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SCO will appeal the gutting of its lawsuit against IBM

Published July 14, 2006 12:00 am
This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Utah's SCO Group is appealing a federal magistrate's gutting of its $5 billion lawsuit against IBM, hoping to salvage the tens of millions of dollars it has spent litigating the case over the past three years.

The Lindon software company asked U.S. District Judge Dale Kimball to reverse a June 28 ruling by U.S. Magistrate Brooke Wells that struck down two thirds of SCO's allegations connected to Big Blue's purported leaking of SCO's Unix code into the freely distributed Linux operating system.

The appeal, technically an "objection" seeking Kimball's review, argues that Wells' reasoning confused SCO's contractual allegations over IBM's alleged export of the code with SCO's Unix copyright claims.

SCO attorney Brent Hatch said the appeal, which was filing electronically with the court clerk's office Thursday night, also contends Wells took out of context some of the case law she cited to support her ruling.

Wells had chastised SCO for willful failure to comply with repeated court orders to provide IBM details supporting 187 of its claims. The magistrate dismissed SCO's contentions that it needed access to IBM engineers to flesh out its suspicions that IBM had illegally contributed its intellectual property to Linux.

At the time, SCO spokesman Blake Stowell allowed that Wells had dealt his company's case scheduled for trial next February a heavy blow: "If two thirds of your case is stricken, then it is a pretty serious matter."

Still, he argued the remaining one third of the nearly 300 claims made by SCO still left a viable case, though details of many of those allegations remain under seal to protect proprietary data.

Rob Enderle, chief analyst for the Enderle Group, said odds were against Kimball supporting SCO's challenge to Wells' ruling and the Utah company's previous publicity campaigns trumpeting its allegations would not help it now.

"Given SCO's public behavior it is hard to imagine a judge anywhere on the planet

hasn't already formed a somewhat negative opinion on them, which clearly is problematic now," he said.

Still, Enderle speculated that Kimball could reinstate some of the dismissed allegations, making the appeal worth the effort.

Yankee Group analyst Laura DiDio said that appeal or not, "SCO has failed to provide specific evidence to support its claims that IBM purloined its Unix code [and] SCO is under increasing pressure to produce concrete evidence and do it quickly.

"Should the appeal fail, it will be a devastating blow to SCO," she added.

In the wake of Wells' decision, SCO stock has lost 37 percent of its value. Shares closed at $2.58 a copy Thursday, down 2 cents.


SCO versus IBM

* SCO sued IBM in March 2003, claiming its Unix code illegally showed up in IBM-distributed Linux applications. SCO wants $5 billion in damages.

* SCO is appealing a federal magistrate's decision striking two-thirds of its specific allegations in the case.

* If the appeal to U.S. District Judge Dale Kimball fails, the Lindon company will be left with a shell of the case it has spent tens of millions of dollars to bring.




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