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SCO Files its Appeal Brief in SCO v. Novell
Friday, March 06 2009 @ 09:22 PM EST

SCO has filed its appeal brief [PDF], appealing the decision in SCO v. Novell. Novell has until April 9 to file its brief in response, plus any appeal issues it might itself wish to raise.

Evidently, the court found SCO's first filing deficient, and so it told SCO [PDF] to correct the deficiencies, which it has done. One deficiency was that SCO failed to tell the appeals court why it felt oral argument was necessary. So, SCO now tells them, in essence, that the case is *complicated*.

Tell me about it. I could write a book. SCO tells the court it expects the court will have questions, so it wants to be there in person to answer their questions. I'm not sure that's a winning argument with a court of appeals, which is generally interested in efficiency, whenever possible.

I don't know if this filing will make it, but presumably so. The summary of SCO's argument is on page 27 of the filing, page 37 of the PDF. Here it is in a PJ nutshell: "No Fair! We Want a Do-Over!"

With a bit more detail, here are their basic arguments, based on a quick reading of the summary:

  • SCO did too get the UNIX copyrights. The judge failed to consider Amendment 2 to the APA, which SCO feels replaced earlier contract language, and the judge was wrong to say Amendment 2 wasn't a sufficient copyright transfer document.
  • The judge erred in ruling that Amendment 2 only gave SCO an "implied license" to the copyrights. If that was the intent, the language would have said so, plus there wouldn't have been a changed language in the Schedule of Assets sold. Anyway, you don't need Amendment 2 if the APA had already conferred an implied license.
  • The judge didn't consider the extrinsic evidence from the witnesses even though he earlier said the APA was ambiguous on the subject of copyright transfers.
  • The judge erred in ruling that Novell had the right to waive SCO's claims against IBM, for the same ambiguous/extrinsic evidence argument. And it's not fair to let them have an "unfettered right, for whatever reason Novell chooses, to take away from SCO all of the rights under the licenses and agreements Novell had transferred."
Off the top of my head, I remember things differently. The judge certainly did consider Amendment 2. Here's one part of what he wrote:
These legal principles, however, do not suggest that the court should analyze the transfer of copyright issue without giving any consideration to the text of the original APA. Rather, the court must consider the original APA, the agreement executed in connection with the APA's closing, Amendment No. 2, and Amendment No. 2's relationship to the original APA and the agreements executed in connection with its closing. The court concludes that the proper way to analyze the issue, therefore, is to look at the Agreements in turn in the same chronological order that the parties entered the agreements.
Duh. And he wrote for pages in the 102-page ruling [text] on August 10, 2007 about the witness testimony, which he found less credible than Novell's, even if the witnesses were what one should use to decide the matter. Here's one quick sample:
The relevance of much of the testimony is questionable because few have a recollection of actual discussions regarding the transfer or retention of copyrights. Many witnesses give an opinion as to whether they think the copyrights should have transferred, but they fail to establish an adequate foundation to support their opinion.
For example, here's what the judge wrote about some of SCO's witnesses, Robert Frankenberg, Alok Mohan, Doug Michels, and Jim Wilt:
Robert Frankenberg, then-President and CEO of Novell, testified in a deposition that his initial intent in entering into negotiations, intent at the time the APA was signed, and intent when the transaction closed was that Novell would transfer copyrights to UNIX and UnixWare technology to Santa Cruz. ... This testimony is obviously at odds with the minutes of the Board meeting and the testimony of the chief drafters of the APA for Novell. Somewhat self-contradictorily as well, Frankenberg also testified that he had high-level discussions with the negotiating team and recalled discussing the fact that retaining UNIX copyrights would facilitate Novell's exercise of rights with respect to capitalizing the SVRX revenue stream and facilitate the negotiation of SVRX License buyouts.... The evidence submitted as to Frankenberg's role shows that he was not intimately involved in the deal. Frankenberg testified that he was involved in high-level discussions but was not involved in the negotiation or drafting of the APA. He further stated that he did not review the details of the deal and he signed the APA on the basis of the recommendation of his team....

