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SCO Invoices For Unix Licenses Get Closer

beggs writes "BusinessWeek, InfoWorld and the EE Times Online all have stories about SCO's plans to send out license invoices to Linux vendors for 'Unix license fees for Linux.' The experts advice: Wait and see what happens with the court cases before you pay." RowLowy points to ZDnet's story, which says that "SCO will pursue commercial Linux users who have discussed their Linux work publicly ... However, it won't take action until it's done more research on those businesses." JayR writes to say that Michael Dell recently told a gathering of Dell investors that Dell Computer will offer no protection from SCO lawsuits to customers who buy Linux-based systems from Dell. Keep score: an anonymous reader points out that SCO executives are still selling off their stock. Total proceeds in August of over $600,000. Senior Vice President Reginald Broughton tops the list with over $300,000."

50 of 588 comments (clear)

  1. Krusty? by BigDumbAnimal · · Score: 5, Funny

    "and if my accountant is watching please STOP PAYMENT on this check"

    1. Re:Krusty? by Anonymous+Cowtard · · Score: 5, Funny

      Incorrect, it's:

      Krusty: "And if my banker is watching, let nothing STOP you from PAYMENT on this check."

  2. Hope they do it in Germany by Brahmastra · · Score: 4, Insightful

    In Germany, SCO got fined $10,800 for one offense. If they send multiple extortion letters, they will be fined for each letter. Or alternately, I hope the US courts wake up and follow the lead of the German courts.

    1. Re:Hope they do it in Germany by mcpkaaos · · Score: 4, Funny

      Or alternately, I hope the US courts wake up and follow the lead of the German courts.

      Are you kidding? We're still trying to figure out how they make their beer so damned good.

      --
      It goes from God, to Jerry, to me.
  3. End in sight ? by Alain+Williams · · Score: 4, Interesting

    • SCO executives are still selling off their stock. Total proceeds in August of over $600,000.

    So will they relax a bit and stop hounding us when the last executive has sold his last share ?

    1. Re:End in sight ? by oolon · · Score: 5, Insightful

      Have a look at their total holdings, HUNSAKER, JEFF F. Vice President will be cashed out completely in 1-2 months at current rate. Even the larger holders at the current rate will be cashed out in a year.

      James

    2. Re:End in sight ? by oolon · · Score: 4, Informative

      The VP Jeff F Hunsaker has sold 60% of his holding in the last 2 months!

      James

  4. I am not paying anything without a PO number by Anonymous Coward · · Score: 5, Insightful

    lots of companies don't pay invoices unless they quote a purchase order number which matches the invoiced amount to within 5%

    1. Re:I am not paying anything without a PO number by Kurt+Gray · · Score: 5, Interesting
      But here's the point most readers here are missing: There are enough companies out there who are dumb enough (or have enough money to throw around without a care) to pay the invoice and that's all SCO is hoping for, a little more revenue plus a little more legitimacy in the eyes of the industry punditocracy as SCO will start reporting how much revenue they've gotten from "Linux licenses".

      It's sad and funny to see a publically traded company resort to an ages-old scam in order to get revenue. Anyone who gets an invoice should contact the National Fraud Information Center.

  5. It's Obvious by Red+Rocket · · Score: 4, Insightful


    Corporation have WAY too much control over the legal process and society. They're wielding their greed-drunk power without any thought for anything except their profit.
    Remember "No Face" from Spirited Away? Think about it. Better to keep them out of the bath house.

    --
    - Hail to our fearless misleader! Fool speed ahead!
  6. Not going to sue... by VivianC · · Score: 4, Funny

    Sure, we won't sue linux companies. We are going to go straight to billing them!

    So I guess they weren't lying!

    --
    Viv

    Gmail invites for ip
  7. Re:Yes!!! by paradxum · · Score: 4, Informative

    I'm just waiting for mister SEC to intervene.... It's looking like just a matter of time.

  8. I hear that SCO invoices... by DG · · Score: 5, Funny

    ...make great toilet paper.

    Although they may not flush well after use - better to send them back from whence they came, once you got your use out of it.

