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8/30/2007
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SCO CEO McBride Speaks Out On Novell, Finances, And Groklaw

Darl McBride says his company has strong products and a growing number of customers, so it will survive regardless of the outcome of legal battles.

SCO CEO Darl McBride is not popular among many segments of the IT industry, thanks to his aggressive methods for defending his ownership rights to the Unix operating system. McBride on Aug. 28 sat down with InformationWeek editor-at-large Paul McDougall to discuss a broad range of topics relating to the company's legal battle against Novell, and what the future might hold for the company in light of its recent courtroom and financial setbacks.

InformationWeek: The Utah federal district court ruled on Aug. 10 that Novell, and not SCO, owns copyrights to Unix. The perception is that the decision effectively gutted your copyright lawsuit against Novell. What was your reaction to the ruling by Judge Dale Kimball?

McBride: The ruling that came down was a pretty hard shot. It was unexpected, a surprise. It was a huge disappointment. What I really wanted was to have our day in court in front of a jury of our peers. This ruling that came down basically took that opportunity away from us.

InformationWeek: Many observers expected the copyright issue to be decided in favor of Novell. Why were you so surprised?

McBride: If you have two sides that have a legitimate story, it should go to trial. We thought we had a pretty legitimate story. It was backed up by nine witnesses in the Novell and SCO management teams that negotiated the [asset transfer agreement between Novell and SCO] in 1995. All of them said SCO owns the copyrights. All of the business principals involved on both sides agreed. The only disagreement came from an attorney at Novell who claimed that he and the outside counsel stripped the copyrights away without telling anyone.

We paid $149 million dollars for a product that says we have all rights, titles, and interests for all versions of Unix. It says we own it all.

InformationWeek: How did you hear about the ruling?

McBride: I was sitting in my conference room getting ready for our big mobile launch. I got a call from our general counsel. He dropped the bomb. He was taken aback by the whole thing.

InformationWeek: Do you plan on filing an appeal?

McBride: We believe this is a very appealable case. There is a form of appeal that our attorneys are working on very hard right now. It's an interlocutory, or midstream, appeal. If we don't get an appeal heard now the case may be so damaged you won't be able to unring the bell. It's like if you have a missed call in a football game that results in a touchdown that shouldn't have been. If you appeal when the game is over, what are you going to do? Bring everyone back and replay the game?

InformationWeek: Was there anything positive about the ruling for SCO?

McBride: It wasn't until the next morning that we got out the 102-page ruling and read it that we realized there are some very powerful things in there that cut in our direction.

The untold story is that the judge and Novell agree that any Unix development work done post-1995 is copyrighted work held by SCO. For instance, the 64-bit Unix work we did with Project Monterey is still ours. The second is that Novell has a noncompete issue with us going forward that the judge didn't throw out. Linux has become Novell's platform product of choice. Well, that platform product of choice is subject to a noncompete issue with us.

InformationWeek: But SCO focuses on Unix, while Novell now focuses mostly on Linux. How is the noncompete relevant?

McBride: What we have said is that the use of Linux is violating a noncompete because of Unix and Unix-similar technologies that are in Linux that make it a competitive platform.

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