright doesn't in and of itself prove you have a valid copyright claim. That is up to the courts to decide.

A second Australian code warrior is lodging a complaint with the Australian Competition and Consumer Commission. Open Source Victoria has already done so:

Leon Brooks, of WA-based Mandrake reseller CyberKnights, said the SCO legal action had been hurting his business during the past couple of months and announced his intentions to lodge a complaint with the ACCC.

"The license fees they are proposing are extortion and we are sick of it," he said. "The fear and confusion is costing me business and causing people who are clear about technical issues to start asking questions. Some customers that were planning Linux installations have put it on hold because they are hearing about SCO so often that they are taking the threat seriously. I have contacted the ACCC and started the process of registering an official complaint. SCO doesn't have a leg to stand on."

A faithful reader had posted a comment about Japan's reaction to McBride's effort to persuade them to pay, but it got lost when comments disappeared, so I am putting the Japan story up here. My goal is to chronicle this saga completely from beginning to end. Happpy end, I trust.

read more (352 words)   View Printable Version
Post a comment

MS: Linux Will Be Hounded Over IP For 4 to 5 Years
Sunday, July 27 2003 @ 03:19 PM EDT

Ballmer and Gates just told us something that isn't a surprise, but it's a confirmation of what I've been saying for months, that SCO is just the opening shot. We can expect more attacks about IP issues. Here's Ballmer first:
"Can IBM give you a product roadmap for Linux? Can they deliver new features and fixes to Linux? Does it indemnify the intellectual property in Linux? No, no and no," he said.

And here's Gates:

At a Q&A after Ballmer's address, Chairman and Chief Software Architect Bill Gates said that Linux is not covered by many of the cross-licensing agreements in the software industry, leaving an opening for new IP disputes. Linux is a form of Unix, not a new operating system environment, Gates said, and Microsoft products achieve a level of innovation beyond Unix's.

"Our innovation reminds people that our operating system is not standing still," Gates said. "Over the next four or five years people will understand more about the intellectual property issues around open source software and Linux and that will address the open ended liability without indemnification for customers. There is going to be some friction around that side of the system."

Well, they don't get the power of Linux, once again, speaking of innovation, and he still thinks it's UNIX, but at least we know what to expect. "Innovation" from Microsoft.

They have laid out their battle plan, so we can now suit up. Here's what they mean by innovate in the software, as opposed to the legal, sphere, according to Gates:

"We don't have to get into new products and develop new products, we just have to innovate and add value to those we have. "

So, what do you think? Will MS win the innovation contest with GNU/Linux using that strategy? Once again, they just don't get it. That seriously impairs their effectiveness, happily. Here is the one part Ballmer gets right, hence the panic:

"The issue is whether software is a business of innovation and value or will it be commoditized?"

Here's the part MS doesn't get about the GPL. It provides companies with superior indemnification compared with any proprietary product. Anyone who receives GPL'd software, no matter how they got it, as binary, as source, both, or even if they just tripped over a CD of it on the street and took it home, has the following rights under the GPL:

Free software is a matter of the users' freedom to run, copy, distribute, study, change and improve the software. More precisely, it refers to four kinds of freedom, for the users of the software:
The freedom to run the program, for any purpose (freedom 0).

The freedom to study how the program works, and adapt it to your needs (freedom 1). Access to the source code is a precondition for this.

The freedom to redistribute copies so you can help your neighbor (freedom 2).

The freedom to improve the program, and release your improvements to the public, so that the whole community benefits freedom 3). Access to the source code is a precondition for this.

A program is free software if users have all of these freedoms. Thus, you should be free to redistribute copies, either with or without modifications, either gratis or charging a fee for distribution, to anyone anywhere . Being free to do these things means (among other things) that you do not have to ask or pay for permission.

Those four freedoms are your indemnification.