Alok Mohan, CEO of Santa Cruz at the time of the APA, testified that he believes Santa Cruz bought the whole business, including copyrights.... But he was not aware that the subject of UNIX copyrights was specifically addressed in the contract.... Mohan testified that he was involved in the negotiations "only at a high level," not in the "detail level of negotiations."... He was also not involved in the "specific drafting of the documents," was not on a distribution list of individuals at Santa Cruz to receive drafts of the agreement, and did not recall the firm or attorneys Santa Cruz hired to represent it in the transaction.... He testified that "the issue of copyrights in or out was not discussed with me."... Furthermore, he contends that Novell did not tell him that it had kept the copyrights, but he also admits that Novell did not tell him that it had given them to Santa Cruz either.... He did believe, however, that Santa Cruz "tried to make the document represent . . . the intent . . . . And we captured, I thought at that time, what the intent was." ...

Doug Michels, Senior Vice President of Santa Cruz at the time of the APA, stated in his deposition that "the only way that I know of, and anyone on my team knew of, to buy a software business is to buy the copyrights, and there is no way we would have ever done a deal to buy a software business where we didn't get the copyrights and all the other intellectual property."... Michels testified that he was very involved in the initiation of the APA, but that he was only involved in two or three meetings with Novell after the initial discussion about the deal.... He did not draft any language of the APA or review drafts of it. He does not recall "even vaguely" any debates in which he participated regarding the drafting of the APA.... He also does not recall any discussion by anyone either at Novell or Santa Cruz regarding the transfer or retention of UNIX copyrights....

Jim Wilt, a business development executive at Santa Cruz, testified that it was his understanding and intent during the negotiations that SCO would acquire Novell's entire UNIX and UnixWare business, including the copyrights.... He viewed the copyrights as essential to the acquisition of a software company. ... Although SCO refers to Wilt as the lead negotiator for Santa Cruz, Ed Chatlos testified that Wilt "dropped out" in the latter half of the negotiations of the Santa Cruz-Novell deal and Wilt, himself, concurred that he was less active at the end of the negotiations when the APA was being drafted. ... He also testified that the lawyers did the drafting of the APA. Wilt testified that he did not recall anyone from Novell stating that copyrights were being transferred....

See what I mean? But read it for yourself. Here's my favorite part, maybe because it's about a paralegal:
SCO also relies on the understanding of Kimberlee Madsen, a paralegal in Santa Cruz's legal department.... She testified that she participated in the negotiations leading up to the drafting of APA and reviewed and drafted some of the agreement.... She testified that it was always her understanding that the UNIX copyrights were part of the assets Santa Cruz purchased and she could not recall anyone in the negotiation team discussing the retention of copyrights.
And what might *that* indicate, if you are not SCO? If a person who helped draft the APA and attended the meetings, some of them, never heard anybody specifically mention retaining the copyrights, does that tell us that they were not retained or that nobody was talking about the copyrights because they were on the excluded assets list, maybe? Here's her deposition, if you are desirous of digging a bit deeper. And here's one salient sentence from her testimony that day: "I don't recall any conversations with Novell pertaining to copyrights." How in the world would a paralegal draw up copyright transfer language if no one ever even brought it up? Not once?

Why appeal something that you are so likely to lose? I don't know. But even if the appeals court were to rule that the judge should go back and reeeeally pay attention to the witnesses, or that it has to go to a jury to decide, what conclusion would he/they still likely come to? You don't have to be a lawyer to figure that out, so why do this?

Because this is SCO, which has its own alternate universe.

I notice on first quick reading that SCO doesn't seem to be appealing anything from the July 16, 2008 ruling. We'll see if Novell does. If I were Novell, I sure would.

Here are the filings (warning for those on dial-up or other slow connection -- the appeal brief is 87 pages/300 kilobytes, and the Appendix with exhibits is 182 pages/6 megabytes):

03/04/2009 - Appellant's deficient brief filed by SCO Group. Type of deficiency: No prior/related appeals statement, no reasons for oral argument (Appendix is fine). Appellant's brief due on 03/16/2009 for SCO Group.

