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| Novell Shows Its Hand in the SCO Correspondence |
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Monday, January 26 2004 @ 06:11 AM EST
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As you know, there is a new front in the SCO wars, or more accurately a newly revealed front. The new player, stage front and center, is Novell. The correspondence between Novell and SCO helps explain some of SCO's otherwise puzzling decisions in the last nine months. The main thing I take away from the letters, rereading them now that SCO has sued Novell, is that I don't see how all of Novell's claims will be cleared away by SCO's slander to title suit, even if it were to prevail. That lawsuit centers on who owns copyrights to Unix. But the Novell correspondence raises another claim that SCO's suit doesn't address, one based on Novell's license to Unix code. Novell's position in the correspondence is based on that license as well as on contractual rights it says it retained in a 1995 deal with the Santa Cruz Organization (now Tarantella), which subsequently sold certain Unix assets to Caldera, which is now the SCO Group. While SCO denies Novell retained those contractual rights, nevertheless, one can't help but wonder how much SCO's decision not to go forward with mailing invoices in the fall and not to sue SGI or to file copyright infringement claims against IBM may at least in part have been influenced by Novell strongly challenging SCO every step of the way behind the scenes. Novell's willingness to do that, to offer indemnification, and to go forward with its Linux plans is founded on their legal analysis as set forth in that correspondence, so it's worth going through it step by step to try to understand their position.
The correspondence began in May of 2003 with SCO sending Novell a Letter to Linux Customers. Jack Messman, CEO of Novell, and later Joseph A. LaSala, Jr., Novell General Counsel, who picks up the Novell side of the conversation as communications between the two companies gets less and less friendly, consistently contend that the company is in a unique position for two reasons: first, because it retained the copyright to Unix in that 1995 deal, and second, because it also has a contractual right to license Unix to its customers. Novell bases its position on its interpretation of the 1995 Asset Purchase Agreement, the Technology License Agreement, and Amendment 1 and Amendment 2, to the APA. SCO's lawsuit addresses the first point, but not the second. In October, when SCO announced it was about to send invoices to Linux users, Novell immediately fired off a letter reminding SCO of the Technology License Agreement, which it says gave Novell a license to not only use the "licensed technology" itself but also to "authorize its customers to use, reproduce and modify" it and to sublicense and distribute same "in source and binary form": "Section II.A.(1) of the TLA provides Novell with 'a non-exclusive, non-terminable, worldwide, fee-free license to . . . use, reproduce and modify, and authorize its customers to use, reproduce and modify, Licensed Technology (including related documentation) in their respective internal business operations' (emphasis added).
"Section II.A.(2) provides Novell with 'a non-exclusive, non-terminable, worldwide, fee-free license to . . . sublicense and distribute, and authorize its customers to sublicense and distribute, such Licensed Technology and modifications thereof, in source and binary form' (emphasis added).
"The license in Section II.A.(1) has no restrictive provisions.
"Section II.A.(2) contains apparent restrictions on the scope of the licensed rights, but they apply only to sublicensing and/or distribution by Novell and not to Novell's authorization of its customers to sublicense or distribute." So you can judge for yourself, here are the cited clauses from the TLA: "II. NOVELL'S RETAINED LICENSES
"A. Effective upon the Closing Date and in connection with the transfer of the Assets by NOVELL to SCO pursuant to the Asset Purchase Agreement, NOVELL hereby retains, with the consent of SCO and, shall have a non-exclusive, non-terminable, world-wide, fee-free license to
"(1) use, reproduce and modify, and authorize its customers to use, reproduce and modify, Licensed Technology (including related documentation) in their respective internal business operations; and
"(2)subject to paragraphs B and C of this Section II, to sublicense and distribute, and authorize its customers to sublicense and distribute, such Licensed Technology and modifications thereof, in source and binary form; provided, however, that (i) such technology and modifications may be sublicensed and/or distributed by NOVELL solely as part of a bundled or integrated offering ("Composite Offering"); (ii) such Composite Offering shall not be directly competitive with core application server offerings of SCO, and (iii) the Licensed Technology shall not constitute a primary portion of the value of such Composite Offering. SCO understands and acknowledges that such restrictions on sublicensing and/or distribution shall not affect any rights specifically retained by NOVELL under the Asset Purchase Agreement, including but not limited to rights under Transitional Contracts."
I hear Novell saying: We don't believe you can sue Linux users based on your claim that Linux contains code from Unix, because we have a license to use any Unix code in there anyway. How can you sue for copyright infringement of Unix code, even if you had the copyrights, when we have a license that allows us to give our customers the authorization to use, reproduce, and modify it? Further, Novell points to section II.B. of the Agreement, which says certain restrictions on Novell cease to exist in the event of a change of control of SCO. Novell defines such an event as Santa Cruz Organization selling the assets it got from Novell to Caldera. Here's that part of the letter: "Moreover, under Section II.B., the proviso 'setting forth restrictions on the sublicense and/or distribution of Licensed Technology and modifications thereof' ceases to exist in the event of a 'Change of Control of SCO.' The 'Definitions' provisions of the TLA specify that 'Change of Control' is defined in the Asset Purchase Agreement ('APA'). The APA defines '"Change of Control" with respect to one party' in Section 6.6(c). That definition easily embraces the transactions pursuant to which the SCO of today acquired the assets sold to the SCO of yesteryear. Accordingly, the restrictions on Novell's sublicensing and distribution of Licensed Technology are no longer applicable.
"In view of SCO's continued harassment of Linux users based on exaggerated and unfounded claims, Novell reserves the right to exercise its rights under the TLA." This part is saying to me that if there was a change of control event, then the restrictions in II.A.(2) would be wiped away, those restrictions being: " . . .such technology and modifications may be sublicensed and/or distributed by NOVELL solely as part of a bundled or integrated offering . . .; (ii) such Composite Offering shall not be directly competitive with core application server offerings of SCO, and (iii) the Licensed Technology shall not constitute a primary portion of the value of such Composite Offering." This appears to be Novell answering SCO's claim that Novell was subject to a noncompete clause. I notice they talked about suing Novell over that noncompete clause if they went ahead with the SuSE deal, but so far nothing like that has happened. Here is Section II.B. and II.C, referenced in II.B, of the Technology License Agreement, referred to by Novell in this letter: "B. In the event of a Change of Control of SCO, and commencing with the effective date of such Change of Control, the proviso in subparagraph IIA(2) setting forth restrictions on the sublicense and/or distribution of Licensed Technology and modifications thereof shall cease to exist.
