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Who Will SCO Sue?

By Frank Hayes
November 24, 2003 12:00 PM ET

Computerworld - Things aren't going well for The SCO Group these days. Business is down. Those Unix licenses SCO is trying to sell to Linux users just aren't moving. SCO's lawsuit against IBM is running into trouble. So is SCO's defense in the lawsuit Red Hat has filed against it. In and out of the courtroom, SCO is getting beaten up on every side.
So what did SCO do last week to fight back? It announced that it's paying its lawyers with SCO Group stock.
And that, by mid-February, those lawyers will sue some large corporate Linux user.
Who will SCO sue? SCO won't say; that's for the lawyers to decide. But it will be one of the 1,500 companies that got a nasty letter from SCO back in May, complaining about the fact that those companies used Linux -- someone who, in the words of SCO lawyer David Boies, "will illustrate the nature of the problem." Some help, huh?
If this all sounds a bit, er, unusual -- yes, it is.
Paying most of your legal bills with company stock is certainly unusual. Even Boies says so. But at a practical level, here's how it works: When the lawyers make legal threats, SCO's stock price tends to go up. If they lose, of course, the stock price will collapse -- and, in effect, they won't get paid. So it's now in the lawyers' interest to keep that stock price jacked up however they can.
And that translates into some luckless corporate Linux user getting sued.
That's a bit unusual, too. After all, SCO is already in court with two separate lawsuits in which the company will have to prove that its copyrights were violated in Linux. Ordinarily, you'd expect SCO's strategy to be to win those cases first; after that, going after corporate Linux users would be much easier to do.
But those cases aren't looking good. In the IBM suit in Utah, IBM's lawyers have told the judge that SCO has refused to turn over documents and answer questions. SCO is required to do this as part of the pretrial discovery process.
Theoretically, this failure could cost SCO the case, though that's not likely. But judges don't like plaintiffs who do this -- especially when part of what SCO has failed to turn over is an explanation of exactly what IBM is supposed to have done wrong. That sort of delay makes it look as if SCO is stalling.
Meanwhile, in the Red Hat case in Delaware, after a series of missteps, SCO wants to stall the entire case for



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