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Temporary Ceasefire Called Between SCO and BayStar

Temporary Ceasefire Called Between SCO and BayStar

Evidently there's a temporary ceasefire in effect between SCO and its habitually malcontent investor BayStar Capital, the VC that's publicly threatened to sue SCO more than once.

At last blush, a month or so ago, BayStar was gonna sue SCO over some "unresolved" and unexplained "dispute" after SCO announced that its repurchase of BayStar's preferred stock had closed. (Remember? BayStar wanted its money back.)

BayStar claimed the deal - it had agreed to trade its 40,000 preferred shares for 2.1 million shares of SCO common and $13 million in cash from SCO - hadn't closed even though its new shares had already been registered with the SEC, which made it, um, a done deal.

Well, as we said, it was never made clear what more BayStar wanted or why and SCO spokesman Blake Stowell claims now there have been no subsequent side deals, so BayStar must have dropped a few tranquillizers because SCO said Wednesday that BayStar had "requested and has now received its stock certificate" and a $13 million wire transfer. So it seems that tempest in a teapot is over.

As near as anyone could figure out BayStar had a burr under its saddle because SCO said it was going to make more money off its abhorred SCOsource Linux licensing scheme than thought - an odd position for a VC, perhaps, but SCO says BayStar is a short player on the market so therein may lie the clue.

SCO CEO Darl McBride said BayStar wanted the names of companies purportedly buying licenses. He basically told them to go suck an egg.

Anyway, SCO is supposed to report the July quarter that BayStar was reportedly upset about on Tuesday, August 31. SCO has previously said SCOsource will clear revenues in the six figures, which ain't much, but more than BayStar supposedly bargained for.

SCO's next big day is supposed to be September 15 when there's a court hearing on IBM's motion for a summary judgment - well, a partial one at any rate - that would trump SCO's 18-month-old $5 billion suit against it.

IBM is challenging the crux of the SCO suit, claiming that SCO has no contractual right to limit how IBM deposes of the AIX and Dynix IBM and its Sequent acquisition wrote simply because SCO counts 74,000 lines of Unix System V code in AIX and 78,000 lines in Dynix, less than 1% of all the AIX-Dynix code.

(Guess that means the judge has to decide whether a bit of SVR4 is as viral as the GPL.)

IBM also alleges that even if SCO could claim rights over the so-called AIX and Dynix derivative code, Novell, the previous owner of Unix, retained papal-style rights of dispensation over any such restrictions and has exercised them, freeing IBM from SCO's clutches.

In its 100-page motion IBM claims that "Although SCO for months perpetuated the illusion that it had evidence that IBM took confidential source code from Unix System V and 'dumped' it into Linux, it has become clear that SCO has no such evidence" so SCO's whole breach of contract case rests on IBM's use of derivative code. IBM denies putting any SVR4 source in Linux. It doesn't deny putting derivative code into Linux.

Stirring up a pot that boiled over long back, SCO has been telling the press that IBM doesn't have proper Unix licenses for AIX, that it discovered internal IBM e-mail buried in discovery that acknowledges that contention and so it might bring new charges against IBM. Whether that means filing a separate case or amending its current claims appears to be a matter of internal debate.

According to SCO, as a result of the joint SCO-IBM Monterey Project that was supposed to produce the definitive operating system for the Itanium, SCO gave IBM the right to use SVR4 but only on Intel machines. However, after Monterey hit the wall running, IBM took the SVR4, produced AIX 5L and put it on its proprietary PowerPC-based servers, positioned to compete with Sun and now a $4.5 billion business.

IBM needed SVR4 to make war on Sun, McBride has said, because the earlier AIX used SVR3 and Sun, which was using SVR4, was technically ahead.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at) or paperboy(at), and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments
Bad Poet 09/03/04 03:50:55 AM EDT

My name is Wallace
I quote quite a bit,
But I don't understand
Any of that sh*t!

GPL is a contract
I tell all the time,
But nobody's buying
Any of that slime.

I carry it proudly
The FSF card,
But GPL is for me,
Way, way too hard!