    Please use a plastic-lined envelope - no need to punish the poor mail carrier for SCO's stupidity.

    DG

    --
    Want to learn about race cars? Read my Book
  9. SCO is awesome!! by smd4985 · · Score: 5, Funny

    before you flame me - hear me out. i was just talking to my workmate, and he exclaimed 'SCO is awesome'. i was a bit taken aback, but after he explained himself i agree.

    it goes a little something like this: SCO is awesome because they guys are just so UTTERLY ridiculous. as idiotic as their thinking is, you have to respect the confidence they have to send out invoices. it is sort of like those poor flys and insects who are attracted to the bright lights of a bug zapper - as many times as they've seen their comrades electrocuted, they still have the wherewithal to fly directly to their deaths. well SCO, you haven't got long to live, so you might as well go out with a bang.

    feel free to send me that invoice, by the way, i'm out of toilet paper :) ....

    --
    smd4985
  10. I'm sueing too. by joostje · · Score: 5, Funny
    I'm sueing too:
    • Slashdot for first making me a sco-story addict, and then leaving me for hours, sometimes even days without sco story.
    • ezines for reporting in favour of SCO, and thus spreading the slander
    • US government, for not sending nukes to Lindon, Utah.
    • SCO, for not sending me an invoice (I Want One Too!)
    • Myself, for replying to an SCO-slashdot post.

    BTW, Darl, I'm looking for a new job. Considering that I have no legal experience whatsoever, can think of loads of silly lawsuits in under 5 minutes (see above), I think I'll fit in perfectly with your legal team.

  11. Re:Yes!!! by bmongar · · Score: 4, Insightful

    It seems to me like the SEC has been more of a post mortum group on things like this rather than a preventative group. They wait until all the damage is done then point fingers and issue fines.

    --
    As x approaches total apathy I couldn't care less.
  12. IBM vs Canopy development? by eddy · · Score: 5, Interesting

    This is the most interesting thing I've seen so far today: "Docket Text: Return of service executed re: Subpoena served on Canopy Group c/o Ralph Yanno on 8/26/03" -- here.

    Could this be IBM going for the neck of the hydra? That would be... wonderful.

    --
    Belief is the currency of delusion.
    1. Re:IBM vs Canopy development? by Soko · · Score: 4, Insightful

      That would be wonderful, but is, of course purely speculative.

      Many have said that SCO picked the wrong company to start this little fiaSCO with, and this might show exactly why.

      Given the nature of the IBM legal team, it's possible that they're not just going to remove SCO from threatening Linux and AIX (and by extention a major slice of IBMs business future) but the people pulling SCOs strings.

      BTW, that should be Ralph J. Yarro, I think. Do a google search on Ralph J. Yarro - the first page is almost all links to "insider trading" going on not only SCO, but Altiris as well.

      Soko

      --
      "Depression is merely anger without enthusiasm." - Anonymous
  13. Can't wait... by Anonymous Coward · · Score: 5, Insightful
    As a state agency, I'd suspect it'd go something like this...

    Finance Manager: Got this invoice from SCO for some linux licenses, but it doesn't reference a Purchase Order number.

    Me: We never ordered anything from them

    Finance Manager: Do we use this Linux thing?

    Me: Yes, but we bought it through Redhat, here is the approved purchase orders and copies of our payment vouchers

    Finance Manager: So we have no business relationship with this company, nor received any goods or services from them?

    Me: No

    Finance Manager: Thanks, I'll forward it to the state attorney general's office for investigation.

    1. Re:Can't wait... by telstar · · Score: 4, Funny

      Yeah, the problem is that since it's a state agency, at the pace you guys function, this conversation will take place about 9 years from now.

  14. SCO Doesn't WANT to Win! by goldspider · · Score: 5, Insightful
    After this long, do you really think that SCO execs are so stupid to actually think their company will come out on top after all is said and done?

    The probable truth is that SCO is getting free press every day, and /. is certainly no exception there. Didn't it ever occur to folks here that press is all they're looking for?

