U.S. Magistrate Brooke Wells has put a serious dent in the SCOGroup's (NASDAQ:SCOX) hopes to squeeze some settlement cash out of IBM (NYSE:IBM). Wells dismissed 182 of the 294 claims SCO made against IBM in a lawsuit over who owns the rights to distribute and modify certain Unix code, and further noted that the accuser has provided very little proof of its allegations.
If you haven't heard of SCO before, the company used to be known as Caldera back when it was a Linux distributor. The company bought some rights to the System V Unix code base from Novell (NASDAQ:NOVL), changed its name, and basically started to sue some seemingly random companies for using that code as part of Linux systems without a proper code license. The targets include IBM, AutoZone (NYSE:AZO), Novell, and DaimlerChrysler (NYSE:DCX). In turn, Red Hat (NASDAQ:RHAT) has sued SCO for false advertising and deceptive trade practices.
This soap opera feels like it's had a longer run than Days of Our Lives, and it still doesn't seem anywhere near its conclusion. Many of the other cases are awaiting a final IBM ruling, though that case does look nearly complete to this humble observer. SCO claims that it's up to IBM to produce proof of the alleged licensing infringements, which is akin to asking a captured criminal to prove his own guilt.
Since October 2003, SCO has burned through about $20 million of cash annually; it has only $18 million left in its coffers now. To keep operations going, SCO is now claiming to innovate in the Unix business again, and going so far as to virtually bribe developers into attending its programming workshops.
The SCO story started as a serious threat to Linux businesses everywhere, but it has downgraded past nuisance status to mere sideshow now, and it's easily forgotten or ignored. The code in question has been through tons of close inspections, with nary an infraction to be found, and it is also continually rewritten. It's safe to say that if there was any unlicensed code to begin with, it's long gone by now.
If SCO really does have new, innovative technology to show off, the company would be well advised to drop the litigation strategy like a hot potato and turn back to its core business. A straight-up mea culpa would also be welcome. Then it'll be up to CEO Darl McBride and company to show that there's still life in UnixWare and that new EdgeBuilder development kit. The proof is in the pudding, Darl -- and we're hungry.
For more:
- Read up on the lawsuit's background.
- Rick Munarriz shows how SCO's shorts are bunching up.
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Fool contributor Anders Bylund owns no stock in the companies discussed this week. He is what he is because of what we all are, and Foolish disclosure is 100% licensed and free of tainted code.
