Judge Kimball Rules at Last! - Updated(Groklaw)

This commentary will primarily address the response coming from SCO in regard to the decision. The above Groklaw article provides the comment from SCO.

It may be that SCO is mainly interested in getting a jury trial since Judge Kimball's decision favors SCO significantly. And that presents the rub for SCO.

If they do appeal, so too will Novell. And if SCO does get a trial by jury, the decision by the jury may not be so favorable to SCO. And if the burden of proof on Novell is fully understood, Novell may do a much better job next time.

I have already made comment on the fact that the amount awarded to Novell is so low that I find it unlikely that Novell will accept that amount and ratify the SUN license. It is more likely in my way of thinking that Novell will in the end refuse those funds, void the SUN license and call them up (just to see if they actually do want to legally open source Solaris). Hey, if you open source technology which is not yours and you have not be so licensed, you are in serious trouble. And unlike SCO, SUN does have a lot of cash to lose if they are wrong. So the last thing that SUN wants, is to be sued by Novell for all damages resulting from open sourcing Solaris.

So that really leaves a couple of interesting questions out there.

Will SCO actually file an appeal of the Kimball decisions or sit on it and pay the $2.5 million? Or, perhaps I should say tender the $2.5 million to Novell. As I made comment earlier, if SCO acted without authority, Novell is not obligated to take the $2.5 million much less ratify the license. If it was $20 million they might be tempted. But, $2.5 million is chump change. A simple phone call to SUN's lawyers by Novell lawyers is very likely to scare up more than that.

If SCO does appeal not only will Novell appeal as well but any new trial (if that is what SCO really wants) might mean a greater judgment for Novell.

SCO is in bankruptcy. And they are losing money. They are also losing customers right and left. Who in their right mind would stick around to see if SCO is going to answer support calls?

If SCO's UNIX business has any chance at all of succeeding in the future it has got to get beyond the current SCO management. It is possible that some deal might mean SCO could get out of bankruptcy. But, there is no way the current management could ever make a go of it. So the assets have to be sold or the current management has to be terminated. Or both.

Remember that IBM and Red Hat are just waiting in the wings looking to see if SCO is going to have any blood left after Novell is through. And it appears that SCO now may be able to pay off Novell and take their chances with IBM, Red Hat, AutoZone? and those other SCOSource licensees that were defrauded.

I am not convinced that SCO will appeal at all. If they do, they could end up a lot worse than they are now. Remember that Novell could abandon the claim of the $2.5 million from SCO and just call up SUN for that friendly/not so friendly chat. And the way SCO has been spending money lately, they really need to keep that $2.5 million if they can.

Chances are that Novell will take this decision back to the bankruptcy court and ask for that constructive trust on the $2.5 million. And that could hurt SCO in the pocketbook even if Novell later decides not to take the cash home. Any money in a constructive trust would be set aside pending the final resolution of the Utah litigation. And that may be awhile. But, if Novell makes the petition, the BK court may decide that setting that money aside is justified now pending final resolution of the appeals and pending final resolution of the bankruptcy.

SCO may appeal even though it is not in their best interests. Entering these lawsuits and starting up the SCOSource license program never was in their best interest and they did that anyway. Besides Microsoft (and SUN) have financed this play and they may still think that pursuing litigation against Linux is in their interests(Microsoft's interests and SUN's interests). It has never been shown to be in SCO's best interest. SCO has been going down hard and is in bankruptcy because of it. But, the SCO lawyers may have been taking their cues not from SCO management but those who coughed up the money for the fees. And no doubt Microsoft hopes this litigation lasts forever.

So it is possible that SCO will not appeal and tender some cash to Novell. If Novell does not take it, SCO may have to give it back to SUN. SUN and Novell can come to any agreement they want. Of course as long as SCO remains in bankruptcy any payment to SUN or Novell by SCO would have to be approved by the bankruptcy judge. But, $2.5 million is doable if they act soon enough? For Novell it might be from the front of the line and for SUN the back of the line. Or, at least in the line with all of the other creditors.

And do not count out those defrauded SCOSource licensees. Judge Kimball noted they got no technology for their money. And they did not. No product at all. Just a release of legal claims. Fraudulent legal claims as it turns out. So maybe they could use some of that money if it comes back?