"C. In the event of a Change of Control of NOVELL, and commencing with the effective date of such Change of Control, the term "Composite Offering" in the proviso of subparagraph IIA(2) above shall be restricted to bundled and integrated offerings of NOVELL or its customers, as the case may be, that have been developed or substantially developed as of the effective date of such Change of Control." With regard to defining what constitutes a change of control, here is Section 6.6(c) of the Asset Purchase Agreement, where it defines "Change of Control": "(c) Change of Control. For purposes of this Agreement a "Change of
Control" with respect to one party shall be deemed to have occurred
whenever (1) there shall be consummated (1) any consolidation or merger
of such party in which such party is not the continuing or surviving
corporation, or pursuant to which shares of such party's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger or (2) any sale, lease, exchange or
transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of such party, or (ii) the stockholders
of such party shall approve any plan or proposal for the liquidation or
dissolution of such party, or (iii) any party, other than such party or
a subsidiary thereof or any employee benefit plan sponsored by such
party or a subsidiary thereof or a corporation owned, directly or
indirectly, by the stockholders of such party in substantially the same
proportions as their ownership of stock of such party, shall become the
beneficial owner of securities of such party representing greater than
fifty percent (50%) of the combined voting power of then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as
a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise. or (iv) at any time after the date of
this Agreement, individuals who at the date hereof constituted the Board
of Directors of such party shall cease for any reason to constitute at
least a majority thereof, unless the election or nomination for election
by such party's stockholders of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the date hereof, or (v) any other event shall occur with
respect to such party that would be required to be reported in response
to Item 6(e) (or any successor provision) of Schedule 14A or
Regulation 14A promulgated under the Exchange Act." If, like me, you wondered why SCO didn't follow through and sue SGI, an October 7 letter from Novell and another letter, dated October 10, shed some light. Novell first directs SCO to "to waive any purported right SCO may claim to terminate SGI's SVRX license" and to "waive any purported right SCO may claim to require SGI to treat SGI Code itself as subject to the confidentiality obligations or use restrictions of SGI's SVRX license", saying that Section 2.01 of the license specifically states that 'ATT-IS claims no ownership interest in any portion of such a modification or derivative work that is not part of a SOFTWARE PRODUCT.'" When SCO failed to waive as directed, Novell sends another letter and waives all SCO's purported rights to terminate SGI's license.
Novell in its June 9, 2003 letter said SCO had no right to unilaterally terminate IBM's SVRX Licenses and that it was inappropriate for SCO to make such threats. Amendment No. X, Novell said, granted IBM the "irrevocable, fully paid-up, perpetual rights". Novell then waives SCO's "termination" of IBM's license, too. SCO denies they have the authority to do that, of course.
In August, Novell begins to require compliance with clauses in the contract that Novell had apparently let slide for years, such as their right to audit SCO's collecting of royalties for Novell. In the August 7 letter, Novell says they will be doing an audit of SCO, something that had not happened since 1998. Novell on August 20 demands SCO supply copies of the source and binary code for all versions of UNIX and UnixWare under SCO's control.
Novell demands copies of the Microsoft and Sun licenses with SCO and that it cease "all such negotiations and other communications with licensees concerning any such transaction without Novell's prior written consent and continued participation". There is the matter of "royalties and other amounts owed to Novell based on the above-mentioned license agreements". Insofar as preexisting licensees of SVRX are concerned, SCO has, Novell writes, no right to proceed without Novell's approval, reminding SCO of Novell's 95% interest in revenues from preexisting SVRX licenses.
In turn, in SCO's letter of June 11, SCO writes that it "acquired all of Novell's right, title and interest: (a) to the AT&T Software and Sublicensing Agreements, including the AT&T/IBM Software Agreement, and (b) to all claims against any parties. SCO therefore acquired all right, title and interest to enforce the Software and Sublicensing Agreements against IBM, without answering to Novell." Not so, Novell replies. Novell retained certain rights "critical to protecting the interests that Novell retained as part of the Asset Purchase Agreement (including its interests in royalty payments and the contractual commitments Novell made in return for royalty payments)." SCO acquired certain assets from Novell but acquired those assets subject to certain rights of Novell. "You can't have one without the other," Novell asserts.
On the matter of who owns the copyrights, Novell now lists all of its registered copyrights on its web site with the letters. But what we now know is that they were in dispute from day one. In a letter dated August 4, Novell writes that according to their agreements, copyrights were not to be transferred to Santa Cruz Operation unless SCO could demonstrate that such a right was required. They never demonstrated any such need and today's SCO doesn't need copyrights, Novell says, "in order to exercise the limited rights granted SCO" and so unless or until SCO "is able to establish that some particular copyright is 'required' for SCO to exercise its rights under the APA, SCO's claim to ownership of any copyrights in UNIX technologies must be rejected, and ownership of such rights instead remains with Novell." Finally, Novell writes in October that on SCO's behalf Novell "waives any purported right SCO may claim to require IBM to treat IBM Code, that is code developed by IBM, or licensed by IBM from a third party, which IBM incorporated in AIX but which itself does not contain proprietary UNIX code supplied by AT&T under the license agreements between AT&T and IBM, itself as subject to the confidentiality obligations or use restrictions of the Agreements." Novell's position, as I understand it, is that it wouldn't matter even if SCO were successful in its slander to title lawsuit. It has a license to Unix code and it can authorize customers to use it, even if it were to appear in Linux, and even if Novell didn't own the copyrights, which they claim they do anyhow. Does this mean SCO will need to address these other issues in a courtroom at some point? Groan. It looks like it from here, unless Novell were to back down, because if SCO were to sue an end user, why couldn't the end user just say they rely on Novell's license? Then it's back to Novell and SCO to battle that out. At this rate, I won't be telling my grandkids about this case someday; they'll be writing Groklaw to finish telling your grandkids about the final lawsuit after we're gone. Of course, I'm not a lawyer, just an interested observer, so do ask an attorney if all this matters to you in some important way. This article, for example, doesn't look at SCO's position in the correspondence, because that isn't the theme of the piece. Companies end up in court because each has a position it wishes to assert and feels justified in presenting. In theory, anyway. And isn't it clear from going through all these contracts and amendments why you need a lawyer before you sign a contract? The words that are so dry on the page you can hardly stand to read them (tell the truth -- you skipped some of the above, didn't you? Or if you didn't, you had to will your eyeballs to stay on course and finish some of the sentences, right? Like the "Change of Control" paragraph?) can spring to life later and either protect you or bite you, depending on how well the contract was written. Of course, really good lawyers write contracts that are so clear and unambiguous, you don't need a judge to tell you what they mean. When you find a lawyer like that, pay him or her whatever it takes, if you can. It can save you plenty down the road.
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| Authored by: SkArcher on Monday, January 26 2004 @ 06:37 AM EST |
nope. nor did i have to force myself to read it.
mind you, i didn't _understand_ it, but thats because it's written in
legalese.
as far as I can tell it relates to the exact circumstances under which the
"change of control" clause comes into effect, but it uses some
financial terms and, well, IANAF...
:)
Now, if anyone can explain it in plain english (and, if possible, explain the
rest of the dealings of the financial part of the SCO scam, i would be very much
obliged. as would a lot of other people i think
---
irc.fdfnet.net #groklaw[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 06:40 AM EST |
"The words that are so dry on the page you can hardly stand to read them
(tell the truth -- you skipped some of the above, didn't you? Or if you
didn't, you had to will your eyeballs to stay on course and finish some of the
sentences, right? Like the "Change of Control"
paragraph?)..."
It's true, I did skip some of the above. In my defense, though, I did read the
contracts when they first became avalable, and, uh, didn't want to subject
myself again?
Thanks again, PJ, for another remarkable and detailed analysis.
[ Reply to This | # ]
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- Tell the Truth - Authored by: Anonymous on Tuesday, January 27 2004 @ 06:23 AM EST
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| Authored by: Anonymous on Monday, January 26 2004 @ 06:51 AM EST |
Just looking over some of the Novell-SCO correspondence again, and one thing
that struck me was the tone of Jack Messman's letters.
