[article] Judge stings SCO in Novell spat over Unix rights

Lemming

From PC Pro magazine:

Read the original article here

Monday 14th June 2004

UPDATED: Judge stings SCO in Novell spat over Unix rights
[PC Pro] 11:02

SCO has lost a major battle in its fight with Novell over the latter's claims that it retains certain rights to Unix.

Currently embroiled in a courtroom tussle, the latest twist is that SCO's motion to have the case sent back to a state court has been denied. This may not seem a seismic shift in direction, but SCO specifically wanted the case to focus on the contract - in particular the asset purchase agreement (APA) between it and Novell, from whom it bought Unix - and its intention to transfer those Unix assets to SCO.

But Novell contends that the language of the APA isn't explicit enough to assert that either all or any specific copyrights were transferred.

If the case focuses on the intention of the contract it can be tried in a state court, but the Judge has decided it is the copyrights themselves that are at the heart of the dispute, and it will therefore have to be tried in a Federal court.

Jason Schultz, staff attorney at the Electronic Frontier Foundation, said: 'The Novell decision is definitely a blow to SCO. Since Novell had the original copyrights at issue, it's really SCO's burden to show that it somehow took them over at some point. If it can't cough up the evidence, Novell goes home with all the copyrights.'

SCO now has to prove that the APA and a subsequent amendment, which suggests without specificity that Novell will transfer copyrights SCO needs to do its business, hold enough weight in court to carry SCO's case forward. And following that, SCO then has to establish exactly which copyrights Novell transferred.

SCO will have its work cut out, though, as the Judge doubts whether the documents constitute the 'instrument of conveyance' SCO needs to proceed with its 'Slander of Title' suit against Novell. In the ruling, Judge Kimball states: 'It is questionable on the face of the documents whether there was any intention to transfer the copyrights as of the date the amendment was executed.' Kimball adds: 'It is questionable whether Amendment No. 2 was meant to convey the required copyrights or whether the parties contemplated a separate writing to actually transfer the copyrights after the 'required' copyrights were identified.'

And if SCO fails in the Novell case, such a loss may have wider implications, touching SCO $5bn suit against IBM. Says Schultz: 'For the IBM case, it means that some of the copyrights SCO is asserting against IBM may be dropped from the case because SCO won't own them anymore. It also might affect the breach of contract claims, since the contract was predicated on SCO owning everything they said they did.'

Bad new on the Novell front is also affecting SCO's ability to license its IP to Linux users. In Thursday's teleconference, SCO CEO Darl McBride said that the negligible income from the SCOsource licensing division is attributable to Novell, whose actions are raising doubts in Linux users' minds as to whether SCO's demands to license its IP are justified. For the last quarter, it spent $4.5mn to bring in just $11,000 of licensing revenue, and McBride and CFO Bert Young refused to be drawn on predictions for future SCOsource revenues.

However, they did say there remains enough in the SCO coffers to continue its litigation against IBM, Novell and end users for 'several years to come'. Judge Kimball's decision has made it more likely that SCO will be forced to continue litigate against end-users rather than license its IP to them.

We asked SCO whether there was any chance they would hang fire on further Linux end-user litigation until the Novell spat had been sorted out but they declined to comment.

In other news, SCO's case against IBM has taken a further twist, with the news that SCO's request that IBM's patent counterclaims be tried separately have been denied, although it has been granted some extensions to the trial schedule.


Matt Whipp

Oh dear .... Novell get the all the copyrights if SCO don't produce evidence, and they've also been denied their request to have IBM's patent counterclaims tried as a seperate case, all on top of loosing some serious revenue.

It doesn't look good for SCO does it?

hostyle

Never underestimate the power of a well-paid lawyer. The contract between Novell and SCO is worded ambiguously. Nothings over yet.

They are going to lose when they finally enter court against IBM though, whatever actually happens. The US government gave up their case against IBM in the 60s (I think - don't have exact facts at hand) because it was costing them too much in legal fees, and SCO are going to get buried in legal fees too (win, loose or draw).

In short, SCO have already committed corporate suicide. Someone on slashdot put it best: "SCO just wilfully entered an ass-kicking contest with an 8 legged monstrosity that has no ass".

Red Alert

I hope that vile little company gets a right kick up the ass. I've asserted before that i'd even recommend Windows 2000 Server to someone just so that they wouldn't buy SCO OpenServer!

sceptre

Originally posted by hostyle
They are going to lose when they finally enter court against IBM though, whatever actually happens. The US government gave up their case against IBM in the 60s (I think - don't have exact facts at hand)

Oh it took a little longer than that. First suit was filed in 1969 and dragged on till 1983. By 1983 IBM was firmly beinning to lose control of the business computer market (especially when Compaq got around to cloning BIOSes) so had the case proceeded further the result would have been a little moot.