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Cleaning Up the Corporate Kit?
Tuesday, July 08 2003 @ 05:50 PM EDT

SCO has just filed some documents with the SEC, on July 7, 2003, having to do with their name change to the SCO Group. The filing includes an Amendment to the corporation's Bylaws, dated May of 2001, signature line Ransom Love. I will write in more detail on this later, but for now, here is where you can find it. Or go to this page and look for line 75, "SCO GROUP INC . . . [text] [html] . . . 8-A12G/A . . . 07/07/2003 . . . 1332 ". Click on each filing in the list.

I looked quickly to see if the amendment was filed in 2001 with the SEC, but I don't see it. Maybe other eyes can find it. Here's the page to start looking.

There are several important matters addressed in the amendment, including immunity from liability for the execs from any lawsuit and some rather intriguing financial matters, having to do with Preferred Stock, as well as the issue of the apparent delay, which I'll address later. I wonder if this amendment was filed in Delaware in 2001 and what Delaware requirements are for corporations . . . I have a meeting to go to, so all I can do for now is post the urls. Meanwhile, have a look for yourself.

2 comments  View Printable Version
Most Recent Post: 07/10 08:40PM by Anonymous

Ransom Love's Linuxworld 2000 Keynote Speech:
Tuesday, July 08 2003 @ 06:24 AM EDT

Ransom Love's Linuxworld 2000 Keynote Speech:
Caldera To "Add Components" to Linux Kernel To Make It Scale

SCO's UNIX code may have legitimately reached the Linux kernel, even by means of Caldera itself donating the code. Ransom Love, then CEO of Caldera, gave the keynote speech at Linuxworld back in August of 2000. In the speech, he said that Caldera would itself be donating code to the Linux kernel in order to make it scale for high-end business use, as part of the IA-64 Linux Project, which Caldera was a member of, along with HP, SuSE, Intel, RedHat, SGI, Debian, Dell, NEC, LinuxCare, Cern, VA Linux, Turbo Linux, and IBM.

read more (1253 words) 6 comments  View Printable Version
Most Recent Post: 07/25 09:27PM by Anonymous

Let's Play Clue
Monday, July 07 2003 @ 04:38 AM EDT

Back in August of 2001, Caldera predicted, "In two to five years Linux will surpass where Unix is now."

That's before IBM allegedly contributed the AIX code to Linux, according to SCO's Complaint. Yet, back then, Caldera already knew it was going to happen. How, then, could they, with a straight face or without suddenly sprouting a very long nose, say Linux was not serious competition and could never equal UNIX without IBM's contributions?

read more (2434 words) 3 comments  View Printable Version
Most Recent Post: 07/07 11:24PM by Anonymous

Something Seems Off in SCO's Claims
Monday, July 07 2003 @ 12:56 AM EDT

I have been pouring over 10Ks and 10Qs and every other SEC filing I can get my hands on, and one thing is very odd about SCO's claim in its complaint, that IBM's support for Linux is killing UNIX. I checked some other companies that sell UNIX, and while all companies are struggling with the economic downturn, including even IBM, both HP and IBM say that their high-end servers are selling well. Surely, if IBM's contributions were destroying the UNIX market, HP would be feeling it too, not just SCO? Or is that logic too simple?

Here's a snip from IBM's 10Q for 5/14/03:

"Revenue from pSeries UNIX servers decreased in 2002 versus 2001 although high-end pSeries server revenue increased in 2002 versus 2001."

They aren't having any trouble making money from operating systems software either, according to the 10Q for this past March:

"Operating-systems software revenue increased 8 percent to $568 million (2 percent at constant currency) in the first quarter of 2003 when compared with the year-ago period. The increase in the first quarter revenue was primarily driven by higher revenue across all of the eServer software products. Software gross profit dollars increased 12.7 percent and the gross profit margin improved 3.5 points versus the first quarter of 2002. Lower support and services costs contributed to the increases in 2003 versus 2002."

