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Friday, April 1, 2005

SCO Slaps Itself With Lawsuit


April 1, 2005 – The SCO Group is preparing to reverse its flagging fortunes by launching a Unix infringement lawsuit against itself, according to documents obtained by this reporter.

Today’s SCO Group consists of the original Caldera Group, the Unix assets purchased from Novell, and the SCO name bought from The Santa Cruz Operation. Prior to launching its lawsuits against the Linux community in 2003 — hitting companies such as AutoZone, DaimlerChrysler and IBM — Caldera was a major supporter of Linux. Indeed, in 2002 it formed a consortium with Conectiva, SuSE and TurboLinux to enhance and promote the open-source operating system.

According to confidential documents, Caldera may have inadvertently shared intellectual property it gained after the purchase of Unix with its own open-source developers. If true, that would be a violation of its own Unix license, and as such, would expose the company to legal charges and potentially huge damages.

“It’s possible,” pondered Ficus McMushroom, senior legal analyst with Guernsey, Jersey, Sark & Alderney. “If SCO’s Unix staff exchanged any information with their Linux staff, whether sitting at a conference table, on an internal bulletin board, or even while swilling beers at a bar, Unix license and intellectual property violations may have occurred.”


Is there a smoking gun? It’s impossible to know until the lawsuit strikes, but according to the secret report, the company is prepared to subpoena extensive documents, including e-mails, voice memos and rainbow-colored Super Sticky Post-It Notes written by SCO honcho Darl McBride.

“We’re clearly on unsteady legal ground,” observed McMushroom. “If the charges are true, the damages might run into the tens or even hundreds of millions of dollars.” Collecting those fees would significantly boost SCO’s revenue for 2005, the analyst noted, and could lead to a rise in stock price or dividend payments, as well as yet another round of restated financials.

The revenue from the suit would be offset by legal fees, and may be potentially covered by SCO’s liability insurance, McMushroom believes. Any additional costs would most likely be treated as an extraordinary charge against earnings.

But in any case, he expects SCO to come out ahead.

But will the suit see the courtroom? “Frankly, I don’t think so,” said McMushroom. “I expect SCO to settle before depositions are taken. But on the other hand, if they go through with the suit, they may set a legal precedent for the Unix lawsuits.”

SCO would not return calls about the rumored lawsuit.

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