SCO Article

Tuesday, Sept. 23, 2003
Lindon, UT
The SCO Group (SCOX)

SCO Group, a leader in IP litigation, has announced that they have recently trademarked the English letters S, C, and O, and all combinations and derived works thereof. SCO announced this important update on Tuesday as another legal front in their long and on-going series of IP lawsuits. The SCO Group is involved in various Intellectual Property (IP) disputes with organizations ranging from IBM and RedHat to LinuxTag of Germany.

SCO plans to leverage their valuable intellectual property (IP) trademark for use in pursuing litigious claims against other companies and individuals who are currently infringing their trademark. The same trademark, including derivative works, is pending in several other languages, the SCO Group reported.

The trademarking of letters, their individual and combined uses, and all derivative works, will allow SCO to protect investments previously made in this area.

Darl McBride, CEO of the SCO Group, questioned whether there would be an end to the infringement of their intellectual property rights. "It seems that every time we turn around, our team of specialists and engineers has detected another word containing our valuable IP (intellectual property). They are using spectral analysis and mathematical models. This is a really exciting time for us." Looking forward, McBride said, "we just want to get this cleared up and protect our IP. Licensing from us will protect us and our customers from potential lawsuits." McBride announced that a licensing plan would be unveiled by the end of the week.

David Boies, famed high-profile lawyer, has been retained to "protect this valuable IP, and its associated and derivate works" for the SCO group. Boies said that trademark law explicitly permitted such protections of derivative works. "For example, we consider the 'Scott Brand' bathroom tissue name to very seriously infringe on the SCO Group's trademark." Boies stated that diverse products ranging from scotch whiskey to the soccer ball may eventually require licensing. Use of the word "fiasco" will generate a per-use licensing fee if used in a commercial setting, stated Boies.

Although involved in other IP suits with SCO, IBM and RedHat have been cleared of any infringement in this area of trademark dispute. Chris Sontag, Senior Vice President at SCO, says, "We're concentrating on the SuSEs, Compaqs, and O'Reillys of the world. Sun has licensed our valuable, proprietary IP, and has fulfilled its fiscal obligations to us." Sun recently announced a plan to indemnify its customers over the use of the letter "S".

Microsoft, a company highly regarded for their respect of intellectual property, has reportedly been in negotiation with SCO for a license. Microsoft, who risks infringing a 'derivative name' based on all three letters, is eager to finalize negotiations with SCO. "Microsoft, in its ongoing quest to respect the valuable intellectual property of others, is investigating the terms and conditions under which we can best protect the intellectual property rights of the SCO Group," stated Tom Burt, Deputy General Counsel for Microsoft.

The up-start Linux operating system, which is involved in other IP disputes with SCO, has dodged a bullet in this round of the fight. The OpenOffice group, however, appears to be "treading all over our proprietary IP in this matter" said McBride, and should be prepared for a costly legal fight.

Laura Didio, senior analyst for the Yankee group, has viewed documents provided by SCO proving trademark violation. "Although I can't reveal exactly what companies' names contain S, C, and O [due to a non-disclosure agreement], there is obvious and serious infringement. I think they have a real case here." Didio went on to advise companies to seek legal advice on the matter. "Thank god Yankee is safe," Didio is quoted as saying.

SCO views this potential revenue stream as "exciting, potentially explosive." SCO's share price has risen from a low of $0.78 earlier this year to an impressive $20 level. McBride views the current 165 P/E ratio as in-line with their growth strategy. "We've got nearly all the areas of IP covered, from lawsuits over copyright and trade secrets to patents -- and now trademark. In addition, we've cut costs significantly, specifically in R&D, support, and sales. And we've pumped up our legal fund dramatically. We have positioned ourselves as a serious litigant in the profitable IP arena."

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