Did Darl ever report to Jack while he was at Novell?
Jack's letters kind of have the tone of a good manager dealing with a
hyperactive and misguided underling, at least at the beginning of the
correspondence. Of course, they take on an "Ok, this is war"
quality.
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| Authored by: RSC on Monday, January 26 2004 @ 07:01 AM EST |
Sorry, I got lost a little. But Can I put the following forward for the
GrokLawsters to tear to shreads.
If IBM was an original Novell customer do they stay a Novell customer?
If that is true, then Novell can say to IBM, any Unix code that has been placed
in Linux, intentionally or not, is there under our permission, (RE: novells
license.) so IBMs' Breech of contract case falls apart. Even the derivitives
angle is blown away. It doesn't matter if the code came for AIX or Dynix,
Novell says its OK.
With this type of agreement, SCO then loses any chance to even sue end users.
Thus SCO will wither away and die.
Start Sheading. :)
RSC.
---
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An Australian who IS interested.[ Reply to This | # ]
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| Authored by: Greebo on Monday, January 26 2004 @ 07:07 AM EST |
Excellent work PJ.
I had downlaoded the zip file of correspondance, nd read most of it, but i wish
i had just waited now.
IANAL, but even i could follow this, although i must admit - you're right - i
did skip some of the legalise stuff. I prefer to read your explainations.
But... This was posted at 06:10 EST? Have you been up all night? You really,
really need to get some sleep!
Anyway, Thanks for the great work you're doing.
Greebo.[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:11 AM EST |
I remember in an article (Code Red?) where Darl talks about how anyone with any
legal sense at SCO says "I don't get it, can't the guys at Novell read
English?".
Which is hilarious.
No, seriously, I laughed.
I remember seeing someone in a /. article say the same thing about SCO about the
same contract before that article was written.
I think we should just start being like, "SCO is wrong because THEY KICK
DEAD BABIES!" just so we can see them say it in an article.[ Reply to This | # ]
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| Authored by: Steve Martin on Monday, January 26 2004 @ 07:13 AM EST |
[...]if SCO were to sue an end user, why couldn't the end
user just say they rely on Novell's license?
P.J., I
think a very important detail is missed in this line of thought. The claim made
by Novell regarding sublicensing specifically states that they have this
authority with regard to its customers. I for one have never been a
Novell customer, so would their right to sublicense the UNIX code extend to
me?
---
"When I say something, I put my name next to it." -- Isaac
Jaffee, "Sports Night" [ Reply to This | # ]
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- Chain - Authored by: maroberts on Monday, January 26 2004 @ 07:32 AM EST
- Chain - Authored by: rgmoore on Monday, January 26 2004 @ 11:27 AM EST
- Chain - Authored by: old joe on Monday, January 26 2004 @ 03:13 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 07:40 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 07:49 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: nickieh on Monday, January 26 2004 @ 09:09 AM EST
- OT: Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 09:57 AM EST
- Linus buys a License - Authored by: the_flatlander on Monday, January 26 2004 @ 10:16 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Jude on Monday, January 26 2004 @ 10:31 AM EST
- No, no, NO! - Authored by: stuart_b on Monday, January 26 2004 @ 12:23 PM EST
- No, no, NO! - Authored by: Anonymous on Monday, January 26 2004 @ 12:47 PM EST
- Not a good idea. - Authored by: Ed Freesmeyer on Monday, January 26 2004 @ 12:55 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Tyro on Monday, January 26 2004 @ 02:10 PM EST
- Unix IP in Linux - I'll buy that for a dollar! - Authored by: crythias on Monday, January 26 2004 @ 10:13 AM EST
- They should rather sell a CD - Authored by: Anonymous on Monday, January 26 2004 @ 02:53 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: eggplant37 on Monday, January 26 2004 @ 09:15 PM EST
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:16 AM EST |
The oddness of the SCO suit against Novell is explained well by a crucial
battle going on behind the scenes. Nothing we see in SCO v IBM and SCO v Linux
explains it as well.
(All of this is IMHO.) The PIPE investors must have
threatened SCO with the possibility of a redemption event of type (ix) for not
disclosing that its claims were under dispute by Novell. This would require SCO
to repay $60M cash, which it probably does not have right now, and would
likely force a bankruptcy.
BayStar is a venture capital firm from the Bay
Area, so they must have competent IP lawyers going over SCO's case. When Novell
published its correpondence with SCO there should have been alarms going off at
BayStar. No doubt they rang SCO right up and demanded an explanation. That's
why we saw the S-3/A that disclosed the possibility of a redemption event. ("Our
redemption obligation may be triggered by events that are beyond our control.")
And then SCO filed suit against Novell on peculiar grounds. And then we saw the
8-K disclosure.
SCO wants to spin the dispute with Novell in a way that
would make it harder for BayStar to declare a redemption event (without a
fight). To do so they are creating the fiction that SCO really did possess full
title and all rights as it claims. According to SCO what has happened recently
is Novell has slandered the title that SCO properly holds and this has caused
SCO business troubles.
So SCO thinks it cannot file the case as a contract
dispute that needs to be resolved and it has instead framed the case as
something where SCO clearly holds the rights it claims, but those rights are
being slandered. To admit the reality of the sitution would be to admit to
misleading its preferred shareholders. And that will kill SCO.
Here is the
language of the redemption event clause:
the Corporation otherwise
shall breach any material term hereunder or under the Securities Purchase
Agreement or the Registration Rights Agreement, including, without limitation,
the representations and warranties contained therein (i.e., in the event of a
material breach as of the date such representation and warranty was made) and if
such breach is curable, shall fail to cure such breach within ten business days
after the Corporation has been notified thereof in writing by the
holder;
Here is the warrant SCO made that is probably getting
it in trouble now:
Each of the Company and its Subsidiaries owns
or is duly licensed (and, in such event, has the unfettered right to grant
sublicenses) to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, inventions, discoveries, processes, scientific, technical,
engineering and marketing data, object and source codes, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its business as now being conducted and as presently contemplated to be
conducted in the future. Section 3(l) of the Disclosure Schedule sets forth a
list of all material patents, patent applications, trademarks, trademark
applications, copyrights, licenses, sublicenses, and copyright applications
owned and/or used by the Company in its business. Neither the Company nor any
Subsidiary of the Company infringes or is in conflict with any right of any
other person with respect to any third party Intangibles. Neither the Company
nor any of its Subsidiaries has received written notice of any pending conflict
with or infringement upon such third party Intangibles. [More...]
