Poker and Shell Games in the SCO Suit

The tension in the room is as thick as quicksand. The smoke gets heavier by the hour, and with each poker hand, the players wonder how long they can hold out. Who will hold? Who will fold? Who is just bluffing? One by one, they drop. The ongoing legal wrangling between SCO, IBM, Novell, AutoZone, DaimlerChrysler, Red Hat and parties-to-be-named-later has much in common with a poker game.

There is bluffing, the stakes are high, the player who wins the pot might not be the one with the highest cards, and only after the cards are laid down can the players tell whether they are winners or losers. Eventually, the winner might not need the best hand, just the ability to last the longest and bluff well, because litigation is not cheap.

Take, for example, AutoZone. It makes car parts. It can make car parts with anyone’s operating system. If it turns out that SCO holds the Unix copyright card and the Linux-infringes-Unix card, AutoZone likely will ante up, fold and use another operating system. If not, AutoZone will get to keep its chips, but it doesn’t need to win this hand to stay in business.

Then again, maybe it’s not like poker. In poker, we know how many cards are in the deck, we know whose turn comes next, and the spectators won’t be accused of illegally copying the cards. In court, there are arguments over who is holding what, and now there are several disputes over whose turn it is to bet or pass. Maybe it’s more like a shell game. Two shell games, actually.

The Unix Shell Game

The first shell game is the Unix shell game. Under which shell do we find the Unix copyright? A group of researchers at AT&T’s Bell Laboratories first developed Unix in 1969, so they started with the Unix copyright. The idea was to design an operating system that was simple and would allow reuse of code. Boy, did it get reused. ric Lvnez put together a diagram showing the evolution of various versions of Unix, Linux and other generic *nixes. That chart occupies 17 pages when printed out. Some of its branches are clearly derivative, but others are not (depending on who you talk to).

Eventually, Bell Labs transferred the rights to Unix to Unix Labs and then on to Novell in 1993. In 1995, Novell licensed Unix system source code to The SCO Group. Caldera, a Unix distributor, bought the Unix development part of The Santa Cruz Operation (SCO) in 2000, including the rights to certain portions of the original Unix operating system code. Were you watching?

Did the copyright move from the Novell shell to the SCO-Caldera shell? Maybe only part of it moved. Novell claims that in the transfer of rights to SCO, it reserved the right to grant licenses to allow people to use Linux. It matters what’s under the shells because IBM says Linux does not include any SCO code or use any SCO trade secrets and, even if it does, it got a license to do so from Novell. Novell says it retained the right to grant such licenses, which SCO disputes.

Unfortunately for the Spectators

That’s the first shell game. Unfortunately for the spectators, turning over a few shells is not going to reveal the answer. Boxes of paper and perusals of long asset-transfer agreements will be required to find the answer.

Now we come to the second shell game. Watch closely. SCO sues IBM in Utah. IBM sues SCO back in the same proceeding, using what is known as counterclaims. Red Hat then sues SCO in Delaware. SCO sues Novell in Utah. SCO sues AutoZone in Nevada and DaimlerChrysler in Michigan.

Red Hat’s claims and IBM’s counterclaims — or most of them — are in the form of “declaratory judgments.” Unlike a judgment for money damages, in which a court orders the defending party to give money to the complaining party, a complainant seeking a declaratory judgment just wants the court to make a declaration in its favor, presumably one that will give the complainant some measure of peace.

Red Hat wants the Delaware court to declare that Red Hat does not infringe on SCO’s copyrights based on its use and distribution of Linux. IBM’s tenth counterclaim, for example, requests that the Utah court declare that IBM’s Linux activities do not infringe any of SCO’s copyrights. If the court were to make that declaration, it would buy considerable peace for IBM.

Throwing Out the Case

SCO asked the Delaware court to throw out the Red Hat-SCO case or at least stay it — legal terminology for “put it on hold” — arguing that the SCO-IBM case should go first. The Delaware court granted a stay. AutoZone asked the Nevada court to stay its case until either the SCO-IBM case or the SCO-Novell case gets resolved. SCO opposed AutoZone’s request. That brings us up to May 2004.

IBM, sensing that it has won the first shell game, recently filed a motion for partial summary judgment so that some of the shells can be turned over and the game can continue. The legal details are ugly, but IBM filed a motion for partial summary judgment on its tenth counterclaim. It is partial because IBM is not asking the court to rule on the entire case or even to rule on any of IBM’s other nine-plus counterclaims.

It is a summary judgment because IBM is asking the court for the ruling before a trial. Essentially, IBM is arguing that even if everything SCO has presented to the court so far is assumed true, SCO still loses because it hasn’t put forth anything to indicate it could win the case. If granted, IBM will get a card (figuratively) that says, “IBM’s Linux activities do not infringe any of SCO’s copyrights,” and will continue the game holding that card.

Naturally, SCO is opposing IBM’s motion for partial summary judgment. However, SCO also argues, in its own motion, for a stay of IBM’s motion pending the outcome of the AutoZone case. Did you see the shells move?

Watching the Shell Shuffle

Earlier, when Red Hat requested that the stay in its case be removed, SCO opposed that request in Delaware, arguing that the Red Hat-SCO case should remain stayed because the SCO-IBM case would resolve all the issues raised in the Red Hat-SCO case. So, SCO gets Red Hat stalled by arguing that IBM needs to go first, then argues in Utah that IBM actually doesn’t need to go first; AutoZone does.

Now, the smart lawyers for IBM were watching the shells closely and noticed this shuffle. In opposing SCO’s motion to stay IBM’s motion, IBM told the Utah court that “SCO’s motion is in fact just another move — which should not be tolerated — in the litigation shell game employed by SCO to avoid judicial review of its assertions of copyright infringement.” Folks, it’s the metaphors that keep this case interesting.

Whether you are watching a poker game or shell games, my best advice is to keep your wallet in your pocket.

For something that was supposed to be free for everyone, the showdown over open-source software is getting quite expensive. SCO is betting that the threat of litigation will force companies to pay licensing fees. SCO does not want the shells to stop moving because if companies see that there are no coins under any of the shells, the game will be over. Or, to put it another way, when the cost of litigation finally gets too high, one of the players will surely blink. When that player folds, the winner can cash in the chips.

Phil Albert, a LinuxInsider columnist, is a patent attorney and partner with the San Francisco office of the intellectual property law firm Townsend and Townsend and Crew LLP.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

LinuxInsider Channels