03/06/2009 - Errata sheet filed by SCO Group. Original and Served on 03/06/2009. Manner of Service: US mail.

03/06/2009 Appellant brief filed by SCO Group. Original and 7 copies.. Served on 03/06/2009 by email. Oral argument requested. Appendix filed (partial). Original and 2 copies. Appendix pages: 16,917. Appellee's brief due 04/09/2009 for Novell, Inc.


  


SCO Files its Appeal Brief in SCO v. Novell | 129 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
corrections
Authored by: webster on Friday, March 06 2009 @ 09:30 PM EST
..if necessary.

[ Reply to This | # ]

copyrights as essential ?
Authored by: Anonymous on Friday, March 06 2009 @ 10:25 PM EST

"to buy a software business is to buy the copyrights"

Yet in Open Unix they say:

"Open UNIX incorporates some proprietary third party technology which means
source code for certain third party modules will not be available due to
licensing restrictions."

UnixWare does indeed incorporate third party software, software for which Novell
never had the copyrights and had licences for. Novell ensured that these
licences could be transferred to Santa Cruz.

So Novell proved that it was entirely possible to run a software business
without [all] the copyrights. Santa Cruz showed they could run a software
business without all the copyrights (granted they had to take MS to court to
cancel payments for software they were no longer using). Caldera proved that
they could run a software business without all the copyrights when they produced
Caldera Linux, and subsequently showed they could do so with Unix and Unixware.
It's just that Caldera didn't do it well enough, but that is not the fault of
the copyrights.

[ Reply to This | # ]

Jury Trial
Authored by: Steve Martin on Friday, March 06 2009 @ 10:57 PM EST

I notice on first quick reading that SCO doesn't seem to be appealing anything from the July 16, 2008 ruling.
Did you notice this? They didn't list Kimball's September 7, 2007 Order striking a jury trial as one of the issues up for appeal, either.

---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

Waiver clause
Authored by: _Arthur on Saturday, March 07 2009 @ 12:05 AM EST
SCO invites the appellate judges to endorse SCO's decision to ignore the APA
contract Waiver clause, because it inconveniences SCO financially.

SCO argues that the terms of Covenant of Fair Dealings (that Novell and
Santa Cruz both signed) precludes a company of taking undue advantage
over the other.

The waiver clause might prevent SCO of scoring $5 Billions from IBM, so SCO
just plain ignored it. After all, SCO argues, they paid $250M for the APA, so
they don't see why Novell can interfere with their lawsuit(s) "at its sole

discretion".

They are pleading for the Appeal judges not to see it they same say SCO
doesn't.

[ Reply to This | # ]

[OT] Off Topic discussion
Authored by: Aladdin Sane on Saturday, March 07 2009 @ 12:10 AM EST
Discuss off-topically here.

---
"Then you admit confirming not denying you ever said that?"
"NO! ... I mean Yes! WHAT?"
"I'll put `maybe.'"
--Bloom County

[ Reply to This | # ]

[NP] News Picks discussion
Authored by: Aladdin Sane on Saturday, March 07 2009 @ 12:11 AM EST
Discuss Groklaw News Picks here.

---
"Then you admit confirming not denying you ever said that?"
"NO! ... I mean Yes! WHAT?"
"I'll put `maybe.'"
--Bloom County

[ Reply to This | # ]

SCO Files its Appeal Brief in SCO v. Novell
Authored by: dio gratia on Saturday, March 07 2009 @ 12:47 AM EST

Didn't the original APA have a dated Bill of Sale in accompaniment transferring assets to the original SCO? There wasn't a new Bill of Sale prepared for additional assets at the time of amendment 2. TSCOG appears to be short a transfer document to go with their APA amendment.