[ Reply to This | # ]
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- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 07:53 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 08:24 AM EST
- The best explanation yet - Authored by: Anonymous on Monday, January 26 2004 @ 09:29 AM EST
- Very OT... but - Authored by: Anonymous on Monday, January 26 2004 @ 09:41 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: elrond_2003 on Monday, January 26 2004 @ 09:32 AM EST
- Nice hypothesis, but doesn't it presume... - Authored by: Jude on Monday, January 26 2004 @ 11:10 AM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Halmonster on Monday, January 26 2004 @ 12:58 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 01:26 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 01:57 PM EST
- Novell Shows Its Hand in the SCO Correspondence - Authored by: Anonymous on Monday, January 26 2004 @ 09:42 PM EST
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| Authored by: fjaffe on Monday, January 26 2004 @ 07:17 AM EST |
| Great piece, PJ. Thanks Novell has said that they had dialog with SCO
regarding SCO requesting the transfer of copyrights. This was some time
back. Since this is Groklaw, here is a reference Apparently,
you share this view, since over the last few months you have repeatedly asked
Novell to transfer the copyrights to SCO, requests that Novell has
rejected. This is from the Novell site in this press
release from May 28, 2003. It would be great to see the dialog documented
where SCO requests that Novell transfer these copyrights. Unfortunately, the
letters Novell released start at May 12, 2003, and do not include the request
for transfer of copyright. [ Reply to This | # ]
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| Authored by: gvc on Monday, January 26 2004 @ 07:18 AM EST |
The agreement reads like an offer to purchase. In real estate, the offer to
purchase is generallly followed up with some sort of transfer document, and the
transfer is registered with the land titles office. Even lacking a registered
deed, there is some sort of symbolic transfer like handing over a key or simply
transferring occupancy. If the vendor fails to transfer the title, he or she
can be sued for failing to close, but the real estate still belongs to the
vendor.
Amendment 2 is hopelessly ambiguous as to which copyrights are excluded from the
excluded assets (and hence, which are included). Again, this reads to me like
"all contents and chattels except those appliances necessary for
cooking." If I (SCOG) took delivery of a house 6 years ago, and found
that the previous owner (Santa Cruz) was supposed to have acquired a microwave
oven from the previous vendor (Novell), and only now went after the previous
vendor demanding the microwave oven, I'd be laughed out of court.
The bottom line is that I don't see anything even resembling an act of transfer
of these copyrights: no registration, no scrap of paper naming them, no
publication with new copyright notices, no act of enforcement. At best we have
a nebulous offer to transfer (to the prior, not current, owner) that was never
consummated.[ Reply to This | # ]
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| Authored by: TwinDX on Monday, January 26 2004 @ 07:22 AM EST |
IANAL (obviously) but what I understand from this is that no SCO licences should
even be considered right now by anyone. SCO are akin to the scamsters who sell
gullible people the Eiffel Tower and the likes (it has happened on a number of
occasions!). They may not have realised that they didn't have the rights to try
this back when McBride started shooting his mouth off, but looking at the Novell
correspondance and SCO's erratic behaviour I think Novell has kicked them into
touch, and suing Novell is a desperate act (especially what they're suing them
for).
SCO get weirder and weirder. It'll make an entertaining Hollywood black comedy
in a few years time, I'm sure.
On a different note, I've actually used SCO UnixWare. It was on a box in a
colleague's office; they'd received the box from a customer who had given up
on it and migrated to Linux. I had a look just to see it - it was dreadful. My
first taste of Linux was with a 2.0 Kernel (1997) and it was akin to that.
Horrid. They wonder why nobody wants their shoddy OS? It's because people
working in their spare time can come up with something better![ Reply to This | # ]
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| Authored by: jrc on Monday, January 26 2004 @ 07:27 AM EST |
The historian in me loves your juxtaposition of the chronology Novell's letters
with the chronology of SCO's actions. Methinks that this type of inquiry will
be very fertile ground...
Good job!
- JC
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:38 AM EST |
Ok, YES I skipped some of that.. but I've got ADD, damnit! :-)
It's worth noting that David Boies himself is dyslexic.. so apparently even
lawyers don't read everything, just pay attention to the important parts.
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:47 AM EST |
If- then logic below... questions arise due to reading above!
Once Novell has ownership of SuSE, then are all copies of SuSE
then sold, then suddenly can be seen as being legally protected by
virtue of being under Novell's retained UNIX rights umbrella?
And once one owns a copy of SuSE (bought after Novell has legal
control of SuSE)... then, will the protected rights then flow from
Novell-to-SuSE-then-via-the-GPL-to-any-use-of-the-GPL'd-Linux-Kernel?
And in other words, if this is the case, then does this flow thru of
Novell's retained rights from any purchased copy of SuSE mean,
that Novell's rights to UNIX reserved for the protection of their
customers extent to all owners of SuSE... AND so, by simply
owning a copy of SuSE, then all users/owners of SuSE can as well
own any other copy of any other LINUX distribution... and via the
flow thru protections of the Linux version of the GPL (SuSE Linux
kernel is GPL'd too)
...be 100% free and clear of ANY SCO claim against them FOR ANY
COPY OF LINUX THAT THEY OWN?
If so - then everyone will own a copy of SuSE soon - but wait until
Novell owns them first (any news on the date of final sale of SuSE
to Novell)?
Anyone with an opinion on this? PJ? [ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:49 AM EST |
Older press releases, etc., even official SCO materials, refer to Smallfoot
being Linux-based or even an optimized version of Linux. However some more
recent documents refer to it being Unixware based.
What is going on?
Is Smallfoot Unixware or Linux???
26 August 2002, http://www.newsforge.com/os/02/08/27/005227.shtml?tid=23
Broughton also talked up the SmallFoot Linux toolkit, designed to make it easy
to deploy small footprint versions of Linux for hardware such as cash registers.
Broughton said SCO sees a good market for small Linux on those point-of-sale
devices.
27 August 2002, http://desktoplinux.com/articles/AT9879265793.html
An interesting project benefitting from UnitedLinux is SCO's Smallfoot, a
technology which quickly creates configurations for small dedicated devices like
game boxes and sales terminals. Smallfoot could easily be configured with
lightweight applications to give new life to old laptops and PCs in Third World
countries or in the education market.
13 January 2003 (official SCO press release),
http://ir.sco.com/ReleaseDetail.cfm?ReleaseID=99267
LINDON, Utah—Jan. 13, 2003—The SCO® Group (SCO) today
announced plans to provide point-of-sale (POS) Linux solutions for retailers
with HP. Building on their existing 18-year relationship, HP and SCO will
develop and market these POS solutions based on SCO Linux and HP countertop
hardware, providing retailers with flexible and robust in-store systems.
...
SCO has built retail-hardened technology around Linux, based on its SmallFoot
template, to create the ideal platform for next generation POS devices. SCO uses
its SmallFoot template and toolkit to generate optimized Linux operating systems
that meet the defined requirements of each retailer. SCO developed this offering
as a result of engagements with a number of retail companies deploying Linux for
POS use.
March 2003 (official SCO White Paper)
http://www.caldera.com/retail/SCOLinuxForPOSWhitepaper.pdf
Page 1 reads:
SCO Solutions for the Retail Marketer
Retailed Hardened Linux for Point of Sale
An SCO White Paper
March 2003
March 2003 (official SCO partner briefing)
http://www.caldera.com/partners/estreet/0303/retail.html
SCO Positioned to Capture Retail Opportunities with Smallfoot & SCO Linux
As more retail customers look to find an alternate in-store solution to
Microsoft, Linux(TM) is poised to challenge Microsoft. Increases in total cost
of ownership (TCO), due to Microsoft licensing fees and the need to reduce
system downtime, the appeal for Linux is becoming widespread. Linux(TM) has
everything retail vendors are looking for: Adaptability, Reliability,
Scalability, and Security - and all at a fraction of what retailers pay for
Microsoft.
