Editing SCO Group (section)

== In the courts ==
=== A focus on intellectual property ===
As soon as McBride became the head of Caldera International, he became interested in what intellectual property the company possessed.<ref name="lj-namechange-2"/>  He had been a manager at Novell in 1993<ref name="lj-namechange-2"/> when Novell had bought Unix System Laboratories, and all of its Unix assets, including copyrights, trademarks, and licensing contracts, for $335&nbsp;million.<ref name="lat-novell">{{cite news | url=https://www.latimes.com/archives/la-xpm-1992-12-22-fi-2406-story.html | title=Technology | newspaper=Los Angeles Times | date=December 22, 1992 | access-date=March 28, 2021 | archive-date=January 16, 2017 | archive-url=https://web.archive.org/web/20170116183938/http://articles.latimes.com/1992-12-22/business/fi-2406_1_networking-technology | url-status=live }}</ref>  Novell had subsequently sold its Unix business to the Santa Cruz Operation, which had then sold it to Caldera.  So in 2002, McBride said he had thought: "In theory, there should be some value to that property &ndash; somewhere between a million and a billion [dollars], right? I just wanted to know what real, tangible intellectual property value the company held."<ref name="lj-namechange-2">{{cite news | url=https://www.linuxjournal.com/article/6293 | title=Geeks on Bikes: The SCO Group/Caldera Product Development Plan| author-first=Jeff | author-last=Gerhardt | magazine=Linux Journal | date=August 28, 2002}}</ref>  Shortly before the name change to SCO, Caldera went through its existing license agreements, found some that were not being collected upon, and came to arrangements with those licensees representing some $600,000 in annual revenue.<ref name="lj-namechange-2"/>

In particular, from the start of his time as CEO, McBride had considered the possibility of claiming ownership of some of the code within Linux.<ref name="bw-hated"/>  Outgoing Caldera CEO Ransom Love had told him: "Don't do it. You don't want to take on the entire Linux community."<ref name="bw-hated"/>  During the August 2002 name change announcement, Bawa stated: "We own the source to UNIX; it's that simple. If we own the source, we are entitled to collect the agreed license fees."<ref name="lj-namechange-2"/>  But at the time, McBride said he had no intention of taking on Linux.<ref name="lj-namechange-2"/>

By October 2002, McBride had created an internal organization "to formalize the licensing of our intellectual property"; this effort was provisionally called SCO Tech.<ref name="starts">{{cite news |url=https://www.cnet.com/news/sco-fees-may-hit-some-linux-users/ |title=SCO fees may hit some Linux users |author-first=Stephen |author-last=Shankand |publisher=CNET |date=January 14, 2003}}</ref>  Senior vice president Chris Sontag was put in charge of it.<ref name="starts"/>

By the end of 2002, McBride and SCO had sought out the services of [[David Boies]] of the law firm [[Boies, Schiller and Flexner]] as part of an effort to litigate against what it saw was unrightful use of its intellectual property.<ref name="nyt-profit"/> Boies had gained fame in the industry for leading the U.S. federal government's successful prosecution of Microsoft in ''[[United States v. Microsoft Corp. (2001)|United States v. Microsoft Corp.]]'';<ref name="cw-scosource"/> as McBride subsequently said: "We went for the biggest gun we could find."<ref name="nyt-profit"/>{{notetag|Boies' record in other cases was mixed, however, including a high-visibility loss in the 2000 ''[[Bush v. Gore]]'' Florida election dispute.<ref name="lbw-ogara"/>}}

News of the SCO Group's intent to take action regarding Linux first broke on January 10, 2003, in a column by technology reporter Maureen O'Gara of ''Linuxgram'' that appeared in ''Client Server News'' and ''Linux Business Week''.<ref name="lbw-ogara"/>  She wrote that a draft press release concerning SCO's plans had been in the works for several weeks and had been quietly circulated to other companies in the industry.<ref name="lbw-ogara">{{cite news | url=http://www.sys-con.com/linux/articlenews.cfm?id=381 | title=SCO Threatens to Press IP Claims on Linux | first=Maureen | last=O'Gara | work=LinuxGram | date=January 10, 2003| archive-url=https://web.archive.org/web/20030201230524/http://www.sys-con.com/linux/articlenews.cfm?id=381 | archive-date=February 1, 2003 }}</ref>  The O'Gara report, unconfirmed as it was, caused some amount of consternation in the Linux community.<ref name="smh-ogara-reax">{{cite news | url=https://www.smh.com.au/technology/sco-denies-plans-to-act-against-other-linux-vendors-20030114-gdg3t8.html | title=SCO denies plans to act against other Linux vendors | newspaper=The Sydney Morning Herald | date=January 13, 2003}}</ref>

On January 22, 2003, creation of the [[SCOsource]] division of the company, to manage the licensing of the company's Unix-related intellectual property, was officially announced, as was the hiring of Boies to investigate and oversee legal protection of that property.<ref>{{cite press release | url=https://tech-insider.org/unix/research/2003/0122.html | title=SCO Establishes SCOsource to License Unix Intellectual Property | publisher=Tech-insider | date=January 22, 2003}}</ref><ref>{{cite news | url=https://www.theglobeandmail.com/technology/sco-hunts-infringers/article1157011/ | title=SCO hunts infringers | newspaper=The Globe and Mail | location=Toronto | date=January 22, 2003}}</ref>  As the ''[[Wall Street Journal]]'' reported, Linux users had generally assumed that Linux was created independently of Unix proprietary code, and Linux advocates were immediately concerned that SCO was going to ask large companies using Linux to pay SCO licensing fees to avoid a lawsuit.<ref>{{cite news | title=SCO Hires Boies to Investigate Property Rights | newspaper=The Wall Street Journal | date=January 22, 2003 | edition= Eastern | url=https://www.proquest.com/docview/398818541 | id={{ProQuest|398818541}} | via=ProQuest}}</ref>  The first announced license program within SCOsource was called SCO System&nbsp;V for Linux, which was a set of [[shared libraries]] intended to allow SCO Unix programs to be run legally on Linux without a user needing to license all of SCO OpenServer or UnixWare as had theretofore been necessary.<ref name="cw-scosource">{{cite news | url=https://www.computerworld.com/article/2580192/sco-to-enforce-its-intellectual-property-in-linux-world.html | title=SCO to enforce its intellectual property in Linux world | author-first= Juan Carlos | author-last=Perez | author2-first= Stephen | author2-last=Lawson | agency= IDG News Service | work=Computerworld | date=January 23, 2003 }}</ref>

The company continued to lose money, on revenues of $13.5&nbsp;million in the first fiscal quarter of 2003, but McBride was enthusiastic about the prospects for the new SCOsource division, telling investors on a February&nbsp;26 earnings call that he expected it to bring in $10&nbsp;million alone in the second fiscal quarter.<ref>{{cite press release | title=The SCO Group Reports Operating Results for First-Quarter Fiscal 2003 | publisher= PR Newswire | date= February 26, 2003 | url= https://www.proquest.com/docview/448846123 | id= {{ProQuest|448846123}} | via=ProQuest }}</ref>

