Linux suit lucrative for lawyers
Firm representing SCO could receive $49.4 million
Documents SCO recently filed with the Securities and Exchange Commission say the Lindon software firm "is in the process of finalizing" a deal with its counsel. Under the agreement, SCO would pay the lawyers 20 percent of the proceeds of "a sale of SCO during the pendancy of litigation." SCO is suing International Business Machines Corp.
SCO's stock closed Wednesday at $17.87, giving the company a market capitalization of $247 million. If SCO sells at that price, the Boies firm would be entitled to $49.4 million — and probably more with the premium that usually comes in a takeover.
SCO's stock closed down 37 cents Thursday at $17.50 per share.
In the suit, SCO claims damages of $3 billion from alleged theft of trade secrets. It says IBM took SCO's Unix software code and inserted it into free Linux software. IBM has denied the claims.
Many critics of SCO's suit in the free-software community have said in the past that they suspected SCO's lawsuit was filed in an effort to get IBM or another large company to buy SCO and neutralize the litigation. SCO has said it just wants to protect its intellectual property.
SCO said in the filing that its counsel would receive a fee of 20 percent of proceeds from a settlement with IBM, 20 percent of any SCO equity financings during the lawsuit, or 20 percent of a sale of the company. In addition, SCO said it may pay the law firm $1 million and issue as many as 400,000 shares to Boies Schiller. That is valued at $7.2 million. SCO said that the firm would be partially paid on a contingency basis. But it hadn't specified terms.
SCO has also sent letters to many large companies suggesting that their use of Linux might leave them infringing on SCO's copyrights. It has offered to free them of legal risk in return for hefty license fees. If any companies decide to pay such licenses, Boies Schiller would be entitled to 20 percent, according to the filing.
In Armonk, N.Y., Boies' assistant referred questions to a lawyer in the firm handling the case, who didn't return phone calls. A spokesman for SCO declined to comment on the filing.
The SEC filing came last month in connection with SCO's disclosure of two investors' recent purchase of a stake in the company.
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