Novell v. SCO: The Telling Blow?

Opinion: In an eventful week for SCO, Linux & Open Source columnist Steven J. Vaughan-Nichols thinks the biggest event by far is that SCO now must face Novell in federal court to battle for Unix's copyright. It's a battle, he thinks, that SCO is li

Its been a busy time for SCO watchers. First, the company—somehow, some way—managed to twist its way out of its deal with BayStar Capital with the lions share of the cash, and BayStar was left holding millions of shares of underwater stock.

Then, in this week alone, weve seen SCO report an absolutely awful second quarter, and a U.S. District Court granted it more time to get its ducks in line for its IBM case.

And last, but by no means least, the same judge told SCO that its case over who really owns Unixs copyright, Novell or SCO, would be fought out in federal court instead of in state court.

Now, if you didnt have a scorecard, you might think the last point was the smallest one. But if youve been playing along at home, or at Groklaw anyway, youll know that the seemingly small change in venue is all-important.

Thats because it completely changes the rules by which SCO will have to show that it, and not Novell, owns Unixs copyright. And without that copyright, all of those other cases SCO is pursuing against AutoZone, DaimlerChrysler, IBM and Red Hat fall apart like a house of cards in a summer thunderstorm.

Im no lawyer; Im just a working journalist whos been following SCO since the late 1980s. But heck, you dont have to take my word that SCO may now be in serious legal hot water. Let me introduce you to Michael R. Graham, intellectual property attorney and partner with the Chicago-based law firm Marshall, Gerstein & Borun LLP.

Graham tells me, "Judge Kimballs decision is a serious loss for SCO. Not only in its slander of title case against Novell, but in SCOs case against IBM. The threshold issue in both cases is whether SCO owns copyright in the Unix software code."

"SCO wanted the case remanded so that the only issue would be contractual: whether the APA [Asset Purchase Agreement] and Amendment No. 2 transferred ownership of the Unix code," Graham says.

"But Judge Kimball concluded that a more fundamental issue is whether the APA and Amendment No. 2 constitute the type of writing required under the federal copyright law to effect a transfer of copyright. This federal analysis could prove fatal to SCOs claim."

Next Page: SCO would have a better chance if the only issue were the terms of its agreement.