    SCO bigwigs don't expect their company to pull through this, and they don't really care. All they're doing is keeping their company in the news and giving current and potential investors the impression that they are an aggressive, profit-driven company.

    Once they have deemed that investors have thrown enough money their way (and driven the stock price high enough), they will bail. This will end with SCO a flaming wreck, and its executives rich, and that's ALL they want.

    --
    "Ask not what your country can do for you." --John F. Kennedy
  15. Re:Extortion? by rusty0101 · · Score: 5, Insightful

    Actually since you never placed an order with SCO for Linux, it is perfectly legal to send them a nice letter in response thanking them for delivering to you a product that you happen to enjoy using, but since you did not order from them, are under no legal obligation to send them any money for.

    -Rusty

    --
    You never know...
  16. Re:IBM vs Canopy development? Correction by Rosco+P.+Coltrane · · Score: 4, Interesting

    Docket Text: Return of service executed re: Subpoena served on Canopy Group c/o Ralph Yanno on 8/26/03

    The guy's name is Ralph Yarro actually. I happen to have met him personally when the Canopy company I worked for held its last Christmas party and he's definitely your typical hateable VC investor.

    Good for him if he gets into trouble. That'll make my company's 7 rounds of layoffs in 2 years easier to swallow.

    --
    "A door is what a dog is perpetually on the wrong side of" - Ogden Nash
  17. Re:Isn't there some point in copyright law... by swillden · · Score: 4, Interesting

    If Audi stole Honda's copyrighted engine design, would Audi owners be sued because they their car contains a part that is the result of copyright infringement? No.

    You can't copyright an engine design. Substitute "patent" and your comment makes sense.

    I still don't see how there is any possible grounds for customer liability. But I've yet to see a piece of legislation that actually says so.

    Doesn't matter. It's SCO's responsibility to find a law that says they can hold the customers liable, not our responsibility to find one that says they can't.

    --
    Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
  18. Some advice from the Better Business Bearu. by Anonymous Coward · · Score: 5, Informative
    Some advice from the Better Business Bearau


    PHONY INVOICE SCAMS

    The anatomy of a typical phony invoice scheme is as follows:


    The Call:

    While there is no set formula for these invoice schemes, most involve the use of an initial telephone contact. The call helps the swindler obtain the names of key business contacts, as well as some important details about the operation of the business and its products or services. The persons making these calls are, for the most part, remarkably smooth operators. Often brazen and forward in their approach, they have been known to talk their way through a chain of receptionists, secretaries, assistant managers, supervisors, and vice presidents to gain access to heads of companies. In most cases, however, they need gain access to only lower-level employees.


    The Invoice:

    The con artist's next contact with the intended victim usually comes in the form of a phony invoice sent through the mail. The invoice, which includes names, figures, and other details that add to the appearance of legitimacy, may be paid unwittingly along with a number of other routine bills. In many cases, the amount of the invoice is just small enough to slip by the check writer's attention. The swindler has had considerable experience calculating the most effective dollar amount, depending on variables such as the size of the firm, and the control it seems to have over its management system. Thousands of mass-mailed invoices, each for a small sum, may prove more luc-rative for the con artist, than several large invoices.


    The Scare Tactic:

    Scare tactics sometimes are used to increase the odds of success. A phony invoice, or past-due notice, stamped "Pay This Bill Now" or "We Are About to Start Action" may intimidate the victim into rushing to make out a check without carefully investigating the supposedly delinquent charge.


    SOLICITATIONS AS INVOICES

    One of the most common variations of the phony invoice scheme are solicitations disguised as invoices. These documents, which are actually solicitations for the purchase of goods or services, are carefully designed to look like legitimate invoices for goods or services ordered and received. In some cases, the small print may identify the bogus bill as a solicitation. The deceptive solicitation may be received through the mail, or it may be presented in person by a con artist who visits a business office on the pretext of saving the company handling charges.


    The business that pays a solicitation disguised as an invoice may receive the merchandise or service it was duped into ordering; more often, it will not, and efforts to trace the fraudulent firm that issued the "invoice" will prove futile.