[ Reply to This | # ]

PJ: "Tell me about it. I could write a book."
Authored by: sproggit on Saturday, March 07 2009 @ 06:08 AM EST
Well PJ, what can I say? I'm here with credit card at the ready, browser tab
open at Amazon, waiting for that announcement...

;o)

[ Reply to This | # ]

Now we know why they subpoenaed O'Gara
Authored by: Steve Martin on Saturday, March 07 2009 @ 07:19 AM EST

On page 22 of the Appeal Brief PDF, we see why they subpoenaed Maureen O'Gara:

Within two hours of Novell's public claim that it owns the UNIX copyrights, SCO's stock plummeted, even though SCO had announced record revenues that day. (13137-38¶¶6-9.) In discovery, SCO learned that the timing of Novell's announcement was not "entirely coincidental," as Mr. Messman had claimed. (13800;10025-26;10029.) Novell Vice Chairman Chris Stone had informed Maureen O'Gara, a journalist who has covered the computer industry since 1972, that Novell intentionally was making the announcement on the day of SCO's earnings report to "confound SCO's stock position" and "upset the stock price." (10025-26;10029.) According to her testimony, Mr. Stone leaked this information "with laughter" and "chortling." (10029.)
With the subpoena and deposition, her report of what Stone told her becomes sworn testimony. Without, it is merely hearsay, and therefore inadmissible. Deposing her got this bit into the record. (Perhaps I just missed it, but I don't remember this coming out in summary judgment briefing or in trial testimony. Does anyone? If it didn't, is TSG attempting to slip an alleged new fact in to the appeal?)

---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

errors in courts conclusion ..
Authored by: emacsuser on Saturday, March 07 2009 @ 08:51 AM EST
'Did the district court err in concluding, as a matter of law, that Santa Cruz
did not obtain the copyrights to the UNIX and UnixWare source code under the
APA, but only an implied license?'

'Did the district court err in concluding, as a matter of law, that if the APA
did not itself transfer the copyrights'

'Did the district court err in concluding, as a matter of law, that Novell has
the right under the APA to force SCO to waive legal claims against IBM'

'Did the district court err in concluding that if Novell has the right under the
APA to waive SCO’s rights against IBM'

'Did the district court err in concluding, as a matter of law, that Novell
retained an interest in royalties from SCO’s 2003 agreement with Sun
Microsystems (“Sun”)'

[ Reply to This | # ]

IBM paid Novell to acquire SuSE
Authored by: emacsuser on Saturday, March 07 2009 @ 08:55 AM EST
"In March 2003, SCO brought copyright and contract claims against IBM ..
Soon thereafter, IBM paid Novell $50 million to acquire SuSE, a leading Linux
distributor"

Is this even true ?

[ Reply to This | # ]

SCO's Deficiency
Authored by: DaveJakeman on Saturday, March 07 2009 @ 09:09 AM EST

The court's rejection of SCO's first brief is worth the read.

Snippet:

If you fail to correct the stated deficiencies within 10 calendar days of the date of this letter, the deficient brief will not be filed. In addition, the appeal may be dismissed without further notice.
Probably boilerplate, but dots on i's and crosses on t's are still required. Let's hope the same applies to specificity when SCO start their tap dance routine. A stiff, no-nonsense Court attitude would be most refreshing here.

---
Monopolistic Ignominious Corporation Requiring Office $tandard Only For Themselves

[ Reply to This | # ]

IBM paid Novell to acquire SuSE
Authored by: emacsuser on Saturday, March 07 2009 @ 09:09 AM EST
"In March 2003, SCO brought copyright and contract claims against IBM ..
Soon thereafter, IBM paid Novell $50 million to acquire SuSE, a leading Linux
distributor"

[ Reply to This | # ]

reason for Novells continuing interest in UNIX
Authored by: emacsuser on Saturday, March 07 2009 @ 09:24 AM EST
'In the summer of 1995, .. Novell sought to sell everything it owned related to UNIX, but after initial negotiations, the parties realized that Santa Cruz could not afford to pay the full price in cash or stock. (08611-12¶¶6-7.) Accordingly, as a financing device, the parties agreed that Novell would retain an interest in 95% of “SVRX Royalties,”'

This is new to me and presumably Novell:

Your honor, Novell never retained any interest in 'UNIX' and even if they did it was merely a financial device cause we didn't have enough funds. Besides which Novell only timed the claim to upset the SCO stock price, you can believe disinterested third-party journalist Maureen O’Gara .. :)

[ Reply to This | # ]

Why appeal something that you are so likely to lose?
Authored by: Anonymous on Saturday, March 07 2009 @ 09:39 AM EST
"Why appeal something that you are so likely to lose?"

