IBM Subpoenas SCO Investors, Analysts

Bigfishbowl writes "Forbes has an interesting article about IBM sending subpoenas to large SCO investors in an effort to compel discovery. An IBM spokesman says IBM is frustrated by SCO's reluctance to produce proof of its allegations. '"It is time for SCO to produce something meaningful. They have been dragging their feet and it is not clear there is any incentive for SCO to try this in court," he says.'"

Comments

Well...

[__aavhli5779]

I am by no means in hell a lawyer, but it seems like IBM is trying to determine whether something much of Slashdot suspects is verifiably true: that some sort of sinister third party (Microsoft comes to mind) is morally and financially behind SCO's actions.

The question is whether a "Microsoft is behind this whole sham" argument will be as well-received in a court room as it has been on Slashdot.

I am so not a lawyer that I don't even know whether it would be admissible.

Or, for that matter, whether my analysis is entirely incorrect.

Re:Well...

[Anonymous Coward]

Well, SCOX was at .70 before this all started and was off everyone's radar. It's not totally crazy that the stock doubled after they announced a $3 billion dollar lawsuit against a large competitior.

However, the people recommending Buy when the stock is at $20 are probably the same folks pumping money into SCO so they can keep the bubble from deflating. Even if it's an honest recommendation, it's based purely on high-risk speculation and not on any fundementals or facts.

Contrary to the slashbots, I think it's highly unlikely that this market manipulation is SCO, Canopy, Microsoft, Sun or anyone else. It's probably just independant brokers who know a goldrush when they see one. Just like VA Linux, etc.

Follow the money

[jaymzter]

At this stage of the game, IBM is publicly stating they doubt TSG is serious about entering a court room. With that in mind they seem to be trying to hurt TSG where it hurts: the wallet. Have you seen SCOX performance lately? Beautifully mimicking a swan dive. Good riddance to bad trash

BTW, 5th post?

SCO Gives Filenames

[emacnabber]

This is a little OT, but SCO told the names "offending" files in a court doc at groklaw. They don't say what parts of the files are "theirs", but they've narrowed it down to about a 1/5 of the kernel. :-)

Re:SCO Gives Filenames

[darnok]

Is there something in the US legal system that actively prevents SCO from claiming every single file in the kernel as their own? I mean, if they're claiming a huge chunk of the kernel anyway, why not claim it all and be done with it?

Presumably the court would have to investigate every single file to establish the veracity of SCO's claims. Can you imagine weeding through every single .h file, many of which are going to look identical on any Unix system, and trying to establish the one true inventor of the file? I'd bet the original creator of a lot of those files is lost in time.

SCO would claim ownership, nobody could dispute it, and SCO could conceivably table some obscure document saying they created blah.h on some vaguely appropriate date. It doesn't have to be truthful - it can be manufactured just like all their other claims. If someone eventually comes forward and says "No, I created blah.h and here's proof", SCO would say "Fine, now let's look at blah2.h...".

Meanwhile, time would pass & SCO execs would be that much closer to their bonus payouts for keeping the stock price going upwards.

Other than the cost of doing things in this very long drawn out fashion, and I suspect SCO could find external funding for their legal costs from one or two sources in order to keep the anti-Linux FUD alive, is there anything in the US legal system preventing them from doing this?

I'm thinking all SCO's execs need to do is waste the court's time until they've got their 4th quarter of stock price rises, then bail out with big final paycheques and leave the remaining investors with whatever's left.

Re:SCO Gives Filenames

[Arker]

What I want to know is whether there's something in the US legal system that can stop SCO just stringing the court out ad infinitum with bogus ownership claims on file after file. All SCO's execs need is another couple of quarters and they win, regardless of what happens to SCO afterwards.

As I understand it, for the moment that's up to the patience of the judge. Once plaintiff gets caught in a few lies the judges tend to get a bit short-tempered.

Beyond that, though, the assumption in your original post that the authorship of this code is somehow murky is incorrect. It took mere hours from the time the examples they screened in Las Vegas became known to the time they were identified, and a couple more days to refine the identification at most. One example that came through SGI is public domain as a result of being derived from V32, the other (the one that TSG claimed as an example of obfuscation) was a reimplimentation from the Berkley spec, both cases are well documented. You can pull any file you want, select a section of code, and pretty quickly track down where it came from, what publically (or, in the case of SysV and the like, semi-publically) available codebases it's occurred in, plot a timeline of changes... the only thing that could really make this difficult is the sheer number of different sections one might wind up looking at.