Now, if there were ever a valid copyright or patent infringement claim, nothing can protect you from that. You must deal with the problem and excise any offending code, which is what the community has been asking SCO to make possible. Nobody wants their code, if it is truly theirs and truly infringing. But end users aren't liable with respect to copyright infringement in software they legitimately got, as Eben Moglen pointed out and we reported earlier:

"You don't need a copyright license from anybody to use any program. That's like saying you need a copyright license to read a newspaper ... if there's plagiarised material in the New York Times, that doesn't mean that people who buy the New York Times are liable."

To date SCO has not offered any legitimate proof. Legitimate proof would be identifying the code so it can be immediately removed. But that potential liability is true for Microsoft also, as the current InterTrust patent lawsuit against them testifies, which we reported yesterday. More here. And don't forget the Timeline patent case, which Microsoft lost. Here is the memo Timeline, Inc. put out in February of this year, warning companies to analyze their "potential patent infringement(s)..." It sounds a lot like SCO's letter to its partners:


To: Interested Parties
From: Timeline, Inc
Subject: Timeline Patent Coverage
Date: February 2003

Timeline[base ']s US Patent # 5,802,511; US Patent # 6,023,694; and US Patent # 6,026,392 (herein collectively the [OE]511 patents) have been termed pioneer patents in the design and use of data marts and data warehouses. Timeline has licensed the patents to Microsoft Corporation, Oracle Corporation, Lawson Software, Hyperion Solutions, Sagent Technology, Broadbase Information Systems (now part of Kana), Noetix, and Seagate (now Crystal Decisions) to provide coverage for their products in certain circumstances. Additionally, Timeline provides products which are embodiments of the [OE]511 patents under OEM agreements with many companies (including Microsoft).

Timeline has also received patent coverage on all or a portion of the inventions covered by the [OE]511 patents in Australia, Israel, Mexico, and Singapore. Additional patents are pending within the same field in the U.S. and many other countries.

This memorandum is intended to help third parties analyze potential patent infringement(s) as it relates to their own product offerings. It is Timeline[base ']s position that any party on notice of the existence of the [OE]511 patents has a legal duty to investigate and form a reasoned opinion on infringement. That is not Timeline[base ']s duty. And, if a party forms an opinion that there is infringement, then its duty is to procure a patent license, or modify its products to [base "]design around[per thou] an infringement, or cease any further use, license, maintenance, etc. of the product. Otherwise, the users, manufacturers, and distributors are subject to statutory claims for treble damages for willful infringement similar to those embodied in RICO, Anti-trust and Consumer Fraud statutes.

The [OE]511 patents can apply to stand alone software products or combinations of software products. Of particular focus at this time are products used in conjunction with Microsoft SQL Server 7.0 or after. All Microsoft products stand-alone are licensed. But whether a combination of products infringes all the elements of a valid claim of a Timeline patent must be examined. If so, then whether the non-Microsoft code or product provides at least one of the material steps in such infringement must be determined. In that case, the step(s) provided by the third party product or code is not covered by Microsoft[base ']s license. The user, licensee, licensor, or manufacturer must secure its own license or stop any further use.

Timeline takes the position that Microsoft Analyst Services databases built with Microsoft[base ']s tools (Manager) provide all necessary steps to infringe one or more of the independent claims of the [OE]511 patents. It would follow that third party products which provide the additional material feature or function covered by a dependant claim to one of those independent claims would cause a new infringement outside the scope of Microsoft[base ']s license. Microsoft does not concede that its products in fact infringe, nor was such a statement required under the Timeline patent license it procured. Also, not every user of SQL Server will use the allegedly infringing portions of SQL Server. However, that is now moot. A combination where all material steps are present, and at least one material step is performed by a third party, requires its own license; regardless of whether Microsoft itself provided sufficient steps to independently infringe a different claim.

Timeline does not take the position that Microsoft SQL Server relational databases built using the basic DTS functionality necessarily infringe the [OE]511 patents. However, Timeline believes that third party code or products used in conjunction with DTS can easily expand DTS capabilities to cause an infringing combination.

