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SCO Caps Legal Expenses At $31 Million
uniqueCondition points to a story on News.com, writing "With SCO's legal costs reaching $7.3 million in their most recent quarter, nearly half of the $15 million it has spent in the last five quarters, SCO can't afford this kind of litigation. They have therefore limited their payment to $31 million for the entire case and is giving their legal team a larger slice of any settlement SCO achieves. Under the current agreement, the firm's contingency payment is 20 percent of a settlement. Under the new agreement, that increases to a range of 20 to 33 percent." uniqueCondition links also to coverage at Techrepublic.com, InformationWeek and The Inquirer.
I'd say that their legal team would probably bail under this new contract (given that they probably don't expect to win), but then I read the "capped" number. 31 million dollars?!? Isn't that a bit like capping baseball players? i.e. They already make so much money that the cap doesn't matter in many ways other than principle.
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I almost feel sorry for their shareholders.
If they weren't comprised of the SCO board of directors, that is...
What I want to know is: who is paying them 660K in sco source licensing reveunue last quarter? Did Microsoft make another payment, did they recategorize other income into that program; what's the deal? It can't possibly be real income.
I kinda wish I was a SCO lawyer. They're making phat bank and they must know it's all going to fall apart in the end. They'll walk away with pockets full of cash and they won't be liable for anything I bet. (IANAL)
A bigger slice of nothing is still nothing.
Reminds me of fly by night dot-bomb executives trying to appease their employees by giving them tantalizing (restricted) stock options.
Then pumping, dumping, and running like hell.
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As someone pointed out over at groklaw, 31 million is almost exactly all SCO is now worth in reserves, assets, etc. Team Boise ain't exactly sacrificing much here.
Everyone talks about SCO running a sleazy poorly executed shakedown (I agree), but I'm wondering if Boise and Crew have just shown us how to run a sleazy *brilliantly* executed shakedown - of SCO.
And from reviewing all the filings, it's clear Boise et al weren't exactly working overtime with their best and brightest in putting the case together.
Boise: "Hey look, it's a moron with tons of money. Let's string him along and see where it takes us."
The would-be con men have been conned, and damn well I'd say.
The way I see it, they've actually done a fantastic job so far.
They've managed to keep a very dubious claim afloat, confuse the judge to the extent that the case wasn't summarily tossed, AND keep the public guessing as to whether the case has any merit or not. Honestly, they've been performing pretty well, given the tools at hand.
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Plausible conjecture should not be misrepresented as proof positive.
When they spend all $31 Million and a settlement is still not coming what will the lawyers do then? I highly doubt they are going to keep working. My bet is the second that $31 mil is gone the lawyers are going to walk away and watch the company die. Perhaps SCO just dictated how and when it will fall.
IBM could just buy SCO and put it out of everyone else's misery, and save money doing it. Plus, they could get the satisfaction of firing Darl McBride.
Do lawfirms have stock? I want to buy stock in SCO's legal representatives. They are certainly having a banner year. And then I want to sell that stock as soon as the last legal fee payment has been made by SCO. At that point, I expect they won't really have a great reputation in the legal community; so they won't be in much demand as lawyers after this case has been decided. I mean, who wants to hire a lawfirm that has a reputation for tying up the courts with a nonsense case, just to bill their client into bankruptcy?
And before you ask... no, I'm not an idiot. I just like piling absurd "what if's" onto our sometimes absurd reality.
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Actually, my impression is that the poison pill measure is simply a way for them to "look good." The fact that Canopy, the Board of Directors and various employees own a substancial chunk of the company to begin with even without the poison pill measures anyone who would be interested in buying SCO would have to negotiate with Canopy, et al.
Basically, its like putting spinning rims on a 1995 Hundai: it does nothing to add to the value of the car, but the owner hopes desperately it will make it look like he's not driving such a POS.
I don't think that the judge is confused. Only in the last week has IBM's legal team stopped pulling punches, and I think they've still got much in reserve, legally speaking. They have the best expert witnesses that blow SCO's out of the water. Now they've started calling SCO liars in the court documents.
The Judge has been very careful, very measured, and I guess, just giving SCO time to really make sure, before they meet his wrath.
-- oldthinkers unbellyfeel ingsoc
IBM could just buy SCO and put it out of everyone else's misery, and save money doing it. Plus, they could get the satisfaction of firing Darl McBride.
Darl McBride would still get his money, and IBM would have to pay for a sign saying "SCO copycat litigants hoping to get bought out for more than they are genuinely worth: Please Queue Here".
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As satisfying as it would be for IBM to buy SCO and give the execs 10 minutes to clean out their offices, I believe the reason they have resisted doing this so far is because it would create an enormous incentive for every failing technology company to try the same thing. Getting bought out is a lot more attractive than watching your company wither and die. IBM is a big enough target that they could very well be made to suffer if enough companies thought they could get themselves bought by filing a bogus lawsuit.