So in what way is Linux destroying business? Here's what IBM says about its support of Linux (not much):

"Technology Innovations[~]IBM has been moving away from commoditized segments of the IT industry and into areas in which it can differentiate itself through innovation, and by leveraging its investments in research and development (R&D). Examples include IBM's leadership position in the design and fabrication of Application Specific Integrated Circuits; work on designing smaller, faster and lower-power-consuming semiconductor devices (using such innovations as copper technology, silicon on insulator, silicon germanium and low-K dielectric); work to design "autonomic"or self-managing computing systems and build the "grid" computing networks that allow computers to go beyond sharing communications and actually combine processing power; and the company's efforts to advance open technology standards such as Linux."

What it says about open standards is a bit more eloquent:

"Open Technology Standards[~]'Open standards' is not a complex high technology catch phrase. The way we use electricity is a good example of an open standard. The outlets in each house and business universally accept any electrical appliance. An example of closed standards would be if every television maker required people to buy a certain type of electricity, perhaps from the television maker itself. So if you wanted to switch television brands, you would also need to rewire your house's electricity. In many ways, this is how the technology industry is today. Many different software products do not run on certain hardware or are not compatible with other software. Certain hardware does not communicate with other hardware. Open standards will solve this situation.

"The broad adoption of open standards is essential to the computing model for e-business on demand. Without the open standards that enable all manner of computing platforms to communicate and work with one another, the integration of any customer's internal systems, applications and processes remains a monumental and expensive task. The broad-based acceptance of open standards[~]rather than closed, proprietary architectures[~]also allows the computing infrastructure to more easily absorb new technical innovations. IBM is committed to fostering open standards because they benefit customers, because they are vital to the on demand computing model, and because their acceptance will expand growth opportunities across the entire IT industry."

So that's why they are doing what they are doing, according to this exhibit attached to their 10K for 2003. All the IBM SEC filings are here.

Hewlett Packard also was not singing the blues about high end offerings, according to this January 31, 2003 quarterly report:

"The combined company revenue decline across business critical server products in the first quarter of fiscal 2003 reflected the ongoing decline in enterprise capital spending as customers continued to delay purchases, coupled with competitive pricing. UNIX® server revenue declined in all business units excluding the high-end, and in all regions excluding Asia Pacific. Revenue declines in low-end and mid-range products were moderated by revenue growth in high-end UNIX® servers which reflected continued strength in Superdome products. The increase in UNIX® server revenue in Asia Pacific was due to a mix shift toward mid-range and high-end servers. NonStop servers continued to be impacted unfavorably by weak spending in the telecommunications and financial services industries.

"The revenue decrease in industry standard servers for the first quarter of fiscal 2003 was attributable primarily to declining average selling prices as price reductions were taken in all regions due to the competitive environment, as well as a continued mix shift toward low-end products. . . .

"The improvement in gross margin was driven by gross margin improvements in software and business critical servers. The software gross margin improved due to a mix shift toward higher-margin OpenView products and services. The gross margin improvement in business critical servers reflected a mix shift toward high-end UNIX® servers, lower product costs reflecting favorable pricing on components and lower warranty expense from continued high quality on UNIX® servers, offset in part by competitive pricing across all business critical servers."

So, could it be that SCO just isn't doing something right? Both IBM and HP offer both UNIX and Linux, and they aren't experiencing what SCO says it is experiencing.

Oh, and by the way, SCO VP Broughton sold another 5,000 shares on June 30.

Patents and Copyright: Two Different Purposes
Saturday, July 05 2003 @ 06:33 PM EDT

I wanted to buy a report summarizing Caldera International's financials for the last 3 years, which is available on Edgar Online from one of its partners for $20. So I clicked on the Buy Now icon and was presented with the following "Important Legal Information":

"The information provided herein is protected by copyright and intellectual property laws. It may be displayed and printed for your personal, non-commercial use only. You may not reproduce, retransmit, distribute, disseminate, sell, publish, broadcast or circulate the information to anyone, without the express written consent of Multex and the research provider."

Um...huh? If I can't do any of those things, then why would I want it? They appear to be saying I can read and learn and I can think about what I read, but I can't share with anyone what I now know? That's not copyright law, not by a mile. Their wording wipes out fair use completely. What other IP laws could they mean? Unless it's encrypted, the only IP law I could think of that could grant a creator an exclusive interest like that is patent law. And even under patent law, you can still talk about the thing patented, even in a writing which you could put online.