In the recent litigation Microsoft Corporation vs. Timeline, Inc., Microsoft attempted to get the courts to interpret its license to the Timeline patents such that any step performed by Microsoft products would be ignored in an infringement analysis of a combination of products used together. This would have required the court to throw out a specific limitation contained in the Timeline/Microsoft license on this point. Microsoft[base ']s efforts failed.

There is plenty more to the memo, but you get the idea. If you are a business using Microsoft SQL Server software, do you feel safe? Totally indemnified?

GNU/Linux and MS are on an even footing with respects to liability, except that GPL'd software gives you enhanced protection. Microsoft's battle plan is FUD, FUD, and more FUD. They want you to think that using their products will indemnify you. Actually, no. They want you to not think. Their plan depends on it. As Peggy Lee sang, "Is That All There Is?" It's just a crying shame, though, IMO, to use the legal system to achieve what is merely a PR/business goal.

Comments Vanishing

I have no idea myself. My software has been acting up for some days. Drafts get posted instead of finals and other anomalies. I can't yet find the problem. I'm just letting you know so you can recomment, if you so choose. Though why you would under current circumstances, I can't see. I am in contact with Radio, and I'll let you know what is what when I know myself.

I just checked the Radio users discussion board. I am not the only one having this problem, so I guess that means it's on Radio's end. Unfortunately, that means I probably can't fix it, though I have an idea in my mind I will try, but please do repost if you get deleted.

3 comments  View Printable Version
Most Recent Post: 07/28 05:28PM by Anonymous

SCO Down, MS in Trouble, and . . .The White House Uses GNU/Linux --
Sunday, July 27 2003 @ 12:04 AM EDT

SCO Down, MS in Trouble, and . . .
The White House Uses GNU/Linux --

Are Pigs Flying, or What?

Take a look at SCO stock. I guess all the insider trading was just in the nick of time. Note all the July 24 entries.

Microsoft has patent troubles, maybe huge ones. Here are a couple of articles in Fortune about the Intertrust case. They didn't do too well at the pretrial hearing. It's good to read up on patents, because I suspect MS plans on attacking GNU/Linux with a patent issue eventually, either directly or through a surrogate. It doesn't hurt to get mentally ready. Here is another article on patents you might enjoy.

And saving the best for last, in the pigs-must-be-flying department, Netcraft reports that the White House web site is running on Linux and Apache. That tops Hellman's, don't you think?

Linux attracts an ecclectic crowd, it seems. SCO told us terrorists like it. Now we learn, so does the White House. I think it may be a tad difficult to dis GNU/Linux users as "Linux-loving crunchies" now, huh, Forbes? At least without disrespecting the White House at the same time... while the whole world falls on the floor laughing, which I am doing myself this exact minute. All in all, a really satisfying day.

P.S. The Register called SCO to ask about the White House, and asked if they would be going after them. SCO spokesman said, "If the White House is running that, they are probably a candidate." Those SEC-bound, might want to reread that Forbes article, just for old times' sake. It explains the Canopy Group, SCO's master. Here's a National Law Journal article on the top litigators under 40 in America.

1 comments  View Printable Version
Most Recent Post: 07/27 12:00PM by Anonymous

The Tide Turns
Saturday, July 26 2003 @ 03:26 AM EDT

When Gartner put out its cautionary message, telling companies to hold off on Linux for now and consider going with MS or UNIX instead, I didn't post it, because I was waiting for more analysts to react. Besides, this is an anti-FUD site. Aside from Gartner and the lovely and tireless Ms. DiDio, I can't find anyone taking SCO's licensing plan seriously.