Anonymous 09/02/04 05:13:14 PM EDT

The point with UCITA (which is admitedly very unpopular because it attempts to introduce explicit contracts into licensing, therefore being borderline "preempted") is this (apart from actually being the law in two states):

How is it possible that legislators would consider the "impossiblity" that Daniel Wallace is incorrect in his interpretation that "every license is a contract"? They were either:

1. Paid to write that in UCITA to piss Daniel Wallace off.
2. Incompetent.
3. On drugs, drunk etc.

I'm thinking 1 and 2. What do you think?

What is this "non-contractual licensing" they speak of? Have they all gone mad? I cannot think of anything better, because we all know you have all the knowledge on all those issues, so it is axiomatic that you are correct.

See, the problem with you posts is that they lack basic common sense. But, don't take my word for it, who am I to challenge the great Daniel Wallace, right? Let's just wait and see how IBMs counterclaim on the infringement of their GPL-ed software by SCO plays out, OK?

In the meantime, focus on the questions...

Daniel Wallace 09/02/04 06:45:44 AM EDT

Ah yes UCITA...

Nope. True, only two states have adopted the proposed
software licensing law called the Uniform Computer Information Transactions Act, and it's opposed by
a wide range of legal, consumer and IT organizations.
And true, the American Bar Association just washed
its hands of this "model" legislation that's notorious
for giving software vendors a green light to
booby-trap their products."

Only forty eight states left to go!
Then of course there is that pesky Federal
Supremacy Clause in the Constitution...

Anonymous 09/01/04 09:38:25 PM EDT

Daniel Wallace at his best:

> "A license is governed by the laws of contract. See McCoy v. Mitsuboshi Cutlery, Inc., 67 F.3d 917, 920, 36 USPQ2d 1289, 1291 (Fed. Cir. 1995) ("Whether express or implied, a
license is a contract governed by ordinary principles of
state contract law.").

Sure it is in most cases. That's why you find a definition in UCITA that each reference to a "license" actually means "contract". There is no reason why two cannot be given in the same document either. This quote on its own means absolutely zero in relation to the GPL.

However, in the same law, UCITA, the law makers refer to "non-contractual intellectual property notices" in relation to free and open source software and say that they are not enforced through UCITA (which is the state law about contracts), but *only* through federal IP laws. I'd say law makers are confused, don't you think? Maybe they should ask you for legal advice next time?

You should answer all these questions before posting more nonsense and embarassing yourself in the process:

1. Does GPL allow sublicensing?
2. What is an "illusory promise"?
3. What is the meaning of the word "autorization"?
4. What are the elements of contract formation?
5. What is the true meaning of preemption?
6. Why is privity a requirement in contracts?

Or, you can just wait for IBM to do all that for you. Won't be long...

Pooky 09/01/04 01:28:31 PM EDT

To: Daniel Wallace,

OMG get a clue. Software Licenses are a conveyence of rights by a copyright holder to a licensee, NOT A CONTRACT. They are governed by US Copyright Law, not State Contract Law. Federal court vs. State court, HUGE difference there.

Perhaps you would like to explain to the crowd here how your reference cases provided are all filed in Federal court if they regard state-law covered contract claims?

Anonymous 09/01/04 12:53:15 PM EDT

Robbay (from the Don And Mike Show) has a word for it...


Daniel Wallace 09/01/04 10:49:09 AM EDT

>You know, the whole "GPL is a contract" theory? She simply >pasted his e-mail straight into the page, without checking >anything. This, of course, created a whole heap of
>nonsense being said about this non-issue.

"A license is governed by the laws of contract. See McCoy v.
Mitsuboshi Cutlery, Inc., 67 F.3d 917, 920, 36 USPQ2d 1289,
1291 (Fed. Cir. 1995) ("Whether express or implied, a
license is a contract governed by ordinary principles of
state contract law.").
JAZZ PHOTO, ET AL. v ITC , 264 F.3d 1094 (Fed. Cir. 2001)

The grosksters being experts on licensing law, should write
the The United States Court of Appeals for the Federal
Circuit and correct them on their intellectual property law
precedent... Tell them Pamela has over ruled The United
States Supreme Court precedent set in 1927 concerning
intellectual property licensing principles:

"No formal granting of a license is necessary in order to
give it effect. Any language used by the owner of the patent
or any conduct on his part exhibited to another, from which
that other may properly infer that the owner consents to his
use of the patent in making or using it, or selling it, upon
which the other acts, constitutes a license, and a defense
to an action for a tort. Whether this constitutes a
gratuitous license, or one for a reasonable compensation,
must, of course, depend upon the circumstances; but the
relation between the parties thereafter in respect of any
suit brought must be held to be contractual, and not an
unlawful invasion of the rights of the owner."
U.S. 236 (1927)

The Groksters should also write this guy and tell him
he's a moron too.

