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08.07.09

A Look at the Microsoft-funded SCO Lawsuit in Light of Newer Anti-Linux Microsoft Lawsuits

Posted in Courtroom, GNU/Linux, IBM, Law, Microsoft, Novell, SCO, TomTom, UNIX at 10:18 am by Dr. Roy Schestowitz

“…Microsoft wished to promote SCO and its pending lawsuit against IBM and the Linux operating system. But Microsoft did not want to be seen as attacking IBM or Linux.”

Larry Goldfarb, Baystar, key investor in SCO

Summary: As the SCO lawsuit falls deeper into oblivion, it is worth relating this to existing new lawsuits (TomTom and Melco, both settled)

YESTERDAY we came across this curious comment about Microsoft, which said: “if/when their revenue get down far enough… i will expect to see more lawsuits being initiated by MS…. when that start to happen.. MS will have officially “jumped the shark” as they say..

Based on Larry Goldfarb’s testimony (under oath), it seems safe to say that Microsoft has at the very least funneled money into SCO. Whether Microsoft is also responsible (in part) for initiating the SCO lawsuit is a separate question which we can only speculate about based on circumstantial evidence.

Apart from that, many reporters seem to have not paid attention to Microsoft’s lawsuits against TomTom and against Melco. Both lawsuits were against Linux and they came directly from Microsoft. They came at a stage when SCO was too deep inside a hole, so its ‘FUD factor’ was pretty much annulled. For those who have not been following the SCO saga as of late, in chronological order we have:

With all these scandals behind, it turns out that unXis will not be allowed to buy SCO’s assets after all. From The Register:

A US judge has blocked SCO’s attempt to sell off part of its business in order to fund its ongoing litigation, and appointed a Chapter 11 trustee to oversee the company’s next moves.

SCO was hoping to sell off some of its assets, in order to fund its court battle against IBM and Novell for claimed Linux licenses. For its part, SCO said it was glad not to be pushed into Chapter 7 – full liquidation of the firm.

[...]

Support from Microsoft added to suspicions that the case was designed to put litigation-wary enterprises off using Linux.

The next stage was this appointment of bankruptcy trustee

In the latest development to emerge from the sordid SCO saga, a bankruptcy judge has blocked SCO’s proposed asset sale while denying Novell’s motion to force the company in to Chapter 7 liquidation. In his decision, the judge says that SCO’s hopes of successful litigation against prominent Linux vendors are like Samuel Beckett’s play Waiting for Godot.

The SCO Group attempted to stave off liquidation in June by signing a last minute deal with Gulf Capital Partners and a tech firm called unXis. The terms of the agreement, which were finalized only moments before a court hearing, stipulated that SCO would sell its remaining UNIX assets for $2.4 million—a maneuver that could have potentially made it possible for SCO to continue pursuing its bogus litigation against the open source Linux operating system.

Groklaw was the centre of attention regarding this important development.

The judge in the SCO bankruptcy has ruled at last. SCO’s motion to let it sell to unXis is denied. There could be an auction later. The motions to convert to Chapter 7 by IBM, Novell and the US Trustee’s Office are also denied, but alternative relief is granted, and there will be a Chapter 11 trustee appointed. IBM and Novell agreed that a Chapter 11 Trustee was appropriate if he did not convert to Chapter 7, and that is what he has done. That means presumably that SCO management no longer run this show.

There are over 820 comments on that one (which is a rare number by all means) and Heise covered it too, summarising it thusly:

A Chapter 11 trustee has been commissioned to take over the business affairs of the SCO Group, which is threatened by bankruptcy. The trustee will work to guide the company out of the impending bankruptcy according to Chapter 11 of US bankruptcy code, but can also send the company into liquidation according to Chapter 7 and auction individual company assets to the highest bidder. With this order, the Bankruptcy Court in Delaware has removed SCO’s executive board.

Groklaw has a corresponding transcript.

The bankruptcy judge partly bought it, as you know, although he blocked the sale to unXis, questioning their good faith, which is of course why IBM and anyone would care about a sale to them, but for us, who have followed the SCO litigation so closely for six years now and saw SCO’s malice toward Linux with no evidence on the table the public has ever seen, it’s a wonderful laugh. SCO’s “potent claims”, indeed. What IBM and Novell “have done to SCO”. SCO sued them, actually. And Novell prevailed totally against SCO’s allegations of slander of title, which was what SCO sued Novell over, a claim which SCO humiliatingly lost. SCO is not appealing that claim. Just read it for yourself. Page 2 of SCO’s appeal brief lists the issues on appeal, and SCO’s claim of slander of title is not on the list.

Why doesn’t SCO just give up? Is its goal to win this lawsuit or just to prolong the agony and — along with it — the fear, the uncertainty, and the doubt?

“[Microsoft's] Mr. Emerson and I discussed a variety of investment structures wherein Microsoft would ‘backstop,’ or guarantee in some way, BayStar’s investment…. Microsoft assured me that it would in some way guarantee BayStar’s investment in SCO.”

Larry Goldfarb, Baystar, key investor in SCO

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