SCO loses key court case against Novell

I can’t say how happy this makes me! You can read the actual articles from Digg, Reuters, Salt Lake Tribune, Information Week or any of the other sources from Google news. SCO didn’t acquire any ownership from the deal with Novell. SCO can’t sue IBM because they don’t have any standing. Novell on the other hand does have standing to sue IBM but Novell directed SCO to waive all rights in regard to this. Also it is important to note the following.

Originally a comment from Digg…

“The court further concludes that because a portion of SCO’s 2003 Sun and Microsoft Agreements indisputably licenses SVRX products listed under Item VI of Schedule 1.1(a) to the APA, even if only indidental to a license for UnixWare, SCO is obligated under the APA to account for and pass through to Novell the appropriate portion relating to the license of SVRX products. Because SCO failed to do so, it breached its fiduciary duty to Novell under the APA and is liable for conversion.”

Conversion is a nice word for “stealing”. When Microsoft and Sun gave SCO millions of dollars for a “unix license” back in 2003, according to SCO’s APA agreement with Novell, SCO was supposed to pass 100% of that money to Novell, who would then pass back 5% of it as SCO’s administrative fee. SCO kept it all. Just as Microsoft and Sun intended. After all, that money was intended to finance SCO’s litigation. SCO now owes Novell more than SCO is worth.

From my understanding it isn’t clear exactly how much SCO owes Novell for those licenses and it might be more than they are worth. If that is the case SCO will be bankrupt. Why am I so happy? Well, it is a win for open source and Linux. Also, where I work we make extensive use of it and after using it I’ve really grown to hate it. Before we go any further I’m referring to SCO OpenServer 5.0.X and 6. What is so special about SCO verses any alternatives? Nothing. There is NO advantage using SCO. SCO has never had a large portion of the market. Sun, HP and IBM have always been the top 3 Unix operating systems. I don’t even know when SCO would have been a good idea probably before Linux became popular. Linux is more than capable of doing everything we need to do and is a whole lot more useful.

It really comes down to maintainability and usability and SCO doesn’t do well. Want to update your system? If I want to install a maintenance pack then I would have to uninstall everything modifying the kernel, install and then reinstall the what I had removed. This fine if you are on-site but if you have to remove a network driver you can’t do this remotely. Updating SCO isn’t exactly easy there. Want to change your IP address? Not before rebooting, which reminds me when you had to do that in Windows 98/ME. Before 5.0.7 there was no standard way to change the default gateway. There are no syslog messages indicating that the system rebooted. If you restarted a network service such as telnet and it had active connections you will have to wait until ALL of the connections time out. If you start it again the service will be unable to open the port and listen. Want to find out some hardware information? 5.0.X was alright but in SCO 6 they depreciated “hwconfig” and now “hw” tells me plenty of useless information. Want to use rsync? You will have to install the package first. You want wget? Yup separate package. Want to boot from a dead system? You don’t have an emergency boot disk? You’ll have to create one and hopefully you know what drivers you need. Want to generate md5 checksums? Ha, there is no command but you can do it though OpenSSL. You can generate another type of checksum with the “sum” command. What process is listening on that port? Not with “netstat” you must use “lsof” to figure it out. Want to do Kerberos/LDAP? You will have to stick with NIS because you can’t authenticate locally with anything besides the /etc/passwd file. Want to compile something? First you will need the development kit (costs a TON) and it will probably fail because the required header file is missing. Want files larger than 2GB? Not in SCO 5.0.X although SCO 6 supports it many of the commands still can’t handle files over 2GB. Why in the world would you spend $900 (for 5 licenses I might add) when you can get Redhat Enterprise Linux for about $300? Want more reasons then check out this comparison.

Update (August 26, 2007)

B. Novell Will Face Irreparable Harm If the Injunction is Denied, Outweighing Any Harm Caused to SCO.

Contrary to SCO’s assertion that a preliminary injunction should be denied because it may accelerate SCO’s bankruptcy, SCO’s imminent bankruptcy is a compelling reason to grant Novell’s motion. When SCO goes into bankruptcy, it will not be because of Novell’s motion, but because of its own financial missteps. For SCO, bankruptcy is inevitable; it characterizes its assets as merely those “remaining” and does not rebut Novell’s arguments that its bankruptcy is imminent. (Opp. at 53 n.8, App. A at 22-23 (55, 58-59).) Once this bankruptcy occurs, Novell will lose all ability to collect its judgment. See In re PKR, P.C., 220 B.R. 114, 117 (B.A.P. 10th Cir. 1998) (“constructive trusts are not recognized or imposed in bankruptcy proceedings unless the trust was imposed either statutorily or judicially prior to the bankruptcy”). Novell’s rights therefore must be preserved before SCO squanders even more of Novell’s trust assets.

“For SCO, bankruptcy is inevitable,” Novell said in the filing. Since SCO’s stock has fallen to ~.50 cents a share on the 13th of August they will be delisted in 30 days if the price stays below a dollar.

Update (September 09, 2007)

This is what remains on the case for the judge to rule on. There will be no jury and the judge will not rule so SCO can file an immediate appeal. They are scheduled to go back to court on September 11th.

Update (September 14, 2007)

Dear SCO Customers and Partners,

This afternoon we took the extraordinary step of filing for Chapter 11 protection in U.S. Bankruptcy Court to protect assets for our creditors and stockholders and to ensure the continuation of our normal business operations. This decision was not taken without extensive consultation with the board of directors, and many outside experts and legal counsel.

SCO intends to maintain business as usual throughout the Chapter 11 proceedings. Subject to court approval, SCO will use the cash flow from its operations to meet its capital needs throughout the reorganization process.

Other companies such as Delta Airlines, Texaco, Dow Corning, K-Mart, United Airlines, Toys R’ Us, Macy’s Department Stores and others have emerged from Chapter 11 protection after restructuring themselves for success. We intend to do the same.

We value our relationship with you and want to provide the assurance that you can continue to order product, and receive exemplary service and support from us during this restructuring period.

We invite you to consult with your SCO representative if you have any questions or concerns.

Sincerely,

Darl McBride
President & CEO
The SCO Group

Update (November 02, 2007)

Any other updates can be found on Groklaw.