"In transactional relationships, property rights (including
intellectual property rights) may furnish background or
default rules that govern the transaction unless otherwise
agreed. From a contract law standpoint (as compared to
contracting practice), setting out background principles is
the primary function of intellectual property law. More
generally, the essence of any property right is that the
owner can transfer or withhold transfer of its property.
Transfers, to be effective, implicate contract law as the
basis for defining the value received and the interests
conveyed. "
Professor Raymond T. Nimmer

Anonymous 09/01/04 08:54:11 AM EDT

Remember when Maureen published Daniel Wallace's theory that the copyright
holder of the original work "bargains" with the copyright holder of the
modificatins so that the derivative work be published under the GPL? You know,
the whole "GPL is a contract" theory? She simply pasted his e-mail straight into
the page, without checking anything. This, of course, created a whole heap of
nonsense being said about this non-issue.
It is amazing how she never bothers to check the facts, even the ones that
can be found in just a few minutes. If she did, she would know that one does not
need to bargain for what one already has. Just check this text from the
copyright law, section 103(b):
(b) The copyright in a compilation or derivative work extends
only to the material contributed by the author of such work, as distinguished
from the preexisting material employed in the work, and does not imply any
exclusive right in the preexisting material. The copyright in such work is
independent of, and does not affect or enlarge the scope, duration, ownership,
or subsistence of, any copyright protection in the preexisting
Quite clearly, two distinct copyrights. So, the original author already
has rights in the derivative, he does not need to bargain for anything. It
is the law the gives him those rights, not any private agreement between him and
contributing author.
But that's obviously too hard to do. It easier to print nonsense, just like
she did here.
On the other hand, in IBM'S REPLY
NON-INFRINGEMENT - as text posted on Groklaw, PJ spells out 20+
bullet points that clearly prove how SCO say one thing in public and
another in court.
So, which one is true journalism? You be the judge.

Daniel Wallace 09/01/04 06:58:35 AM EDT

My name is Pamela, Queen of Queens:
Look upon my works, ye Mighty, and despair!
My valiant Groksters have vowed to slay
Any that would defy the truth of my way
They will skin my opponents to the bone
Warriors... too dumb to think on their own
My name is Pamela, Queen of Queens!

TomF 09/01/04 04:05:39 AM EDT

How can this person work for a Linux mag and at the same time shill for the anti-GPL clique?

DB Guy 08/31/04 01:04:18 PM EDT

Nobody takes this SCO shill seriously any more.

William Argyle Eckerslike 08/31/04 04:42:09 AM EDT

Total nads. Sack the author, get a journalist in instead.

David 08/30/04 05:12:42 PM EDT

It is sad, but you are a shining example of how even today, human beings can be bought and sold like slaves. And just as in those days, the only beneficiaries are the slavemasters. The individual is left with no dignity, no pride, no life.

Another way to look at it is that you are performing self-degrading acts in exchange for money. There's a name for that too.

Blinded 08/30/04 05:01:08 PM EDT

The polarization of this article is so blatently obvious, it's blindingly clear the author is not interested in facts, the truth, or presenting anything that resembles either.

Journalists, I am told, often attempt to get information from *BOTH* sides of the issue before they write an article.

No where in this article does the author ask BayStar, IBM, or anyone else but SCO for their side of the story.

This is called bad journalisim, and a lot of other nastier things that I won't repeat.

Bad Job Maureen, bad, bad, bad. Next time at least *try* to look like you aren't a paid mouthpiece.

Juan Casares 08/30/04 04:34:23 PM EDT

For some facts please take a look at Maureen O'Gara Records SCO's Latest Spin and Performs a Public Service

Juan Casares 08/30/04 04:26:14 PM EDT

For some facts please take a look at

Michael 08/30/04 03:55:24 PM EDT

If you don't bother to fact check the swill SCO puts out, you're not a journalist, you're a press agent, but you already know that don't you?
This is just getting embarrassing. They're going to start calling you Maura O'Garadio if this keeps up.