To take advantage of this opportunity, SCO has designed a plan to assist retail
customers make the switch to Linux. SCO now offers SCO Linux powered by
UnitedLinux(TM) for in-store Backoffice needs and Smallfoot for the
Point-of-Sale (POS) device.
August 2003 (SCO forum presentation)
http://www.google.com/search?q=site:caldera.com+smallfoot&hl=en&lr=&
ie=UTF-8&oe=UTF-8&start=10&sa=N
Near the end of presentation is bit on Smallfoot.
now it is "Based on Standard Unixware POS"
August 2003 (SCO forum presentation)
http://www.caldera.com/2003forum/maac/sullivan_maac_smallfoot_files/frame.htm#sl
ide0002.htm
Slide 11: "Smallfoot deployments based on SCO UNIX have been supporting
retailers for years in NA and Europe"
18 August 2003, http://www.eweek.com/article2/0,4149,1224528,00.asp
SCO will release next year a toolkit for its UnixWare OS-based SCO Smallfoot
designed for point-of-sale devices.
November 2003 (official SCO partner briefing),
http://uk.sco.com/events/Partner_Briefings/nov_2003/presentations/
SCO Product Roadmap
Bringing you up-to-date on SCO's current UNIX platforms (SCO OpenServer and SCO
UnixWare) and new features planned for these platforms in 2004/2005. This
presentation also provides you with information on SCO's new product lines and
services initiatives (SCO Update), SCO Smallfoot (retail hardened platform for
POS) and an overview of the forthcoming versions of SCOoffice Mail Server on SCO
UnixWare and SCO OpenServer.
PLUS:
Undated, offical SCO description:
http://www.caldera.com/retail/smallfoot.html
Retail Hardened Linux for POS
SCO SmallFoot
SCO's expertise in the retail market is reflected in its approach to POS
operating system design. Building on Linux's strength as a highly configurable,
secure and reliable operating system SCO has built a template, called SmallFoot,
used to build application specific customized Linux distributions.
SCO's Retail Hardened Linux for POS is based on the SmallFoot template and
incorporates key features that deliver lower cost of ownership and more flexible
deployment of retail store infrastructure. Full details can be obtained by
downloading the SCO Retail Hardened Linux for POS Whitepaper.
...
SCO's Retail Hardened Linux for POS provides
...
Optimized Linux Operating System Footprint - minimum necessary software
configuration minimizes the hardware costs. A range of hardware specifications
can be supported starting as low as Intel 486 processors with minimum RAM
requirements starting at 4Mb
NOTE: This page also has a diagram, which has at its center
"SmallFoot - Footprint optimized Linux template"[ Reply to This | # ]
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| Authored by: cybervegan on Monday, January 26 2004 @ 07:49 AM EST |
After this revelation, isn't it time that Tarantella broke its silence? As an
original party to the deal, I'm sure they can shed some light on just what
*they* thought they sold SCO(Caldera)... I'd *love* to know if they agree or
disagree with SCO(Caldera)'s reading of the deal.
It's amusing to know that Novell have sat on this for so long - they could have
produced countless press releases if they'd wanted to. They must have had a
hard time hiding their sniggers as they watched the fight unfold, and you can
bet they were joking in the back room, out of sight: "Won't it be funny
when all this gets out! SCO will look *so* stupid!"
Novell never used to be very good with the press (either not saying enough or
saying it too late), but they seem to have got the timing off to a tee on this
occasion ;-)
regards,
-cybervegan
---
Stand and fight we do consider
Reminded of an inner pact between us
That's seen as we go
And ride there
In motion
To fields in debts of honor
Defending
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:52 AM EST |
McBride's recently asserted that nobody can make money with Linux, or similar
things.
Here's what he said 18 months ago:
http://www.newsforge.com/os/02/08/27/005227.shtml?tid=23
McBride poked a little fun at the popular notion that software companies can't
make money with Linux during his Monday morning keynote. He called up an
audience member and asked him what he'd pay for a glass of tap water.
"Nothing," was the answer. McBride then asked the man how much he'd
pay for bottle of brand-name bottled water. "Two dollars."
McBride noted that $2 for a bottle of water works out to about $14 a gallon, yet
people complain when they have to pay $2 for a gallon of gas. "I think we
have some interesting opportunities," McBride said. "Are we going
away from Linux? No. We're going to enhance Linux."
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 07:58 AM EST |
A close correlation, time wise, to filing suit against IBM (March 6), and all
those executive options at $0.001 per share, don't you think?
A coincidence?
http://ir.sco.com/ReleaseDetail.cfm?ReleaseID=102389
LINDON, Utah, Feb 21, 2003 -- The SCO® Group (SCO) (Nasdaq: SCOX), a leading
provider of Linux and UNIX business software solutions, announced that it has
retained Silverman Heller Associates to assist the Company in developing and
implementing a comprehensive investor relations program.
"In retaining Silverman Heller Associates," said Darl McBride,
president and chief executive officer, "we look forward to expanding our
dialogue with the investment community. Silverman Heller will assist us in
finding new investors who share our enthusiasm for SCO's future and whose
support will be instrumental in our efforts to maximize shareholder
value." [ Reply to This | # ]
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| Authored by: Tom on Monday, January 26 2004 @ 08:17 AM EST |
(IANAL)
My brain hurts!
Thanks for the brilliant article, PJ.
I've been wondering about this for ages, but haven't had the time to read the
whole APA, amendment and correspondance.
I have a question. Under which
of the possibilities in section 6.6(c) (definition of "change of control") does
the sale of SCO's server division to Caldera fall?
I would guess option
(i) (which I think is mistakenly marked as (1)). Part (2) (of option (i)) says
"any sale, lease, exchange or transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of such
party" However, the context to this (ie the rest of option (1)) is
discussing a merger or consolidation, so there seems to be a strong argument
that this means transfer of ALL (or substantially ALL) of the assets of the
company, not just those acuired under the APA. I don't think anything like this
took place between SCO and Caldera. Only the server division was sold wasn't
it?
I can't find any other part of the definition which covers sale of
the APA-acquired assets to another company. If I'm right, which I'm probably not
(hopefully not, anyway), could this be a loophole? I know it's just a
technicality: The language of 6.6(c) is clearly intended to cover any
eventuality in which either side finds themselves dealing with someone other
than the original other party. However, maybe it could be argued that the
definition of "change of control" does not cover the sale of only a subset of
the assets of original SCO.
Incidentally, I wonder if lawyers would
benefit from a whole separate language all to themselves. They have a large
vocabulary of their own, but they use the same syntax as everyone else, often
abusing it atrociously in the process. Perhaps if contracts were written in
something like a programming language, in which complicated logic could be
expressed concisely, unambiguously and as readably as possible, there would be
fewer lawsuits. I'm sure that section 6.6(c) would be look less hideous if it
was rewritten as a well indented C function (perhaps returning a boolean value
to indicate whether a "change of control" has taken place or not). [ Reply to This | # ]
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| Authored by: photonic on Monday, January 26 2004 @ 08:26 AM EST |
Not totally on topic on this Novell story, but the following came to my mind:
This whole SCO debacle has often been shown as an example (by SCO itself, MS,
Gartner??) that using/contributing to open source software might get you into
legal trouble. Reading some of the contracts between SCO and Novell i get the
impression that it is actually the other way round: the GPL is so damn simple
and crystal clear that it has hardly been necessary to bring it to court.