=== Lawsuits begin ===
{{SCO Controversy}}
On March 6, 2003, SCO filed suit against IBM, claiming that the computer giant had misappropriated trade secrets by transferring portions of its Unix-based [[AIX]] operating system into Linux, and asked for at least $1&nbsp;billion in damages.<ref>{{cite news | url=https://www.newspapers.com/clip/88379283/ | title=Suit Alleges IBM Is Abusing Trade Secrets | agency=Bloomberg News | newspaper=Los Angeles Times | date=March 7, 2003 | page=C3| via=Newspapers.com}}</ref>{{notetag|The amount was subsequently raised to $3&nbsp;billion,<ref name="bw-hated"/> and later still to $5 billion.<ref name="slt-yarro"/> The suit initially coincided with SCO's existing relationship with IBM to sell UnixWare on [[IBM Netfinity]] systems.<ref name="ci-earnings-1999">{{cite news | title=SCO Ends Four-Year Slump With $17m Profits, New Business | work=[[Computergram International]] | date= October 27, 1999 | via= Gale General OneFile <!-- (accessed April 17, 2021). --> | url=https://link.gale.com/apps/doc/A56955961/ITOF?u=wikipedia&sid=ITOF&xid=6a741805 }}</ref>}} The complaint also alleged [[breach of contract]] and [[tortious interference]] by IBM against the Santa Cruz Operation for its part in the failed [[Project Monterey]] of the late 1990s.<ref name="cnet-ibm-suit">{{cite news | url=https://www.cnet.com/news/sco-sues-big-blue-over-unix-linux/ | title=SCO sues Big Blue over Unix, Linux | author-first=Stephen | author-last=Shankland | publisher=Cnet | date=March 11, 2003}}</ref>  Overall, SCO maintained that Linux could not have caught up to "Unix performance standards for complete enterprise functionality" so quickly without coordination by a large company, and that this coordination could have happened through the taking of "methods or concepts" even if not a single line of Unix code appeared within Linux.<ref name="cnet-ibm-suit"/>  The ''[[SCO v. IBM]]'' case was underway; it would come to be considered one of the top technology battles of all time.<ref>{{cite news | url=https://www.itnews.com.au/news/top-10-technology-tussles-154995 | title=Top 10 technology tussles | author-first=Iain | author-last=Thomson | publisher=IT News | date=September 7, 2009}}</ref>

Many industry analysts were not impressed by the lawsuit, with one saying: "It's a fairly end-of-life move for the stockholders and managers of that company [...] This is a way of salvaging value out of the SCO franchise they can't get by winning in the marketplace."<ref name="cnet-ibm-suit"/> Other analysts pointed to the deep legal resources IBM had for any protracted fight in the courts, but McBride professed to be nonplussed: "If it takes a couple of years, we're geared to do that."<ref name="nyt-profit"/>  For his part, Boies said he liked [[David versus Goliath]] struggles, and his firm would see a substantial gain out of any victory.<ref name="bw-hated"/>

In mid-May 2003, SCO sent a letter to some 1,500 companies, cautioning them that using Linux could put them in legal jeopardy.<ref name="nyt-profit"/>  As part of this, SCO proclaimed that Linux contained substantial amounts of Unix System&nbsp;V source code and that, as such, "We believe that Linux is, in material part, an unauthorized derivative of Unix."<ref name="ap-unauth">{{cite news | url=https://apnews.com/article/0f48e3656783defbf5818999ebab1fe7 | title=SCO Group Warns Linux Users of Violations | author-first=Matthew | author-last=Fordahl | work=Associated Press | date=May 14, 2003}}</ref><ref name="nyt-profit"/><ref name="pr-copyrights"/>  As [[CNET]] wrote, the move "dramatically broaden[ed]" the scope of the company's legal actions.<ref name="cnet-letters">{{cite news |url=https://www.cnet.com/news/sco-targets-linux-customers/ |title=SCO targets Linux customers |author-first=Stephen |author-last=Shankland |publisher=CNET |date=May 15, 2003}}</ref>

At the same time, SCO announced it would stop selling its own SCO Linux product.<ref name="ap-unauth"/>  A casualty of this stance was SCO's participation in the United Linux effort, and in turn United Linux itself.<ref name="eweek-united"/>  While the formal announcement that United Linux had ended did not come until January 2004, in reality the project stopped doing any tangible work soon after SCO filed its lawsuit against IBM.<ref name="eweek-united">{{cite news | url=https://www.eweek.com/servers/unitedlinux-rip/ | title=UnitedLinux, RIP | author-first= Steven J. | author-last=Vaughan-Nichols | magazine=eWeek | date=January 23, 2004 }}</ref>

A few days later, Microsoft{{snd}} which had long expressed disdain for Linux{{snd}} said that it was acquiring a Unix license from SCO,<ref name="cnet-ms-lic">{{cite news | url=https://www.cnet.com/tech/services-and-software/microsoft-to-license-unix-code/ | title=Microsoft to license Unix code | author-first=Scott | author-last=Ard | publisher=CNET | date=May 19, 2003}}</ref> in order to ensure interoperability with its own products and to ward off any questions about rights.<ref name="nyt-myclip-2003"/>  The action was a boon to SCO, which to this point had received little support in the industry for its licensing initiative.<ref name="nyt-myclip-2003">{{cite news | title=New Economy: A Unix company hopes a Microsoft deal will strengthen its legal case against Linux. | author-first=Laurie J. | author-last=Flynn | newspaper=The New York Times | date=May 26, 2003 | page=C3}}</ref>  Another major computer company, [[Sun Microsystems]], bought an additional level of Unix licensing from SCO to add to what it had originally obtained a decade earlier.<ref name="fortune-2003"/>

On May 28, 2003, Novell counterattacked, saying its sale of the Unix business to the Santa Cruz Operation back in 1995 did ''not'' include the Unix software copyrights, and thus that the SCO Group's legal position was empty.<ref name="nyt-profit"/>  Jack Messman, the CEO of Novell, accused SCO of attempting an extortion plan against Linux users and distributors.<ref name="nyt-profit"/>  Unix has a complex corporate history,<ref name="cnet-ibm-suit"/> with the SCO Group a number of steps removed from the [[Bell Labs]] origins of the operating system.  Novell and the SCO Group quickly fell into a vocal dispute that revolved around the interpretation of the 1995 asset-transfer agreement between them.<ref name="IW_Confusing_2003"/>  That agreement had been uncertain enough at the time that an amendment to it had to be signed in October 1996, and even that was insufficiently unambiguous to now preclude an extended battle between the two companies.<ref name="IW_Confusing_2003">{{cite news | url=https://www.informationweek.com/sco-novell-deal-was-confusing-from-the-start/d/d-id/1019435 | title=SCO-Novell Deal Was Confusing From The Start | author-first=John | author-last=Foley | magazine=Information Week | date=2003-06-06}}</ref><ref name="dn-verdict"/>

In July 2003, SCO began offering UnixWare licenses for commercial Linux users, stating that "SCO will hold [as] harmless [any] commercial Linux customers that purchase a UnixWare license against any past copyright violations, and for any future use of Linux in a run-only, binary format."<ref name="pr-copyrights">{{cite press release |title=SCO Registers UNIX Copyrights and Offers UNIX License |url=http://ir.sco.com/releasedetail.cfm?ReleaseID=114170 |date=July 21, 2003 |archive-url=https://web.archive.org/web/20100102232443/http://ir.sco.com/releasedetail.cfm?ReleaseID=114170 |archive-date=January 2, 2010 |url-status=dead}}</ref>
The server-based licenses were priced at $699 per machine, and if they were to become mandatory for Linux users, would represent a tremendous source of revenue for SCO.<ref name="bw-hated"/>  The potential for this happening was certainly beneficial to SCO's stock price, which during one three-week span in May 2003 tripled in value.<ref name="nyt-myclip-2003"/>

Another counterattack came in August 2003, when ''[[Red Hat, Inc. v. SCO Group, Inc.]]'' was filed by the largest of the Linux distribution companies.