  19. USPS and FTC by red+floyd · · Score: 5, Informative

    If they're sending via USMail, and you live in the US and receive one, send a copy to the USPS Postal Inspector. That's mail fraud, and the USPS takes a dim view of such things.

    I suspect the FTC wouldn't particularly like it either... Your state's Attorney General might be interested in the extortion issue, too.

    --
    The only reason we have the rights we have is that people just like us died to gain those rights. -- Cheerio Boy
    1. Re:USPS and FTC by dmaxwell · · Score: 4, Interesting

      Before you do that, send them a letter asking to identify specifically which parts of Linux are infringing. Don't volunteer anything, just try to get them to elaborate as much as possible. Save all responses and their envelopes and give that to the authorities. Record any phone conversations and indicate at the start you are doing so.

      Basically, if they admit on paper that they want payment from you for unsubstantiated claims then they're toast. If they won't admit it, save the copies of that as well. It will make an excellent shield if they try to take you to court. Any refusal to elaborate also makes a good spear if they try to bring collection and credit reporting agencies into it. You'll have a libel case.

      What you want is a packet of papers that makes the scam SCO is pulling clear. The "invoice" they send you in and of itself won't mean much without the background information. Mr. Postal Inspector and A.G. probably won't know the blow by blow the way you do. They won't necessarily take your word for it either.

  20. Sounds like mail fraud by Kohath · · Score: 5, Interesting
    I thought mailing invoices for goods and services not rendered was called mail fraud.

    Here's the mail fraud complaint form.

    Hint: Select "False Bill or Notice" when you fill this out.

  21. Re:Isn't there some point in copyright law... by Java+Pimp · · Score: 5, Interesting
    From a previous post of mine ...

    ... This is a point that I think is very important and I don't see it mentioned here too often. Copyright law provides certain protection to the author of copyrighted works. The copyrighted works cannot be used beyond the normal "fair use" provided for by copyright law without the "express writtten permission" of the author.

    The GPL provides this "express written permission" by the author and outlines the terms and conditions under which the permissions are granted. If the terms are not agreed to then the permissions are not granted. Any other use is in violation of the GPL "contract" and also copyright law!

    Let's assume that Linux in fact DOES contain SCO code. There are two options. Remember that Linux existed and SCO code would have been added. SCO has two choices: 1) release their additions under the provisions of the GPL and be in compliance. 2) actively move to identify and remove the IP from the Linux code base and prosecute whoever was responsible for breaching SCO's intelectual property.

    They cannot leave their IP in Linux and not release it under the GPL let alone try to license it. That is a violation of the GPL as well as a violation of the original author's (Linus's) copyright on Linux itself.

    --
    Ascalante: Your bride is over 3,000 years old.
    Kull: She told me she was 19!
  22. Only in Slashdot... by Mika_Lindman · · Score: 4, Funny

    ...you get your incorrect Simpsons-quote corrected within 5 minutes.

    by BigDumbAnimal (532071) on Wednesday September 03, @11:02AM (#6858949)

    "and if my accountant is watching please STOP PAYMENT on this check"

    by Anonymous Cowtard (573891) on Wednesday September 03, @11:06AM (#6858989)

    Incorrect, it's:

    Krusty: "And if my banker is watching, let nothing STOP you from PAYMENT on this check."

  23. Re:Extortion? by Lumpy · · Score: 5, Interesting

    Yes it is and if my company get's one the lawyers and financial department have already said that they will instantly persue legal action against SCO.

    it is illegal to do what they are doing, and they know it.

    it's time people start suing McBribe directly attack his pockets.