I don't see how Caldera's financials, no matter how creatively composed could qualify for a patent. And patent law only covers, or is supposed to cover, things so novel and non-obvious that they represent a clear step forward in a functionality that is useful, and then the exclusivity is only for 17 years, not life of the author plus his kids, as under copyright law currently, nor "to time indefinite, even forever" as under Edgar's wording.

There is an important difference between the purpose of patent law and that of copyright law. Here are some cases and one essay on the subject that will show the difference, specifically with regard to software, though the courts themselves haven't quite finished being confused themselves about software, but here is the dominant thinking so far.

read more (4069 words) 3 comments  View Printable Version
Most Recent Post: 07/07 10:53PM by Anonymous

What I Would Like to Ask SCO
Friday, July 04 2003 @ 03:44 PM EDT

Is NSA's Security-Enhanced Linux also guilty of using SCO's code or derivatives thereof? If so, what is SCO planning on doing about it? And if Linux is truly a security hazard, because of its international source distribution, wouldn't the NSA have noticed this back in 2001 when it released its own version of Linux? In short, is the NSA guilty of software piracy? Hmm....or, is this all a joke? Or a redefining of the past? What? SCO has tried to portray Linux users as unpatriotic, hippie, music-downloading pirate equivalents, which as a Linux user myself I find offensive, but if it were true, what, then, is the NSA? They not only use it, they helped write it. Does that make them unpatriotic? That is for sure laughable. Pirates? Abusers of others' IP? Puh-lease.

Here is part of what the NSA says about Security-Enhanced Linux on its web site:

"The results of several previous research projects in this area have been incorporated in a security-enhanced Linux system. This version of Linux has a strong, flexible mandatory access control architecture incorporated into the major subsystems of the kernel. The system provides a mechanism to enforce the separation of information based on confidentiality and integrity requirements. This allows threats of tampering and bypassing of application security mechanisms to be addressed and enables the confinement of damage that can be caused by malicious or flawed applications.

"Linux was chosen as the platform for this work because its growing success and open development environment provided an opportunity to demonstrate that this functionality can be successful in a mainstream operating system and, at the same time, contribute to the security of a widely used system. Additionally, the integration of these security research results into Linux may encourage additional operating system security research that may lead to additional improvement in system security."

Here is the NSA press release put out on January 2, 2001:


"Recognizing the critical role of operating system security mechanisms in supporting security for critical and sensitive applications, National Security Agency (NSA) researchers have been investigating an operating system architecture that can provide the necessary security functionality in a manner that can meet the security needs of a wide range of computing environments. The NSA is pleased to announce that it has developed, and is making available to the public, a prototype version of a security-enhanced Linux system. The prototype includes enhancements to Linux that provide new, stronger protection against tampering and bypassing of application security mechanisms and greater limits on the damage that can be caused by malicious or flawed applications.

"The security mechanisms implemented in the system provide flexible support for a wide range of security policies. The currently implemented access controls are a combination of type enforcement and role-based access control. The specific policy enforced by the kernel is dictated by security policy configuration files which include type enforcement and role-based access control components. This release includes a set of sample security policy configuration files designed to meet common, general-purpose security goals.

"Both the President's National Coordinator for Security, Infrastructure Protection, and Counter-Terrorism and the President's Information Technology Advisory Committee have recently called for increasing the federal government's role as both user and contributor to open source software. "Open source software plays an increasingly important role in federal IT systems. I'm delighted the NSA's security experts are making this valuable contribution to the open source community," said Jeffery Hunker, Senior Director for Critical Infrastructure at the White House National Security Council.

"Since this system is a prototype, there is still much work to be done to develop a complete security solution. Anyone interested in experimenting with the system or getting more information about it, should visit the project web site at This site contains the source to the system as well as some technical documentation about it.

"NSA is presenting this system under the terms of the GNU General Public License with the intention to work with the Linux community to refine these enhancements for eventual inclusion into Linux. The system is not intended to be a complete security solution for Linux, nor does it correct any flaws that may currently exist in Linux.