[[Image:TRAX courthouse.jpg|thumb|left|The Frank E. Moss United States Courthouse in downtown Salt Lake City, where many of SCO's legal battles played out, as seen in 2004]]

The SCO Group received a major boost in October 2003 when [[BayStar Capital]], a technology-focused venture capital firm, made a $50&nbsp;million [[private placement]] investment in SCO, to be used towards the company's legal costs and general product development efforts.<ref name="slt-baystar">{{cite news | url=https://www.newspapers.com/clip/91046282/ | title=SCO gets infusion of $50M | author-first=Bob | author-last=Mims | newspaper=The Salt Lake Tribune | date=October 17, 2003 | page=D8 | via=Newspapers.com}}</ref>  In December 2003, SCO sent letters to 1,000 Linux customers that in essence accused them of making illegal use of SCO's intellectual property.<ref name="bw-hated"/>

Novell continued to insist that it owned the copyrights to Unix.  While Novell no longer had a commercial interest in Unix technology itself, it did want to clear the way for Linux, having recently purchased [[SuSE Linux]], the second largest commercial Linux distribution at the time.<ref>{{cite news | url=https://www.cnet.com/news/sco-sues-novell-over-copyright-claims/ | title=SCO sues Novell over copyright claims | author-first=David | author-last=Becker | publisher=CNET | date=January 21, 2004}}</ref>  On January 20, 2004, the SCO Group filed a [[slander of title]] suit against Novell, alleging that Novell had exhibited bad faith in denying SCO's intellectual property rights to Unix and UnixWare and that Novell had made false statements in an effort to persuade companies and organizations not to do business with SCO.<ref name="nw-slandertitle">{{cite news | url=https://www.networkworld.com/article/2329813/sco-sues-novell-for-slander-of-title-over-unix.html | title=SCO sues Novell for slander of title over Unix | author-first=Grant | author-last=Gross | agency=IDG News Service | magazine=Network World | date=January 20, 2004}}</ref>  The ''[[SCO v. Novell]]'' court case was underway.

Lawsuits against two Linux end users,<ref name="fortune-2004"/> ''[[SCO Group, Inc. v. DaimlerChrysler Corp.]]'' and ''[[SCO v. AutoZone]]'' were filed on March&nbsp;3, 2004.<ref name="scs-az-dc">{{cite news | url=https://www.newspapers.com/clip/91040800/ | title=SCO Group reports 16-cent loss, more lawsuits | author-first=Jennifer | author-last=Pittman | newspaper=Santa Cruz Sentinel | date=March 4, 2004 | page=D-6 | via=Newspapers.com}}</ref>  The first alleged that Daimler Chrysler had violated the terms of the Unix software agreement it had with SCO, while the second claimed that AutoZone was running versions of Linux that contained unlicensed source code from SCO.<ref name="nw-surviveiflose"/>  As a strategy this move was met by criticism; as ''[[Computerworld]]'' later sarcastically wrote: "Faced with a skeptical customer base, SCO did what any good business would do to get new customers: sue them for money."<ref name="cw-chap7"/>

In any case, the stage was set for the next several years' worth of court filings, depositions, hearings, interim rulings, and so on.

=== Vultus acquisition and a change in SCOx ===
The SCOsource division got off to a quick start, bringing in $8.8&nbsp;million during the company's second fiscal quarter, which led to the SCO Group turning a profit for the first time in its Caldera-origined history.<ref name="nyt-profit">{{cite news | date=May 29, 2003 | url=https://www.nytimes.com/2003/05/29/business/technology-software-company-s-battle-over-unix-produces-profit.html | title=Technology: Software Company's Battle Over Unix Produces Profit | author-first=Steve | author-last=Lohr | newspaper=The New York Times | page=C6}}</ref>

In July 2003, the SCO Group announced it had acquired Vultus Inc. for an unspecified price.<ref name="dn-vultus"/>  Vultus was a start-up company, also based in Lindon, Utah,<ref name="dn-vultus"/> and the Lindon-based [[Canopy Group]] was a major investor in Vultus just as it was the SCO Group.<ref name="cnet-vultus">{{cite news | url=https://www.cnet.com/news/sco-scoops-up-web-services-start-up/ | title=SCO scoops up Web services start-up | author-first=Martin | author-last=LaMonica | publisher=CNET | date=July 22, 2003}}</ref>  Vultus made the WebFace Solution Suite, a web-based application development environment with a set of browser-based user interface elements that provided a richer UI functionality without the need for Java applets or other plug-ins.<ref name="dn-vultus">{{cite news | url=https://www.deseret.com/platform/amp/2003/7/23/19736996/sco-purchase-of-vultus-also-includes-webface | title=SCO purchase of Vultus also includes WebFace | newspaper=Deseret News | date=July 23, 2003}}</ref><ref name="cw-vultus">{{cite news | url=https://www.computerworld.com/article/2804829/sco-fuels-web-services-play-with-acquisition.html | title=News SCO fuels Web services play with acquisition | author-first=Amy | author-last=Bennett | agency=IDG News Service | work=Computerworld | date=July 24, 2003 | access-date=December 26, 2021 | archive-date=December 26, 2021 | archive-url=https://web.archive.org/web/20211226221908/https://www.computerworld.com/article/2804829/sco-fuels-web-services-play-with-acquisition.html | url-status=dead }}</ref> Indeed, in putting together WebFace, Vultus was a pioneer in [[Ajax (programming)|AJAX techniques]] before that term was even coined.<ref name="vultus-ajax">{{cite web | archive-url=https://web.archive.org/web/20120201210845/http://itc.conversationsnetwork.org/shows/detail1010.html | archive-date=February 1, 2012 | url=http://itc.conversationsnetwork.org/shows/detail1010.html | title=AJAX Progress and Challenges | publisher=IT Conversations | date=March 1, 2006}}</ref>

The acquisition of Vultus resulted in a shift of emphasis in the company's web services initiative, with an announcement being made in August 2003 at SCO Forum that SCOx would now be a web services-based Application Substrate, featuring a combination of tools and APIs from Vultus's WebFace suite and from [[Ericom Software]]'s Host Publisher development framework.<ref name="scox-substrate">{{cite news | url=https://www.computerworld.com/article/2571426/sco-to-push-web-services-with-ericom-alliance.html | title=SCO to push Web services with Ericom alliance | author-first=  Robert | author-last=McMillan | agency=IDG News Service | work=Computerworld | date=August 18, 2003 }}</ref>

