A U.S. magistrate struck down most of The SCO Group's (SCOX) claims of copyright infringement in the battle over source code in the freely distributed Linux operating system.
Dealing a setback to the Utah company's $5 billion lawsuit against IBM Corp., (IBM) Magistrate Brooke Wells dismissed 182 of SCO's 294 legal claims in an order signed Wednesday and obtained Friday by The Associated Press.
IBM was accused of dumping confidential Unix code into Linux, but Wells ruled SCO had produced virtually no proof of the allegation.
She said SCO had "willfully failed to comply" with court orders to show IBM which of millions of lines of code in Linux were supposedly misappropriated.
SCO argued that was IBM's job.
Wells likened SCO's stance to a security guard's accusing a shopper of stealing merchandise — and demanding the shopper show proof of the theft.
"It would be absurd for an officer to tell the accused that 'you know what you stole; I'm not telling,"' Wells wrote in a 39-page decision.
The magistrate said that if there was any merit to SCO's claims, they were likely to produce only nominal damages instead of billions of dollars.
"It is almost like SCO sought to hide its case until the ninth inning in hopes of gaining an unfair advantage despite being repeatedly told to put 'all evidence ... on the table,"' she wrote.
Wells dismissed SCO's arguments that only IBM engineers could verify that IBM gave away proprietary software code to Linux, a work of thousands of hackers.
"SCO's arguments are akin to SCO telling IBM, 'Sorry, we are not going to tell you what you did wrong because you already know,"' the magistrate wrote.
SCO acknowledged Friday that the ruling was a setback but that it would continue to press its case.
SCO spokesman Blake Stowell said Wells left strong claims asserting line-by-line Unix code was dumped into Linux, dismissing the more generalized claims that IBM misappropriated the architecture of Unix code.
"If two-thirds of your case is stricken, then it is a pretty serious matter. Our lawyers will determine how we proceed from here," Stowell told The Salt Lake Tribune.
He said the case was like trying to show after the fact how a car engine was built.
"That's hard to prove," he said.
Enderle Group chief analyst Rob Enderle said Wells' ruling was a defeat for SCO's use of a "quantity-over-quality approach to litigation strategy."
Now, "it will be vastly more difficult for them to get funding going forward as a result of the perceptions [stemming from] this decision," Enderle told The Salt Lake Tribune. "And they are burning through their cash reserves very quickly."
The ruling capped a month of bad news for SCO. The company reported $4.69 million in losses for its most recent quarter, including nearly $3.8 million in new litigation expenses.
Any appeal would go to U.S. District Judge David Kimball, who already upheld an evidence-related ruling by Wells that SCO had appealed.
IBM spokesman John Charlson said the company doesn't comment on litigation that Wells' ruling "says it all."
SCO doesn't have enough evidence "to shake a stick at," said Pamela Jones, creator and editor of Groklaw.net, a Web site devoted to open-source software legal issues. "Linux is booming, and everyone knows now that the code has been examined every which way, and it's clean as code can be."