After weeks of threats and repeated delays, the SCO Group has finally sued two Fortune 500 end-user companies, DaimlerChrysler and AutoZone.
SCO is suing the carmaker, which is already one of its Unix licensees, for not certifying, as SCO says it's required to do under its agreement, that it is not running Linux binaries anywhere in its establishment or, if it is, that it has built a Chinese wall between its Unix and Linux developers, or any of the six other similarly minded oaths SCO is now demanding its users take.
It's not that DaimlerChrysler refused SCO terms, it just ignored them, missing SCO's 30-day deadline. So SCO is suing it in state court in Michigan.
SCO is suing AutoZone, the premier auto parts chain and former SCO user, worth about $5.5 billion in annual sales, for violating SCO's contested "Unix copyrights by running versions of the Linux operating system that contain code, structure, sequence and/or organization from SCO's proprietary Unix System V code."
In the suit SCO defines this widgetry as including SVR5 static shared libraries; dynamic shared libraries and inter-process communication mechanisms including semaphores, message queues and shared memory; enhanced reliable signal processing; the SVR5 file system switch interface; virtual file system capabilities; process scheduling classes including real-time support; asynchronous I/O; file system quotas; support for lightweight processes (kernel threads); user-level threads; and loadable kernel modules.
A Utah company incorporated in Delaware, SCO is suing AutoZone, a Memphis company, in Nevada, where AutoZone is incorporated. SCO wants the Nevada federal courts to slap AutoZone with an injunction and order it to stop using SCO's proprietary code. It also wants actual, statutory and enhanced damages as well as costs.
In its conference call, SCO said it didn't want to delve too deeply into its legal machinations for fear of offending the magistrate currently presiding over its $5 billion suit against IBM who has already warned SCO and IBM about trying the case in the press, but SCO did describe the AutoZone charges as a "general set of claims" that could be brought against anyone who's running Linux.
That said, however, AutoZone, which used to run its business on SCO's OpenServer Unix, came up in the deposition interrogatories delineating its case against Linux that SCO answered for IBM.
There SCO claimed that IBM rustled the AutoZone account away from SCO in 2Q01 and that after that AutoZone wouldn't pay SCO the annual fee to maintain SCO products.
According to the story SCO tells, AutoZone's migration to Linux used the shared libraries that had been stripped out of OpenServer by IBM, which IBM Consulting was allegedly paid handsomely to do, and embedded in AutoZone's Linux implementation so it could continue to run its legacy OpenServer apps.
SCO's evidence for this charge is its belief that "The precision and efficiency with which the migration to Linux occurred...suggests the use of shared libraries to run legacy applications on Linux."
SCO also thinks that AutoZone is still running the OpenServer shared libraries to run legacy apps on Linux.
Separately, it appears AutoZone used Red Hat over Caldera Linux on the terminals in its string of retail stores starting in 1999 when SCO was Caldera and still a Linux house but according to Credit Suisse AutoZone and Red Hat don't have a current financial relationship.
AutoZone declined to talk about its infrastructure at all, said it hadn't seen the suit and took a shot and noted that SCO had "sent letters to hundreds of companies making allegations."
However, Jim Greer, who was a senior technical advisor at AutoZone, told Groklaw that the notion that SCO's shared libraries were a necessary part of AutoZone's Linux port was "false" and that "no SCO libraries were involved in the porting activity."
He said he should know because he initiated AutoZone's transition to Linux, directed the port of their legacy software base to Linux, personally ported all of AutoZone's internal software libraries to Linux and personally developed the rules by which other AutoZone developers should make changes to their code to support both Linux and OpenServer, which he described as "trivial given that our code did not generally rely on SCO-specific features and that the more technologically sophisticated portions of our code tended to reside in our libraries."
Greer, who says he used to be on SCO's customer advisory board, also denies SCO contention that IBM induced AutoZone to move to Linux. He said it was "SCO's activities that 'greased the skids' and allowed the business case for using Linux to be made more easily."
Greer added that when "SCO was eventually made aware of AutoZone's transition to Linux. They responded by offering to assist AutoZone in the porting activity. By the time of their offer, AutoZone had already completed the initial porting activity and had already installed a Linux-based version of their store system in several stores."
Anyway, both SCO and AutoZone reported their quarterly results Wednesday. AutoZone did a lot better by far. SCO limped in with net losses of $2.3 million, or 16 cents a share, on revenues of $11.4 million, down roughly $2 million year-over-year, and the news that its IP licensing scheme had only brought in a scant $20,000 in the January quarter.
All the rest of the money came from the company's flagging Unix business.
Operating losses came to $5.2 million. Operating losses from its fabled SCOsource licensing program came to $3.4 million, a number that includes the company's legal bills.
In truth, SCO had previously indicated that SCOsource wasn't going to contribute much. It's promising to expand the program in the coming quarters in defense of its IP assets with license negotiations and end-user lawsuits. It expects SCOsource and a revived Unix business to "yield positive long-term results."
SCO is expecting to do between $10 million and $14 million in the current quarter and says that SCOsource results "remain difficult to predict in the short-term due to the nature of these licensing transactions and the variability of the timing of revenue recognition."
SCO has got roughly $58 million in the bank.
AutoZone stock dropped $3.87 to $84.53 by mid-day Wednesday and Wall Street said it was because of the suit although its top line came in a tad short. SCO was off $1.66 (12.4%) to $11.76. DaimlerChrysler was off 67 cents to $44.24.
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