Behind SCO's open source challenge

Three and a half years ago, a company called the SCO Group took another company called International Business Machines Corporation to court. Among many other sins, said SCO, IBM had misappropriated intellectual property by stealing parts of Unix and putting them in Linux. If true, enormous implications would follow for open source in general and Linux in particular.

The subsequent course of this and related cases has not been kind to SCO. To the frustration of many, including the judge, the company has been unable or unwilling to provide specific evidence of infraction. Quite the opposite: not only has no stolen code been revealed, but the company's claims of Unix IP ownership are now looking very shaky.

Few are surprised. Despite many grandiose statements and much early bluster, SCO's marked reluctance to provide specifics persuaded most observers early on that, barring some bizarre re-reading of the law, the case was substantially without merit. This must have been obvious to the company and its lawyers then — and 10 times as much now.

So why did SCO do it? Did it believe it would win the case on its merits, or was it gunning for an early settlement from an opponent unwilling to put up a fight? An old journalistic maxim is to follow the money, and a new submission to the court reveals a large smoking bundle of the stuff.

Immediately prior to the court case, SCO received $50m in funding from an investment company called BayStar. In the submission by BayStar founder Lawrence Goldfarb, he states that this investment followed discussions with senior Microsoft staff, including managing director of intellectual property Kenneth Lustig. Informal promises were made that MS would guarantee BayStar's SCO investment. Likewise, SCO's chief executive Darl McBride and lawyer David Boies said IBM would settle quickly.

Armed with these assurances, Goldfarb says, BayStar made the investment. Some time later, having seen no evidence that the court case would end successfully and after Microsoft had stopped returning calls, Baystar bailed — losing tens of millions of dollars on the deal. Microsoft says merely that it had no investment in BayStar and that it gave no guarantee — neither of which contradicts the statement.

One can question the wisdom of making a $50m investment on the basis of promises and spin. Indeed, one can assign incompetence, greed, manipulation and wishful thinking to various players in various measure. But there's no denying that whatever the original intentions of the bringers of the case and under almost any conceivable outcome on the current evidence, open source has done very well out of SCO's actions.

The intensive examination of Linux IP that has resulted leaves the operating system stronger and safer than ever — while its attackers look shabbier by the day. This is good for competition, good for innovation and good for the industry.

Thanks, Larry. Perhaps that $50m was wisely invested, after all.