A year later, in September 2004, this idea materialized when the SCOx Web Services Substrate (WSS) was released for UnixWare 7.1.4.<ref name="pr-wss"/> Its aim was to give existing SCO customers a way to "webify" their applications via Ericom's tool and then make the functionality of those applications available via web services.<ref name="pr-wss">{{cite press release | title=SCO Extends Partnership with Ericom Software through Release of SCOx Web Services Substrate (WSS) on SCO UNIX(R) | publisher= PR Newswire | date= July 19, 2004 | url=https://www.proquest.com/docview/448628760 | id= {{ProQuest|448628760}} | via=ProQuest}}</ref>  However, as McBride later conceded, the SCOx WSS failed to gain an audience,<ref name="iwk-meinc"/> and it was largely gone from company mention a year later.<ref>SCO Forum breakout session schedules list a number of WSS and Ericom sessions in 2004; only Ericom sessions and no mention of WSS in 2005; and no mention of either in 2006 and later.</ref>

=== Views on infringement claims ===
In the keynote address at its SCO Forum conference in August 2003, held at the [[MGM Grand Las Vegas]], the SCO Group made an expansive defense of its legal actions.<ref name="nw-forum03">{{cite news | url=https://www.networkworld.com/article/2336557/sco-makes-legal-case-to-its-resellers.html | title=SCO makes legal case to its resellers | author-first=Robert | author-last=McMillan | magazine=Network World | date=August 18, 2003}}</ref> Framed by licensed-from-MGM [[Production of the James Bond films|James Bond music and film clips]], McBride portrayed SCO as a valiant warrior for the continuance of [[proprietary software]], saying they were in "a huge raging battle around the globe", that the [[GNU General Public License]] that Linux was based on was "about destroying value", and saying that like Bond, they would be thrown into many battles but come out the victor in the end.<ref name="nw-forum03"/>

Linux advocates had repeatedly asked SCO to enumerate and show the specific areas of code in Linux that SCO thought were infringing on Unix.<ref name="nyt-myclip-2003"/><ref name="iw-if-3"/>  An analyst for [[International Data Corporation|IDC]] said that if SCO were more forthcoming on the details, "the whole discussion might take a different tone."<ref name="nyt-myclip-2003"/>  However, SCO was reluctant to show any such code in public, preferring to keep it {{nowrap|secret{{px2}}{{mdash}}{{px2}}}}a strategy that was commonly adopted in intellectual property litigation.<ref name="iw-if-3">{{cite news | title=Oh So Slowly, SCO Makes Its Case | author-first=Tom | author-last=Yager | magazine=InfoWorld | date=September 22, 2003 | pages=42&ndash;43}}<!-- see also online version with correction addendum https://www.infoworld.com/article/2679098/sco-stays-in-the-game.html --></ref>

However, during the company's Forum conference, SCO did publicly show several alleged examples of illegal copying of copyright code in Linux. Until that time, these examples had only been available to people who signed a [[non-disclosure agreement]], which had prohibited them from revealing the information shown to them. SCO claimed the infringements were divided into four separate categories: literal copying, [[Obfuscation (software)|obfuscation]], derivative works, and non-literal transfers.  The example used by SCO to demonstrate literal copying became known as the ''[[atemalloc]]'' example. While the name of the original contributor was not revealed by SCO, quick analysis of the code in question pointed to [[Silicon Graphics|SGI]]. At this time it was also revealed that the code had already been removed from the Linux kernel, because it duplicated already existing functions.

By early 2004, the small amount of evidence that had been presented publicly was viewed as inconclusive by lawyers and software professionals who were not partisan to either side.<ref name="bw-hated"/>  As ''Businessweek'' wrote, "While there are similarities between some code that SCO claims it owns and material in Linux, it's not clear to software experts that there's a violation."<ref name="bw-hated"/>  The legal considerations involved were complex, and resolved around subtleties such as how the notion of [[derivative work]]s should be applied.<ref name="fortune-2004"/>  Furthermore, Novell's argument that it had never transferred copyrights to the Santa Cruz Operation placed a cloud over the SCO Group's legal campaign.<ref name="bw-hated"/>  Most, but not all, industry observers felt that SCO was unlikely to win.<ref name="bw-hated"/><ref name="fortune-2004"/><ref name="iw-if-5"/>  ''InfoWorld'' drily noted that Las Vegas bookmakers were not giving odds on the battle, but the three analysts it polled gave odds of 6-to-4 against SCO, 200-to-1 against SCO, and 6-to-4 for SCO.<ref name="iw-if-5">{{cite news | title=The Latest Line on SCO |magazine=InfoWorld | date=September 22, 2003 | page=45}}</ref>

In any case, while Linux customers may not have been happy about the concerns and threats that the SCO Group was raising, it was unclear whether that was slowing their adoption of Linux; some business media reports indicated that it was,<ref name="cnn-mydoom"/> or that it might,<ref name="fortune-2003"/> while others indicated that it was not.<ref name="bw-hated"/>

=== "The Most Hated Company in Tech" <span class="anchor" id="The Most Hated Company In Tech"></span> ===
The stakes were high in the battle the SCO Group had started, involving the future of Unix, Linux, and open source software in general.<ref name="iw-if-0">{{cite news | title=SCO Rolls the dice | magazine=InfoWorld | date=September 22, 2003 | page=41}}</ref>  If SCO were to win its legal battles, the results could be extremely disruptive to the IT industry, especially if SCO's notion of derivative works were to be construed broadly by the courts.<ref name="iw-if-1">{{cite news | title=What if SCO Wins? | author-first=Robert | author-last=McMillan | magazine=InfoWorld | date=September 22, 2003 | pages=42, 44}}</ref>  Furthermore a SCO victory would be devastating to the open source movement, especially if the legal validity of the GPL license were to be called into question.<ref name="iw-if-1"/>  Conversely, a clear SCO loss would clarify any intellectual property concerns related to Linux, make corporate IT managers feel more relaxed about adopting Linux as a solution, and potentially bolster corporate enthusiasm for the open source movement as a whole.<ref name="iw-if-2">{{cite news | title=What if SCO Loses? | author-first=Ed | author-last=Scannell | magazine=InfoWorld | date=September 22, 2003 | pages=43, 45}}</ref>

{{Quote box|quote=There's nothing like a good legal battle to whip up passions, and the SCO Group-versus-the-open-source-world dogfight is no exception. Rhetoric runs high. From the open-source advocates, it's "you're stifling free thought in the name of greed." SCO allies counter with "you're attacking the core values of capitalism."|source=—LinuxInsider, 2004.<ref name="li-groklaw-2004"/>
|width=27%|align=left|style=padding:8px;}}

Linux advocates were incensed by SCO's actions,<ref name="cnet-ddos"/><ref name="bw-hated"/> accusing the company of trying to reap financial gain by sowing [[fear, uncertainty, and doubt]] (FUD) about Linux within the industry.<ref name="nyt-profit"/>  Linux creator [[Linus Torvalds]] said, "I'd dearly love to hear exactly ''what'' they think is infringing, but they haven't told anybody. Oh, well. They seem to be more interested in FUD than anything else."<ref name="ap-unauth"/>  Open source advocate [[Bruce Perens]] said of SCO, "They don't care who or what they hurt."<ref name="ap-unauth"/>  Industry analyst and open source advocate Gordon Haff said that SCO had thrown a [[dirty bomb]] into the Linux user community.<ref name="cnet-letters"/>

