SCO Group’s Private Equity Plan – An Analysis

SCO Group is trying to enforce UNIX rights. The following lawsuit details summarize the issues:
  1. SCO vs. IBM – The March 2003 lawsuit claims IBM devalued SCO’s version of the Unix operating system. The primary allegation is that IBM applied SCO’s intellectual property to the Linux operating system code base. The lawsuit stems from IBM’s admission of contributing AIX code to the Linux kernel. AIX is a derivative of Unix System V (SVRx) and SCO claims to have rights on SVRx. Most of SCO’s evidence was rejected by the judge in 2006.
  2. SCO vs. Novell – The Jan 2004 lawsuit, in response to Novell registering certain Unix copyrights, was based on SCO’s assumption that they owned Unix. Novell rejected this claim publicly and stated they never sold Unix copyrights as part of a 1995 asset purchase agreement. On August 2007, Novell was ruled as the owner of Unix and UnixWare copyrights.
  3. Red Hat vs. SCO – Red Hat’s August 2003 lawsuit pushed for a permanent injunction of SCO’s Linux campaign and a number of declaratory judgments that Red Hat was not in violation of SCO’s copyrights.
  4. SCO vs. DaimlerChrysler and SCO vs. AutoZone – These two lawsuits filed on December 2003 and March 2004 respectively alleged their use of Linux violated SCO’s copyrights.
The present situation:

The down hill run started for SCO Group after a federal judge ruled Novell, Inc as the owner of UNIX and UnixWare copyrights in August 2007. The stock went down steadily from $1.56 per share to a low $0.05 per share on January 18 2008. The valuation highlights the fact that none of SCO’s lawsuits are relevant as long as they do not own Unix copyrights and it is all but certain that shareholders stand to gain nothing as bankruptcy proceedings get under way. The shares went up six times to $0.30 per share following a surprise announcement about a private equity investment of up to $100M on February 13, 2008.

Outlook:

One of the stated objectives of the private equity plan is to see the lawsuits ‘through to their full conclusion’. Translated, the idea is for the private company to pursue a payoff from IBM, Novell, and others in return for not pursuing the legal route any further. At the right price, this may prove to be an attractive prospect for these companies. A closure to this issue would be a welcome rain to the Linux community as well. Even though Novell has stated publicly that it has no intention to pursue Unix copyrights, it needs to be ascertained that Novell as the rightful owner of the Unix copyright will not trace SCO’s steps. IBM and others may have an interest in seeing the lawsuits through to closure with SCO only if they are spared of similar lawsuits with other firms in the future. An agreement with Novell and SCO group brokered by IBM where Novell and SCO group agree to waive copyrights on Unix is the most probable outcome.

No comments :