    --
    Do not look at laser with remaining good eye.
  24. Re:Outrageous! by LWATCDR · · Score: 4, Insightful

    Dell offers no protection for systems with Windows installed.
    Microsoft does not offer protection for systems with Windows installed.
    Apple offers no protection for people with OS/X installed.
    Sun offers no protection for people with Solaris installed.
    Do we see a patern here?
    Heck if your new car's brakes fail and you crash into a bus of Nuns takinq orphans to a puppy farm do you think the car company will offer indemification? Heck no.
    No large company on the face of this earth will indemify another company. Large companies understand this. It is just the press and normal people that do not. If a large customer of Dell's gets sued by SCO then they will try and entagle Dell in the suit or if they loose, sue Dell.
    It is not Dells fault. SCO is using the scumbag tactic of going after the small fry hoping to scare them into giving them money. Even if SCO looses they will not refund their money! Why doesn't SCO sue Dell for selling Linux, or SuSE, or SUN... Wait Sun is going to release a version of Linux SCO says SUN in not indanger of a law suite since they have the rights to redistribute Unix. So if SUN which is safe releases a Linux Distro under GPL then...
    1. All the Linux code that SUN releases is now SCO safe under GPL with SCO's blessing
    OR
    2. SUN is breaking their agreement with SCO and releasing SCO's IP under GPL with full knowlage that they are doing so. So they should be added to the law suite ASAP. In fact if SCO does not add them then they could be considered to be giving permison to release the code as GPL.
    OR
    3. Sun is breaking the GPL and needs to be sued.

    This could be interesting.

    --
    See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
  25. Estoppel prevents SCO from asserting claims. by FirstOne · · Score: 4, Interesting
    SCO by distributing linux and source code, et al, has agreed to the terms and conditions of GPL license. Furthermore, SCO has benefited greatly from usage and distribution of GPL software. GPL software is a collection of copyrighted works, whose distribution license requires the express requirement that future distribution, and usage rights may not be encumbered by the licensee.

    A few definitions from Black's law.

    "Estoppel" means that party is prevented by his own acts from claiming a right detriment of other party who was entitled to rely on such conduct and acted accordingly. Graham v. Asbury, 112 Ariz. 184, 540 P.2d 656, 658.

    A principle that provides that an individual is barred from denying or alleging a certain fact or state of facts because of that individuals previous conduct, allegation, or denial. A doctrine which holds that an inconsistent position, attitude, or course of conduct may not be adopted to loss or injury of another. Brand v. Farmers Mut. Protective Ass'n or Texas, Tex,Civ.App., 95 S.W.2d 994, 997.

    Thus by matter of record, SCO is Estopped from asserting any claims to the distribution or usage of GPL code which SCO has itself distributed. SCO is also prohibited by the doctrine of "Apparent authority" from asserting the claim that the distribution was not authorized.

    Basically, an open and shut case. SCO loses. (Defendant should seek both costs and scantions on plaintiff)

  26. 7 more months of this fun? by dafz1 · · Score: 5, Informative

    Looking through the history of 2:03cv00294/ SCO Grp v Intl Bus Mach Inc, I found the schedule for when things are going to happen.

    10/1: Amending of Pleadings
    10/22: Discovery Cutoff
    11/10: Deadline for Filing motions
    3/11/05: Attorney Conference
    3/28/05: Final Pretrial Conference for 2:30
    4/11/05: 5 Week Jury Trial

    By the 22nd of next month, SCO will have to release to IBM the offending code as part of the discovery phase. The question is how fast it will be leaked.

    And we get to watch this whole specatacle until May!

    1. Re:7 more months of this fun? by idiotnot · · Score: 4, Informative

      Erm, check your calendar there. Discovery cuttoff is 10/22/04, and the trial is 4/11/05. So, that's more like ninteen months.

      And no, I won't be paying any SCO invoices in the meantime.

  27. Not so obvious. by ratamacue · · Score: 4, Insightful

    Give credit where credit is due: This is the result of an overly complex, ambiguous, highly exploitable system of law. We are looking at a problem with government, not the corporations which are only playing the hand they've been dealt.

    If we want to address the problem, we need to cure the disease. Attacking the symptoms won't do a damn thing to change the way things work.

    1. Re:Not so obvious. by Red+Rocket · · Score: 5, Insightful


      We are looking at a problem with government, not the corporations...

      Exactly. And the problem with government is that it's been taken over by the corporations. "We the people" no longer run the government so corporations are getting out of control. Extremely bad behavior is being rewarded with extremely high profits (Microsoft) or increased stock prices (SCO).