Cory 08/30/04 03:22:54 PM EDT

Your articles are always good for a laugh. No where else can I find such an out of touch, absolutly clueless author. How sad...

McLae 08/30/04 03:11:27 PM EDT

The SCO-IBM case is making all the SCO lawyers look bad. It is also making some 'journalists' look bad too.
When the readers know more about the subject than the writer..... Welcome to the Digital Age. (Get a real job)

Peter Verrey 08/30/04 03:05:31 PM EDT

Hi, I have a comment about this article, in particular to the
following paragraph:

"IBM is challenging the crux of the SCO suit, claiming that SCO has no
contractual right to limit how IBM deposes of the AIX and Dynix IBM
and its Sequent acquisition wrote simply because SCO counts 74,000
lines of Unix System V code in AIX and 78,000 lines in Dynix, less
than 1% of all the AIX-Dynix code.

(Guess that means the judge has to decide whether a bit of SVR4 is as
viral as the GPL.) "

I read the same summary judgment paper (from Groklaw of course, so you
already know my bend, probably).

IBM's statement is that they contributed code once to the joint
venture of SCO and IBM, and once again to Linux. They did not take the
code from the joint venture. But SCO claims because that code appeared
in the joint venture, they have all rights to it, which is ludicrous.

IBM did not ever give out any code that SCO wrote, nor did they give
out any code written for the SCO/IBM joint venture. They basically
gave code to two different projects, under different licenses.

You say under SCO's or your theory, that would make the SVR4 as viral
as the GPL, but this is plainly not so. People who license their code
under the GPL are free to license their original code under any
different license. What they CANNOT do is change the license on code
that was created under that "joint venture" between them and anyone
else who worked on their GPL licensed code. The GPL is simply not
viral in this way. There are numerouse cases of code released both as
GPL, and as BSD, and even in a closed fashion.

So my first challenge to you is: why can't IBM rerelease old code not
part of the joint venture?

My second challenge to you is: why can't a company who uses GPL
release their code under a different license later on?

bubba 08/30/04 02:53:32 PM EDT

IBM- SCO-there is no unix code in linux... these are contract claim. SCO to public- linux has tons of unix code! reality- IBM is gutting SCO case adn evertime SCO opens there mouth they only end up helping IBM. plus- IBM is suing SCO for copyright infringment.

baystar deal- screwed up to begin with. SCO (later) didn't want to go through with it because they would lose a ton of money. baystar forced the deal. got *most* of there cash back... SCO losted a big wad of cash.
SCO- SCO is under new ownership (i.e. Darl) they don't understand nor had anything to do with the previous owners actions.(current) SCO haven't the slightest clue.

Thad 08/30/04 02:49:02 PM EDT

Maureen O'Gara has shilled before. Go back and listen to the recording of
the last "earnings" call. Ms O'Gara gets the first question, and rambles on
almost completely incoherently about the German stock markets. She then asks a
few insincere follow-up questions, eventually taking up the first several
minutes of the Q/A period. SCO had released a couple of
similarly incoherent
press releases about the mythical short sellers in Germany illegally driving
down their stock price, and if you read (or ever better, listen to) the
transcript, it's clear that Ms O'Gara is participating in the diversionary
Quite sad, really. She sounds absolutely terrible in the conference call, as
if she was drugged or half-asleep. Certainly, her heart wasn't in it. If she
doesn't ask about these IBM memos tomorrow, I'll be shocked.

bubba 08/30/04 02:42:04 PM EDT

i want to be kind. i really do. unfortunalty- this is so biased and based on opinion (and not fact) that it virtually makes it hard to be nice about it. instead- i will simply give the facts.
Chrysler- case thrown out of court.
AutoZone- Judge to SCO- claims don't make sense- fix them or i thow case out of court.
Novell- Case about to be thrown out. hearing delayed. (this is a big one- if SCO loses- it means they don't own Unix(and they don't!)
(to be continued...)

Proof of the Pudding 08/30/04 02:41:43 PM EDT

Let not all forget SCOX make their second quarter '04 results public during a webcast tomorrow, Aug 31, at 1700 Eastern Time

apfejes 08/30/04 02:18:57 PM EDT

Does anyone else have a problem with a "journalist" using "gonna sue", and "ain't"? Rather than sound cute, this makes my skin crawl. What happened to the American education system?