Because they have nothing *too* lose. It's other people's money they are
spending.

[ Reply to This | # ]

"I could write a book."
Authored by: rsi on Saturday, March 07 2009 @ 11:39 AM EST
PJ, I thought you WERE writing a book on the whole SCO vs. The World mess!
Actually, it probably should be a trilogy as this has gone on so long, and as
was said, it IS so complicated. I get lost in all the details!

If you do, your book along with groklaw.net, will be used in Law schools and
Journalism schools for decades to come!

Cheers PJ!

[ Reply to This | # ]

My impressions - for whatever they are worth
Authored by: Gringo on Saturday, March 07 2009 @ 02:49 PM EST

SCO's Appeal Brief was a long read. It seemed to be very well written from the point of view of its internal logic structure - if we don’t consider any external references. It has an internal logic, consistency and coherency as much as a good work of fiction or piece of music has. Whoever wrote it spent considerable effort in polishing this document. Perhaps it is SCO’s great hope that some potential investor will be sufficiently convinced by its literary truth as to further invest in their gambling habit.

Now to enjoy a movie or a good book requires an implicit "suspension of disbelief" on the part of the reader, that he may enjoy the novel to the fullest. If we were to place under a microscope every twist and turn of a plot to test for plausibility, we would not derive much enjoyment from the work. As a corollary, a poorly written novel or film with glaring flaws or loose threads intrudes upon our pleasure as we are abruptly awakened from our state of suspended disbelief.

According to Wikipedia, suspension of disbelief “refers to the willingness of a person to accept as true the premises of a work of fiction, even if they are fantastic or impossible. … According to the theory, suspension of disbelief is a quid pro quo: the audience tacitly agrees to provisionally suspend their judgment in exchange for the promise of entertainment.”

Well – I was certainly “entertained”, to say the least. From reading their brief alone, you could get the feeling that the judge had been really unfair to them, and really got it all very wrong. I was almost beginning to feel sorry for SCO when I turned to reread the original judgment they were appealing. What a shock it was to read that again after reading the appeal brief – as if a bucket of icy water was thrown over me, such a complete and thorough condemnation of SCO’s shenanigans it was.

So then I am left to ponder the glaring contrast of the harsh judgment with the calm logic of SCO’s appeal. Wow, I think – like black and white, day and night. Somebody is completely wrong here. How is the layman to resolve the completely contradictory images painted by these two documents – the original judgment and the appeal brief? How do you prove parallel lines never meet without following them all the way to their conclusion at infinity?

Well the short answer is that you don’t – you can’t – you don’t have the time and resources to follow those parallel lines to infinity – any more than you don’t have the time to go get a law degree so that you might have the requisite knowledge to reconcile these two points of view. You need an expedient shortcut to arrive at some useful conclusion. In the case of parallel lines, Euclid's Fifth Postulate gave us another way to consider the problem, by looking at internal angles of intersecting lines. Even if it was a somewhat awkward and incomplete proof, it had a ring of rightness to it. Then that is the way I will weight SCO’s appeal brief, by looking the problem from a different approach than a lawyer would take.

Let us consider that the SCO point of view is as reasonable and logical as it superficially appears. Then we must condemn the judge who rendered the original judgment as either totally incompetent, totally biased in favor of Novel, or both. SCO leaves us no middle ground where we could say that perhaps he made a small error. The only way we can accept SCO’s point of view points is via total indictment of the judge.