"The Information Assurance Research Office of the NSA is responsible for conducting research and advance development of technologies needed to enable the NSA to provide the Solutions, Products, and Services to achieve Information Assurance for information infrastructures critical to U.S. National Security interests. The security-enhanced Linux prototype was developed in conjunction with research partners from NAI Labs, Secure Computing Corporation (SCC), and MITRE Corporation. Researchers at the NSA implemented the security architecture in the major subsystems of the Linux kernel with some refinements provided by NAI Labs. SCC, MITRE, and NAI Labs also assisted the NSA in developing application security policies and enhanced utilities for the system."

EEK. It's released under the GPL.Here's what it says on the FAQ page:

"What does your distribution include?
"Security-enhanced Linux includes patches to the Linux kernel and patches to a number of standard tools and utilities. It also includes a number of new utilities, support files, and documentation. By far the easiest way to build and install Security-enhanced Linux currently is to duplicate our source trees (lsm-2.4 and selinux) and follow the instructions in selinux/README. We have provided compressed archives of our source trees, as well as several ways to build it by acquiring only our modifications from our web site ( ). As time permits, we intend to create or modify the RPM spec files as appropriate and provide SRPM format files.

Can I install Security-enhanced Linux on an existing Linux system?
"Yes. You actually need to have an existing Linux system. The Security-enhanced Linux distribution is source code for a modified Linux kernel and some utilities. You must have the ability to compile a kernel and also have necessary, but unmodified system packages. Our distribution is known to install on the Red Hat distribution, and has not been tested with others."

You can download it here after you read the disclaimers on the page. At least, the NSA page says you can. I assume they know whether their own product is legal or not. I am not advising you personally, because we are now in Alice-in-Wonderland upside-downness, where you can't be sure who is who and what is what any more.

Their "Linux 2.5 Kernel Summit Presentation on SELinux" is available in Postscript or PDF on this page at the bottom of the page. I do believe 2.5 is a version of the kernel SCO claims is in question. So, what is the deal? Is the government itself guilty of misappropriation of SCO IP? Heavens to Betsy! If so, it must mean it's "Off with their heads!"

If the NSA didn't notice a problem, is Linus responsible for not noticing the same alleged problem? And who is the one responsible for policing its own IP in this picture? If SCO, as Caldera, for nearly a decade released under the GPL, wouldn't you think they would have done their own due diligence and noticed a problem back when it allegedly happened? It's not like the code was hidden away. Anyone could read it any time they liked. So, if SCO/Caldera didn't notice back then either, how can they sue others for not noticing?

I admit, my head is about to explode trying to parse out the logic of this mad hatter's tea party argument. But it seemed like these would be appropriate questions to ask on this July 4, 2003.

Sayonara, Mr. McBride
Friday, July 04 2003 @ 01:16 PM EDT

McBride is reportedly flying to Japan to meet with some of the 8 Japanese firms that have just formed the CE Linux Forum (CELF). CELF members are Hitachi, Matsushita, NEC, Philips, Samsung, Sharp, Sony and Toshiba.

McBride, according to the EE Times, will show them the allegedly identical code snips. The news of the Japan trip apparently comes from SCO itself, because the article doesn't identify who exactly has agreed to look at the code. SCO says they are lining up in droves, but that is, as usual, SCO-speak, and it could be taken to mean that no specific meetings have yet been set up but discussions are under way, or that lots of companies are already set up, or SCO would rather not be specific as to how many. There is no way to really know from that sentence, and apparently the reporter either didn't ask for clarification or couldn't get it. I feel sure that if it was with all of them, the article would have said so.

Here's something interesting from the article:

"'It shows how entrenched Linux has become,' said Victor Yodaiken, CEO of FSMLabs Inc. (Socorro, N.M.), a maker of real-time software for Linux. 'These companies are not known as adventurers, and they wouldn't do this if they thought there would be legal repercussions. It's an endorsement of how irreplaceable Linux has become for them.'"