R. Growler 08/30/04 02:18:28 PM EDT

I am quite sure that Maureen O'Gara's LinuxGram(TM) is well received in Maureen O'Gara World where she commits groundbreaking journalism before the rest of the press have gotten their SCOX on. In this magnificient world she has probably also won the coveted Maureen O'Gara's Award For Outstanding Journalism(TM) several times and is the author of the Maureen O'Gara's Times bestseller:"Fact checking, is it really worth it?"
Meanwhile in The Real World(TM):
You write about Linux, so because of Linux you have a job. Which again means you make a living of other peoples hard work! Would it kill you to just *try* to understand the GPL? and *try* to understand why *we* put *our* work under the licence *we chose*? Didn't think so. Well it does not matter, and neither do you.

Nix 08/30/04 01:42:30 PM EDT

Completely unfounded, those wild assertions. Try any of the following 3 stories picked from many dozens involving SCO over the past year:

  • IBM, One Last Time: "SCO Has No Evidence"
  • Microsoft *Was* Matchmaker Between BayStar & SCO
  • Linus' Top Ten SCO Barbs

  • Nnyan 08/30/04 01:23:01 PM EDT

    You really can't expect anything better coming from Linuxworld (which really should be M$FUDDToTheHighestBidderWorld). They spin, spin, spin the facts to ATTEMPT to put it in a positive light for SCOX and negative to FOSS. Either that or the REALLY can't read and relied on SCOX's "Linux of Idiots" book, otherwise why not ACTUALLY READ the GPL before you start spouting uninformed opinion?

    Richard 08/30/04 01:19:22 PM EDT

    One more article written about SCO by someone who doesn't know enough to check first. Here's a tip: type the query "sco ibm" into google, and see what the VERY FIRST link is to. It's just possible that doing so will provide that little boost in knowledge that saves the author from knowing less about the subject than everyone who reads the article. Personally, I'm a little surprised every time SCO finds another reporter willing to take their press releases at face value, but I guess that's just silly of me. I'm sure there's one born every minute.

    Pat 08/30/04 01:01:08 PM EDT

    Were you under the influence when you wrote that? None of it makes sense or is even factual.

    ex: The Baystar deal is considered closed. Done, finished. Not temporary. That's it, they got their stocks, they made their loss and now it's over.

    ex: The Sept 15th hearing isn't about copyright issues at all. IBM isn't attacking that yet at all. It's about trying to declare that IBM's linux activities are perfectly legit witch SCO actually tries to claim isn't really related to their case...not really the crux of the complaint now is it?

    ex: Go suck and egg???? Really?? To Baystar execs??? Surely you jest?

    ex: Baystar was pissed because SCO was planning to make TOO MUCH money off their license schemes??? Are you trying to get them investigated by the SEC??

    ex: IBM Used SRV4 Illegally??? It's already been well documented that SCO GAVE the code to IBM.

    You's better stop trying to write news and start READING might learn a thing or two.

    Jason Lotito 08/30/04 12:51:15 PM EDT

    "According to SCO, as a result of the joint SCO-IBM Monterey Project that was supposed to produce the definitive operating system for the Itanium, SCO gave IBM the right to use SVR4 but only on Intel machines. However, after Monterey hit the wall running, IBM took the SVR4, produced AIX 5L and put it on its proprietary PowerPC-based servers, positioned to compete with Sun and now a $4.5 billion business."

    According to SCO, they knew about this, and even supported AIX 5L on PowerPC-based servers.

    From SCO: "The next generation of AIX--AIX 5L--takes AIX to the next level with advanced technology, a strong Linux affinity and added support for IBM's Power and Intel's future IA-64 processor-based platforms, making it the most open UNIX operating system in the industry."

    Yawn 08/30/04 12:33:04 PM EDT


    (Guess that means the judge has to decide whether a bit of SVR4 is as viral as the GPL.)


    Do you still not get it? The copyright holder of GPL'd code can do what he/she likes with their *own* copyrighted code - just not with someone else's copyrighted (and GPL'd) code.

    Unlike SCO who seem to think that they own IBM's copyrighted code and can dictate to IBM how IBM can licence it's own code.

    What a bizarre train of logic you have, Maureen - I guess that's why you just attempt to write about source code, rather than contribute.

    rand 08/30/04 12:12:47 PM EDT

    No comments yet? Har! You just ain't worth the effort no more, Sweetheart!