Corporate contracts, as this case shows, can be minefields with so many small
prints that it is hard to say who owns what! This case is thus hardly an
argument against open source, but all the more against standard corporate
(closed source) contracts.
Comments?[ Reply to This | # ]
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| Authored by: blacklight on Monday, January 26 2004 @ 08:27 AM EST |
Novell's position not only converges but is probably in sync with my assessment
that Novell used the SCO Group as a proxy licensor, a rather menial
responsibility that did not require any transfer of IP either in the form of
patents or copyrights from Novell to the SCO Group. And the SCO Group carried
out this licensor activity for years without either needing or asking for
patents or copyrights from Novell.[ Reply to This | # ]
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| Authored by: CyberCFO on Monday, January 26 2004 @ 08:46 AM EST |
Novell also intimates, but does not come right out and say, that the Sun and
Microsoft licenses may be simply extensions of existing SysV licenses, and
therefore, SCO owes Novell 95% of those payments made by Sun and Microsoft. A
disaster to say the least if this were true.
I would not be surprised to see this claim show up in a breach of contract
countersuit by Novell.
---
/g[ Reply to This | # ]
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| Authored by: pooky on Monday, January 26 2004 @ 09:16 AM EST |
Interesting point regarding Novell’s waiving of claims against SGI and IBM. As I
see it, if SCOG backed off SGI due to Novell’s actions, why then did they not
back off IBM when told to do so? I think it’s far more likely that one of the
following is the true reason:
a) SCOG simply doesn’t care enough right now to sue SGI or terminate their
license and get sued.
b) SGI has something unique in their contract, different than IBM, which put a
halt to SCOG’s actions.
SCO doesn’t seem to interpret the APA the same way as virtually everyone else
(which I guess is Groklaw and Novell). Therefore, I also don’t think that
anything Novell has done has significantly altered SCOG’s plans except for the
copyright issue. Even if Novell’s claim isn’t valid, SCOG still can’t sue an end
user, there’s no point. SCOG has to resolve this issue in a court with Novell
before any of their plans against end users can proceed.
I submit this is why they changed course and started harassing their own
customer base, the UNIX licensees. As they have repeatedly pointed out, they
feel they can litigate against a UNIX licensee because the licensee is in
violation of their license if they are using Linux, or fail to comply with the
forthcoming license termination for non-compliance with the “audit”. This tactic
boils down to a contract dispute, not copyright law.
Someone I know asked a simple question about SCOG v The World, which was “What
is the goal here?” Usually the sound approach to take when IP issues come up is
to use an approach that shows a court you have made every effort to resolve the
issue before suing. Usually when suing someone, it’s done along with the filing
of a restraining order because of ongoing harm being done to the plaintiff
(TRO’s have a way of getting peoples attention quickly). None of this is done in
the public eye because of the harm it could cause the defendant and right or
wrong, you can be held liable for that harm if you lose.
SCOG however is making every effort to be as public as possible about their
campaign, threatening many things but so far only suing 2 companies (IBM and
Novell). Both suits have been well publicized, by SCOG themselves, where SCOG is
telling everyone (mostly in IBM’s case) that IBM has irreparably harmed them.
SCOG has made boisterous claims about IBM’s misdeeds, none backed up publicly
(although they are quite willing to accuse publicly).
So what’s the goal? I believe they aren’t really terribly interested in suing
lots of end users, probably only one. To engage in a lawsuit campaign will
deprive them of their precious cash reserve quite quickly, and 3 suits where
they are the plaintiff and 4 where they are the defendant is a lot to fight at
once (add in RedHat, IBM counter suit, Novell soon to come countersuit, and
countersuit filed by unlucky end-user). I doubt any court is going to buy the
theory that they can’t fight it all at once because except for RedHat, every
other suit will result from SCOG’s own initiated legal action.
So the goal is not to sue you, the goal is to scare you. To scare business
owners, CIOs, the government into fearing the future if they use Linux and
OpenSource. To raise the specter of who will follow SCOG in launching legal
campaigns against OpenSource products. The fear that there will be endless
harassment around use of these products and that future business might be harmed
due to negative customer perception around use of these products. SCOG, win or
lose, has already gone some of the way to making the above a reality and they
know it (or rather Canopy knows it).
-pooky
---
Veni, vidi, velcro.
"I came, I saw, I stuck around."
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 09:30 AM EST |
I'm a bit puzzled now.
Didn't Darl go on about how he had 'stamped out' the problems with Novell
'in a few days' and made out they had somehow ran off with their tail between
their legs? But all the time there are these nuclear letters arcing through the
air between the Utah Monads, some of them of a very serious and
business-affecting nature, like Novell chopping SCO off at the knees when they
started after SGI.
How can Darl say these things which are totally out of whack with the facts, not
mention stuff like the Novell chip pan catching fire in the SEC filings, and
still be walking around unscathed? Why isn't he the subject of investigations
and spittle-frothing shareholders' curses?
[ Reply to This | # ]
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| Authored by: Jude on Monday, January 26 2004 @ 09:37 AM EST |
...doesn't the purchase agreement restrict SCO's rights to sell new SysV
licenses? I believe SCO has to get Novell's approval in writing to do so. So
how does SCO think they can sell "Unix IP licenses" to Linux users?
It would seem that either:
1) The prospective licensee is already a SysV licensee, in which case 95% of the
sale price goes to Novell.
2) The prospective licensee isn't already a SysV licensee, in which case SCO
has to get Novell's permission to cut the deal.
[ Reply to This | # ]
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| Authored by: overshoot on Monday, January 26 2004 @ 10:23 AM EST |
| Several people have pointed out that the Sun and Microsoft licenses are likely
to have been subject to Novell's 95% interest, so that Novell could demand all
but 5% from SCO in breach. Me, I'm thinking that SCO didn't have the
contractual authority to negotiate those agreements without Novell present and
Novell will have to assert that in the first place -- in other words, SCO
defrauded Sun and MS. As I see it: - Novell claims in their countersuit
that SCO violated the terms of their authority
- Novell asks the Court to void
the licenses and refund the $$$
- As interim relief, Novell asks
the Court for an injunction securing the monies in dispute, since SCO might
otherwise spend them beyond possibility of recovery.
The injunction is
actually the most important part, since the Court might determine any of three
outcomes:- The licenses are invalid, and SCO has to refund Sun and
MS
- It's too late to void the licenses that Sun and MS entered into in good
faith, but Novell is still due its 95%
- SCO gets to keep the money.
The
first two are quite likely based on evidence so far available, so the
conservative thing would be to secure the interests of Novell, Sun, and MS by
injunction until the matter can be settled.Comments? [ Reply to This | # ]
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| Authored by: bob on Monday, January 26 2004 @ 10:38 AM EST |
Apologies if this has been discussed before, but one thing I've been
wondering about in the context of these letters is the quote
from Ransom
Love where he says "Indeed, at first we wanted to
open-source all of Unix's code, but we quickly found that even though we owned
it, it was, and still is, full of other companies'
copyrights."