Labels

401k ( 15 ) Abad Turtle Beach ( 1 ) Abrams Capital Management ( 5 ) Acoustic Electric Guitars ( 1 ) Acoustic Guitars ( 1 ) ACT ( 1 ) Activist ( 4 ) Address Change ( 2 ) Advanced Placement ( 4 ) air asia ( 2 ) airlines ( 2 ) Akre Capital Management ( 18 ) Alex Roepers ( 5 ) AP ( 4 ) apartments ( 2 ) Appaloosa ( 15 ) ARIUS ( 1 ) Arlington Value Capital ( 3 ) Atlantic Investment Management ( 5 ) Ayemenem ( 1 ) Bangalore ( 3 ) Bangkok ( 2 ) Bannerghatta National Park ( 1 ) barbuda ( 2 ) Battery Park ( 1 ) Baupost ( 2 ) Baupost Group ( 17 ) bay area ( 2 ) BDCs ( 3 ) Benjamin Graham ( 2 ) Benjamin Graham Model ( 2 ) Berijam Lake ( 2 ) Berkshire Hathaway ( 30 ) best sites ( 9 ) Bill & Melinda Gates Foundation ( 13 ) Bill Ackman ( 19 ) Bill Gates ( 14 ) Blue Ridge Capital ( 13 ) Blum Capital Partners ( 12 ) books ( 4 ) Boone Pickens ( 2 ) BP Capital Management ( 2 ) Brave Warrior ( 3 ) Brave Warrior Advisors ( 12 ) british honduras ( 2 ) Bruce Berkowitz ( 19 ) Bruce Fund ( 12 ) Camcorders ( 3 ) canada ( 4 ) cancun ( 3 ) CANROYs ( 7 ) Cantillon ( 12 ) carl icahn ( 9 ) Carl Ichan ( 8 ) casino ( 3 ) Casio ( 2 ) CBRE ( 2 ) CEF ( 2 ) Charles Akre ( 15 ) Charlie Munger ( 13 ) Chase Coleman ( 13 ) Chou Associates ( 18 ) Christmas gifts ( 7 ) Christopher H. Browne ( 7 ) Chuck Akre ( 13 ) Cisco ( 2 ) Class Action Settlements ( 2 ) CLEP ( 1 ) Coatue Management ( 13 ) Cochin ( 2 ) coin collecting ( 266 ) collectibles ( 266 ) Consumer Product Reviews ( 29 ) cook islands ( 2 ) coonoor ( 2 ) Covered Calls ( 2 ) credai ( 4 ) Daily Journal ( 13 ) Dalal Street ( 8 ) Dan Loeb ( 10 ) DAT ( 1 ) David Abrams ( 5 ) David Einhorn ( 22 ) David Swensen ( 17 ) David Tepper ( 15 ) David Winters ( 15 ) DCF ( 2 ) Digital Piano ( 3 ) Dinakar Singh ( 13 ) Donald Yacktman ( 10 ) dry bulk shipping ( 2 ) Duquesne ( 18 ) Education ( 37 ) Edward Lampert ( 14 ) Egerton Capital ( 13 ) Egypt ( 3 ) Elementary Education ( 10 ) Elementary School Textbooks ( 5 ) eReaders ( 2 ) Eric Mindich ( 13 ) ESL Investments ( 9 ) ESPP ( 6 ) ETF ( 2 ) ETN ( 2 ) Eton Park ( 13 ) Everyday Musings ( 58 ) Exam Prep ( 7 ) Exiting the rat race - how to? ( 19 ) EXPLORE ( 1 ) Fair Value Estimates ( 4 ) Fairfax Financial ( 4 ) Fairfax Financial Holdings ( 14 ) Fairholme ( 19 ) Fairpointe ( 13 ) Family Office ( 5 ) FD Laddering ( 1 ) Financial Independence ( 93 ) Fisher Asset Management ( 10 ) Flash Camcorders ( 3 ) flat ( 4 ) flats ( 2 ) Flip ( 3 ) Francis Chou ( 18 ) free ( 17 ) frugal ( 3 ) Frugal Living ( 34 ) Fund Holdings ( 755 ) futures ( 2 ) FVE ( 2 ) gambling ( 3 ) garmin ( 2 ) Genting ( 2 ) george soros ( 21 ) giveaway ( 15 ) Glenn Greenberg ( 16 ) Glenview Capital ( 10 ) GMAT ( 1 ) Google ( 2 ) Gotham Asset Management ( 7 ) gps ( 4 ) GRE ( 1 ) Greenlight Capital ( 22 ) Guitars ( 3 ) Half Marathon ( 2 ) Hawaii ( 2 ) Hedge Funds ( 774 ) HELOC ( 1 ) High School Education ( 7 ) High School Textbooks ( 6 ) HOA ( 3 ) hobby ( 17 ) holiday shopping ( 7 ) Holidays ( 3 ) Holyland ( 11 ) Home Improvement ( 2 ) home ownership ( 5 ) Homes ( 18 ) Homeschool ( 18 ) Houses ( 2 ) Housing ( 3 ) Hykon ( 2 ) Ian Cumming ( 15 ) Icahn Enterprises ( 6 ) india real estate ( 5 ) Infinuvo ( 6 ) Insurance ( 2 ) invesco ( 17 ) investing strategies ( 2 ) Investment Portfolio ( 94 ) Investment Research ( 10 ) Investments ( 7 ) iRobot ( 5 ) Irving Kahn ( 10 ) israel ( 5 ) Jason Maynard ( 10 ) Jefferies ( 2 ) Jeffrey Bruce ( 13 ) Jeffrey Ubben ( 12 ) Jerusalem ( 2 ) Jim Chanos ( 13 ) Joel Greenblatt ( 7 ) John Armitage ( 13 ) John Griffin ( 13 ) John Paulson ( 17 ) Joho Capital ( 15 ) Jordan ( 3 ) Joseph Steinberg ( 9 ) Julian Robertson ( 4 ) Kahn Brothers ( 10 ) Kakkanad ( 4 ) Kanyakumari ( 2 ) Kawai ( 2 ) Ken Fisher ( 10 ) kerala real estate ( 5 ) Kids ( 49 ) Kids Yamaha ( 3 ) Kindle ( 2 ) kochi ( 8 ) Kodaikanal ( 2 ) Korg ( 2 ) Kraft ( 2 ) Kuala Lumpur ( 2 ) KWA ( 2 ) Kynikos ( 13 ) laptop ( 5 ) Larry Robbins ( 10 ) Las Vegas ( 2 ) Leon Cooperman ( 14 ) Leucadia ( 2 ) Leucadia National ( 13 ) Lone Pine Capital ( 9 ) long ( 6 ) long call ( 2 ) long puts ( 3 ) Lou Simpson ( 15 ) LSAT ( 1 ) Mahabalipuram ( 2 ) Malaysia ( 3 ) Marathon ( 2 ) Mark McGoldrick ( 10 ) Markel ( 13 ) Mason Hawkins ( 4 ) MCAT ( 1 ) Melinda Gates ( 7 ) memorabilia ( 266 ) MFP Investors ( 13 ) Michael Dell ( 15 ) Michael Price ( 13 ) Middle School Education ( 4 ) Middle School Textbooks ( 3 ) Mini Notebook ( 2 ) MODUS ( 1 ) Mohnish Pabrai ( 21 ) mortgage ( 2 ) Mount Kellett ( 10 ) MSD Capital ( 15 ) Music ( 6 ) Mutual Funds ( 5 ) mysore ( 2 ) Nelson Peltz ( 9 ) Netbook ( 3 ) Notebook ( 2 ) numismatics ( 266 ) O-Duster ( 1 ) Oahu ( 2 ) offers ( 2 ) Ole Andreas Halvorsen ( 10 ) Omega Advisors ( 14 ) online tax ( 3 ) ooty ( 2 ) Options ( 4 ) Pabrai Fund ( 17 ) passive income ( 7 ) pattaya ( 2 ) Paulson & Company ( 7 ) Paulson and Company ( 9 ) PEG ( 2 ) Pershing Square ( 19 ) Phil Fisher ( 5 ) philately ( 283 ) Philippe Laffont ( 13 ) Piano ( 9 ) PLAN Test ( 1 ) portfolio ( 4 ) Prem Watsa ( 17 ) product reviews ( 13 ) Property Taxes ( 2 ) PSAT ( 1 ) R2I ( 24 ) R2I Finances ( 3 ) R2I Housing ( 5 ) Raising Kids ( 41 ) Rat Race ( 15 ) RBS Partners ( 12 ) reading ( 5 ) real estate ( 6 ) Reducing Expenses ( 2 ) REIT ( 3 ) Retirement Portfolio ( 9 ) Reviews ( 81 ) Richard C. Blum ( 12 ) Robert Bruce ( 13 ) Robert Karr ( 15 ) Robotic Vacuum ( 4 ) Roland ( 2 ) Roomba ( 10 ) schooling ( 2 ) Sears ( 9 ) seeking alpha ( 2 ) Services - Reviews ( 33 ) Seth Klarman ( 19 ) Shipping ( 5 ) Shopping ( 3 ) short ( 5 ) short calls ( 2 ) short put ( 2 ) short puts ( 2 ) short selling ( 7 ) Ski ( 5 ) Sled ( 4 ) Solar Stocks ( 13 ) Soros Fund Management ( 14 ) Southeastern Asset Management ( 4 ) Southwest ( 2 ) spin-offs ( 2 ) SQ Advisors ( 15 ) stamp collecting ( 283 ) Stanley Druckenmiller ( 18 ) Statue of Liberty ( 2 ) Stephen Mandel ( 9 ) Stock Analysis ( 84 ) Stock Investments ( 4 ) Stock Portfolio Updates ( 6 ) stocks ( 3 ) summer ( 2 ) tax ( 5 ) TaxAct ( 2 ) TaxCut ( 1 ) Teacher's Editions ( 5 ) Technology ( 4 ) Test Prep ( 11 ) Thailand ( 3 ) Thekkady ( 2 ) theme park ( 2 ) Third Point ( 10 ) Thomas Gayner ( 13 ) Thyra Zerhusen ( 13 ) Tiger Cub ( 28 ) Tiger Global ( 14 ) Tiger Management ( 12 ) Time Square ( 2 ) TOEFL ( 1 ) TPG-Axon ( 13 ) Travel ( 278 ) Travel Reviews ( 82 ) Trian Fund Holdings ( 9 ) trip report ( 21 ) TurboTax ( 3 ) Tweedy Browne ( 10 ) Vacations ( 28 ) value investing ( 12 ) ValueAct ( 5 ) ValueAct Holdings ( 6 ) Vancouver ( 2 ) Video ( 3 ) Viking Global ( 10 ) Wallace Weitz ( 10 ) Warren Buffett ( 30 ) Wayanad ( 4 ) Weitz Investment Management ( 9 ) wilbur ross ( 17 ) William Von Mueffling ( 12 ) Wintergreen Advisors ( 15 ) Yacktman Asset Management ( 10 ) Yale Endowment ( 17 ) Yale University ( 7 ) Yamaha ( 7 ) YDP ( 1 ) YPG ( 1 )