Oh, wait. I forgot Bill Gates. This SCO wannabe now says that Microsoft code is in Linux and that Linux will suffer in the commercial market because of the lawsuit and the GPL.

read more (2396 words) 14 comments  View Printable Version
Most Recent Post: 07/29 03:59PM by Anonymous

Filing a Complaint With the SEC
Friday, July 25 2003 @ 06:29 AM EDT

I've been getting requests for information on how to file a complaint with the SEC. I didn't respond immediately, because I wanted to think about it first. I've decided that just as I can't give you advice on what to do, I also can't give advice on what not to do. So I will simply explain the process, for educational purposes only, in response to your requests. What you do with the information is up to you.

The only advice I ever give is: ask a lawyer. Don't enter the legal arena without one, not ever. Any of you guys out there ever go through Family Court, where they tell you that you don't need a lawyer? How'd it work out? Or if you have been involved in an ICANN domain name fight, where again you supposedly don't need a lawyer, how did you fare without one?

The law is complex. Not even lawyers grok the entire field. They have to specialize, because there is quite simply too much to know. You can read up on an area of law when you need to, but it's never the same in real life as in the books, so a specialist in a particular field will always do better than a visitor to the field, no matter how skilled. For one reason, the law, unlike chess, doesn't stay the same. The rules keep changing, and you have to keep up.

Boies, for example, for whom I have the highest respect as far as his skills are concerned, isn't an IP attorney. Perhaps you've noticed some glitches? Part of that may be because others in the office have been doing some of the work, while he was working on other cases (he lost the NY case I wrote about before, by the way), but part of it is because this isn't his area of particular expertise. And it showed. He'll get up to speed, I have no doubt, but he'll never be as comfortable as an attorney who works in this area of the law. He just can't. Nobody can.

Law is like chess, but with people instead of pawns, with all the complications that people bring to the table. There is complicated, long-range planning and strategy involved, just like chess. Spontaneity isn't generally a plus. So, if you want to Do Something about SCO, the first thing to do is think. Ask an attorney how to be effective before you act.

If you can't afford one by yourself, pool. Lots of you belong to LUGs. Make a list of questions you want answered, call up an IP attorney or one who specializes in pump-and-dump/stock fraud cases or whatever area you think is the right one (the ABA can give you a referral to three names in any particular area of law, if a friend can't give you a name, or look on Google for names of attorneys in the news that acted the way you think they should or who seem to win more than others in the same field) and call them up and ask how much they would charge for an hour of their time to answer some questions. Pay them. They won't do research without being paid, so decide how many hours of research you are willing to pay for, and tell them that limit when you see them, so they can then do the research, if it's needed. Yes, even a specialist may have to do research before he can answer all your questions. It's complicated, as I said.

After you find out the answers to your questions, and those questions should include the "what can I do" question, then follow the advice. Or contact the FSF's attorneys and ask them what you can do to help or if you need help.

The community can help in other ways too. Non-geeks don't know things that you know. That includes lawyers. They can't find evidence that you know just where to look to find. If they find something, they may not recognize what it means. They may not even know what to look for. Did you read SCO's initial Complaint? Notice some tech gaffes? This is an advantage on your side. Part of my purpose in doing this blog is to look for helpful things myself and put them out there, and to explain and show what kinds of things are useful.

With that preamble, here is the info about the SEC:

Here is the SEC's pump and dump info page, if that is what you are interested in learning about. It includes a description and this information:

"Caution: By law, the reports that companies file with the SEC must be truthful and complete, presenting the facts investors find important in making decisions to buy, hold, or sell a security. But the SEC cannot guarantee the accuracy of the reports companies file. Some dishonest companies break the law and file false reports. Every year, the SEC brings enforcement actions against companies who've 'cooked their books' or failed to provide important information to investors. Read SEC filings [~] and all other information [~] with a questioning and critical mind. . . .

"Questionable Press Releases -- Fraudsters often issue press releases that contain exaggerations or lies about the microcap company's sales, acquisitions, revenue projections, or new products or services. These fraudulent press releases are then disseminated through legitimate financial news portals on the Internet."

