SCO Caps Legal Costs in Linux Fight

In an attempt to reassure shareholders and limit runaway legal costs, SCO has announced that it is restructuring its arrangement with Boies, Schiller & Flexner, the company’s legal firm. SCO is currently in a protracted battle with the IBM and the Linux community over claims that it owns sections of the Linux kernel source code, and claims that the GNU Public License is invalid.

SCO has now agreed to pay BSF US$31 million (€25.5 million) for the entire legal case, but but they will now receive a higher proportion of any settlement fee if SCO win the case. BSF now are now looking to get up to 30% of any damages awarded to SCO.

With things not looking too bright for the UNIX provider, 30% of nothing may not make BSF very happy. Recent developments in the case with IBM have seen SCO’s evidence based on sections of the Linux kernel code dismissed. They have even been accused for manipulating their source code to make it look more like Linux kernel by omitting lines. Some of the code put forward as evidence does not even appear in the kernel, is public domain, or is exempt because of compatibility standards.

SCO has cash and securities amounting to about US$43 million (€35.35), so even if they lose they’ll have US$12 million (€9.87) in the bank. Legal costs for SCO have been becoming increasingly expensive of late – last quarter’s bill came to US$7.3 million (€6 million), contrasted with the US$15 million (€12.33 million) the company spent in the five quarters previously.SCO’s president and CEO, Darl McBride, is still upbeat about his company’s future: “Several positive developments fell into place for us this quarter that strengthened the Company’s overall position. We successfully delivered on our strategy to restore profitability within our UNIX business which is generating positive cash flow. At the same time, we saw a nice uplift from SCOsource licensing revenue. In addition, we closed the BayStar transaction and as announced today, we implemented a Shareholder Rights Plan that will help protect the Company from any potential undervalued takeover attempt. Finally, we are pleased to have entered into a letter of intent with Boies, Schiller & Flexner that not only demonstrates their belief in SCO’s legal case but will also provide SCO with greater financial flexibility. We remain steadfastly committed to enforcing our intellectual property rights on behalf of our customers, employees and shareholders. Through the combination of the quarter’s positive developments and our current cash position, we are well-positioned to pursue our current litigation through its conclusion.”


Slashdot debates SCO’s case

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Fraser Lovatt

Fraser Lovatt has spent the last fifteen years working in publishing, TV and the Internet in various capacities, and believes that they will be seperate platforms for at least a while yet. His main interests at the moment are exploring where Linux is taking home entertainment and how technology is conferring technical skills on more and more people. Fraser Lovatt was born in the same year that 2001: A Space Odyssey was delighting and confusing people in the cinemas, and developed a lifelong love of technology as soon as he realised that things could be taken apart, sometimes put back together again, but mostly left in bits or made into something the original designer hadn't quite planned upon. At school he was definitely in the ZX Spectrum/Magpie/BMX camp, rather than the BBC Micro/Blue Peter/well-behaved group. This is all deeply ironic as he later went on to spend nine years working at the BBC. After a few years of working as a bookseller in Scotland, ("Back when it was actually a skilled profession" he'll tell anyone still listening), he moved to England for reasons he can't quite explain adequately to himself. After a couple of publishing jobs punctuated by sporadic bursts of travelling and photography came the aforementioned nine years at the BBC where he specialised in internet technologies and video. These days his primary interests are Java, Linux, videogames and pies - and if they're not candidates for convergence, then what is?