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October 9, 2006

Microsoft guaranteed SCO investor?

Posted by David Hunter at 12:09 PM ET.

In the “dirty tricks” or at least the “odd potential use of cash” department, Eric Bangeman reports at Ars Technica on some revelations in the SCO lawsuit against IBM:

In the ongoing saga of SCO v. IBM, one peripheral question has been the extent of Microsoft’s financial support for SCO. Groklaw has dug up an interesting bit of data in the case, namely that Microsoft supposedly promised venture capital firm BayStar that they would guarantee their multimillion-dollar investment in SCO.

Buried in IBM’s recent motion for summary judgment against SCO is a Declaration from BayStar general partner Larry Goldfarb. Near the beginning of the long-running legal soap opera, BayStar invested $50 million in SCO. In exchange for their investment, BayStar received 20,000 shares of preferred stock in SCO.

In his declaration, Goldfarb testifies that former Microsoft senior VP for corporate development and strategy Richard Emerson discussed “a variety of investment structures wherein Microsoft would ‘backstop,’ or guarantee in some way, BayStar’s investment.” Goldfarb then said that after BayStar committed the $50 million to SCO’s cause, Microsoft “stopped returning my phone calls and e-mails, and to the best of my knowledge, Mr. Emerson was fired from Microsoft.”

Microsoft stood to gain in the event of a SCO victory, as Linux would become a much-less-attractive option for companies looking to wean themselves from UNIX or even Microsoft’s own commercial offerings. In March 2004, an e-mail surfaced that indicated Microsoft had played a part in hooking BayStar up with SCO. At the time, both BayStar and Microsoft denied that the Redmond, WA-based software giant had any financial involvement in the deal, although it did purchase a UNIX license from SCO in 2003, ultimately spending $16.6 million on licensing fees.

Many more details by following the link, but SCO and its laughable lawsuit continue to be a vast morass that soils everyone who gets near it.

Update: Microsoft denies a connection.

Filed under Coopetition, Financial, General Business, IBM, Linux, Microsoft, Open Source, Public Relations, SCO

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February 22, 2006

IBM subpoenas Microsoft, others in SCO case

Posted by David Hunter at 11:15 AM ET.

Here’s an interesting twist as reported by Graeme Wearden at CNET:

Microsoft, Hewlett-Packard, Sun Microsystems and BayStar Capital must hand over details of their involvement with SCO Group, as IBM builds its defenses against the charge that it included SCO’s Unix code in Linux.

The long-running legal battle between IBM and SCO over the claim that Linux violates SCO’s intellectual property took another twist on Tuesday, when IBM sent subpoenas to four other tech players.

The subpoenas demand that Microsoft, HP, Sun and BayStar hand over a range of information, including details of their dealings with SCO, by March 7. They will also have to appear in court later in March to give depositions.

Microsoft’s subpoena runs to 13 separate demands. They include handing over details of agreements relating to any Unix product involving Microsoft and SCO, and all communications between the two companies. In early 2003, Microsoft started paying SCO what eventually grew to $16.6 million for a Unix license, according to regulatory filings. Only longtime Unix fan Sun previously paid close to that, with a $9.3 million license deal. Microsoft provided a second, though indirect, boost in August or September of 2003, when it referred SCO to BayStar, a fund that arranged a $50 million investment.

BayStar must hand over details of its communications, agreements and investments in SCO. It must also reveal communications between it and Microsoft regarding SCO, IBM and the ongoing court case.

More by following the link and at Groklaw which published the full text of the subpoenas.

Hold on to your hats! IBM has subpoenaed Microsoft! And Sun! At last, we’re getting to the core of the matter. We’re going to get to find out the whole story. I’d pay for this. No kidding. Feast your eyes on these and don’t skip the topics for deposition…

The subtext here is the suspicion that SCO was encouraged by other parties to sue IBM as a way of inhibiting the growth of Linux.

Filed under Coopetition, IBM, Legal, Linux, Open Source, SCO

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