They suggest some things you can do to avoid being taken in by a pump and dump scheme, or who to tell if you feel you have been:

"We strongly urge you to contact your state securities regulator to find out whether they have information about a company and the people behind it. Look in the government section of your phone book or visit the website of the North American Securities Administrators Association to get the name and phone number. Even though the company does not have to register its securities with the SEC, it may have to register them with your state. Your regulator will tell you whether the company has been legally cleared to sell securities in your state. Too many investors could easily have avoided heavy and painful financial losses if they only called their state securities regulator before they bought stock.

". . . . Visit your local public library or the nearest law or business school library. You'll find many reference materials containing information about companies. You can also access commercial databases for more information about the company's history, management, products or services, revenues, and credit ratings. The SEC cannot recommend or endorse any particular research firm, its personnel, or its products. But there are a number of commercial resources you may consult, including: Bloomberg, Dun & Bradstreet, Hoover's Profiles, Lexis-Nexis, and Standard & Poor's Corporate Profiles. Ask your librarian about additional resources.

". . . . Contact the secretary of state where the company is incorporated to find out whether the company is a corporation in good standing. You may also be able to obtain copies of the company's incorporation papers and any annual reports it files with the state. Please visit the National Association of Secretaries of State website at for contact information regarding a particular Secretary of State."

Delaware's secretary of state is here. Contact information is here. DE's FAQ page is here.

Here is the online complaint form:

You can also print out the form and mail it to:

SEC Complaint Center
450 Fifth Street, NW
Washington, D.C. 20549-0213
Fax: 202-942-9634

If you own stock in a company and you feel you wish to report something, you can instead write to:

Securities and Exchange Commission
Office of Investor Education and Assistance
450 Fifth Street N.W.
Washington, D.C. 20549-0213

Note this procedural info:

"At the SEC, we will research your complaint, contact the firm or person you have complained about and ask them to respond to your specific complaint or question. Sometimes our intervention yields a satisfactory result. If these steps don't work, you may need to take legal action on your own. We can send you information on mediation, arbitration, and suggest how to locate a lawyer if you need one."

After you click on the complaint link, you'll arrive onthis page, where you will have to choose from this list:

Problems with buy or sell orders
Problems with my brokerage firm or broker
Manipulation of security price or volume
Fraudulent or unregistered offer or sale of securities
Financial privacy complaint
Cold calling
Problems with my investment adviser or financial planner
Problems with my mutual fund
Problems with 401(k), pension or retirement
Problems with IPO allocation or eligibility
Failure to file required reports with the SEC
False or misleading statements about a company (including false or misleading SEC reports or financial statements)
Fraud in the marketing of a securities trading course, program or similar product

No matter which topic you choose, the form is identical. The SEC also suggests contacting your state securities regulator. Normally this is for complaints against brokers and brokerage firms. To find your state's regulator, go here.

What should you say in a complaint and what happens after you file a complaint? Here's what the SEC has to say about that:

"What Should I Say in My Complaint?

"We can best review a complaint if we receive accurate and complete information from you. Though you are not required to furnish any more information than you wish, critical information for us to completely evaluate your complaint includes:

"--Your name, mail and email addresses, and telephone numbers.
"-- The name, mail and email addresses, telephone numbers, and website address of any individual or company you mention in the complaint.

"--Specific details of how, why, and when you were defrauded or encountered problems with investments or your broker or adviser.

"What Happens After I File a Complaint

"We thoroughly review and evaluate each complaint so that we may refer it to the appropriate SEC office. The Office of Investor Education and Assistance will handle certain general questions about the securities laws and complaints relating to financial professionals or a complainant's personal financial matters. The professionals in this office can counsel you regarding possible remedies and may, under appropriate circumstances, approach brokerage firms, advisers or other financial professional concerning matters you have raised.

"Attorneys in the Division of Enforcement evaluate complaints implicating violations of the federal securities laws. It is the general policy of the SEC to conduct its investigations on a confidential basis to preserve the integrity of its investigative process as well as to protect persons against whom unfounded charges may be made or where the SEC determines that enforcement action is not necessary or appropriate.