I've been wondering if by "other companies" he was
thinking mostly of Novell -- IOW, is this whole Novell ownership issue something
that Caldera knew full well about before his Darlness showed up? And
perhaps, did much of that knowledge walk out the door with Mr.
Love?
BTW, that quote database is just *sooo* useful. :-)
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 11:44 AM EST |
Implicit in Linus's argument that the exchange of source codified in the GPL
represents a financial transaction is the fact that such barter transactions are
taxable. Whether they make Linus a customer of IBM or vice versa I do not ken.[ Reply to This | # ]
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| Authored by: jdos on Monday, January 26 2004 @ 12:10 PM EST |
Could this mean that Microsoft does not have valid licenses for things like
Windows Services for UNIX?
Depending on Novell's appetite for
conflict, this could have a fairly devastating impact on Microsoft's enterprise
roadmap. If its real, that is. [ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 12:32 PM EST |
Open Positions (from scoG's website today)
Inside Sales Manager 09 Jan 2004
Inside Sales Manager 09 Jan 2004
Inside Sales Manager 09 Jan 2004
Public Relations Intern 23 Jan 2004
Computer Instructor 23 Jan 2004
Train employees to use and maintain SCO's UNIX-based systems
Train customers to use and maintain SCO's UNIX-based systems
Would you work for a company like this
morven24
[ Reply to This | # ]
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| Authored by: Anon Ymonus on Monday, January 26 2004 @ 01:24 PM EST |
Forgive me if this sounds naive, but the first thing that came to mind when the
"Change in Control" clause was mentioned was scary: Did Darl think
that the courts are so far behind technologically that he could try to blind
them to that clause, just by changing the name of Caldera to SCO? I mean,
unless one were aware of the history of Old_SCO and New_SCO, one would not know
that New != Old....
Perhaps Darl thought that he could prevent the lifting of Novell's restrictions
in some way by taking on the SCO name and throwing the dice to see who the judge
would be.
Unfortunately for Darl, it looks like a bad roll for him.
---
---
Anon Ymonus
"Who can it be now?" -- Men at Work[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 01:37 PM EST |
Long time reader, first time poster.
Just one request, brought to light particularly in today's articles and
discussions. Can we clarify the acronyms used for the various SCO entities?
People seem to be using SCO to represent both The Santa Cruz Operation
(Organization?) and The SCO Group. Particularly when discussing Novell's
contracts with various entities it seems important to distinguish between the
current SCO Group vs. the original Santa Cruz folks.
It may help to define acronyms with the posting of articles or just plain expand
the old SCO to Santa Cruz and use SCOG or SCOX for the current SCO.
Thanks-
brian[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 01:57 PM EST |
More importantly, what company purchasing a collection of IP from another
company agrees to give 95% of license revenue based on that product back to the
company you purchased it from? It's like double taxation, man... Apparently
the stupidity at SCO didn't start in 2003, but way back in 1994. :-/
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 02:48 PM EST |
Which document (APA, Amendments, etc) SPECIFICALLY refers to
"Attachment E"? The pdf of the fax is too unclear to see that
identification footnoote of the document.
It is a list of Unix manuals, plus source codes for pre-SysV
"ancestral"
unices.
It is an attachment to what? I couldn't find it referenced in any to the
available docs.
Maybe it is an attachment to some so-far unavailable document?[ Reply to This | # ]
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| Authored by: mitphd on Monday, January 26 2004 @ 03:24 PM EST |
| OK, even though IANAL I will take up the challenge of trying to understand the
definition of "Change of Control" in the APA.
I can't easily find the
original APA images, but from context it is clear that there is a typo in the
text: the first '(1)' should read as '(i)' instead, since there are four
subsequent top-level clauses labeled (ii), (iii), (iv), and (v). With that
correction, let's go 'deep diving' into the definition:
6(c)
Change of Control. For purposes of this Agreement a "Change of Control" with
respect to one party shall be deemed to have occurred
whenever
The definition comprises five sub-definitions,
(i) through (v), any one of which is sufficient to comprise a Change of
Control.
(i) there shall be consummated
(1) any
consolidation or merger of such party in which such party is not the continuing
or surviving corporation,
This part, at least, is
clear. If the corporation ceases to exist because of a merger, it is a Change
of Control.
or pursuant to which shares of such
party's common stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger or
This one's tough. Does the
'not' in the clause above apply here too? I guess it must, since then it means
that any merger that changes the ownership proportion of the common stockholders
is a Change of Control. (Otherwise it wouldn't make
sense.)
(2) any sale, lease, exchange or transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of such party, or (ii) the stockholders of such party shall
approve any plan or proposal for the liquidation or dissolution of such party,
or
Another easy one: if all of the assets are
sold to someone else, just leaving the corporate shell, or if the business is
wound up, then it is a Change of Control.
(iii) any party,
other than such party or a subsidiary thereof or any employee benefit plan
sponsored by such party or a subsidiary thereof or a corporation owned, directly
or indirectly, by the stockholders of such party in substantially the same
proportions as their ownership of
stock of such party, shall become the
beneficial owner of securities of such party representing greater than fifty
percent (50%) of the combined voting power of then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having the
right
to vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise.
or
This means that a takeover (hostile or not) is a 'Change of
Control'.
(iv) at any time after the date of this Agreement,
individuals who at the date hereof constituted the Board of Directors of such
party shall cease for any reason to constitute at least a majority thereof,
unless the election or nomination for election by such party's stockholders of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the date hereof,
or
If a majority of the Board is replaced, it is a Change of
Control unless each new director is approved by 2/3 of the old directors still
on the Board.
(v) any other event shall occur with respect to
such party that would be required to be reported in response to Item 6(e) (or
any successor provision) of Schedule 14A or Regulation 14A promulgated under the
Exchange Act.
[typo: the second 'or' should be 'of'] Item
6(e) is a report of change of control to the SEC. Apparently this is a 'belt
and suspenders' section to catch any change of control that might be missed
above but caught by the SEC.
So where does that leave us? Caldera's
acquisition of the Unix business from (old) SCO doesn't neatly fit into any of
the definitions above, yet it is most obviously a change of control of the
assets bought from Novell. (I suppose clause (iv) might apply, since the Board
of Directors of Caldera was different from that of (old) SCO.)
Was it a
'Change of Control' for purposes of the APA? Maybe it would be clear to a
lawyer, but it's surely not clear to me.
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 03:55 PM EST |
I would think that rather than forcing sco to pay the 100% to novel (then have
novel pay 5% back to newSCO) that this would simply invalidate those contracts
and SCO would have to refund the money to the original partys. If I remember
correctly SCO had to involve Novel in these discussions for them to be valid.
[ Reply to This | # ]
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| Authored by: sef on Monday, January 26 2004 @ 04:26 PM EST |
Here's a stupid question:
Can Novell summarily grant a license to
everyone on the planet, free
of charge?
[ Reply to This | # ]
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| Authored by: Anonymous on Monday, January 26 2004 @ 04:29 PM EST |
I agree with a poster on the Yahoo! SCO message board, that something is fishy
with the documents SCOx is posting. Download their PDF of Amendment 2 to the
APA - the last page appears twice, once with SCOx signature only, once with
Novell signature only.
