[clug] CSIRO gets SCO's threatening letter

Kim Holburn kim.holburn at anu.edu.au
Fri Feb 13 00:06:28 GMT 2004


From SCOX's own report to the US SEC

http://ir.sco.com/EdgarDetail.cfm?CompanyID=CALD&CIK=1102542&FID=1047469-04-4069&SID=04-00

Some interesting quotes:

> We do not have a history of profitable operations.
>
>         Our fiscal year ended October 31, 2003 was the first full year we were profitable in our operating history. Our profitability in fiscal year 2003 resulted primarily from our SCOsource licensing initiative. If we do not receive SCOsource licensing revenue in future quarters and our revenue from the sale of our operating system platform products and  services continues to decline, we will need to further reduce operating expenses to maintain profitability or generate positive cash flow.


> We may lose the support of industry partners leading to an accelerated decline in our UNIX products and services revenue.
>
>         Our SCOsource initiatives, particularly lawsuits against end users violating our intellectual property and contractual rights, may cause industry partners,  developers and hardware and software vendors to choose not to support or certify to our UNIX operating system products. This would lead to an accelerated decline in our UNIX products and services  revenue and would adversely impact our results of operations and liquidity.
>
> Our claims relating to our UNIX intellectual property may subject us to additional legal proceedings.
>
>         On or about August 4, 2003, Red Hat filed a complaint against us that is currently pending in the United States District Court for the District of Delaware. Red Hat has asserted that the Linux operating system does not infringe on our UNIX intellectual property rights and seeks a declaratory judgment for non-infringement of  copyrights and no misappropriation of trade secrets. In addition, Red Hat claims we have engaged in false advertising in violation of the Lanham Act, deceptive trade practices, unfair competition,  tortious interference with prospective business opportunities, and trade libel and disparagement. We have filed a motion to dismiss the Red Hat complaint, asserting that Red Hat lacks standing and  that no case or controversy exists on which to base a declaratory judgment. Red Hat has filed an opposition to our motion to dismiss, but the court has not ruled on the motion. If Red Hat is  successful in its claim against us, our business and results of operations could be materially harmed.
>
>         The Australian Competition and Consumer Commission ("ACCC") contacted us in August 2003 regarding complaints it has received concerning our intellectual property claims and our  statements regarding the need for commercial Linux users to obtain a UNIX license. The ACCC further informed us that it has not made any decision to pursue the complaints it has received or determined  what, if any, action it will take. We have hired counsel in Australia and responded to the ACCC's request for information. We have not heard from the ACCC and it is unknown if future action will be  taken.
>
>         Several entities in Germany have obtained temporary restraining orders in Germany precluding our German subsidiary, from making statements in Germany that, in substance, disparage Linux,  or  entities involved in the Linux industry, or implicate Linux as infringing our intellectual property rights. SCO GmbH has received an administrative fine of 10,000 Euros for a technical violation of  one of the temporary restraining orders. We are currently negotiating with the various claimants in Germany over the temporary restraining orders and are evaluating whether we will appeal the  administrative fine. Informal complaints similar to those raised in Germany have been received from companies in Austria and Poland. We have responded to those complaints. It is not known if those  complainants will take future action.
>
>         In addition to these above-mentioned actions, other regulators or others in the Linux community may initiate legal actions against us, all of which may negatively impact our operations  or future operating performance.
>
> Fluctuations in our operating results or the failure of our operating results to meet the expectations of public market analysts and investors may negatively impact our stock price.

-- 
--
Kim Holburn 
Network Consultant - Telecommunications Engineering
Research School of Information Sciences and Engineering
Australian National University - Ph: +61 2 61258620 M: +61 0417820641
Email: kim.holburn at anu.edu.au  - PGP Public Key on request

Life is complex - It has real and imaginary parts.
     Andrea Leistra (rec.arts.sf.written.Robert-jordan)


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