"Subject to the provisions of the Freedom of Information Act, the SEC cannot disclose the existence or non-existence of an investigation and any information gathered unless made a matter of public record in proceedings brought before the SEC or in the courts. You can find information about public enforcement actions on our Web site."

There is a Privacy page that you should read before you file a complaint, that basically lets you know the SEC is free to use any information you provide without limitation:

"Our principal purpose for requesting information from you is to respond to inquiries and complaints from members of the public. The SEC may also use your information to determine whether any person has violated, is violating, or is about to violate the federal securities laws or rules that the SEC enforces, such as the rules of the securities exchanges and the Municipal Securities Rulemaking Board. The SEC may use the information you provide in an enforcement proceeding. If the information points to violations of other laws or regulations, we may turn it over to other government agencies, including United States Attorneys and state prosecutors. We generally do not disclose to you whether we have done so or not.

"The SEC will not agree to limit its use of your information in any way, unless the SEC or its staff explicitly agrees to do so in writing."

There's more on that page, so read it all. The SEC also has a Fast Answers page, where you can seach for information by key words or key topics, and on that page it suggests if you have certain types of questions, a phone call to them is best. The Division of Corporation Finance, Office of Chief Counsel's number is (202) 942-2900. There are regional offices, too. To find your region, look on this page. To find your state's attorney general, look for the tool here. So that's how you file a complaint with the SEC, if you are so inclined. I can't advise you as to whether or not to do it, even if I knew. And I honestly don't know. The only suggestion I've seen from any attorney mentioned trade libel as a possible cause of action. Look for the second story down on the page. Here is some information on defamation.

Maybe you're puzzling over how I can admire Boies, under the current circumstances? In addition to his talent, it's because his whole career he has been willing to represent clients with nearly hopeless cases. He was willing to represent Napster, remember? It takes a certain character to do that.

Also, I know, being in the field, that lawyers don't always have the luxury of representing only clients they like or respect. That's too short a list to pay the rent. Even if they did, the good ones wouldn't limit themselves to only people they like, because they are dedicated to a particularly American ideal, that our system of justice depends on somebody being willing to represent the most loathsome clients. It is, if you think about it, the difference between rule of law and mob action. That is especially true in criminal justice, but it's also important in civil matters. Nobody can represent themselves, if they aren't trained as a lawyer, and do well. So somebody has to represent everybody.

And truthfully, the client isn't what intrigues a lawyer so much as what the case is about legally. That's the interesting part to a lawyer and his or her team. So, while I am sorry he's on the other side, I don't despise him for representing SCO, although I wish he'd jump ship. By now, he may be wishing he'd made a different choice himself. Who knows? He's stuck now, though, because it isn't so easy to stop representing a client, once you are retained, so we'll just have to beat him with skill and effort, fair and square.

Australian Linux Group Fights Back -- So Does the World
Thursday, July 24 2003 @ 01:10 AM EDT

As you may haveread, Open Source Victoria has filed a complaint with the Australian Competition and Consumer Commission, asking it to investigate SCO's activities in light of "unsubstantiated claims and extortive legal threats for money" against possibly hundreds of thousands of Australians: OSV member Con Zymaris said "We take serious issue with The SCO Group's latest ploy, namely that of seeking licence fees from Linux users. As such, we have filed a complaint with the ACCC. We call on any Australian Linux users who feel pressured by SCO's actions to immediately contact the ACCC and file a complaint."> I contacted Con Zymaris to ask him to explain what it all means to those of us who are not Australians and don't know their law.

read more (974 words) 7 comments  View Printable Version
Most Recent Post: 07/25 02:30AM by Anonymous

The Pregnant Cow Case
Wednesday, July 23 2003 @ 09:42 AM EDT

It is a fact that a lot of people do not understand the GPL. Even some attorneys don't, because they've never used it or litigated over it. I think we've seen SCO make mistakes because of not understanding it themselves. So when I saw some attorneys quoted as saying that an 1880's pregnant cow case might allow SCO to say they never meant to release under the GPL and thus could take it back, I didn't think it could be correct.