Many  Linux enthusiasts approached the issue with a moralistic fervor.<ref name="cnet-letters"/>
By August 2003, McBride said that pickets had been seen at SCO offices.<ref name="nw-forum03"/>  McBride tended to compare Linux to [[Napster]] in the music world,<ref name="nyt-myclip-2003"/> a comparison that could be understood by people outside the technology industry.  The assault on open source produced intense feelings in people; [[Ralph Yarro]], chairman of SCO and head of the Canopy Group, and the person characterized by some as the mastermind behind ''SCO v. IBM'',<ref name="fortune-2003">{{cite news | url=https://money.cnn.com/magazines/fortune/fortune_archive/2003/07/21/346123/index.htm | title=Penguin Slayer | author-first=Adam | author-last=Lashinsky | magazine=Fortune | date=2003-07-21}}</ref>  reported that back in his home area in Utah, "I have had friends, good friends, tell me they can't believe what we're doing."<ref name="bw-hated"/>  Internet message boards such as [[Slashdot]] saw many outraged postings.<ref name="fortune-2003"/>  The [[Yahoo! Finance]] discussion boards, a popular site at the time for investors, were full of messages urging others to sell SCO stock.<ref name="nw-forum03"/>

SCO suffered a [[distributed denial-of-service attack]] against its website in early May 2003,<ref name="cnet-ddos">{{cite news | url=https://www.cnet.com/tech/services-and-software/net-attack-crushes-sco-web-site/ | title=Net attack crushes SCO Web site | author-first=Stephen | author-last=Shankland | publisher=CNET | date=May 5, 2003}}</ref> the first of several times the website would be shut down by hackers.<ref name="bw-hated"/>  One that began in late January 2004<ref name="cnn-mydoom">{{cite news | url=https://money.cnn.com/2004/01/27/technology/techinvestor/lamonica/index.htm | title=Of worms and penguins? | author-first=Paul R. | author-last=La Monica | publisher=CNN Money | date=January 28, 2004}}</ref> became the most prolonged, when a denial-of-service attack coming out of the [[Mydoom]] computer worm prevented access to the <code>sco.com</code> domain for over a month.<ref name="zdn-mydoom">{{cite news | url=https://www.zdnet.com/article/sco-recovers-from-mydoom/ | title=SCO recovers from MyDoom | author-first= Munir | author-last=Kotadia | publisher=ZDNet | date= March 8, 2004 }}</ref>

{{Quote box|quote=The theater of {{nowrap|this{{px2}}{{mdash}}{{px2}}}}it's sort of beyond belief for all of us.|source=—Darl McBride, 2004.<ref name="bw-hated"/>|width=27%|align=right|style=padding:8px;}}

The general IT industry was not pleased with what SCO was doing either.  The September 22, 2003 issue of ''[[InfoWorld]]'' had a dual-orientation cover that, if read right side up, had a thumbs-up picture with the text "If SCO Loses", and if read upside down, had a thumbs-down picture with the text "If SCO Wins".<ref name="iw-if-00">{{cite news | title=Cover | magazine=InfoWorld | date=September 22, 2003}}<!-- can see most of cover it at https://books.google.com/books?id=zjkEAAAAMBAJ&pg=RA1-PA1#v=onepage&q&f=false --></ref>  
By February of the following year, ''[[Businessweek]]'' was headlining that the SCO Group was "The Most Hated Company In Tech".<ref name="bw-hated">{{cite news |url=https://www.bloomberg.com/news/articles/2004-02-01/the-most-hated-company-in-tech |title=The Most Hated Company In Tech |author-first=Jim |author-last=Kerstetter |magazine=Businessweek |date=February 2, 2004 | archive-url=https://web.archive.org/web/20210423002322/https://www.bloomberg.com/news/articles/2004-02-01/the-most-hated-company-in-tech | archive-date=April 23, 2021 | url-status=live<!--paywalled-->}}<!-- copyvio site https://sco-vs-ibm.org/review/2004/0202.html --><!-- seems gone now, but have a txt file from a quick ^a^c of the archive site --></ref>  A similar characterization was made by the [[Robert X. Cringely]]-bylined column in ''[[InfoWorld]]'', which in March 2004 called SCO "the Most Despised Technology Company".<ref name="iw-despised">{{cite news | title=Notes from the Field: Misery Loves Companies | author-first=Robert X. | author-last=Cringely | magazine=InfoWorld | date=March 29, 2004 | page=12}}</ref>  The cover of a May 2004 issue of ''[[Fortune (magazine)|Fortune]]'' magazine had a photograph of McBride accompanied by the large text "Corporate Enemy No. 1".<ref name="fortune-2004">{{cite news | url=https://money.cnn.com/magazines/fortune/fortune_archive/2004/05/17/369609/index.htm | title=Gunning for Linux | author-first=Roger | author-last=Parloff | magazine=Fortune | date=May 17, 2004}} Also cover of issue.</ref>  SCO's actions in suing Linux end users was especially responsible for some forms of corporate distaste towards it.<ref name="fortune-2004"/>

[[Image:Bruce Perens Belfast 2006.jpg|thumb|left|One of the most prominent critics of SCO's actions, Bruce Perens, speaking at a free and open source software conference in 2006]]

The company that had previously held that title, Microsoft,<ref name="bw-hated"/><ref name="iw-despised"/> had by February 2004 spent a reported $12&nbsp;million on Unix licenses from SCO.<ref name="bw-hated"/>  The industry giant said the licenses were taken out as part of normal intellectual property compliance for their [[Windows Services for UNIX]] product, which provided a Unix compatibility environment for higher-end Windows systems.<ref name="r-ms-lic">{{cite news | url=https://www.wired.com/2003/05/microsoft-licenses-unix-from-sco/ | title=Microsoft Licenses Unix From SCO | agency=Reuters | magazine=Wired | date=May 19, 2003}}</ref>  Linux advocates, however, saw the move as Microsoft looking for a way to fund SCO's lawsuits in an attempt to damage Linux,<ref name="bw-hated"/> a view that was shared by some other large industry rivals such as [[Oracle Corporation]]'s [[Larry Ellison]].<ref name="r-ms-lic"/>  Indeed, Linux advocates had seen Microsoft's hand in the SCO Group's actions from almost the beginning; as Bruce Perens wrote in May 2003:  "Who really benefits from this mess? Microsoft, whose involvement in getting a defeated Unix company to take on the missionary work of spreading FUD [...] about Linux is finally coming to light."<ref>{{cite web | author-last=Perens | date=May 20, 2003 | url=https://www.zdnet.com/article/microsofts-spreading-fud-over-linux/ | title=Microsoft's spreading FUD over Linux | author-first=Bruce | publisher=ZDNet}}</ref>  The open source community's antipathy towards Microsoft only increased when it became apparent that Microsoft had played at least some role in introducing the SCO Group to BayStar Capital as a potential investment vehicle (both BayStar and Microsoft said there was no stronger role by Microsoft than that).<ref>{{cite news | url=https://www.eweek.com/database/microsoft-led-sco-to-baystar/ | title=Microsoft Led SCO to BayStar | author-first=Peter | author-last=Galli | magazine=eWeek | date=March 22, 2004}}</ref>