But judges, as I said, aren't known for limitless patience. Once SCO gets specific and advances some verifiable claims, and has them shot down in flames, the judge isn't going to simply let them go through that cycle ad infinitum. He's going to berate them for wasting his time, forward some transcripts to ethics committees and possibly other agencies, and turn his attention to the counterclaims. TSG knows this, and that's why they're dancing like crazy in these filings trying to deny that they ever made the claims they made, trying to avoid specifying any real claims that can be refuted.

The jig is almost up for them. The US legal system may move slow, but it gets quicker when the judge starts suspecting someone is jerking him around, and that's what's happening. Oral arguments have been scheduled, a good sign he's already caught a whiff of what TSG has cooking and he doesn't like it.

Re:This is about calling SCO's bluff about code

[antiMStroll]

A better theory, IBM is cutting off SCO's funding by using SCO's tactics against them. SCO expended most of their energy so far badgering corporate Linux users with threats of IP transgression and 'offers' or ridiculously priced licenses. The obvious intent is to make corporate users think twice before adopting Linux.

It's no coincidence that IBM's move came soon after the RBC and BayStar announcements. It's a warning to other potential investors, invest in SCO and endure the gaze of IBM's army of lawyers. With Worldcom and Enron still fresh in their memory, watch them blink first. Anyone care to bet on another anonymous mass purchase of SCO licenses?

But

[Raul654]

The idea here is to do to SCO what they are trying to do to the OS movement - make the public afraid to touch them. I mean, if buying SCO stock means you risk getting a subpeana, who is going to do it? So what if ESR gets one - I'm sure he'd be happy to give SCO a piece of his mind. The goal is to make your average wall streeter afraid to touch SCO with a 10 foot pole, and there's not a whole lot SCO can do that they haven't already done.

There are words for this

[MarkusQ]

Big companies like IBM, Microsoft, et al don't act in a single-minded way like we individuals tend to.

That's because when individuals act the way big companies do, we call them things like "nut cases" and "psycopaths." An individual that dumped toxic waste into a river or FUD into the media (at what would be a modest rate by corporate standards) would be locked up. An individual who was insulting someone while kissing up to them would seem (at best) socialy maladroit.

This is what makes corporate characterization of hackers as social outcasts so ironic. The most nerdly hacker is still an order of magnitude more sane & sociable than the average mega-corp.

-- MarkusQ

IBM readies first nuclear bomb

[El]

"IBM needs to get answers from analysts about why they wrote positive reports and from Baystar about why they invested," Ferguson says.

Why would IBM need that information, unless they intended to go after somebody for securities fraud?

Huh?

[Bruce Perens]

Cuts both ways? Is that just vapors or do you have a reason to say so?

I don't see why Eric wouldn't want to testify. I'd like to. I sure don't have anything to hide with regard to this case, and I can't see how he would.

Bruce

Since no one else pointed it out

[DaveAtFraud]

The author of this piece, Daniel Lyons, should use the by line, "SCO Mouthpiece." He is the same hack who wrote the "Linux's Hit Men" article about the FSF plus there was another recent piece of SCO FUD that I've managed to flush out of my memory.

You will also note that quietly buried in the body of the article is that Forbes was also served with a subpoena. This is undoubtedly because of Mr. Lyons' articles.

Re:Aces and Eights

[NortWind]

They say it was the hand that Wild Bill Hickock was holding when he was shot in the back of the head.

Re:It's About time

[Geek of Tech]

Don't they realize that doing this is suicide? If they were to determine that the GPL is enforcable, SCO just shot themselves in the foot. It they decide that the GPL is not enforcable, every kernel contributor, even everyone who has worked on a package that has appeared in Caldera or SCO Linux could sue SCO. In just a few weeks, they could bankrupt the company.

IBM's options at this point

[Animats]

The Cravath machine is starting to roll.

First, if SCO stalls much longer on discovery, Cravath will be in a good position to move for a dismissal. They might get it, too. Maybe even a dismissal with prejudice, so SCO can't refile, or summary judgement in IBM's favor.

Independent of this, it looks like IBM is gearing up for a securities-fraud counterclaim. Cravath has pointed out in legal filings that SCO has made statements publicly that are inconsistent with the positions they take in court. Ordinarily, that's OK. But when the stock price spikes and insiders are cashing out, that's not OK.

There's also the potential of a false-claim-of-copyright claim. That's rarely used, but here, it's clearly appropriate.

This is going to crank for a while, but unless SCO comes up with something a lot better than what they've shown so far, they're not going to win.

Re:This is about calling SCO's bluff about code

[InfoVore]

It's a warning to other potential investors, invest in SCO and endure the gaze of IBM's army of lawyers.

I like it. Call it the "IBM Basilisk Effect" - watch your potential investors turn into stone when IBM lawyers look at them.

Ignore parent

[aws4y]

Sorry hit submit instead of preview, I got flustered and the buttons are so close together.