Not to mention that displaying the document properties shows the original to be
(I think) a Quark Express document, PDF'd by Acrobat Distiller for Macintosh.
A sample from Novell's site shows the document to be produced by Acrobat Scan
Plug-in for Windows, with no designation of the original document.
So, the questions are:
1) Does SCO have to use Macs for their document processing?
2) Why create a document in a DTP application, then create the PDF, when you can
just scan it in?
I forget which document, but one of those from SCO's site had a
creation/modification date of 01/20/2004 - don't know if it's fishy or not,
and unfortunately don't have the time to check, but I'd be interested in the
results of someone's comparisons of the origins of the PDFs... [ Reply to This | # ]
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| Authored by: YorikNMe on Monday, January 26 2004 @ 06:27 PM EST |
I can't say I understand much about these Novell/SCO contracts, but I do recall
that SCO is hot to test an amendment, supposedly cancelling Novell's rights.
Can't say I remember what amendment that is, either. However, here is an
article mentioning it, but not by specific name. Does anyone recall what
amendment it is, and has anyone done an analysis on it?
http://yahoo.businessweek.com/magazine/content/04_05/b3868109_mz063.htm
Q: You bought the Unix business from Novell, but it took you a while to find an
amendment to that contract that says you also bought the underlying intellectual
property as well. Where was that amendment?
A: First of all, we weren't spending a lot of time looking for it. Our case
against IBM was purely grounded in ontract. It wasn't until Jack Messman [CEO
of] Novell came out in an open letter to us saying, "Novell owns those
copyrights, and we are going to make these all available and bless the Linux
community, and there will be no problems there."
Well, that was the first day we started looking for the amendment. We weren't
seriously concerned about it before that. My executive secretary, to her credit,
she went through a ton of files. She found this thing, it was maybe four days
later. I called Messman that night and dropped the news on him.... When we had
those copyrights in hand, that's what made the whole case on the Linux side
much stronger.
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| Authored by: Anonymous on Tuesday, January 27 2004 @ 05:24 AM EST |
I think PJ did a very good job here. Except Novell's most important tactical
move is perhaps being overlooked.
Novell has demanded SCO's UNIX and Unixware source code, and they have
explained that if there happens to be any UNIX source code in Linux, then their
customers are licensed to use it.
Caldera can't sustain a claim that Project Monterey Unixware trade secrets were
misappropriated from them, unless they, at one time or another, possessed some
Project Monterey trade secrets. According to the definition contained in the
Utah statute they obviously never did.
Novell has waived any SGI and IBM confidentiality obligations for the IRIX and
AIX code that they own. Novell's license for Unixware and Old-SCO's
derivatives can be used in a similar way to speed-up discovery related to
so-called "trade secrets" already contained in their own Linux
open-source products. This could speed-up the resolution of the IBM case
considerably.
Novell retained a perpetual, worldwide, royalty-free license to the iA32 and
iA64 Unixware source code derivatives (Monterey) under the APA section 1.6 and
the TLA. That license allowed distribution in both source or binary code
formats. This was only a year after the BSD settlement. Old SCO knew exactly
what this license meant. There was only a very limited non-compete clause.
For example, it can be shown that Novell developed a Netware OS for the Merced
iA64 processor called Modesto that was aimed directly at SCO's core server
software business. The APA is silent on such matters because it only applied to
UNIX and Unixware.
This worked both ways. we all know that Microsoft was getting a $15 dollar per
copy royalty and that there were other third party IP owners. SCO developed
competing products that used non-AT&T kernels. Novell had trial products
with the Chorus microkernel long before the USL acquisition too. They also tried
Linux. Caldera's founders had actually been in charge of that product's
research at Novell. Old SCO announced a telecommunications or "carrier
grade" product one month before the Novell deal in August
1995 called MK-2 and marketed it to Siemans. It was simply OpenServer 5 on top
of a Chorus microkernel. The Novell APA is silent about the use of Chorus, or
the Linux kernel in competing products.
Caldera of course is not Old-SCO, they never had a moments protection from a
non-compete clause. Even if they own the copyrights, they do not own any
SCO-Unixware trade secrets as defined by the Utah code 13-24-2 since 100% of
their "copyrighted code" was always licensed to a competitor who was
skilled in it's use, and authorized to publish the sources on a royalty free
perpetual basis under the terms of the GPL license. It's hard to see how
Caldera can claim that technology "derives independent economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy."
Old SCO may have purchased all claims, but Novell retained the unambiguous right
to license all of Old SCO's code, and to permit their customers to do so.
Unlike Berkeley's old license, Novell's has no confidentiality obligations.
This simply puts it on a par with Berkeley's post settlement distribution
rights.
It's seems clear that neither SCO or Caldera bothered to obtain any formal
written amendments, or codify their agreements with Novell in 2001. Novell
retained the SVRX royalties - and the patents that applied to the old AT&T
licenses. The August 2000 Caldera-SCO Reorgaization Plan (as amended) contained
provisions regarding non-assignable assets that allowed SCO to retain ownership
of any non-assignable licenses and pass royalties on to Caldera. The SEC filings
indicated a three-year earn-out on the old OpenServer line. At the time of
closing the Santa Cruz Operation held a one-third ownership interest in Caldera.
Recently SCO was bought-out and Darl McBride was appointed.
Caldera's January 2003 10-K indicated that they were carrying on and acting as
Novell's agent for a 5% fee.
Caldera recently observed themselves that the old AT&T licenses are
non-transferable and non-assignable. They may find that they need to acquire a
patent license from Novell, or stipulate that Tarantella still owns the paid-up
AT&T SOFT-000302 licenses.
Hope This Helps!
---
"Perhaps the lesson from this is that the first rule when dealing with the
devil is: don't," Dave McCrabb President SCO Server Software Division
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| Authored by: Thomas Frayne on Tuesday, January 27 2004 @ 03:26 PM EST |
I tried everything I could think of to make A Question work, but failed, so I am not
using a shortcut for that link. Please remove "amp;" from the next link. If
anyone knows what is happening, please let me know.
In the last comment
in the thread
http://www.groklaw.net/comment.php?mode=display&sid=2004011411254734&am
p;type=article&pid=59507
I raised the question: what feature of the
SCO-Caldera sale triggered what condition in the Change of Control
paragraph.
IMO, a definitive answer to this question has been given
in
Change of control clause.
To summarize:
1. The
condition in the paragraph: (1) any consolidation or merger of such party
in which such party is not the continuing or surviving corporation,
2.
IMO, the relevant part of the definition of consolidationis: A consolidation
can be a product line. The result of a consolidation is a newly created
continuing corporation that contains the assets that are part of the
consolidation.
3. The feature of the transaction: The SVRX product
line of old SCO was consolidated into continuing corporation NewCaldera, which
was not oldSCO.
This seems to me to be a definitive proof that the
transaction was a consolidation in which SCO was not the continuing
corporation.
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| Authored by: swengr on Tuesday, January 27 2004 @ 04:18 PM EST |
But... if Novell still owns the IP... what is the Canopy loan secured by?
Oh what a tangled web we weave...
---
Gratis is nice, Libre is an inalienable right.[ Reply to This | # ]
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