The distaste for SCO's actions seeped into evaluations of SCO's product line and technical initiatives as well.  ''[[Software Development Times]]'' acknowledged at one point that "many writers in the tech media, which has a pro-open-source, pro-Linux bias, are subtly or overtly hostile to SCO."<ref name="sdt-edgeclick"/>
As an instance, in July 2003 a columnist for ''[[Computerworld]]'' examined the SCO Group acquisition of Vultus and concluded that the purpose was not to acquire its technology or staff but rather that Canopy was playing  "a shell game [...] to move its companies around" in order to exploit and cash in on the SCO Group's rising stock price.<ref name="CW_shell_2003">{{cite news | url=https://books.google.com/books?id=gXrMKeIkx74C&pg=PA50 | title=SCO's Shell Game | author-first=Frank | author-last=Hayes | work=Computerworld | date= July 28, 2003 | page=50}}</ref>
As an analyst for [[RedMonk]] stated, "Regardless of the technology they have, there are a lot of enterprises that are going to be ticked off with them. Some of them are receiving these letters (demanding license fees for Linux). There's a perception among companies we've spoken to that SCO is really out to get acquired or to make their money off of licensing schemes rather than technologies. That's an obstacle to adoption of their products."<ref name="cw-vultus"/>  This kind of attitude was exemplified by an apologetic review of UnixWare 7.1.3 in ''[[OSNews]]'' in December 2003 that acknowledged that SCO had "earned their now nefarious reputation of pure evil" but that "SCO does actually sell a product" and that the reviewer had to assess it objectively.<ref name="osn=uw713">{{cite news | url=https://www.osnews.com/story/5416/unixware-713-review/ | title=UnixWare 7.1.3 Review | author-first=Tony | author-last=Bourke | publisher=OS News | date=December 16, 2003}}</ref>

Another group of people who found the actions of the SCO Group distasteful were some of those familiar with the Santa Cruz Operation, including those who had worked there and those who had written about it; they became protective of that earlier company's reputation, especially given the possible name confusion regarding the two.<ref name="sarai-rem"/><ref name="coursey-bad"/><ref name="stross-p5"/>  In an ''[[eWeek]]'' column entitled "SCO: When Bad Things Happen to Good Brands", technology journalist David Coursey wrote that "SCO was a good company with a good reputation. In some ways, SCO was Linux before Linux, popularizing Unix on low-cost Intel machines [...] It's a good brand name that deserves better, or at least a decent burial and a wake. But instead, its memory is being trashed by people who don't and maybe can't appreciate the fondness many of us still have for the old Santa Cruz Operation."<ref name="coursey-bad">{{cite news | url=https://www.eweek.com/servers/sco-when-bad-things-happen-to-good-brands | title=SCO: When Bad Things Happen to Good Brands | author-first=David | author-last=Coursey | magazine=eWeek | date= June 15, 2004}}</ref>  Science fiction author [[Charles Stross]], who had worked as a tech writer in the original SCO's office in England in the early-mid-1990s, called the SCO Group "the brain-eating zombie of the UNIX world" that had done little more than "play merry hell with the Linux community and take a copious metaphorical shit all over my resumé."<ref name="stross-p5">{{cite web | url=http://www.antipope.org/charlie/blog-static/2009/06/how_i_got_here_in_the_end_part_3.html | title=How I got here in the end, part five: 'things can only get better!' | author-first=Charles | author-last=Stross | publisher=antipope.org | date=June 19, 2009}}</ref>  More simply, former original SCO employee turned journalist and publisher Sara Isenberg, in writing about the history of tech companies in the Santa Cruz area, wrote about The SCO Group, "I'll spare you the sordid legal details, but by then, it was no longer our SCO."<ref name="sarai-rem">{{cite news | url=https://www.santacruztechbeat.com/2015/04/23/tech-in-santa-cruz-sara-isenberg/ | title=Don't let anyone tell you tech is new in Santa Cruz! | author-first=Sara | author-last=Isenberg | newspaper=Santa Cruz Tech Beat | date=April 23, 2015}}</ref>

To be sure, not all former original-SCO employees necessarily felt that way.  The company still had developers and other staff at the original Santa Cruz location, as well as at the [[Murray Hill, New Jersey]] office<ref name="nw-surviveiflose"/> that dated back not just to the original SCO but to Novell and Unix System Laboratories and AT&T before that.<ref name="cw-init"/>  There was also a development office in [[Delhi, India]],<ref name="nw-surviveiflose"/> as well as regional offices that in many cases came from original SCO.  And in 2006, Santa Cruz Operation co-founder Doug Michels made a return to the SCO Forum stage, with McBride presenting him an award for lifetime achievement.<ref>{{cite video | url=https://www.youtube.com/watch?v=M9Vnb_omAoM | title=Doug Michels receives lifetime achievement at SCO Forum 2006 | publisher=CitizenValley.org and BayLive Media | access-date=December 9, 2019}}</ref>

[[Image:SCO Forum 2004 Darl McBride and others on video screen.jpg|thumb|right|SCO Group CEO Darl McBride speaking at a SCO Forum 2004 keynote session at the MGM Grand in Las Vegas; SCOsource division head Chris Sontag and vice president of engineering Sandy Gupta stand alongside him]]

A major factor in the SCO&ndash;Linux battle was the [[Groklaw]] website and its author, paralegal [[Pamela Jones]].<ref name="reg-groklaw"/> The site explained in depth the legal principles and procedures that would be involved in the different court {{nowrap|cases{{px2}}{{mdash}}{{px2}}}}giving technology-oriented readers a level of understanding of legal matters they would otherwise not {{nowrap|have{{px2}}{{mdash}}{{px2}}}}and pulled together in an easily browsed form a massive number of official court documents and filings.<ref name="li-groklaw-2004"/>  Additionally, some Groklaw readers attended the court hearings in person and posted their detailed observations afterward.<ref name="reg-groklaw"/>  Accompanying these valuable data points on Groklaw was an interpretative commentary, from both Jones and her readers, that was relentlessly pro-open source and anti-SCO,<!-- see also https://newmedialaw.proskauer.com/2010/03/10/jury-picked-and-trial-commences-in-sco-v-novell-unix-code-copyright-ownership-dispute/ --> to the point where journalist [[Andrew Orlowski]] of ''[[The Register]]'' pointed out that Groklaw sometimes suffered badly from an [[Echo chamber (media)|online echo chamber]] effect.<ref name="reg-groklaw">{{cite news | url=https://www.theregister.com/Print/2005/04/30/groklaw_monterey_mystery/ | title=SCO, Groklaw and the Monterey mystery that never was | author-first=Andrew | author-last=Orlowski | work=The Register | date=April 30, 2005}}</ref>  In any case, such was Groklaw's influence that SCO made thinly veiled accusations that Jones was, in fact, working on behest of IBM, something that she categorically denied.<ref name="li-groklaw-2004">{{cite news | url=https://www.linuxinsider.com/story/32990.html | title=Writing Linux History: Groklaw's Role in the SCO Controversy | author-first=David | author-last=Halperin | publisher=LinuxInsider | date=March 1, 2004}} and the follow-up {{cite news | url=https://www.linuxinsider.com/story/33059.html | title=The Groklaw Story, Part Two | author-first=David | author-last=Halperin | publisher=LinuxInsider | date=March 8, 2004}}</ref>  <!-- TODO find the Groklaw bit about Darl admiring their passion -->