      --
      - Hail to our fearless misleader! Fool speed ahead!
  28. Re:lemme get this straight.. by canajin56 · · Score: 4, Insightful

    Actually, it does matter. Because if you invoice over a good/service that you didn't provide, but you are claiming that you DID, that is fraud, which is a federal offence. If a judge rules that there is SCO code in Linux, AND that Linux users have to pay, then all is good for SCO. But if the judge determines that there ISN'T any code, or that users don't have to pay, then SCO could very well get charged with one count of fraud for every invoice they sent.

    At least, that is MY understanding of fraud. IANAL
    --
    ASCII stupid question, get a stupid ANSI
  29. Re:Extortion? by ronaldb64 · · Score: 4, Insightful
    So far they've only said they are going to send invoices. Just like they said their IP is in Linux, they said they have prove of it, etc. etc.

    Do you see a pattern here?

    --
    There's no place like 127.0.0.1
  30. It's mail fraud and illegal by tarranp · · Score: 5, Informative

    If you get one of these letters, I suggest you go to this link:

    https://www.usps.com/postalinspectors/fraud/Mail Fr audComplaint.htm

    Essentially, sending a fraudulant invoice through the US mails is a crime:

    "Extortion (18 USC 873, 876 & 877)
    Postal Inspectors investigate extortion and blackmail when demands for ransoms or rewards are sent through the U.S. Mail. Inspectors also strictly enforce laws prohibiting mail that contains threats of kidnapping, physical injury, or injury to the property or reputations of others

    Mail Fraud (18 USC 1341, 1342 & 1345; 39 USC 3005 & 3007)
    The Postal Inspection Service is committed to protecting postal customers from misuse of the mail. Inspectors place special emphasis on mail fraud scams related to advance fees, boiler rooms, health care, insurance, investments, deceptive mailings and other consumer frauds, especially when they target the elderly or other susceptible groups."

    The guys who investigate it are U.S. Postal Inspectors, who have very draconian powers, and have very wide-ranging jurisdiction.

  31. Maybe not cretins by h00pla · · Score: 5, Informative
    The Groklaw weblog talks about some of the venture capital people buying up stock and just who is behind the buyers. Quite telling, methinks.

    --
    I've been swashdotted -- Elmer Fudd
  32. Actually, no by Royster · · Score: 5, Informative

    There's a big loophole in the insider trading laws and the SCO execs are taking advantage of it. There is a safe harbor if you have a plan to sell shares at predetermined points in time over a long enough period. The SCO execs have such a plan filed back in January at the same time that the lawsuit grumblings began to be heard.

    Look for another press release to boost the stock price next Monday, September 8, when some of the top execs will be selling again.

    --
    I have discovered a truly marvelous sig, unfortunately the sig limit is too small to contain i
  33. Isn't Darl from Texas? by FFFish · · Score: 4, Funny

    And doesn't Texas have some arcane law about how it's legal to shoot someone if they're too damn dumb to live?

    Come, Americans. You've got more guns than you have people. Surely you can take care of the SCO problem!

    --

    --
    Don't like it? Respond with words, not karma.
  34. Re:Extortion? -- YES by screenrc · · Score: 4, Informative

    Extortion is when you use fear to extract money
    from people you have no prior business relationship,
    and without giving reasons why they legaly have
    to pay you. I am sorry, "pay so I don't report
    you to the authorities", or "pay so I don't
    sue you" is illegal. It is simple extortion,
    as plain as it can possibly be.

  35. SCO routine by azaris · · Score: 5, Funny

    SCO: The Linux kernel has millions of lines of infringing SCO code.
    Torvalds: You're smoking crack.
    SCO: Would you believe one million?
    Torvalds: No.
    SCO: Would you believe 80 lines?
    Torvalds: Doubtful.
    SCO: How about two variables with the same names?

  36. SCO legal Timeline by Tsu+Dho+Nimh · · Score: 4, Interesting
    SCO's reply to redhat is due Sep 15.
    SCO's 10Q is due Sep 15.
    SCO's reply to IBM is due Sep 25.

    This could be an interesting month.

