How Significant Is SCOs Win?

 
 
By Steven Vaughan-Nichols  |  Posted 2005-01-21
 
 
 

How Significant Is SCOs Win?


How significant was The SCO Group Inc.s victory in its discovery motion over IBM in the companies ongoing battle over Linux copyright and Unix contract issues? It depends on which analysts and lawyers you talk to about Magistrate Judge Brooke Wells decision.

Wells granted SCOs discovery motion, in which the Lindon, Utah, company had demanded that IBM turn over the source code of "all versions and changes" of IBMs AIX and Dynix Unix operating systems. Along with this, she ordered IBM to turn over the "programmers notes, design documents, white papers, the comments and notes made by those who did the changes [to AIX and Dynix]."

"This is a significant and much needed victory for the SCO Group," said Laura DiDio, a senior analyst at the Yankee Group.

"Its apparent to all that SCOs fortunes are inexorably linked to the ongoing lawsuits. They wax and wane with each new revelation or setback," observed DiDio.

"Judge Brooke Wells decision to compel IBM to turn over the programmers notes, design documents, white papers, the comments and notes made by those who did the changes [to AIX and Dynix], the names and contact information of individuals who made changes and what changes they specifically made is central and crucial to this case," she said.

"When you strip away all the hype and hyperbole, on both sides, SCOs basic claim comes down to its allegations that IBM illegally inserted derivative Unix code that it owns into Linux." DiDio said.

Click here to read about the state of SCOs business.

DiDio also found the following comments from Wells possibly indicative of the latitude she may grant SCO if and when this case ever gets to court:

"While the court agrees with IBM that this case concerns code that may have been improperly contributed to Linux, the court disagrees with IBMs narrow interpretation of relevant code. Under a plausible reading of the contract, it is possible that protections and prohibitions exist for code contributed by IBM to Linux. This code that eventually ended up in Linux may not look similar to the code initially provided to IBM under the contract, but if it was based on modifications, elements or derivations that are protected under the contract then it is clearly relevant. In contrast to IBMs argument this protection may even extend to homegrown code depending on the interpretation of the contract," Wells wrote.

Such comments "clearly favor SCOs position," DiDio said. And shes not the only one who sees it that way.

"The ruling contains some comfort for SCO … on the ultimate merits of the question whether IBM has a contractual obligation regarding the Unix code that is broader than the obligation imposed by copyright law," said Annette Hurst, director and co-chair of the Intellectual Property Practice Group in the San Francisco office of Howard Rice Nemerovski Canady Falk & Rabkin.

"The magistrate judge summarized the law on this issue in SCOs favor," said Hurst.

If this leads to a "ruling in SCOs favor on the issue [it] could mean a problem for IBM and other Linux users if SCO could show that the Linux code derived from contractually protected code in a way that might not otherwise violate the copyright law because it does not meet the derivative work standard," Hurst said.

Next Page: Burdens on SCO.

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Still, she said, "it is a theoretical concept, and frankly hard to imagine how that could occur with much significance in the present context. The burden will be on SCO to analyze an enormous amount of data to try to show that some one or more of thousands of programmers were somehow sparked by the Unix code in their contributions to Linux-based systems in a way that is meaningful but did not result in substantial similarity between the Unix and Linux code.

"It seems like a gamble that will cost SCO a lot of money without any clear prospect of success," Hurst said.

Kelly Talcott, a partner with international law firm Kirkpatrick & Lockhart Nicholson Graham LLP, also saw this point.

"The judge [has] highlighted another possible avenue of liability for IBM that has not received as much attention as SCOs copyright claims: breach of certain software agreements that, according to SCO, restricted IBMs use of certain software products for internal business purposes," said Talcott.

"The magistrate judge pointed out that SCOs breach of contract claims could end up playing a more important role in the case than the copyright infringement claims because they could implicate code that does not infringe any SCO copyright," she said.

But with all that in mind, Talcott emphasized that "the ruling only addressed whether IBM had to produce the code [as well as some other discovery issues]. It is not a ruling on the viability or not of SCOs breach of contract claims. But, by highlighting IBMs potential liability under the contract claims, the magistrate judge has given IBM something to think about."

"It is important to point out that SCO has so far not proven its case against IBM," said Stacey Quandt, senior business analyst with the Robert Frances Group.

All in all, "at one level it is not terribly significant, given the general deference to broad discovery built into the U.S. legal system," Talcott said. "Anything that is reasonably likely to lead to the discovery of admissible evidence is fair game for discovery."

Allonn Levy, a partner in the San Jose, Calif., law firm Hopkins & Carley, agrees that SCO hasnt won much of a victory.

"After a series of very public setbacks, SCO is looking to demonstrate a win in its high-profile Linux cases," Levy said. "Unfortunately, Judge Wells order probably isnt as dramatic a victory as SCO would like. In reality, the court issued a fairly routine discovery order compelling IBM to respond further to certain discovery and ordering it to turn over certain source code and documents."

Next Page: Order not "surprising."

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Thomas Carey, chairman of the business practice group at Boston-based Bromberg & Sunstein LLP, a firm specializing in intellectual property litigation and business law, said the order wasnt surprising.

"From the viewpoint of efficiency, this was an unfortunate order because it will cost IBM plenty to comply with, and the magistrate failed to limit the scope of discovery to matters that could really be a violation of the contract," Carey said. "But from the viewpoint of what normally appears at this stage of a lawsuit, it is not surprising. Plaintiffs typically are given wide latitude to hunt through a defendants files to look for a smoking gun."

Could there be a silver lining for IBM? Levy thinks so: "Ironically, this order forcing IBM to disclose more information to SCO may help IBM in its efforts to obtain summary judgment by removing any argument by SCO that information necessary for its case has been withheld—a point Judge Wells seems to allude to in her order."

One thing everyone did agree on is that the case will now take even more time. "This case has more twists and turns than a corkscrew, and that shows no signs of abating," said DiDio.

"These pretrial motions can go on for years, and theres no end in sight," she said. "IBM is much better equipped than SCO to play the waiting game from a financial and business perspective. Like everyone else who has been involved or observed this case, the Yankee Group is anxious for a resolution, but were resigned to the fact that it will occur later rather than sooner. Meanwhile, the lawsuit has not hampered Linuxs adoption by corporate enterprises."

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