The personification of the SCO&ndash;Linux battle was no doubt McBride,<ref name="fortune-2004"/> who was viewed by many as a villain.<ref name="lbw-dmb-hated"/>  Columnist Maureen O'Gara, generally seen as at least somewhat sympathetic to SCO's position, characterized McBride as "the most hated man in the computer industry".<ref name="lbw-dmb-hated">{{cite news | archive-url=https://web.archive.org/web/20040529052830/http://www.linuxworld.com/story/44809.htm | archive-date=May 29, 2004 | url=http://www.linuxworld.com/story/44809.htm | title=Latest SCO News is Plain Weird | author-first=Maureen | author-last=O'Gara | magazine=Linux Business Week | date=May 14, 2004 }}</ref>  McBride acknowledged, "I know people want us to go away, but we are not going to go away. We're going to see this through."<ref name="bw-hated"/>  The ''[[Sunday New York Times]]'' business section's "Executive Life" feature ran a self-profile of McBride in February 2004, in which he reflected upon his no-nonsense father raising him on a ranch and the difficulties of being a [[Mormon missionary]] in Japan and later a Novell executive there, and concluded, "I am absolutely driven by people saying I can't do something."<ref>{{cite news | title=The Boss: Cowboy Willpower | author-first=Darl C. | author-last=McBride | newspaper=The New York Times | date=February 29, 2004 | page=10 (Sunday Business)}} As told to Eve Tahmincioglu.</ref>
McBride received death threats serious enough to warrant extra security during his public appearances.<ref name="bw-hated"/>  Asked in May 2004 to reflect upon what the preceding year had been like, McBride said "This is like ... nothing ... nothing compares to what's happened in the last year."<ref name="lbw-dmb-hated"/>

=== Financial aspects ===
<!--{{image frame
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 | yAxisTitle=
 | legend=
 | type=line
 | x=2002,2003,2004,2005,2006,2007,2008
 | y1=64,79,43,36,29,22,16
 | y1Title=Revenue
 | y2=-25,3.4,-28,-11,-16,-7,-8.7
 | y2Title=Profit/loss
 | y3=0,0,0,0,0,0,0
 | y3Title=(break-even)
 | colors=#0000aa,#FF0000,#000000
}}
|width=600
|caption=SCO Group revenues and profit/loss by year (in millions of dollars).<ref name="starts"/><ref name="cw-fy2004"/><ref name="sec-ar-2006"/><ref name="cnet-fy2007"/><ref name="sec-ar-fy2008"/> No annual reports would be filed after 2008.<ref>See {{cite web | url=https://www.sec.gov/edgar/browse/?CIK=0001102542 | title=EDGAR: Company Search Results: SCO GROUP INC | publisher=Securities and Exchange Commission | access-date=December 31, 2021}}</ref>
|border=no
}}--><!-- PREVIOUS HAS BEEN COMMENTED OUT AS A TEMPORARY MEASURE AS IMAGE ITSELF DOESN'T SHOW, ONLY THE CAPTION SHOWS -->
SCO's legal campaign coincided with the best financial results it would have, when in fiscal 2003 they had revenues of $79 million and a profit of $3.4 million.<ref name="cw-fy2004">{{cite news | url=https://www.computerworld.com/article/2568609/sco-group-revenue-drops-58---losses-increase-as-legal-fight-continues.html | title=SCO Group revenue drops 58%, losses increase as legal fight continues | author-first=Todd R. | author-last=Weiss | work=Computerworld | date=December 22, 2004}}</ref>  The campaign was also initially very beneficial to its stock price.  The stock had been under $1.50 in December 2002 and reached a high of $22.29 during mid-October 2003.<ref name="street-range">{{cite news | url=https://www.thestreet.com/technology/sco-group-hit-by-double-whammy-10130633 | title=SCO Group Hit by Double Whammy | author-first=Ronna | author-last=Abramson | publisher=TheStreet | date=December 8, 2003}}</ref>  In some cases jumps in the price occurred when [[stock analyst]]s initiated coverage of the stock and gave optimistic price targets for it.<ref>{{cite news | url=https://www.zdnet.com/article/sco-backs-off-linux-invoice-plan/ | title=SCO backs off Linux invoice plan | author-first=Stephen | author-last=Shankland | publisher=ZDNet | date=October 15, 2003}}</ref>

[[File:SCO-2001-2006-headcount-by-department.jpg|thumb|right|Falling headcounts at the SCO Group, as sourced from official company SEC filings via Yahoo! Finance message boards]]

But the stock began a downward slide soon after that, and by the end of 2003 about a quarter of all outstanding shares were controlled by [[short seller]]s.<ref name="cnn-mydoom"/>  SCOsource revenue was erratic, with the first half of fiscal 2004 being especially poor.<ref name="cw-caps"/><ref>{{cite news | url= https://books.google.com/books?id=FP-NbtUZeSkC&pg=PA12 | title=McBride Vows SCO Will Win Legal Fight | author-first=Todd R. | author-last=Weiss | work=Computerworld | date=August 9, 2004 | page=12}}</ref>
The SCO group had 340 employees worldwide when the lawsuits were first underway in 2003.<ref>{{cite news | url=https://www.newspapers.com/clip/91087286/ | title=SCO posts first-ever net income | author-first=Karen A. | author-last=Davis | newspaper=Santa Cruz Sentinel | date=May 29, 2003 | page=D-6 | via=Newspapers.com}}<!-- same paper gives the 340 figure for March 2003 and July 2003 as well --></ref>  By a year later, this count had fallen somewhat to 305 employees.<ref name="scs-az-dc"/>

During 2004, SCO and BayStar had a falling out,<ref name="lbw-dmb-hated"/> in part due to the investment firm being unhappy with SCO's constant presence in the headlines and the passionate arguments it was involved in with open source advocates,<ref>{{cite news | url=https://www.nytimes.com/2004/04/22/business/technology-investor-s-pullout-stirs-doubts-about-sco-group.html | title=Technology: Investor's Pullout Stirs Doubts About SCO Group | author-first=Steve | author-last=Lohr | newspaper=The New York Times | date=April 22, 2004}}</ref> and in part due to the ongoing expenses of running a struggling software products business.<ref name="iwk-baystar">{{cite news | url= https://www.informationweek.com/software/vc-firm-to-sco-changes-needed-to-keep-money-2 | title=VC Firm To SCO: Changes Needed To Keep Money 2 | author-first=Larry | author-last=Greenemeier | magazine=InformationWeek | date=April 22, 2004}}</ref>  Both BayStar and [[Royal Bank of Canada]], which had been part of the initial placement, bought out of the investment by mid-year.<ref name="dn-baystar"/> Nevertheless, by the calculation of the ''[[Deseret News]]'', SCO had gained a net $37 million out of the arrangement.<ref name="dn-baystar">{{cite news | url=https://www.deseret.com/2004/6/8/19833466/sco-group-s-13-million-payout-to-baystar-is-good-news | title=SCO Group's $13 million payout to BayStar is good news | author-first=David L. | author-last=Politis | newspaper=Deseret News | date=June 8, 2004}}</ref>