Some of thoes files don't contain any UNIX System V source code, only "UNIX methods" which is a vague way of saying that it may have appeared in a textbook. That is why IBM feels that simply giving filenames is insuffecent since even if there is not one pice of SysV code in thoes files SCO can still claim that some of the algorithims are similar to thoes in SysV and thus there is still a copyright violation, even though these alogrithims are taught to students in classes and SCO dosent have a patent on them.

The last point is the major weakness in SCO's case and why Novell can now just flick them away like the tiny fly that they are.

Dumping is Good

[Bob9113]

I've been wondering when someone was going to try this for quite a while. "Dumping", selling a product below cost in order to force your competitors out of business, is illegal for good reasons.

I'm not sure whether it's illegal or not (as so many of our economics-related laws are irrational), but if it is, it is most definitely not illegal for good reason. Economists tend to get hot under the collar whenever their government engages in the economically self-destructive practice of protectionism under the spectre of dumping. Any first year economics student can explain precisely why dumping is good for the economy that is being dumped into in essentially every real world situation[1]. Any Linux enthusiast can as easily explain why the same is true of operating systems[2].

Consider the example of Netscape - Microsoft has spent nearly ten years attempting to dump it out of existence. Microsoft's price for IE remains at zero (not to mention their correlary anti-competitive attacks), and still Netscape lives on (and a host of other browsers, including ones with non-zero prices have poppoed up). And that's just looking at the browser producers - the rest of the world, the browser consumers, like 99.99% of the population and a similar percentage of businesses, are ECSTATIC about the browser wars. How different would the world today be if Netscape, Opera, Mozilla, Konquerer, and IE all cost $99, and had never been free?

[1] DUMPING

Selling something for less than the cost of producing it. This may be used by a DOMINANT FIRM to attack rivals, a strategy known to ANTITRUST authorities as PREDATORY PRICING. Participants in international trade are often accused of dumping by domestic FIRMS charging more than rival IMPORTS. Countries can slap duties on cheap imports that they judge are being dumped in their markets. Often this amounts to thinly disguised PROTECTIONISM against more efficient foreign firms.

In practice, genuine predatory pricing is rare - certainly much rarer than anti-dumping actions - because it relies on the unlikely ability of a single producer to dominate a world market. In any case, consumers gain from lower PRICES; so do companies that can buy their supplies more cheaply abroad.

That is - unless IBM's Linux division has a maintainable monopoly on the OS market (it does not), and the ability to raise its price (it does not), and the ability to drive its competition out (OK, guilty), and there are significant barriers to reentry to the OS market (there are none), claiming dumping is specious at best.

[2] Having the ability to run a variety of operating systems without having to pay for each license makes it easier for the user to satisfy his or her wants. On the business side, a vastly greater number of businesses are OS consumers than are OS producers - thus the business world as a whole *LOVES* OS dumping (if it can be called that).

Congressman Barney Frank (D Mass.) on SCO suit

[hqm]

When SCO was going around threatening end users, I sent a letter to my congressman, Barney Frank of Massachusetts. Here is his response:

====

September 26, 2003

Dear Mr. Minsky,

I share your view that the suits being brought by the SCO Group
against the users of the Linux system are an entirely inappropriate
use of the legal systems for broader corporate purposes. While I have
note been able, obviously, to examine these in detail, the suits do
not appear to me, from what I have read, to have any merit, and in
fact seem to be motivated, as I said, by an effort simply to prevent
the use of Linux for competitive reasons.

There is, unfortunately, a very limited role for Congress here. I
agree with those who would like to see us "stop SCO from punishing
innocent consumers to inflate its other legal claims." But under our
separation of powers doctrine, Congress has no role whatsoever to play
in the pursuit of particular cases. We can pass laws which prevent
certain types of suits from being brought, but it is very, very
difficult to pass those in a way that would be retroactive - that is,
that would apply to existing suits. And the problem with this suit is
not that it is of a sort of legal claim that is inappropriate to
bring, but that it is totally unjustified on the merits. In other
words, the remedy here is for these suits to be dismissed on their
merits and Congress has no role, as I have said, in doing that.

I am prepared to join in expressions of extreme disapproval of what
SCO is doing, and I will be consulting with my colleagues to see if
there is a movement to do that. I hope that will have some impact on
them. All of these lawsuits brought against individuals will of course
be dismissed but I realize that is of little consolation to people
who have had to go through the trouble and expense of defending against
them. It may be that at some point a judge will act decisively enough
in this regard to prevent this proliferation of suits, and while, as I
said, our Congressional role is very limited here, I will be
encouraging anything we can do along these lines.

Barney Frank