  37. SEC should not ignore this! by MegaLung · · Score: 4, Insightful

    Where is the SEC in all this? Doesn't anybody see that this is just a floundering company's feeble attempt to gain profit. This is clearly a case for the SEC. Look at the artificially inflated stock price. The executives are selling their crappy stock at huge gains by bringing up this trumped up lawsuit. The SEC should be having a field day with SCO. These guys are criminals and should be prosecuted for such blatant, slanderous tripe. Come on system! Work! It is just like Enron. Fake company and fake profits.

  38. my opportunity to get on board by sacrilicious · · Score: 4, Funny
    SCO executives are still selling off their stock.

    I'm pretty sure that SCO is going to be a great stock to hold onto. I'm hoping very much to get a job there. I keep checking their jobs page eagerly every day, but so far only the disappointing phrase "There are currently no job openings at SCO". Because so many top quality engineers are champing at the bit to work there, I will just have to be patient. I feel like a kid waiting outside a candy store that's about to open...

    --
    - First they ignore you, then they laugh at you, then ???, then profit.
  39. Compare this with McBride's public statements... by linuxjack55 · · Score: 4, Interesting

    Taken from page 12 of SCO's Q2 FY2003 quarterly report:

    Pursuit of the litigation against IBM and, potentially, others will be costly, and management expects the costs for legal fees could be substantial. In addition, the Company may experience a decrease in revenue as a result of the loss of sales of Linux products and initiatives previously undertaken jointly with IBM and others affiliated with IBM. The Company anticipates that participants in the Linux industry will seek to influence participants in the markets in which we sell our products to reduce or eliminate the amount of our products and services that they purchase. There is also a risk that the assertion of the Company's intellectual property rights will be negatively viewed by participants in our marketplace and we may lose support from such participants. Any of the foregoing could adversely affect the Company's position in the marketplace and our results of operations. The ultimate outcome or potential effect on the Company's results of operations or financial position is not currently known or determinable. [emphasis added]

    This is in a footnote to the company's financials. Yet, when the company's CEO speaks publicly about the matter (and the related actions the company is taking), none of these risk factors are mentioned. Intellectual property litigation is a high-risk proposition under any circumstances. Given the convoluted pedigree of the rights involved in this case, asserting that a favorable outcome is certain -- as Mr. McBride has done with every reporter he has talked to -- is speculation of the most pernicious order, and shows a reckless disregard of his duty to provide the investing public with an accurate statement of the company's affairs.

    The conscientious exercise of that duty would seem especially important for a publicly-traded corporation where insiders or related parties own almost 50% of the outstanding stock, and millions of low-balled options are in the portfolios of executives and board members. Based on Mr. McBride's statements -- which are ultimately self-serving, since he has an interest in 800,000 options priced between $0.76 and $2.07 a share -- the price of SCOX has septupled in just six months. Whether its the product of fact or fiction remains to be seen, but there seems to be something very, very wrong with a CEO publicly contradicting the risks reported in a company's financial statement.

    --
    The trouble with practical jokes is that very often they get elected. -- Will Rogers
  40. Time to tell SCO employees... by Zeinfeld · · Score: 4, Insightful
    I think it is now time to tell SCO employees that they are simply never going to work in this industry again. I certainly would not hire someone who worked for a company with the business ethics that SCO is displaying. Nor would I advise any of the VC companies I work with to fund a company that involved any of these people in senior positions.

    I have always believed that personal integrity is one of the biggest indicators of likely success. A few years ago that was an unfashionable position to take, today in the wake of Enron, Haliburton, Sunbeam etc. more people seem to take my point of view.

    I remember back when the Cantor and Segal thing hit telling Laurence Canter that the Hi Tech industry was a small pond and that most of the people who got rich from it did so by being a part of the right circles, playing the inside game. Few people can have realized the potential of the internet as early as Canter and Segal did and ended up worse off than they started as a result.

    I think it will turn out the same way for the SCO folk. It is not like they have skills that are exactly sought after in the Windows world. It is going to be interesting seeing these chuckleheads trying to get jobs at IBM and Red Hat in a years time.

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