Legal actions were a large expense, costing the SCO Group several million dollars each quarter and hurting financial results.<ref name="cw-legend"/>  For its third quarter of fiscal 2004, for instance, the company reported revenue of $11.2 million and a loss of $7.4 million, of which $7.2 million was legal expenses.<ref name="cw-caps">{{cite news| url=https://www.computerworld.com/article/2566954/sco-caps-legal-costs-as-losses-mount.html | title=SCO caps legal costs as losses mount |author-first=Robert | author-last=McMillan | agency=IDG News Service | work=Computerworld | date=September 1, 2004}}</ref>  To that point, the company had spent a total of some $15 million on such costs.<ref>{{cite news | url=https://www.crn.com/news/applications-os/46200408/sco-puts-cap-on-legal-costs-moves-to-protect-shareholders.htm?itc=refresh | title=SCO Puts Cap On Legal Costs, Moves To Protect Shareholders | author-first=Paula | author-last=Rooney | publisher=CRN | date=August 31, 2004}}</ref>  Accordingly, in August 2004, SCO renegotiated its deal with its lawyers to put into place a cap on legal expenses at $31 million, in return for which Boise, Schiller & Flexner would receive a larger share of any eventual settlement.<ref name="cw-caps"/>

[[Image:JanpathOfficeBuildings.jpg|thumb|left|SCO development office in Delhi, as seen in 2006]]
[[Image:Entrance of SCO China office May 2006.jpg|thumb|left|SCO regional office in Beijing, as seen in 2006]]

McBride continued to come up with new ideas; at the 2004 Forum show he talked about the SCO Marketplace Initiative, which would set up an online exchange where developers could bid on work-for-hire jobs for SCO Unix enhancements that were otherwise not on the SCO product roadmap.<ref name="cw-init"/>  Besides helping SCO out, this would set up an alternative to the open source model, one where programmers could "develop-for-fee" rather than "develop-for-free".<ref name="cw-init">{{cite news | url=https://www.computerworld.com/article/2812578/sco-ceo--no-need-to-sue-more-customers.html | title=SCO CEO: No need to sue more customers | author-first=Amy | author-last=Bennett | agency=IDG News Service | work=Computerworld | date=August 3, 2004 | access-date=December 27, 2021 | archive-date=December 27, 2021 | archive-url=https://web.archive.org/web/20211227123107/https://www.computerworld.com/article/2812578/sco-ceo--no-need-to-sue-more-customers.html | url-status=dead }}</ref>  McBride ultimately envisioned it becoming "an online distribution engine for business applications from a wide variety [of] companies and solution providers."<ref name="zdn-iit"/>  The SCO Marketplace began operation a couple of months later, with jobs posted including the writing of device drivers.<ref name="zdn-iit">{{cite news | url=https://www.zdnet.com/article/sco-marketplace-now-open-to-developers/ | title=SCO marketplace now open to developers | publisher=ZDNet | date=October 27, 2004}}</ref>

The stock slide continued, and by September 2004 had fallen below the $4 level.<ref name="cw-caps"/>  The company had some 230 employees worldwide at that point.<ref name="cw-caps"/>  
During the latter portion of 2004,  the California office of the company moved out of Santa Cruz proper,<ref>{{cite news | url=https://www.newspapers.com/clip/90988201/ | title=Good deals in Scotts Valley lure local businesses | author-first=Jennifer | author-last=Pittman | newspaper=Santa Cruz Sentinel | date=December 24, 2004 | page=A-22| via=Newspapers.com}}</ref> as its longtime 400 Encinal Street office building was mostly empty.<ref name="scs-sep04"/>  The thirty employees still remaining took new space on Scotts Valley Drive<!--TODO when did the new office shut down? still going as of Aug 2005 at least ... full address 5615 Scotts Valley Drive --> in nearby [[Scotts Valley, California]].<ref name="scs-sep04">{{cite news | url=https://www.newspapers.com/clip/90982426/ | title=SCO plans further cuts in Q4 | author-first=Jennifer | author-last=Pittman | newspaper=Santa Cruz Sentinel | date=September 2, 2004 | page=C-4 | via=Newspapers.com}}</ref>

By early 2005, the SCO Group was in definite financial trouble. Its court case against IBM did not seem to be going well.<ref name="scs-march05"/>  Sales for fiscal 2004 dropped by 46 percent compared to the year prior, to less than $43 million, and losses rose by a factor of three to over $16 million.  Results for the full fiscal 2004 year were bad: revenues dropped by 46 percent compared to the year prior,<ref name="scs-march05">{{cite news | url=https://www.newspapers.com/clip/90979857/ | title=SCO sys quarterly statements were wrong | newspaper=Santa Cruz Sentinel | date=March 4, 2005 | page=D-5 | via=Newspapers.com}}</ref> falling to around $43 million, and there was a loss on that of over $28 million.<ref name="cw-fy2004"/>  The company had to restate three of its quarterly earnings statements due to accounting mistakes and was at risk of being delisted by NASDAQ.<ref name="scs-march05"/>  During the previous year it had laid off around 100 people, constituting a third of its workforce,<ref name="scs-march05"/> and by August 2005 the headcount had fallen to under 200.<ref name="nw-surviveiflose"/>

The company became independent of The Canopy Group in March 2005, after the settlement of a lawsuit between the [[Raymond Noorda|Noorda family]] and Yarro.<ref name="DN_FR_2005_2">{{cite news |title=Canopy Group settles with former executives |author-first=Jesse |author-last=Hyde |date=March 15, 2005 |newspaper=Deseret News |url=https://www.deseret.com/2005/3/15/19882089/canopy-group-settles-with-former-executives |access-date=2020-02-15 |url-status=live |archive-url=https://web.archive.org/web/20200215185000/https://www.deseret.com/2005/3/15/19882089/canopy-group-settles-with-former-executives |archive-date=2020-02-15}}</ref>  As part of the settlement, Canopy transferred all of its shares in the SCO Group to Yarro.<ref name="slt-yarro">{{cite news |url=http://www.sltrib.com/business/ci_2605421 |title=Canopy deal: Former CEO stays on board of SCO Group |author-last=Mims |author-first=Bob |date=2005-03-12 |newspaper=The Salt Lake Tribune |archive-url=https://web.archive.org/web/20050312233019/http://www.sltrib.com/business/ci_2605421 |archive-date=2005-03-12}}</ref><ref name="ZDN_settlement_2005">{{cite news | url=https://www.zdnet.com/article/settlement-leaves-sco-board-intact/ | title=Settlement leaves SCO board intact | author-first=Stephen | author-last=Shankland | publisher=ZDNet | date=March 12, 2005 }}</ref>  
{{clear}}