SCO to Battle IBM and Novell in Court

A set of separate decisions came down on Friday in SCO’s litigation against IBM and Novell .

It would appear that both cases will continue well into the rest of the decade, with the IBM case extended and the Novell case given the go-ahead to continue.

In March, SCO asked the court to spin off into a separate trial several counterclaims IBM made in 2003 in its formal response to SCO’s suit. Judge Dale Kimball of the U.S.
District Court for the District of Utah Central Division ruled in favor of
IBM and denied SCO’s request.

SCO had also made a request of the court to change the Scheduling Order for
the case, due to the fact that IBM asserted 14 counterclaims after the
Scheduling Order had been entered. SCO also argued that IBM had caused
delays in the discovery process, making the current deadline of August 4, 2004 unachievable. For its part, IBM argued that the
delay would serve SCO’s “improper goal of maintaining fear, uncertainty,
and doubt in the marketplace concerning Linux and IBM’s (and many others’)
products.”

In this instance, Judge Kimball sided with SCO and amended the scheduling
order, though he noted that he would not change the order again, “absent
extremely compelling circumstances.” Under the new schedule, the Fast
Discovery phase now has a deadline of February 11, 2005, while expert
discovery must be completed by April 22, 2005. The five-week jury trial is
now not expected until November 1, 2005.

Also in March, Novell
moved
to dismiss its case with SCO, in which SCO alleged that Novell slandered its
title to UNIX by publicly stating that Novell owns the UNIX and
Unixware copyrights. These copyrights were allegedly sold to SCO’s predecessor, Santa
Cruz Operations, in 1995. Novell claims that copyrights were not transferred.
In this instance, the Judge ruled against Novell and denied the motion to
dismiss the case, but did grant the company “special damages.” SCO has now been instructed by the court to file
specific damages within 30 days against Novell, something it has not yet
done.

The legal bateles are starting to take a toll on SCO’s business. In its second quarter financial results conference call on Thursday, June 10, SCO CEO Darl McBride said that his company has the financial wherewithal to continue to spend $3 to $5 million per quarter on its legal cases.

SCO lost $15 million dollars last quarter and reported only $11,000 in
revenue from its SCOsource licensing program.