IBM has had the means to buy SCO all along. They'll never do it because it sets a bad precedent: Launch a baseless lawsuit against IBM, get bought out.
My username does not make me Apathetic. It's irony, get it?
Other issues that are relevant. The above figures are a month old and last quarter SCOG was burning about 2.4 million a month in legal fees. Also, outstanding legal fees that had not yet been paid as of 31st July were unclear.
Who is SCOG's auditor and will they need to insist that SCOG presents a truthful balance sheet? And when?
As many have quipped here already, there isn't likely to be a settlement in this case. So assuming that the lawyers themselves are not stupid, this cap agreement would seem to indicate that SCO has not yet racked up $31M in billing charges. And again, if the lawyers are not stupid, they probably already know, perhaps better than anyone else, that there isn't going to be a settlement. So it seems likely that when the $31M cap is reached, the lawyers will bail out. There's probably some kind of contract clause that will allow them to do this. If one knows how much has been billed already and the rate of billing, then it is possible to estimate how long it will be before the lawyers bail given the cap.
It all sounds pretty slimy when you think about it. I mean, how many millions were made on the SCO share run-up for largely baseless litigation? And one can bet that the lawyers aren't taking a loss on this deal. So they all do okay. To borrow a Chinese expression, its a sharing pork world!
To the making of books there is no end, so let's get started
The problem is that if IBM buys SCO, then every two-bit scammer will try the same thing (sue IBM hoping IBM will settle/buy them out). IBM knows this and is in the process of driving SCO into the ground to make an example of them.
In the long run, it is (far) cheaper for IBM to fight this case to the bitter end rather then trying to deal with hundreds of similar cases that could arise if IBM buys SCO.
Besides the point, it is not even clear that SCO owns anything at all. SCO claims to have the rights to sub-licence UNIX System V for Novel (its not clear if this agreement is still in effect, for various reasons). From this, SCO claims to have the rights to enforce licencing deals for Novell (via copyrights that may or may not have been transfered) And so on and so forth. With so many ambiguities, it would be sheer madness for IBM to buy SCO just to make the lawsuit go away.
Yes, IBM could have bought out SCO the day the lawsuit was started, and, in fact, they would have spent less to buy the company at that point than they've probably spent on legal fees in the case so far. But it's more than just the precedent involved here. SCO is claiming that IBM violated their contracts, and stole SCO's "intellectual property". They've threatened IBM's reputation and smeared their good name.
It may shock some of the cynics here, who think that businesses only ever care about maximizing the profit on each nickel that flies by, but IBM actually cares about their reputation. They care about it for good, solid business reasons, but they still care. They know something that MS has yet to learn - if your customers (and partners) feel they can trust you, they're going to be a lot more willing to do a lot more business with you. SCO has accused IBM of being untrustworthy, and that's not something IBM will take lying down.
This kind of thinking has got to be completely alien to Darl and Ralph, who are probably still in shock that their "buy me, buy me!" scheme didn't work. They may well have studied the odds, and found that IBM only fights a certain percentage of nuisance lawsuits (chosen at random), and figured their chances were pretty good. I don't think they realized that this was a case that IBM would never roll over for, because that kind of thinking (ethical) is not something they're equipped for.
I'm dying to see how SCOX will try to discredit Brian Kernighan.
Even more, I'd like to see them try to discredit Randall Davis. Davis' declaration says that SCO doesn't know how to compare code and discover if it's substantially similar. Who is Davis to know this? Well, aside from the Director of MIT's AI lab, Chairman of the NSF committee on software intellectual property and frequent testifier to Congress, he was the man consulted by 2nd Circuit Judge Pratt when Pratt defined the Abstraction-Filtration-Comparison test, which is the technique used by most US Federal courts -- including the 10th Circuit -- to determine if software is substantially similar.
This means that when Judge Kimball goes back to review the rulings that defined the AFC test, so that he can be sure to apply it correctly, he'll be reading Davis' name, Davis' ideas and probably even some of Davis' words.
Kernighan is well-known and well-respected in geek circles, but Judges know that Davis is the expert of experts on software copying.
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If they have given the legal team an additional 13% from the settlement, we can easily calculate how high considers its probability of success to be.
If we estimate that the payment cap to the lawyers deprive them of... say $30 million, and they are trying to get $5bn from IBM settlement, they consider their chances to be:
$5bn * p = $30 million
=> p = 4.6%
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Destruction of company property and files can be a criminal offence.
Will IBM really be vengeful against the people involved?
Yes. I don't think IBM has any real issues with SCO personnel; they know it is all being directed by those at the top. Darl's very public comments paints a target sign on him. They need to make an very public example of out someone.
Darl has all but accused them IBM of stealing from his company to anyone who will listen. This has damaged their reputation, and, remember IBM has banked heavily on Linux. So this affects their bottom line too.
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