[AktiviX] Memo proof that Microsoft bankrolled SCO legal action against Linux?

[Paul Mobbs]

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SCO Says Microsoft Memo Is Legit 

By Michelle Delio
WIRED: 03:22 PM Mar. 04, 2004 PT


The SCO Group confirmed Thursday that a memo published on open-source 
community blogs is legitimate, but that it is not the smoking gun that Linux 
advocates say it is.

The memo, first published on the website of open-source advocate Eric Raymond, 
was presented as correspondence leaked by a whistleblower from within SCO 
that showed that Microsoft has invested up to $100 million in the company to 
squash the Linux operating system. 

 For the past year, SCO has been asserting that it is the rightful owner of 
the Unix operating system and its derivatives, including Linux. It has sued 
companies like IBM for allegedly misappropriating Unix code and infringing on 
its copyright -- charges that IBM and Linux advocates ridicule. In addition, 
Linux supporters have suspected that Microsoft has been bankrolling SCO so 
that it can sue Linux out of existence. The memo was hailed as proof of this.

But SCO said the writer of the memo didn't have his facts straight.

"The memo is the result of a misunderstanding by an outside consultant," said 
Marc Modersitzki, SCO's public relations manager. "Microsoft did not invest 
in SCO, and Microsoft did not orchestrate or participate in any investments 
in SCO."

A Microsoft spokesperson said the company had not invested in SCO.

"The allegations in the posting are not accurate," Microsoft's statement on 
the SCO memo read. "Microsoft has purchased a license to SCO's intellectual 
property, to ensure interoperability and legal indemnification for our 
customers. The details of this agreement have been widely reported and this 
is the only financial relationship Microsoft has with SCO. In addition, 
Microsoft has no direct or indirect financial relationship with BayStar."

The memo, dated Oct. 12, 2003, appears to be a message from Mike Anderer, of 
consulting firm S2, to Chris Sontag, vice president and general manager of 
SCOsource, SCO's intellectual property division. According to the memo, 
Microsoft had invested $50 million dollars in SCO via venture capital firm 
BayStar Capital.

BayStar Capital is a private equity fund that makes direct investments in 
privately held and publicly traded companies. One of BayStar's largest 
investors, according to BayStar (PDF), is Vulcan Capital, the private 
investment vehicle of Paul Allen. Allen co-founded Microsoft with Bill Gates, 
and is the second-largest Microsoft shareholder after Gates.

At the time the investment was announced last November, questions were raised 
over Microsoft's possible participation in the investment.

But BayStar and SCO both denied any Microsoft involvement when the investment 
was announced.

The text of the memo also states that Microsoft supplied SCO with more than 
$30 million in other funding in 2003, partly through licensing fees.

"It was a misunderstanding by someone from outside SCO," said Modersitzki. 
"Microsoft has not invested a penny into SCO."

SCO has sued IBM for more than $5 billion in damages, charging that IBM moved 
Unix code to Linux. IBM denies wrongdoing and has countersued SCO. Technology 
firms Novell and Red Hat have brought their own suits against SCO. And SCO 
sued AutoZone and DaimlerChrysler on Wednesday, alleging violations of 
copyright and of a software licensing agreement. 




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"We are not for names, nor men, nor titles of Government, nor are we for
this party nor against the other but we are for justice and mercy and
truth and peace and true freedom, that these may be exalted in our nation,
and that goodness, righteousness, meekness, temperance, peace and unity
with God, and with one another, that these things may abound."
(Edward Burroughs, 1659 - from 'Quaker Faith and Practice')


Paul Mobbs, Mobbs' Environmental Investigations,
3 Grosvenor Road, Banbury OX16 5HN, England
tel./fax (+44/0)1295 261864

email - mobbsey at gn.apc.org
website - http://www.fraw.org.uk/mobbsey/index.html



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