Novell tips a bucket on SCO’s sordid Unix System V mess

Let's see if we’ve got this right: it turns out that SCO Group doesn’t actually have the Unix-related copyrights and patents it led people to believe it had. It turns out that Novell, from which SCO implied it had acquired those copyrights and patents, refused to transfer them to SCO. And it turns out that SCO has known this for a while, because SCO kept sending Novell letters asking Novell to transfer the copyrights and patents to SCO, and Novell ignored SCO’s letters.

So, lots of what we thought we knew about this SCO mess turns out to be wrong. Which raises an obvious question: what do we know?

Well, we know SCO does have the right to license Unix source code to companies like Microsoft. And SCO does have Unix licence contracts with IBM, Sun, Hewlett-Packard and other hardware and software vendors, some of which it inherited from AT&T, which created Unix at its Bell Labs.

And we now have a pretty good idea of SCO’s philosophy on the subject of software licences and other contracts. As the company put it in a terse, inelegantly worded statement last week: “Contracts are what you use against parties you have relationships with.” No doubt that’s useful to know for SCO’s 6000-odd Unix licensees. They probably thought those contracts were about a mutual benefit. Now they know SCO sees them as a weapon.

We know SCO is now explaining that its lawsuit against IBM is really just a contract dispute, not a suit over copyrights and patents — a fairly safe position for the moment, since we don’t know exactly what’s in the IBM Unix contract. But SCO isn’t offering explanations for why it recently sent threatening letters to nearly 1500 large companies, suggesting that their use of Linux might put them in legal jeopardy because of copyright and patent issues. Most of those companies don’t have contracts that SCO could use against them. In fact, one of those companies was Novell, which actually owns the Unix copyrights and patents that SCO was suggesting it had.

We finally do have an explanation for why IBM’s legal brief responding to SCO’s lawsuit was so, well, brief. If you haven’t read it or heard about it, IBM’s legal response was little more than a statement that said that virtually nothing in SCO’s lawsuit is true. Thanks to Novell, we now know that as far as ownership of the copyrighted Unix source code IBM originally licensed from AT&T goes, IBM was exactly right.

And thanks to Novell, we now have a pretty good idea of what happens when hard facts meet heavy FUD (fear, uncertainty, doubt). Wednesday morning last week, SCO issued a healthy quarterly financial report — the company was actually profitable again. That same morning, Novell made its statement that it had never transferred Unix copyrights and patents to SCO.

Result: SCO’s stock plunged, losing nearly 25 per cent of its value by that Wednesday night. That lets us know pretty decisively what investors were looking at when they bid up the price of SCO. SCO’s biggest asset was the sabre rattling it did for its billion-dollar lawsuit against IBM. And now investors no longer believe there’s any sabre left to rattle. So, to summarise: SCO’s lawsuit against IBM turns out to be a lot narrower than SCO had implied. SCO’s claims against companies that don’t have contracts with SCO turn out to be nonexistent. And SCO’s inflated stock turns out to have nowhere to go but down.

Which means there are really just two things left that we don’t know when it comes to SCO.

We don’t know whether SCO can actually be saved from the hole that CEO Darl McBride has dug for it — reputation damaged, credibility shot, customer hostility at an all-time high.

And we don’t know how much longer it will take before Ray Noorda (CEO and president of Novell until Jiune 1994), who owns nearly half of SCO, will finally pull the plug on this sordid, sorry mess.

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