Thursday, February 14, 2008

SCO Rises From the Dead with $100M

The Wall Street Journal reported today that the SCO Group Inc. ("SCO") raised $100M to go private and exit bankruptcy. The funding came from the private equity firm Stephen Norris Capital Partners and partners in the Middle East. The Journal reports that Stephen Norris Capital Partners and their partners will have a controlling interest in SCO.

The announcement is puzzling because SCO's principal assets were its UNIX rights (the scope of which are unclear). Yet, a court decision in August rejected all of SCO's claims to enforce copyrights in Linux that it claimed to own. The court rejected both SCO's contract claims for breach of the UNIX license agreements against existing UNIX licensees, such as IBM, and for copyright infringement of UNIX copyright by users of Linux (the court found that Novell owned the copyright in UNIX software and had not assigned it to SCO. In my 25 years of practice, the SCO decision was one of three most dramatic failures of an intellectual property strategy. The decision also made clear that SCO knew about these problems when they launched their litigation against IBM because they tried to get Novell to confirm the transfer of the copyrights. Apparently, we have not heard the end of this story.