SCO Bankruptcy "Imminent, Inevitable"

mattaw writes "From analysis by Groklaw it seems that SCO may owe Novell nearly all the SCOSource licensing fees, and has been hiding the fact for 3 years. Imminent. Inevitable. Bankruptcy. Those are the words from Novell's lawyers. Perhaps the IBM/SCO case could close earlier than planned? Perhaps we can finally be rid of this specter once and for all?"

Comments

Re:Can anyone explain?

[Scarblac]

SCO has been acting as if they had bought some sort of IP rights to SysV UNIX from Novell, and sold licenses based on those rights to Sun and Microsoft ("SVRX licenses").

Novell is now pointing at the actual text of the contract, which says that all SCO acquired was the right to act as an agent of Novell - basically, they can sell licenses in Novell's place, then hand over all the money to Novell. After that, Novell will return them 5% of the money as an agent fee.

It all seems pretty undisputable, from following Groklaw. As Novell claims SCO did its job badly so they won't even have to give them the 5% back, they're basically claiming that those cash infusions from Microsoft and Sun belong to Novell. And it's asking the judge to make haste, since this is simply their money, SCO is wasting it, and they'll soon be bankrupt.

Re:I'm excited

[Amazing Quantum Man]

The current SCO is not, and has never been the Santa Cruz Organization.

The current SCO (newSCO) is what used to be Caldera. Santa Cruz (oldSCO) became Tarantella, and was bought by Sun.

It's more than bankruptcy.

[Jaywalk]

Judge Kimball has ruled that the Novell case should go before the IBM case, so the Novell timeline is now more important than that of IBM. While it's SCO that sued Novell, the whole show (including IBM) is likely to be shut down by Novell's counterclaims. Boiled down, Novell's has nine "claims for relief" and, if granted, there is nothing left for SCO to sue about. You can read them yourself in the PDF, but the basics are:

1. Novell owns the copyrights and not SCO.
2. SCO needs to give Novell a full accounting of unreported money it owes Novell for SVRX licenses.
3. Novell wants to court to order SCO to comply with their contract, which gives all the royalties from SVRX to Novell.
4. Novell has the right to waive SCO's claims on UNIX code. Including those against IBM.
5. Novell wants the court to issue a "declaratory judgment" that Novell has the right to audit SCO's performance to make sure that it doesn't take any more of Novell's money.
6. SCO needs to put all the money it "converted" (i.e., "stole") from those licenses into a constructive trust. (This is the one they're fussing about now. Sun and Microsoft gave SCO a bucket of cash to carry on the lawsuit against Linux under cover of a UNIX license. But SCO is supposed to give UNIX license money to Novell.)
7. Number seven repeats number six and asks for the trust again. Eh, lawyers. Go figure.
8. Number eight asks for the trust again, but adds punitive damages for swiping the money in the first place. Since SCO has already spent most of the cash, this is pretty much just adding insult to injury.
9. Finally, Novell wants a complete accounting of all SVRX agreements or "other agreements relating to royalty bearing products." That's because SCO was claiming that the Sun and Microsoft agreements weren't "real" SVRX agreements, so SCO didn't owe Novell any money. Novell wants an accounting to make sure SCO isn't hiding any more ill-gotten gains.

So, yeah, the cash is a big deal and it's going to bankrupt SCO. Couldn't happen to a more deserving bunch of fellas. But read number four again. If Novell has it's way, the IBM case is gone too because SCO never had the right to sue in the first place.
 
Of course, there are always IBM's counterclaims, but it's unlikely there will be anything left after Novell is done.

Re:I don't think they knew.

[Jaywalk]

Why wasn't Novell doing all of this monitoring and watching in the first place? And why didn't they realize they were getting scammed sooner?

Believe it or not, I don't think Novell knew. The original press releases read like something you'd expect from the Three Stooges. First Novell accepted SCO's version and assumed they had sold the copyrights. Then they said they said they didn't sell the copyrights. Then SCO found a piece of paper in their files that Novell couldn't find in their version and sent it to Novell. Novell read the paper and agreed that it looked like they had sold the copyrights. Then Novell's lawyers looked at the paper and said that they didn't. Eventually, somebody dug up the minutes of a meeting for the Board of Directors from something like a decade ago and decided they definitely did not sell the copyrights.

Keep in mind that nobody was much interested in UNIX by this point. The original deal was between the original Santa Cruz Operation and Novell because Novell wanted out of the UNIX biz while Santa Cruz wanted some stuff so they could do a joint project with IBM. That project didn't pan out, so they renamed themselves Tarentella and sold the UNIX business to Caldera. Novell didn't much care who owned the business as long as they got their checks, which both Santa Cruz and Caldera sent them as per the contract.

Caldera didn't want the UNIX business either. They were a Linux business and thought they could convert SCO's UNIX distribution network to selling Linux instead. That didn't work out either; apparently the UNIX resellers didn't want to switch to Linux and Caldera was making more selling UNIX than distributing Linux. So they ditched Linux (and their CEO) and switched to concentrating on UNIX and changed their name to SCO for the name recognition.

But there was no scam -- at least with the UNIX royalties -- until the whole Linux shakedown started. Santa Cruz and Caldera sent Novell the checks and Novell pocketed the money. The Linux shakedown was just supposed to get IBM to buy them out, in which case it would have stayed business as usual. Things didn't hit the fan until after SCO tried to up the ante by threatening to sue Linux users over UNIX rights. And even then it took a while.

I'd have loved to have been in the Novell staff meeting when someone (I've always pictured a balding accountant with a slight paunch) looked up from his notes and said, "Hey, isn't SCO supposed to be giving most of the UNIX money to us?"