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Temporary Ceasefire Called Between SCO and BayStar

Temporary Ceasefire Called Between SCO and BayStar

Evidently there's a temporary ceasefire in effect between SCO and its habitually malcontent investor BayStar Capital, the VC that's publicly threatened to sue SCO more than once.

At last blush, a month or so ago, BayStar was gonna sue SCO over some "unresolved" and unexplained "dispute" after SCO announced that its repurchase of BayStar's preferred stock had closed. (Remember? BayStar wanted its money back.)

BayStar claimed the deal - it had agreed to trade its 40,000 preferred shares for 2.1 million shares of SCO common and $13 million in cash from SCO - hadn't closed even though its new shares had already been registered with the SEC, which made it, um, a done deal.

Well, as we said, it was never made clear what more BayStar wanted or why and SCO spokesman Blake Stowell claims now there have been no subsequent side deals, so BayStar must have dropped a few tranquillizers because SCO said Wednesday that BayStar had "requested and has now received its stock certificate" and a $13 million wire transfer. So it seems that tempest in a teapot is over.

As near as anyone could figure out BayStar had a burr under its saddle because SCO said it was going to make more money off its abhorred SCOsource Linux licensing scheme than thought - an odd position for a VC, perhaps, but SCO says BayStar is a short player on the market so therein may lie the clue.

SCO CEO Darl McBride said BayStar wanted the names of companies purportedly buying licenses. He basically told them to go suck an egg.

Anyway, SCO is supposed to report the July quarter that BayStar was reportedly upset about on Tuesday, August 31. SCO has previously said SCOsource will clear revenues in the six figures, which ain't much, but more than BayStar supposedly bargained for.

SCO's next big day is supposed to be September 15 when there's a court hearing on IBM's motion for a summary judgment - well, a partial one at any rate - that would trump SCO's 18-month-old $5 billion suit against it.

IBM is challenging the crux of the SCO suit, claiming that SCO has no contractual right to limit how IBM deposes of the AIX and Dynix IBM and its Sequent acquisition wrote simply because SCO counts 74,000 lines of Unix System V code in AIX and 78,000 lines in Dynix, less than 1% of all the AIX-Dynix code.

(Guess that means the judge has to decide whether a bit of SVR4 is as viral as the GPL.)

IBM also alleges that even if SCO could claim rights over the so-called AIX and Dynix derivative code, Novell, the previous owner of Unix, retained papal-style rights of dispensation over any such restrictions and has exercised them, freeing IBM from SCO's clutches.

In its 100-page motion IBM claims that "Although SCO for months perpetuated the illusion that it had evidence that IBM took confidential source code from Unix System V and 'dumped' it into Linux, it has become clear that SCO has no such evidence" so SCO's whole breach of contract case rests on IBM's use of derivative code. IBM denies putting any SVR4 source in Linux. It doesn't deny putting derivative code into Linux.

Stirring up a pot that boiled over long back, SCO has been telling the press that IBM doesn't have proper Unix licenses for AIX, that it discovered internal IBM e-mail buried in discovery that acknowledges that contention and so it might bring new charges against IBM. Whether that means filing a separate case or amending its current claims appears to be a matter of internal debate.

According to SCO, as a result of the joint SCO-IBM Monterey Project that was supposed to produce the definitive operating system for the Itanium, SCO gave IBM the right to use SVR4 but only on Intel machines. However, after Monterey hit the wall running, IBM took the SVR4, produced AIX 5L and put it on its proprietary PowerPC-based servers, positioned to compete with Sun and now a $4.5 billion business.

IBM needed SVR4 to make war on Sun, McBride has said, because the earlier AIX used SVR3 and Sun, which was using SVR4, was technically ahead.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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