SCO v. IBM winds toward resolution

Last Updated on October 30, 2018 by Dave Farquhar

Slashdot reported yesterday that SCO v. IBM is back on. Well, it is, sort of. The case never was fully resolved, due to SCO running out of money and filing for bankruptcy. Groklaw has the details.

If this sounds vaguely familiar, I’ll try to refresh your memory.

SCO’s Microsoft connection

SCO’s tangled history includes helping to port Microsoft Xenix, a form of Unix, to Intel CPUs.

SCO was a Unix vendor, peddling an obsolete (and fast-fading) version of Unix that ran on x86-based PCs. Ironically, SCO Unix had its roots in Microsoft Xenix. It’s easy to forget that Microsoft was once a Unix vendor too. A small company called The Santa Cruz Operation helped Microsoft port Xenix to Intel CPUs, and after Microsoft decided to divest itself of its Unix business, it sold the product back to SCO. SCO eventually obtained the old AT&T Unix codebase from Novell, and sold all of its Unix properties in 2001 to Linux vendor Caldera.

In 2002, Caldera got a new CEO, Darl McBride. McBride changed the company’s name to SCO and proceeded to threaten legal action against anyone who used Linux.

SCO and Caldera Linux

People often forget that Caldera became SCO. And Caldera was at one time a top-tier Linux vendor. Caldera’s Linux distribution was actually the first one I ever played with, because for a time it was the easiest one to get up and running.

SCO and Digital Research

Caldera was a member of Ray Noorda’s Canopy Group. Ray Noorda was the founder of Novell, and The Canopy Group was his post-Novell project. If you look at the Canopy Group and Caldera in particular, you can see it ended up with a lot of Novell’s unfinished business. Caldera bought DR-DOS from Novell, then sued Microsoft and settled out of court for an undisclosed amount of money. A few years later, Caldera ended up with Novell’s Unix assets.

And Caldera had a habit of taking closed software and opening it. Caldera opened the source code for DR-DOS and for Digital Research’s CP/M and the GEM GUI. Then Caldera toyed with making Linux more Unix-like. Caldera even released some of the old Unix code under the GPL.

Enter the SCO v. IBM lawsuit

This is important, because not long after Darl McBride entered the scene, changed Caldera’s name to SCO and tried to bury the company’s own history with Linux, he accused IBM of putting Unix code inside Linux. In the late 1990s, IBM committed to spending a billion dollars to improve Linux in a very public fashion. Then it followed through in 2001. That was the basis of SCO’s lawsuit. This had problems from the start. IBM’s most valuable contribution to the Linux kernel, its journaling filesystem, came from OS/2 and not AIX. Perhaps that was to minimize the possibility of violating any copyrights.

There is AT&T-written code in Linux, but the piece that SCO released and clumsily redacted by changing the font to Wingdings turned out to have been released, twice, under BSD licenses. It was free for Linux contributors or anyone else to use. It probably was there long before IBM started adding code.

If any other AT&T code did end up in Linux, another very real possibility is that SCO put it in there itself, in its earlier incarnation as Caldera.

The money-making opportunity

Knowing all of this, I set out in the 2002-2003 timeframe to short-sell a bunch of SCO stock. Unfortunately my broker dragged his feet, and by the time we were ready to do it, the share price already had dropped to $5. I think when I started, it was trading for upwards of $20 per share. Short sales, if you’re not familiar with them, involve borrowing stock, selling it, then buying it back when the owner asks you to return it. If the stock drops in price, you keep the profit. If the stock rises in price, you lose the difference. Unfortunately, at $5 per share, there wasn’t a lot of profit left to take. The price dropped so quickly after the lawsuit that I think a lot of other people independently had the same idea as me. SCO was delisted when it hit 12 cents per share.

My theory on SCO v. IBM

I suspect one goal of the SCO v. IBM lawsuit was to convince IBM it would be cheaper to settle or to buy the company rather than fight the litigation. IBM didn’t take the bait. Interestingly, Gary Kildall, the author of CP/M, decided against suing IBM in 1981 for fear that IBM would just tie his company up in litigation until it ran out of money, effectively bleeding it to death. So Kildall never sued IBM. When the company that wound up owning his copyrights did, IBM did just what Gary Kildall’s lawyers feared.

Things might have gone better for SCO had it known more about its own history.

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