Novell Pushes for End to SCOs Suit

By Steven Vaughan-Nichols  |  Posted 2004-11-11

Novell Pushes for End to SCOs Suit

Did Novell just drop a bombshell in its ongoing IP (intellectual property) war with SCO over who owns Unix, or is just one more fight in their legal battle?

In its latest court motion, Reply in Support of Novells Motion to Dismiss Amended Complaint, Novell Inc. said it has filed an exhibit—a set of minutes from a 1995 Novell board of directors meeting—which clearly states that Novell was to retain its Unix copyrights when it sold the operating system to the Santa Cruz Operation.

This is at the heart of the two companies battle over whether Novell sold its Unix copyrights to the company that would become The SCO Group Inc.

In turn, SCOs $5 billion lawsuit against IBM largely depends on showing that IBM misused its licensed Unix code by contributing it to Linux. If the court rules that SCO doesnt have a copyright to Unixs code, its case will be greatly weakened.

But according to Douglas E. Phillips, IP attorney in the Washington, D.C., office of the international law firm Covington & Burling, this latest development isnt a smoking gun that will end either the Novell or the IBM cases.

"First, even a favorable ruling for Novell on its current motion would not determine who owns the Unix copyrights. SCOs litigation against IBM and users would not be affected," Phillips said.

Thats because "SCOs case against Novell is for slander of title. Its based on Novell having told people that Novell, not SCO, owns the Unix copyrights. To win, SCO needs to show not only that Novells claims of ownership were false, but also that Novell made those claims with malice—in other words, knowing that they were false or with reckless disregard for whether they were true."

"Because SCO needs to establish both elements; Novell can win by negating either one," Phillips said. "Its often easier to show an absence of malice than it is to show that what was said was correct. So, not surprisingly, Novell has asked the court to end SCOs case on the ground that, whether or not Novell actually owns the copyrights, its claims of ownership were not malicious."

Next Page: Digging into internal documents.

Internal Documents

In addition, Phillips said he doesnt think Novells meeting minutes are all that clear-cut in the case. "Theres probably at least enough of an issue of disputed fact to keep the SCO case against Novell going for now."

Thats because "courts dont usually grant summary judgment based on one internal document thats open to more than one interpretation," he said.

Specifically, Phillips noted that the "minutes say that Novell will retain all of its patents, copyrights and trademarks (except for the trademarks Unix and UnixWare), a royalty-free, perpetual, worldwide license back to Unix and UnixWare for internal use and resale in bundled products, Tuxedo and other miscellaneous and unrelated technology."

"True, the first clause in this sentence says that Novell will retain all its patents and copyrights, which would include the Unix copyrights and any Unix patents," Phillips said.

"But the very next clause in the same sentence says that Novell will also retain a worldwide license back to Unix and UnixWare. Why would Novell need a license back from SCO for internal use and resale of Unix and UnixWare if Novell were not assigning any Unix or UnixWare copyrights or patents to SCO?"

Therefore, "its tough to say that this one internal document, standing alone, would provide a basis for the court to end the case against Novell," Phillips said.

Click here to read Senior Editor Steven Vaughan-Nichols thoughts on SCOs legacy.

But Glenn Peterson, IP attorney and shareholder with Sacramento, Calif.-based law firm McDonough Holland & Allen, said he sees this latest Novell filing as devastating SCOs case. "Novells legal team [has] absolutely decimated SCOs case on the knowing falsehood issue. This is where Novell dropped the nuclear bombshell," Peterson said.

According to Peterson, the "board minutes from a September 1995 meeting unequivocally show that Novells board approved the sale of assets to SCOs predecessor with the explicit understanding that Novell retained ownership of the Unix copyrights."

"In doing so," he said, "Novells lawyers have now made SCOs knowing falsehood claims an absolute joke. If that werent enough, Novell offered additional evidence that, in May 2003, SCO sent a letter asking Novell to transfer the copyrights to SCO! Thus, the argument: If SCO truly believed it owned the copyrights, why ask?

"There is ample room here for Judge Kimball to toss SCOs case, and I would be surprised by any different outcome," Peterson said. "I have from the outset been quite skeptical about SCOs creative slander of title strategy in this case. As more and more facts emerge in the court papers, creative is rapidly on its way to embarrassing."

Who is right? Only the court will decide that, and it has not indicated when it will render a decision.

In the meantime, SCO will fight on. "SCO looks forward to progressing with discovery in this case so that all of the relevant facts can be presented to the court," said Blake Stowell, SCOs public relations director.

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