| SCO takes body blows, stock tanks |
Dec. 01, 2006
SCO took big hits this week -- both in the courts, and in the stock market. Regardless of what SCO's management decides to do, the company's stockholders seem to have finally had enough of the troubled company.
First, on Nov. 29, U.S. District Court Judge Dale Kimball affirmed Magistrate Judge Brooke Wells's June 28, 2006 Order. In that order, Wells dismissed 188 of SCO's claimed 294 examples of IBM contributing Unix code to Linux.
At the time, Wells wrote, "Certainly if an individual was stopped and accused of shoplifting after walking out of Neiman Marcus, they would expect to be eventually told what they allegedly stole. It would be absurd for an officer to tell the accused that 'you know what you stole I'm not telling.' Or, to simply hand the accused individual a catalog of Neiman Marcus' entire inventory and say 'it's in there somewhere, you figure it out.'"
Kimball wasn't half so colorful, but he did write, "The court finds that, even under a de novo [an in-depth review that can't be appealed] standard of review, the Magistrate Judge's June 28, 2006 Order is correct. The court finds that SCO failed to comply with the court's previous discovery-related Orders and Rule 26(e), that SCO acted willfully, that SCO's conduct has resulted in prejudice to IBM, and that this result -- the inability of SCO to use the evidence at issue to prove its claims -- should come as no surprise to SCO. In addition, the court finds that neither particularized findings on an item-by-item basis nor an evidentiary hearing is required to make these determinations. The court, therefore, affirms and adopts the Magistrate Judge's June 28, 2006 Order in its entirety."
Or, in English: the vast majority of SCO's claims are once and for all kaput.
At the same time, Kimball ruled that the SCO vs. Novell case should be heard before the SCO vs. IBM case. This case had been set to happen on Sep. 17, 2007, but it appears it may now be heard in the summer of 2007.
The reason for this change is that Novell claims that when SCO bought Unix, it did not buy the operating system's IP (intellectual property). Therefore, if Novell is correct, SCO never had any grounds to make any of its claims against Linux.
Then, on Nov. 30, things continued not to go SCO's way when Wells ruled that SCO could not have its experts allege new claims against IBM. Back in June, SCO had tried to add new claims in its case against IBM.
IBM's lawyers replied (PDF link), "Long after the deadline for disclosing its allegations, SCO seeks by indirection to change them. In three of its eight expert reports, SCO alleges the misuse of material nowhere identified in the Final Disclosures, the very purpose of which was to fix the parties' allegations once and for all last year. ... SCO's expert reports should be stricken insofar as they make new, previously-undisclosed allegations of misconduct."
Judge Wells agreed with IBM. SCO can now try to follow the matter up with Kimball, if they wish.
As if all these legal problems weren't bad enough, on Dec. 1, SCO's stock plummeted 38 percent on very heavy trading, hitting a new low of $1.22 per share. Leading up to Friday's plunge, the company's stock had been gradually declining since June, when it was around $5.
-- Steven J. Vaughan-Nichols
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