SCO’s AutoZone Case Still Idling

A judge has agreed to delay the proceedings of SCO Group’s copyright-themed lawsuit against AutoZone , a ruling that’s a partial win for both sides.

The lawsuit, filed against AutoZone in March, claims that, as a large user of Linux, the auto parts retailer “violated SCO’s UNIX copyrights by running versions of the Linux operating system that contain code, structure, sequence and/or organization from SCO’s proprietary UNIX System V code in violation of SCO’s copyrights.”

AutoZone had argued in a recent motion that any decision would be premature until a separate case over whether SCO has a claim to parts of Linux is settled. The judge agreed with the company, which argued that SCO Group must establish two facts: that it owns “valid and enforceable copyrights in Unix,” and that the Linux kernel “infringes those rights,” according to the filing.

“The resolution of each of these prior filed actions will significantly clarify, if not resolve, SCO’s claims against AutoZone,” the filing continued. “Staying SCO’s claims will thereby avoid duplicative litigation and save the parties and the court significant time and expense that may ultimately prove to be unnecessary.”

However, SCO Group officials don’t consider the ruling a setback. The judge in the case also ruled that SCO has 90 days to build up a case against AutoZone — 60 days for discovery (examination of facts and documents) and 30 days for depositions — at which time SCO can ask the court for a preliminary injunction against AutoZone. If the injunction isn’t filed, the case will be suspended until the IBM case is resolved.

The AutoZone case is just one of five around the country in which the SCO Group is involved. Each case, at least peripherally, touches on the company’s contention that IBM staffers improperly swiped and placed SCO’s UNIX code into select parts of the Linux kernel.

The Linux community is also fighting SCO. Linux distributor Red Hat filed a seven-count
lawsuit
against the owners of the UNIX System V source code in August
2003: two counts showing its Linux technology does not infringe on SCO
Group’s source code and five counts of SCO Group executives spreading
“unsubstantiated innuendo and rumor.”

IBM, which licensed some UNIX code from the SCO Group for its own operating
system, AIX, was originally
sued
for breach of contract. Lawyers for the plaintiff argued AIX
staffers
used some of its code to bolster the Linux code, thereby
violating its contract with the SCO Group.

The case was later split to include a copyright
infringement
suit after the company said it received U.S. copyright
registrations for Unix System V and UnixWare source code.

Novell , however, chimed in, saying that when it sold the UNIX code
to the SCO Group in 1995, it did not
include
the copyright registrations. The SCO Group quickly filed a slander
suit
against Novell.

The SCO Group also sued two of its customers — AutoZone and
Chrysler-Daimler
— for refusing to certify their systems were not using
Linux.

The cases, except for the IBM/SCO battle, have ground to a
standstill. Lawyers in the Red Hat/SCO case send updates on the IBM
case to the presiding judge, as will lawyers in the AutoZone v. SCO case
if SCO isn’t successful with a preliminary judgement against AutoZone.

Last month, the SCO Group was allowed
to extend the timeline of its case against IBM and proceed with its slander
suit against Novell, in two separate rulings.

Last week, the SCO Group elaborated on its slander lawsuit against Novell in
an amended complaint, asking the judge for a preliminary and permanent
injunction to force Novell to: transfer all Unix and UnixWare rights, titles
and interest, as well as the operating system and source code; Novell
retract any statements it made regarding ownership of the Unix and UnixWare
copyright; and restrict Novell from making any ownership claims in the
future. The SCO Group is also asking for a jury trial to determine an
amount for “actual, special and punitive damages,” the filing states.

In the IBM case, the SCO Group on July 6 issued a “Renewed Motion to
Compel,” saying the company did not provide adequate documentation from the
SCO Group’s initial request last year. The company is especially keen on
personal correspondence, e-mails and notes from Sam Palmisano, IBM chairman
and CEO, IBM board of directors and Irving Wladawsky-Berger, IBM’s vice
president of technology and strategy.

On Tuesday, Judge Dale Kimball allowed the SCO Group to file an over-length
memorandum to reply to a 19-page IBM memorandum explaining why it should not
have to produce the requested information. The SCO Group is asking to
extend it’s 28-page memorandum to reply to IBM’s reply.

The only thing that is settled thus far is that the expanding paperwork trail will
delay final resolution of the case for years, which puts the SCO Group in a
bad place financially. In its last quarter ending in April, the
company only posted $11,000 in revenues from its SCOsource licensing program
and belatedly released server updates to its UnixWare and OpenServer product line last
month.

Blake Stowell, a SCO spokesperson, said company executives are confident
they have the funding to make it through a years-long court process against
several companies.

“In our last earnings call we reported $50-plus million in cash still and
$50 million is more than plenty; if we had to completely depend on that
alone for the legal fees, then that would be enough,” he said. “We don’t
believe that we’ll actually have to burn through all that cash, though.”

He said he believes the company will return to profitability soon, saying
there has been interest in the ISV and reseller communities for
UnixWare 7.1.4 and that an update to its OpenServer, currently at version
5.0.7, is expected by the end of the year.

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