Now before I am going to condemn the judge, I must consider if I have any grounds to do so. Previously on Groklaw I had the opportunity to read a bit about his career, and by all accounts, at least up to SCO vs Novell he appeared to be a competent and respected professional in his field. Am I then to imagine that something suddenly happened to impair his competence or impartiality in this case? That I would find very hard to believe, specifically because there is has been no evidence brought forward to support or even suggest such a notion. On the other hand, obviously SCO is not impartial at all and it would absurd to expect them to be. On the contrary, we can expect them to employ every device they can lay their hands on to tell their sad tail of justice denied. The conclusion then becomes obvious to me. SCO’s appeal is merely a work of fiction design to entertain some unsophisticated audience and is without substance or force to sway the appellate court. It may even achieve the opposite effect that SCO would hope for by insulting the intelligence and competence of a respected member of the judicial body.

[ Reply to This | # ]

SCO Files its Appeal Brief in SCO v. Novell
Authored by: JamesK on Saturday, March 07 2009 @ 04:10 PM EST
"One deficiency was that SCO failed to tell the appeals court why it felt
oral argument was necessary."

Ummm... The dog ate their homework? ;-)


---
There are 10 kinds of people in the world, those who understand binary and those
who don't.

[ Reply to This | # ]

Hearing Already Scheduled
Authored by: sk43 on Saturday, March 07 2009 @ 04:28 PM EST
Check out the Calendar.

Wednesday, May 6 Morning Session (9:00 AM start). Byron White Court House in Denver, Courtroom I.

SCO Group, Appellant v. Novell, Inc. is the fourth oral argument on the agenda.

The preceding case on the agenda is "RMA Ventures v. Sunamerica". You can find it here. In case anyone cares.

[ Reply to This | # ]

Says it all - SCO Files its Appeal Brief in SCO v. Novell
Authored by: Anonymous on Saturday, March 07 2009 @ 05:09 PM EST
Concerning SCO's expert witnesses.

"...they fail to establish an adequate foundation to support their
opinion."

[ Reply to This | # ]

The thing that annoys me....
Authored by: tiger99 on Saturday, March 07 2009 @ 06:28 PM EST
.... is that Judge Kimball and Magistrate Judge Wells went to extraordinary lengths to allow SCO every possible opportunity to present their non-existent evidence in both the IBM and Novell cases, so much so that some people here were concerned that they may be biased in favour of SCO. This was of course done by the judges, in the interests of overall judicial economy, so that there would be as few grounds as possible for appeal.

Yet now it seems that SCO have scraped up some bogus reasons for that very appeal. It may waste lots more time, and achieve nothing.

[ Reply to This | # ]

SCO Still lying
Authored by: Anonymous on Sunday, March 08 2009 @ 10:20 AM EDT
In 1993, Novell purchased the UNIX business from AT&T for $300 million. (06100.) In 1995, Santa Cruz purchased the UNIX business from Novell under the APA, for consideration to date of approximately $250 million.
Santa Cruz did not pay Novell approximately $250 million in considertion for the UNIX business. They paid well under $100 million in combined cash and Santa Cruz stock. The rest of the money that SCO is claiming was for the purchase of the UNIX business is Novell's licensing fees that Santa Cruz and SCO has conllected for Novell over the years. This money is money that is owed to Novell by other UNIX licensees, and SCO is acting as a collection agent to collect and forward Novell's money to Novell, in exchange for a 5 percent administration fee.

These licensing fees are due to Novell ongoing forever, or until those oteher licensees decide to stop selling UNIX and therefore no longer owe the money to Novell.

[ Reply to This | # ]

The fascinating part
Authored by: Anonymous on Sunday, March 08 2009 @ 01:03 PM EDT
At this point the only thing i find incredible in this saga is the lack of any
evidence from the plaintiff. They have a 6 years court process ( so far ) based
on unsupported opinions.

Why should I, as a foreigner, want to deal with a country whose law system is so
broken that I can get sued out of business regardless of any merit?

[ Reply to This | # ]

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