SCO has had the greater part of its legal case against IBM thrown out of court.
SCO failed to provide evidence backing up its claim as it was ordered to do - with the implication that the evidence does not exist and that SCO's legal case is baseless.
Its lawsuit against IBM began in March 2003. SCO claimed that parts of its Unix code had been included by IBM in Dynix and AIX and subsequently donated to Linux. During the suit, IBM requested the court compel SCO to say which parts of the Linux O/S code used SCO proprietary Unix code. The court issued an order telling SCO to do this. Subsequently IBM argued that SCO had not complied with the order. In June this year, the court agreed with IBM.
At the hearing Judge Wells said: "In the view of the court it is almost like SCO sought to hide its case until the ninth inning in hopes of gaining an unfair advantage despite being repeatedly told to put 'all evidence... on the table'"
SCO objected and appealed but a fresh court hearing has just rejected SCO's appeal. At this hearing Judge Kimball agreed with the conclusions of Judge Wells and said SCO had acted wilfully in not disclosing the apparently misused code. Kimball's ruling cannot be appealed.
The immediate effect is that around two thirds of the 294 claims against IBM have been discarded. A SCO case against Novell on similar grounds of misuse of proprietary SCO code will be held before the SCO-IBM case.
This is part of a seemingly concerted fear, uncertainty and doubt (FUD) war against Linux. Microsoft has recently claimed that Linux code uses proprietary Microsoft intellectual property and pointed to an agreement with Novell in support of this. Novell disputes that claim strongly.
SCO made a loss of $3,580,000 in its third fiscal quarter, ending July 31, 2006. In August last year, SCO claimed that its legal fees were capped at $40 million in perpetuity. The 31 July results statement contradicts this, stating: "Legal and other expenses incurred in connection with the Company's litigation were $2,315,000 for the third quarter of fiscal year 2006 ... Because of the unique and unpredictable nature of this litigation, the occurrence and timing of litigation-related expenses is difficult to predict, and will be difficult to predict in the future."
Since its fiscal year 2003 SCO has lost a total of $39,858,000, a figure very close to the claimed $40 million cap on its legal fees. It begins to look as if it might be paying this $40 million to lawyers with no result other than to make the company unprofitable.