Maybe the FUD machine isn't in high gear yet in Japan. The rest of the article is counterpuntal remarks by analysts, the usual suspects, on one side, saying Linux people should be very worried, and CEOs of Linux companies and Jon Hall, on the other, on how SCO isn't stopping Linux from being adopted by major companies, as evidenced by CELF. The poor reporter seems unsure know what to believe. Join the crowd, sir. Still, that's real progress. Confusion is better than flat-out FUD. At least when reporters are confused, they report both sides. That's an improvement over a FUD-spinner calling a reporter and having him or her just type up what they heard without even checking the other side or even if there is one. According to the article, McBride speaks Japanese fluently. Rats.

On his way back, he might want to make a stop in Canada, because the largest provider of property and casualty insurance there, ING Canada, just chose Linux, specifically IBM's eServer zSeries servers running Linux. Then he'd best make a quick hop to check on those pirates in Hollywood. They had the nerve to make the new movie Sinbad entirely on GNU/Linux.

And iT News says SCO will have a news conference on July 9 to announce what it sees as the solution, its next step in its licensing dreams. I can't see why a company would agree to a license before a court establishes whether or not SCO even has a claim, but you can always ask, I suppose. One thing SCO isn't lacking is chutzpah.

As for the German report on the GPL, which we posted on July 2, here is a translation, from mathfox, of the pertinent paragraph, which makes it very clear that what the report actually said is a lot different than what the media said it said. Ah, FUD! mathfox disclaims as follows, "It is from one foreign language to the other and I am not educated in law, so there's plenty of margin for error in the translation." Nevertheless, it's a lot clearer than the computer-generated version, so thank you, mathfox. Here is his translation of the top paragraph of page 21 (pdf page 13):

"On the contrary; one can not conclude to a general rejection of the GPL against unwritten fundamental rules of copyright law form this; because the Open Source movement uses the instruments provided by copyright law, to reach a certain goal. Intellectual property law is used, contrary to its exclusion goals, to achieve the desired distribution. It is partly against the foundation and function of copyrights. Just as the practice of giving away things doesn't invalidate the concept of ownership, using the GPL doesn't invalidate the principles of intellectual property."

Could This Be the Central Control Point Critics Have Been Whining For?
Wednesday, July 02 2003 @ 09:29 PM EDT

Peter Galli at eWEEK, who gets a lot of good stories first, is reporting that Linus' "right-hand man", Andrew Morton, will also work full-time for the Open Source Development Lab. He will concentrate on the 2.6 kernel. Linus' statement said in part, "Now the maintainers of both the development kernel and the stable kernel have the support of a vendor-neutral organization committed to advancing Linux." The story seems to be indicating, to me anyway, the answer to complaints about no centralized oversight of the kernel, depending on the details. Of course, GNU already has such structure with FSF, so this would complete the oversight. Here's what OSDL's spokesman said:

"We are clearly being recognized as the center of gravity for Linux and are in the midst of forming a customer end-user advisory council to look at the business proposition of Linux and what users need from a full value chain if you will to implement Linux enterprise wide."

They also say that they are putting their money where their mouth is, and for sure, if they intend on being the central point, they really are, because centralization usually means somebody to sue.

That, of course, is what businesses like.

Wednesday, July 02 2003 @ 08:21 PM EDT

As you may already know, a group calling itself VSI, a software federation of proprietary software firms and other hangers-on located in Munich, Germany, has put out a study, claiming that there are legal issues with using open source in Germany, because of the GPL and the openness of the process leading to copyright concerns. Heiseis reporting the story in German, with an English translation here.

I smelled more coordinated FUD, so I went to find out who are the members of VSI.

read more (247 words) 2 comments  View Printable Version
Most Recent Post: 07/03 10:04AM by Anonymous

Wednesday, July 02 2003 @ 01:23 AM EDT

First, some anti-FUD. There is a very nice article in both The Age and the Sydney Morning Herald by Con Zymaris, CEO of Cybersource, and IT company in Australia on how the SCO v. IBM lawsuit affects Linux. He also has a paper [PDF] comparing the GPL with EULAs available on the company web site.

After that refreshment, now we start to sink into the FUD mud.

read more (2114 words) 2 comments  View Printable Version
Most Recent Post: 07/06 11:31AM by Anonymous

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