I have now had a chance to ask Dan Ravicher, Esq., about the pregnant cow case. He doesn't think it is relevant, for one important reason, as well as some subsidiary ones, namely, the simple fact that the cow case was about a contract. and the GPL isn't a contract. The GPL is a license, not a contract, and that's why it just doesn't seem to apply.

read more (2899 words)   View Printable Version
Post a comment

New Page for Copyright Information
Tuesday, July 22 2003 @ 09:15 PM EDT

This is to let you know that I researched and researched and researched all day and evening, and I've collected all the information I could find on the copyright in a separate, permanent page, which you can access by clicking on the "Copyright Info" link to the left. I can't promise that it's complete for reasons I detail on the page itself, but it's a start. Update 2008: You can find all the copyrights on the Contracts page.]

I don't know if it's possible to get carpal tunnel in the shoulder, but that's what I feel like tonight, so I'll save everything else I learned today until the next time, except for one thing.

I learned today that Dan Ravicher, who is an attorney with Patterson, Belknap, Webb & Tyler, and who wrote "Software Derivative Work: A Circuit Dependent Determination" which is available here as a pdf, is now pro bono counsel also for the FSF. I didn't know that, and I thought some of you coders out there might like to know.

2 comments  View Printable Version
Most Recent Post: 07/24 08:22PM by Anonymous

SCO Can't Go After Statutory Damages or Atty's Fees
Tuesday, July 22 2003 @ 03:27 PM EDT

SCO Can't Go After Statutory Damages or Atty's Fees
For Newly Registered Materials, Says Copyright Office

I just spoke with an "information specialist" as they are termed, at the US Copyright Office. The office has them available to explain things, (202) 707-5959, M-F, 8:30 AM to 5 PM, EDT.

We walked through the copyrights, the old one and the new SCO Group one, and Skip told me that whatever is "New Matter" or "revisions" is copyrighted only as of the date of the filing. Whatever was filed in 1992 is covered since back then, but whatever they just filed is not. So the question is: what was registered back in the 90's (I see nothing later than that for Unix System Laboratories, Inc.) and what was just registered?

This means, he explained, that SCO couldn't go after statutory damages and lawyer's fees for any infringement that happened prior to the date of the new filing in June regarding any infringement of the "New Matter" or "revisions". They could still go after actual damages, but my, oh my, is that ever harder to prove. No wonder they aren't in a hurry to sue anyone. And here I thought they were turning over a new leaf. . . . not.

He explained some other details too, such as the fact that TXu means unpublished but registered, and that the "et al" in the new copyright record means that there were other revisions and filings after 1992. He also suggested Circular 61 as being the best explanation about registering a copyright, and you can get the pdf here. What would be important would be when the SMP, RCU, JFS, etc. functions were registered in UNIX System V, if they were. If anyone were in the Washington area, they could just pop over to the Copyright Office and go through the paper records and find out exactly who registered what and when, tracing the entire ownership history. They have experts there to help out. Anyone volunteer? If so, here are directions:

"The Copyright Office is open to the public Monday-Friday, 8:30 a.m. to 5 p.m., eastern time, except federal holidays. The Copyright Office is located in the Library of Congress, James Madison Memorial Building, 101 Independence Avenue, S.E., Washington, D.C., near the Capitol South Metro stop. The Public Information Office is in LM-401, and information specialists are available to answer questions, provide circulars, and accept applications for registration. Visitors must follow certain security procedures upon entry and exit. Access for disabled individuals is at the front door on Independence Avenue, S.E. All patrons using copyright records in public service areas are required to have Reader Identification Cards issued by the Library."


5 comments  View Printable Version
Most Recent Post: 07/23 01:10AM by Anonymous

May 2016
Click on any day to search postings for that date.

Articles Only

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )