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What *Is* Slander of Title, Anyway?
Wednesday, February 11 2004 @ 06:12 PM EST

Now that the Novell lawsuit is heating up, I guess it's time to explain what slander of title is. A lot of people have never heard of it. Frankly, I had never heard of it outside of real estate matters, so I did some research.

This dispute, as you know, centers around who really owns the copyright on Unix and UnixWare and both parties claim they do. So I also researched the issue of how copyrights are validly transferred. SCO is claiming that Amendment 2 to their Asset Purchase Agreement was such a copyright transfer; Novell disputes that.

Is a contract sufficient to transfer a copyright? And did SCO goof by suing for slander of title instead of breach of contract? Here is what I found out in my research.

As always, check with your own attorney in your own state for any specific case, as what I found is general information only, and it's paralegal research to boot, not a legal opinion. It is enough to give us some idea of what is going on in the SCO v. Novell matter.

First, what is slander of title? Normally a claim you find in real estate matters, it's "false, unjustified statements regarding another person's title to property". There are elements you must prove to win:

A cause of action for slander of title occurs when there is a false and malicious statement made to disparage a person's title to real estate. The elements of slander of title are: (1) falsity of the statement made; and (2) malice.
The exact elements required can vary from state to state, but they are generally similar. A Utah case showing the elements needed in that state for a slander of title action is First Sec. Bank of Utah, N.A. v. Banberry Crossing, 780 P.2d 1253 (Utah 1989):
[t]o prove slander of title, a claimant must prove that (1) there was a publication of a slanderous statement disparaging claimant’s title, (2) the statement was false, (3) the statement was made with malice, and (4) the statement caused actual or special damages.
If you own a house, and I go down and file a false lien against your house, you can sue me for slander of title, because I have cast a cloud over your unobstructed right to that house. There is such a thing as libel not only to your personal reputation but also to the reputation of property. You can read a bit more on that here if you are interested.

But if it's instead a good-faith conflict, in which each side thinks it really does own the house, well, that's a different kettle of fish. It still needs to get worked out in the courts, but it isn't slander of title, because it's not malicious to assert what you believe are your legal rights. And malice is normally a necessary element in a slander claim. The malicious claim must be intentional:

To recover in an action for slander of title, a party must allege and prove:

(i) the utterings and publishing of disparaging words;
(ii) that they were false;
(iii) that they were malicious;
(iv) that special damages were sustained thereby;
(v) that the plaintiff possessed an estate or interest in the property disparaged; and
(vi) the loss of a specific sale.

Malice as a basis for recovery of actual damages in a slander of title case means merely that the acts must have been deliberate conduct without reasonable cause. A patent may well be the subject of a slander of title action as Prosser and Keeton state that intangible interest such as "trademarks, copyrights [and] patents" may be the subject of the tort.

As compared to other "injurious falsehood" causes of action, slander of title or property differs in that there is no presumption of damages. The plaintiff must show that he or she sustains special damage proximately, naturally and reasonably resulting from the alleged slander. Attorneys' fees are not recoverable in slander of title actions, and neither damages to reputation nor consequential mental damages are recoverable in action for slander of title. The plaintiff must prove the loss of a specific sale, i.e., that a pending sale was defeated by the slander. However, the reasonable expense of litigation necessary to remove the doubt, or cloud, from the property or title thereto has been held to be recoverable. Additionally, punitive damages are also recoverable in an action for slander of title. Thus, as was the case with a defamation cause of action, a plaintiff should allege that defendant's actions were both intentional and with malice.

Here is a case where Francis Ford Coppola sued Warner Bros. for, among other things, slander of title, and he lost. One reason he lost that part of his action was absence of malice. That wasn't a Utah case, but it has a bearing, obviously, on SCO's case against Novell in the sense that in Utah too, malice must be proven. It's why some are questioning SCO's choice of slander of title.

When you read Novell's letters, do you get the impression that they feel they actually *do* own the copyrights? Note particularly the dates May 28, June 6 and 26, August 4, and October 9 to follow the copyright argument. If so, where is there slander of title, without the necessary element of malice? It's not slander if the party has some colorable claim. Monday, Novell filed a Motion to Dismiss, and from news reports, I gather they are pinning the motion on the lack of specific damages, but there may be more to the motion. Once I see it, we'll be able to see if that is the only basis for the motion.

What about the copyright issue, though? Who owns the copyrights here anyway? To delve into it deeply, you would need to read the contracts involved. SCO highlights particularly Amendment 2 to the Asset Purchase Agreement, but Novell points out that there were other documents, Amendment 1, the Schedules, and a Technology License Agreement, although the latter does not pertain to the copyright issue per se.

Novell isn't saying SCO has no rights. It is saying it retained certain rights, that SCO needed to assert a need for copyrights and that it never did that, that there were, in other words, conditions that SCO has not satisfied. Because they did not satisfy the conditions, the copyrights never transferred. In an interview on Bloomberg News today, Novell CEO Jack Messman said this:

We also sold them the business. We didn't sell them the copyright. That's why we filed for the copyrights. They dispute that, but we'll get in - the lawsuit will resolve that, and we think we're going to be winners.

So that is their position. Why didn't SCO sue for breach of contract, then, if their position is correct and copyrights were supposed to transfer and Amendment 2 is the contract that was to make that happen? No one I have talked to can figure that out. Since SCO alleges that the copyrights were to have transferred under the Asset Purchase Agreement, why *not* sue for breach of contract and ask the judge to enforce the contract?

SCO has been claiming that its rights to Unix are absolute, but all the while it has been in hot and heavy correspondence with Novell in which Novell contested their rights strongly. That fact alone, the fact that Novell firmly asserted what they claim to be their rights, indicates that SCO may have great difficulty persuading a judge that malice is involved. If you have read the contract documents, you already know it is far from obvious that Novell has no legitimate claim. On the contrary, you might even conclude that their claim seems stronger than SCO's. So where is the necessary element of malice?

SCO registered for copyrights, and so did Novell, but for SCO to have copyrights, it would need to show that Novell transferred those rights to them. And it had to have been in writing, because copyright law requires copyright transfers to be in writing and "signed by the owner of the rights conveyed or such owner's duly authorized agent." For example, a friend of mine just registered a copyright in some music he wrote, and he made a mistake in the form, and he got a letter from the US Copyright Office that included this sentence: "Copyright belongs initially to the author. It may be transferred to another person or organization by a written agreement or by operation of law. For registration purposes, the copyright claimant is either (1) the author or (2) the person or organization that has obtained ownership of all rights under the copyright." Here, that would mean Novell, who would have to transfer by writing to SCO. There is no official form for such transfer; normally it is effectuated by contract.

Here are some examples of copyright transfer forms some have used, to give you an idea, here and here and here and here.

So is Amendment 2 a contract? Well, it's an amendment to one, yes. Is a contract enough to transfer a copyright? Yes. Is it clear on its face that it did mean to effectuate such a transfer? Obviously Novell doesn't think so.

Lewis Mettler, Esq. of Lamlaw raised this question when SCO first filed it slander of title action: if SCO in the end fails to establish copyright ownership, after publicly claiming copyright ownership for nearly a year and maybe even suing an end user for copyright infringement in the meanwhile, and it turns out it was without any reasonable basis, is SCO opening itself up to becoming a defendant in a future slander of title action itself?

The answer to that may be found in the Coppola case, and it turns on the issue of whether SCO ever had any reasonable basis for its claims to begin with. Here is what the court wrote in that case:

We have concluded that the underlying claim of Warner in and to any Coppola 'Pinocchio' project was legally tenable or colorable. We do not decide whether Warner's claim was legally viable or enforceable -- only that it was legally tenable, not totally and completely without merit.

History will decide, as the cases work their way through to decisions whether SCO had a colorable claim, one "not totally and completely without merit".


  


What *Is* Slander of Title, Anyway? | 250 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
What *Is* Slander of Title, Anyway?
Authored by: Anonymous on Wednesday, February 11 2004 @ 06:17 PM EST
Thanks PJ this helps me a lot

-Jimbob0i0-

[ Reply to This | # ]

The question now becomes...
Authored by: SkArcher on Wednesday, February 11 2004 @ 06:23 PM EST
If slander of title (in Utah) is;
?[t]o prove slander of title, a claimant must prove that (1) there was a publication of a slanderous statement disparaging claimant?s title, (2) the statement was false, (3) the statement was made with malice, and (4) the statement caused actual or special damages.?

Can Novell sue SCO on the same grounds?

Lets see. (1) SCO have published material (press releases) disparaging claimants title. (2) The statement was false (demonstated - SCO claimed to terminate IBMs license, Novell said they couldn't - regardless of ownership of the SuSV code, NBovell have that right according to their contract). (3) SCOs statement was made with intent to damage Linux, which is in Novells interest to protect and which protection is aided by the ownership of the SySV code, and (4) SCOs actions have undoubtedly damaged the Linux market share, and with it Novell, and caused Novell to have to indemnify their customers, exposing Novell to risk and lowering their profitability.

So, providing Novell can assert undisputed title to the SysV copyright, can Novell sue SCO for slander of title?

---
irc.fdfnet.net #groklaw

[ Reply to This | # ]

OT: DB
Authored by: Anonymous on Wednesday, February 11 2004 @ 06:26 PM EST
A number of posters on the Yahoo board, claimed that DB had reiterated the buy
rating and $45 target today. Furthermore some said, they had downgraded SCO's
earnings prediction at the same time.

I have no way to know if these claims are correct

P.S.
http://www.internetnews.com/ent-news/article.php/3311761

[ Reply to This | # ]

  • OT: DB - Authored by: Jadeclaw on Wednesday, February 11 2004 @ 07:37 PM EST
    • OT: DB - Authored by: Anonymous on Wednesday, February 11 2004 @ 07:57 PM EST
What *Is* Slander of Title, Anyway?
Authored by: WhiteFang on Wednesday, February 11 2004 @ 06:29 PM EST
Don't forget.

SCOX was trying to get the copyrights transferred _before_ they started the
lawsuit with IBM and _before_ they started to make claims of absolutely owning
the copyrights in public.

Seems to me that a case can be made that SCOX certainly and willfully knew that
their claims to the copyrights were not solid. I don't know how this plays out
with anything, but it certainly is interesting in light of SCOX's choice to go
with 'slander of title' and not with 'breach of contract'.

Also, there is still some question that Novell even signed Amendment 2. We still
don't know the truth of that either. I suspect that is another bomb Novell may
be waiting to drop.

We shall see what we shall see.

[ Reply to This | # ]

InternetNews coverage
Authored by: Anonymous on Wednesday, February 11 2004 @ 06:29 PM EST
http://www.internetnews.com/ent-news/article.php/3311761

There are lots of quotes from Novell, including some that look like from the
motion.

It seems also that this article is a lot more accurate the CNET one (the CNET
one confused the dismissal motion with the $ echo issue on derivative works,
which are two separate issues)

I am also glad to see that our friend Blake Stowell has chosen to return to
giving quotes to the press. I hope Darl follows suit soon.

SCO spokesman Blake Stowell said the company will "continue to aggressively
defend these Unix copyrights in our court case against Novell. In the next 20
days, we expect that SCO's lawyers will file a response motion to this filing by
Novell."

Stowell also rebutted Novell's arguments. "SCO owns the copyrights to Unix.
The transfer of these copyrights is made plain, clear and unambiguous in the
1995 Asset Purchase Agreement between SCO and Novell," he said.


[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: jmc on Wednesday, February 11 2004 @ 06:32 PM EST

History will decide, as the cases work their way through to decisions whether SCO had a colorable claim, one "not totally and completely without merit".

Don't you mean Novell there?

Surely the argument of the precedent is that if the Defendant to Slander of Title (Novell in this case Warner in the quoted case) had the beginnings of a case then the action must fail?

[ Reply to This | # ]

Malice on SCO's part?
Authored by: Anonymous on Wednesday, February 11 2004 @ 06:34 PM EST
Novell has stated a number of times that Caldera tried to convince Novell to
transfer Unix copyrights to them (Caldera), back in late 2002, early 2003.
Novell refused to transfer anything, from what they said. Isn't that a good
indication that Caldera/SCO knows that they do NOT own those copyrights, and
therefore filed for copyright out of malice?

[ Reply to This | # ]

What *Is* MALICE, legally speaking?
Authored by: Tsu Dho Nimh on Wednesday, February 11 2004 @ 06:35 PM EST
From legaldefinitons.com: "malice is the intent to commit a wrongful act
without justification for doing so."

Well, if you are justified, I guess it's OK to commit a wrongful act, or else
it's not wrongful ... but there has to be intent

http://www.lectlaw.com/def2/m006.htm has a better definition:
Actual malice involves making a statement with "knowledge of falsity or
reckless disregard as to truth or falsity." Masson, 501 U.S. at 511. See
also Harte-Hanks Communications, Inc., 491 U.S. 657; Anderson v. Liberty Lobby,
477 U.S. 242, 244 (1986); New York Times, 376 U.S. at 279-280. A public figure
must show by clear and convincing evidence that the defendant "in fact
entertained serious doubts as to the truth of his [statements] or acted with a
high degree of awareness of . . . probable falsity."

[ Reply to This | # ]

Novell has new letter to SCO up!
Authored by: JeR on Wednesday, February 11 2004 @ 06:46 PM EST
<http://www.novell.com/licensing/indemnity/pdf/2_11_04_n-sco.pdf> (Link on
<http://www.novell.com/licensing/indemnity/legal.html> is titled:
"Failure to Respond to Letter of 6 February 2004").

[ Reply to This | # ]

Novell Timeline
Authored by: Anonymous on Wednesday, February 11 2004 @ 06:51 PM EST
Hi PJ,
I have been an avid reader of groklaw for awhile. I think you are doing a
wonderful job with it. I was wondering, however, how come there isn't a
"Novell Timeline" yet? especially now that the case seemed to have
picked up the pace.

[ Reply to This | # ]

TSG is not the old sco group
Authored by: mossc on Wednesday, February 11 2004 @ 06:52 PM EST
Even here we seem to be falling into the trap of equating oldSCO to
Caldera/SCO.

"but for SCO to have copyrights, it would need to show that Novell
transferred those rights to them"

Actually won't they have to show that Novell transferred the rights to oldSCO
AND that oldSCO transferred the rights to Caldera/SCO/TSG?

I have yet to see a copy of the contract from oldSCO to new SCO/Caldera. (not
that it is not out there I may have overlooked that) Is that something that TSG
can't find for discovery?

To show that they have copyrights don't they have to show that by the text of
the contract and the intent of the parties that the copyrights transferred from
Novell to oldSCO and from oldSCO to Caldera.

If the contract from oldSCO to Caldera/SCO has no mention of system V copyrights
that would seem to slam the door on all their claims.

Chuck

[ Reply to This | # ]

Why they chose Slander of Title
Authored by: Anonymous on Wednesday, February 11 2004 @ 07:14 PM EST
I think the biggest issue is why SCO chose Slander Of Title

My take on it, is the Slander Of Title (as opposed to say Breach Of Contract)
allows SCO to maintain (say to investors) that they really do have clear title
on copyrights etc., and that Novell is just acting maliciously by issuing false
statements

Why would SCO want to take this position?

Could it be that they (SCO) represented to RBC, Baystar and/or others, that they
really did have clear title, and made warranties to this effect?

[ Reply to This | # ]

Theory: Intellectual Property agenda
Authored by: Anonymous on Wednesday, February 11 2004 @ 07:32 PM EST
Well, I at least think it's clear that SCO (among others) really, really wants a
new class of "intellectual property" laws on the books.

Could the Slander of Title charge be a way of equating, legally, physical
property and intellectual property? Seems like they might be hoping to set a
precedent here. Next step, sue someone for *theft* instead of infringement.

IANAL.



[ Reply to This | # ]

Intention of Amendment 2
Authored by: ericl on Wednesday, February 11 2004 @ 08:05 PM EST
It seems the best way to clarify the intent of Amendment 2 is to ask the two parties who signed it: Steven Sabbath, VP and house counsel of the Santa Cruz Operation, and James Tolonen, CFO of Novell at that time. Tolonen is no longer with Novell; I am not sure of Sabbath's current relationship with SCO. This story seems to suggest that at least some other parties familiar with the deal believe SCO's side of the story, and they collected depositions to that end. Amendment 2(A) seems to be a somewhat sloppy paragraph that had certain intentions back when the parties signed it, but is not at all explicit about what that is.

What copyrights does SCO think it needs "for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies"? Indeed, what specific copyrights are being discussed here? Does SCO have to inform Novell of the acquisition and exercise of these rights? Because the language is so loose and vague (perhaps deliberately so), my uninformed guess is that they had some sort of gentleman's agreement in mind, in which SCO would ask for certain reasonable rights pertaining to some unknown future aspect of their business, which Novell would reasonably grant them. That business now seems to be Linux. The question now is, does SCO require Novell's permission to be granted these rights, or can they simply argue that they need these rights (whatever they may be) unilaterally, without any written document or consent?

[ Reply to This | # ]

Why "lack of specific damages"
Authored by: DaveAtFraud on Wednesday, February 11 2004 @ 08:05 PM EST
Simple. Its a slam dunk. Novell has done *nothing* to impair SCO's ability to
do business that has resulted in any lost sales. SCO can continue to sell
Unixware and they can continue to be bag man for the System V licensing fees.
Novell's actions and assertion of ownership of the SVRx copyrights has done
nothing to hurt the business that SCO has been doing for several years. Slam
dunk but it gets better.

While going for "lack of malice" as grounds for dismissal may be
easier given the correspondence between Novell and SCO on this matter,
"lack of specific damages" actually does more to push SCO back into
their cage since it says that nothing Novell has done (asserting ownership of
the SVRx copyrights, withdrawing SCO's revocation of IBM's AIX license, etc.)
damaged SCO because these were things SCO wasn't allowed to do to begin with. A
"Lack of malice" dismissal would probably still leave open a breach of
contract suit from SCO since it would only say that Novell has attempted to
resolve the ownership dispute but the dispute remains. A "Lack of specific
damages" dismissal says SCO doesn't own what they claim and therefore can't
be damaged by Novell asserting ownership. SCO lost no sales because they
weren't entitled to sell what they were attempting to sell because they didn't
own it.

---
Quietly implementing RFC 1925 wherever I go.

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: odysseus on Wednesday, February 11 2004 @ 08:11 PM EST
Why Slander of Title?

1) As is pointed out above, the whole RBC/Baystar thing
around warrenties of clear title;

2) It was a quick stop-gap to be seen to be doing
something about Novell, but wouldn't be fatal if tossed
out on a technicality (in fact, they may have known it
would be...);

3) If they took breach of contract, then the whole
contract would be on the table for a clear and unambiguous
interpretation by the courts, something SCO doesn't want
so they can keep making their unsubstantiated claims to
the press and their investors. Not that it saves them
from a massive retalitory BoC claim from Novell...

I'm looking forward to Novell filing in the near future on
everything that came out of the audit, missing and
withheld license fees, failures to respond to directions,
etc, etc, etc...

John.

[ Reply to This | # ]

And Here it is.....
Authored by: Anonymous on Wednesday, February 11 2004 @ 08:43 PM EST
http://www.novell.com/licensing/indemnity/pdf/2_11_04_n-sco.pdf

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: RSC on Wednesday, February 11 2004 @ 08:46 PM EST
I'm a tad confused.

If this case is dismissed, when if ever is someone actually going to get to the
copyright ownership. I can't see anywhere in all of this fiasco, when the actual
ownership of the said copyrights is going to be resolved.

I find it depressing to think that it could be decades before this issue of
copyrights is resolved.

Or am I missing something. (Mind you, I will admit that the whole things is
getting way too confusing for me).

RSC


---
----
An Australian who IS interested.

[ Reply to This | # ]

Maybe they DID transfer?
Authored by: GLJason on Wednesday, February 11 2004 @ 08:56 PM EST
I know it's hard to talk to people that have made up their minds, but I think SCO may actually own the copyrights. People don't want to admit it, but specifically the APA lists NOVELL as selling the "source code" to all those operating systems. The exclusion of patents and copyrights could easily be seen to mean only the copyrights in any material that belongs to Novell, for instance Novell put code into UNIX SYSV to allow it to work with Netware, probably code taken from Netware. Of course they wouldn't want SCO owning the copyright on that, then they would have a problem with selling Netware themselves without a license from SCO. If you purchase a product's "source code", and all copies of it, what are you getting? I would argue the copyright transfer is implied.

SCO quoted Liu v. Price Waterhouse incorrectly in their SCO Forum presentation, but I think it might have merit here. The copyright for a derivative work was transferred back to the owner because the contract said this: "Upon completion of the project, ALL source code will be given back to Price Waterhouse." Note that "copyright" isn't mentioned, only source code.

Just being the devil's advocate...

[ Reply to This | # ]

Not a goof, but a delay
Authored by: Anonymous on Wednesday, February 11 2004 @ 09:06 PM EST
It could be that SCO knows that it couldn't win a proper case, so it went with
something that they know will get thrown out of court.

If the premise is to delay, then we'll probably see more of these
"goofs" so that they can try to keep the stock prices high, sell some
more, and generally delay their demise.

[ Reply to This | # ]

Who Owns the Unix Copyright?
Authored by: Anonymous on Wednesday, February 11 2004 @ 09:10 PM EST
I may have missed something, but has anyone checked with the U. S. copyright
office to see whom the copyrights are issued to?

lvteacher

[ Reply to This | # ]

Money-go-round
Authored by: toolboxnz on Wednesday, February 11 2004 @ 10:03 PM EST
The thing I find odd about the whole licensing situation is that SCO have to pay
100% of licensing fees for UNIX to Novell who then give them back 5% as a
collection charge. So what was it that oldSCO actually did buy? Aside from being
able to use the code themselves for their own products, a license to collect
license fees?

[ Reply to This | # ]

  • What they bought - Authored by: Anonymous on Wednesday, February 11 2004 @ 10:50 PM EST
  • Money-go-round - Authored by: Anonymous on Thursday, February 12 2004 @ 01:58 AM EST
why not sue for breach of contract?
Authored by: gdeinsta on Wednesday, February 11 2004 @ 10:11 PM EST
Why didn't SCO sue for breach of contract, then, if their position is correct and copyrights were supposed to transfer and Amendment 2 is the contract that was to make that happen? No one I have talked to can figure that out. Since SCO alleges that the copyrights were to have transferred under the Asset Purchase Agreement, why *not* sue for breach of contract and ask the judge to enforce the contract?

Because then they could ask the judge to force the copyright transfer, but Novell could counter-offer to mitigate by cancelling the deal and refunding the purchase price ($36 million was it that Caldera paid?). In that case TSG's bluff would be called. No open-ended claims, no billions of dollars, no stock pump.

So they could claim that it is worth billions because of derivative works yada yada... but then they are in the position of trying to convince a court to enforce transfer to them of something that is worth billions but was purchased for mere tens of millions. Suddenly they don't look like poor little victims of theft, instead they look like greedy scum. Hard to win a jury's sympathy that way.

[ Reply to This | # ]

It just don't matter...
Authored by: pbarritt on Wednesday, February 11 2004 @ 10:17 PM EST
IIRC, the copyright applications for both Novell and SCOG
were for "additions and modifications" and both had different
"as of" dates. So in fact, probably both have some material
in both SVR4 and UnixWare. Who cares? Not IBM.

IBM does not care about who owns the copyrights. Their
case does not depend on who actually owns them. It depends
on the whether they are infringing. So IBM will let SCOG
prosecute the infringement on behalf of Novell.

Wouldn't you?

---
just an idiot looking for a village...

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: Anonymous on Wednesday, February 11 2004 @ 10:20 PM EST
I can't make up my mind on whether the contract was
intended to transfer the copyrights to SVRX or not. The
problem with the contract is that it doesn't specifically
address SVRX source code. To my eyes, the parties foresaw
the following future course of conduct. (1) The existing
SVRX licenses were Novell's and Novell's alone. SCO would
agree to collect the royalties, but that was just a service
agreement. Further development of SVRX would cease.
Neither party, SCO or Novell, would ever sell a SVRX
license in the future. (2) SCO would develop Unixware,
which was based on SVRX and was currently being developed.
Unixware would completely replace SVRX. SCO got ownership
of the Unixware code, and would license Unixware code.

In essence, I think the parties foresaw totally abandoning
SVRX, and the contract therefore didn't specifically
address the SVRX source code.

So from this I can conclude two things: (1) SCO doesn't
need the copyright to SVRX source code because they have
the copyright to Unixware, which was all they need to
pursue their business, or (2) SCO needs to have the
copyright to SVRX source code so that they can continue to
create a derivative work based on SVRX source code.

Very confusing to me.

[ Reply to This | # ]

Is anybody shorting SCOX stock?
Authored by: Anonymous on Wednesday, February 11 2004 @ 10:36 PM EST
Gotta a be a real chance to make some money off of their blunders--

IANAB (I am not a broker)

[ Reply to This | # ]

How big a factor is the money?
Authored by: Anonymous on Wednesday, February 11 2004 @ 10:38 PM EST
One of the largest problems I see SCO facing trying to convince a jury that they
actually own anything is the money. As a juror I would have to balk at the idea
that they own much of anything when nearly every red cent of the licensing money
goes to Novell. Why if SCO owns everything is Novell the only benefactor to any
licensing. Now I don't know about you guys but it deeply signifies that SCO owns
nothing and clearly knows it.

[ Reply to This | # ]

OT: Novell backs out of Harvard
Authored by: penfold on Thursday, February 12 2004 @ 12:04 AM EST
The Harvard webpage has annouced the Novell will not be appearing as scheduled. However, Eben Moglen will be there on Feb 23 at 6:30pm.
Due to concerns regarding litigation filed by SCO after our invitation to speak was issued, Novell's General Counsel has informed us that Chris Stone will be unable to come speak to JOLT on Feb 23rd.

Instead, the Harvard Journal of Law and Technology is pleased to welcome our third speaker of the year: Eben Moglen, Professor of Law and Legal History at Columbia Law School in New York. Professor Moglen is General Counsel of the Free Software Foundation, and a leading spokesperson for open source and free software.

---
Blood from a turnip? That's easy! Try getting SCOX to produce evidence!

[ Reply to This | # ]

Novell is fast!
Authored by: sam on Thursday, February 12 2004 @ 12:09 AM EST
Novell has already posted on it's website the letter it sent to SCO today.

http://www.novell.com/licensing/indemnity/legal.html

[ Reply to This | # ]

Documentation of transfer of AT&T Copyrights to Novell?
Authored by: tce on Thursday, February 12 2004 @ 01:40 AM EST
Hi All,
Apologies if this is just too easy to find on Groklaw...

Do we have documentation of the clear written transfer of all UNIX copyrights
from AT&T to Novell?

Might the scolawags (sp) at TSG reasonably have asked to review the AT&T
-> Novell contracts and used those as models for the Novel -> TSG
contracts?

If we can review the AT&T -> Novell transfer and see a side by side clear
difference in the written transfer (e.g. a doc vs um, nothing) well then, it's
another step toward the end of the plank. On the other hand, if the first
transfer is embedded in contract language that looks a bit like SOC's contracts
then this issue doesn't go away quite as fast.

Tom

[ Reply to This | # ]

OT: Canopy Web Site Changes
Authored by: geoff lane on Thursday, February 12 2004 @ 01:40 AM EST
The Linux-Elitist email list is reporting that the Canopy home page
(www.canopy.com) has been altered so that there is no longer the display list
of "Canopy" companies and the "News" section has
disappeared.

The changes remove the obvious connection between Canopy, SCO and a number of
Linux companies funded by Canopy. Are we seeing the first steps in
disconnecting SCO from Canopy?

Pity Canopy couldn't have done a proper job and updated the copyright notice
date on their other pages - it's still 2002.

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: Anonymous on Thursday, February 12 2004 @ 01:56 AM EST

PJ,

I think here you might have been alluding to the Novells's lack of malice as being part of Novell's Motion to Dismiss when you say

...Monday, Novell filed a Motion to Dismiss, and from news reports, I gather they are pinning the motion on the lack of specific damages, but there may be more to the motion. Once I see it, we'll be able to see if that is the only basis for the motion. ...

I suspect it will not be. Without going back to the original filing I seem to remember SCO assigning such nefarious intents to Novell's public statements. Therefore, malice becomes a finding of fact per course of the trial rather than a finding of law as would be the case if SCO omits special damages in their filing.

Likewise, Novell sites the copyright ownership as criteria for dismissal. Falsity is elemental to slander of title, but this element can not be known by this action because this "finding of fact", namely, who owns the copyright, is not in the jurisdiction of this court, hence the Motion to Remove.

[ Reply to This | # ]

Slander of Title and copyright
Authored by: Anonymous on Thursday, February 12 2004 @ 02:05 AM EST
I have a hard time understanding how the concept of slander of title could apply
to a copyright. In fact, I think that anyone who tries to apply the concept to
a copyright is operating under a fundamental misunderstanding of the nature of a
copyright.

To explain:

A title to a house is an instrument that conveys positive ownership. If I have
the title, I own the house. When someone files a false lein on the house, they
are making the false claim that my title is invalid. As such, a real estate
title defines the exact nature and scope of the property in excruciating detail,
using methods such as land surveys.

Copyrights are instruments that convey negative ownership, which makes them very
different. A copyright is not a title. It is in a sense the opposite of a
title. A copyright is not the right TO a work. Instead it is the right to
prevent other people from repeating and building upon a work, which is very
different.

It is very different because a derived work qualifies for copyright regardless
of the copyright status of the underlying work. This is very different from
real estate law.

Here is a long example of how two copyright holders can hold copyrights on
virtually the same material without conflict:

George Lucas (presumably) owns a copyright on the work "The Phantom
Menace." However, there is a videotape floating around that is a fan edit,
referred to as "The Phantom Edit." The person who created this
derivative work (I will call him Anonymous) rearranged some of the plot
elements, shuffled some scenes around, and generally altered the movie, notably
removing many scenes involving Jar Jar Binks.

In other words, Anonymous created a new work by adding new creative elements to
an existing work. This new work certainly qualifies for copyright protection,
and the anonymous creator of "The Phantom Edit" could, if he chose,
register a copyright on his creation. (actually, under copyright law, he
already had a copyright on his creation the moment he created it.)

Anonymous' copyright registration would not constitute slander of title. His
copyright can fully coexist with George Lucas' copyright without creating any
conflict of rights and interests. The important thing to understand is that
unlike a conflicting real estate title, Anonymous' copyright on "The
Phantom Edit" does no harm to George Lucas' copyright on "The Phantom
Menace."

Here is how the two copyrights would interact:

1) George Lucas has the right to exclude others from propagating copies and
derivatives of "The Phantom Menace", including "The Phantom
Edit."

2) Anonymous has the right to exclude others from propagating copies and
derivatives of "The Phantom Edit." Anonymous acquires no rights to
exclude others, including George Lucas, from propagating "The Phantom
Menace", or any other alteration of "The Phantom Menace" that is
not derived from "The Phantom Edit."

3) George Lucas may not distribute copies of "The Phantom Edit"
without the permission of Anonymous, because even though "The Phantom
Edit" is comprised entirely of footage and dialogue lifted from "The
Phantom Menace", that particular arrangement of those elements is protected
by Anonymous' copyright.

4) Anonymous may not distribute copies of "The Phantom Menace" or
"The Phantom Edit" without the permission of George Lucas, because
even though he has created a new arrangement of the footage and dialog aspects
of "The Phantom Menace", he is prevented from using those elements
without permission by George Lucas' copyright.

See. No conflict.

Copyright registrations do not go enter into the sort of detail that a title
goes into because a copyright is a registration, not a title. If copyright were
a title, like a land title, it would have to include a detailed
"survey" of what elements constituted the claimed property of the
copyright holder. But copyrights do not. And it's a good thing that they
don't, or everyone who filed for a copyright would have to provide a detailed
analysis of their work and precisely claim their "real estate", like a
patent application. This would be incredibly burdensome in most cases and
impossible in many cases.

And that's the difference between a copyright and a title. It is technically
incorrect to refer to "THE copyright holder", as if copyright were a
positive title, especially in a case such as Unix, where Unix has been altered
and extended by literally thousands of individuals.

Which brings me back to the case at hand.

If Novell has made even a single line of changes to the Unix codebase, it is
fully entitled to register a copyright on that new version. Of course, in this
case, the copyright would only cover the changes Novell made, not the code that
Novell did not write, and this would be noted nowhere in the copyright
registration.

This would be completely regular and proper, and in fact is done all the time.
Pick up any second or third edition of a textbook and look at the copyright
notice. You will see a copyright claim for the year that the book was written,
even if the first edition of the book was written 10 years ago, even if the
previous editions were written and published by a different author and
publisher. It is understood that the date-of-publication copyright claim on
such a second or third edition only covers the creative elements added by the
author in the preperation of that edition, and does not constitute a copyright
claim to the preexisting elements.

In short, I think that one could make a strong argument that attempting to apply
the theory of slander of title to copyrights is intrinsically incorrect. It is
an oxymoron to claim "slander of title" on a copyright, because
copyright does not function as a title. The legal harms caused by a slander of
title to real estate do not exist in the realm of copyright, and the novel claim
of "slander of title" on a copyright should be thrown out on those
grounds. It is essentially meaningless and either betrays bad faith on the part
of SCO, or a profound ignorance of the basic nature of what a copyright is.

[ Reply to This | # ]

Just letting you know
Authored by: Anonymous on Thursday, February 12 2004 @ 02:36 AM EST
PJ,
It looks like www.osviews.com is quoting directly from Groklaw re:SCO, without
attribution. Check it out. There are several articles. Just look through the
recent few days.

Love your work,
Adam
Ps another comment, be careful not to get to vitriolic re:SCO and other
anti-Open companies. The original judge in the MS case learnt that lesson well.
We have to try to be partisan even if they aren't.

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: Anonymous on Thursday, February 12 2004 @ 02:40 AM EST
I think it counts as loss of the entire ranch.

[ Reply to This | # ]

oldSco vs NewSco
Authored by: Anonymous on Thursday, February 12 2004 @ 03:31 AM EST
One comment on the article: There is not a clear distinction between oldSco and
newSco. Did novell transfer something to NewSco, or only OldSco? Are there
documents about the transfer between oldSco(tarantella) and NewSco? What happen
when and the end Novell owns the copyright. Did OldSco sold something what they
didn't own? Is that fraud if that's so?

[ Reply to This | # ]

What *Is* copyright, Anyway?
Authored by: Anonymous on Thursday, February 12 2004 @ 03:57 AM EST
After reading much of the comments, i get the impression we also need some brush up on an even more fundamental point here: what is copyright anyway. Everyone seems to speak of it in terms of something that is transferred, where i think it is something that is granted. I have no legal eduatation, and if I did it would have been for the wrong set of laws. Maybe someone could write down the basics for the ignorant lot of us?

[ Reply to This | # ]

Why the SCO's copyright regitrations were improper
Authored by: rakaz on Thursday, February 12 2004 @ 04:28 AM EST
17 U.S.C. Sec 204:
A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.
In order to transfer a copyright you need to hae a instrument of conveyance. A small written and signed statement written by the owner that sign the copyrights over to the new owner. Examples of such forms are given by PJ in this article.

Is the APA such a instrument of conveyance? SCO seems to think it is, Novell disagrees. I believe Novell is right about this one. If you look at the example's PJ has given they all have one thing in common. They all specifically list the work that is being transferred. This is all very important, because otherwise you simply do not know which work is being tranferred.

Of course these are just examples and if the scope is made perfectly clear it is not necessary to list the specific works. For example Liu v. Price Waterhouse. Liu was a contractor that worked on software owned by Price Waterhouse. The contract said that Liu had to give "all the source code" back to Price Waterhouse. The judge ruled that the meaning of "all" was specific enough within the scope of this contract.

Now back to the APA. Is it clear which copyrights SCO is entitled to? Well there are two very big problems.

First of all the contract does not make specifically clear which copyrights SCO is entitled to. SCO is in my opinion entitled to the copyrights of UnixWare, but are the SysV copyrights transferred? It does not say specficly. Just to prove my point, even SCO and Novell disagree about the meaning of the agreement. Novell thinks they retained some copyrights, SCO seem to think they own it all. If the agreement doesn't clearly determine which copyrights are transferred it simply cannot be an intrument of conveyance.

Secondly, the APA sets a specific condition on whether SCO is entitled to some of the copyrights: "required for SCO to exercise its rights with respect to the acquisition". Again, does the APA clearly specify what SCO is entitled to? No it says SCO is entitled to some copyrights in certain conditions. Which copyrights? The APA doesn't say... Is the condition satifisfied? The APA doesn't say... Who determines when those conditions are satisfied? The APA doesn't say... So the APA alone does not specificly make clear which copyrights SCO is entitled to. Once again, if the agreement doesn't clearly determine which copyrights are transferred it simply cannot be an intrument of conveyance.

I think that anybody who analyses these contracts agrees with me that the APA wasn't written with the transfer of copyrights in mind. When they later tacked this onto the contract using Amendment 2 they did it in such a confusing way that it simply cannot impossible to conclusively determine which copyrights are owned by SCO.

Now that there is a dispute over what this contract means, a judge is going to have to determine what the intend of both parties was when the contract was executed. But SCO didn't do this... Instead of asking a judge they simply 'snuck into the copyright office and registered the copyrights'.

Does this mean SCO is not entitled to the copyrights they claim to own? No it simply means that SCO was premature when they registered the copyrights. Is SCO entitled to the copyrights... I don't know, I'm not a judge, but neither is SCO.

[ Reply to This | # ]

The least read thread
Authored by: Anonymous on Thursday, February 12 2004 @ 04:39 AM EST
Don't lose sight of passed discussions. This thread contains very insightful information regarding amendment2 and copyright claims.

[ Reply to This | # ]

Change of Control: Let's Be Clear: It's NOT Clear!
Authored by: nealywilly on Thursday, February 12 2004 @ 06:08 AM EST
Many people have discussed the Change of Control issue here and under other
headlines as if it were in fact NOT an issue at all. I agree that there was
definitely a change of control from oldSCO (Santa Cruz Operation) to newSCO
(Caldera->TSG).

However, in the context of the APA and TLA and what is relevant for this Slander
of Title case and other claims related to copyright ownership between SCO and
Novell, I believe there IS an issue, namely ambiguity, when it comes to the
Change of Control.

I have a problem with the Change of Control argument because of the apparent
conflicts with respect to its meaning versus its definition. If that sounds
funny to you, please note that the TLA in "I. DEFINITIONS" it states:

<excerpt>
For purposes of this Agreement:
The terms "Assets", *"Change of Control"*, "Closing
Date", "Licensed Technology" and "Transitional
Contracts" shall have the respective *meanings* attributed to such terms in
the Asset Purchase Agreement. [my emphasis via "*" throughout this
post - I'm cutting and pasting from plain old text format]
</excerpt>

Now, this clearly points us back to the APA, but it is not clear where exactly
because the APA refers to Change of Control in three places and provides two
meanings:

<excerpt>
1.6 License Back of Assets. [I am snipping here to skip straight to the text
related to Change of Control] The license agreement shall also provide Seller
with an unlimited royalty-free, perpetual, worldwide license to the Licensed
Technology upon the occurrence of a

Change of Control of Buyer described in Section 6.3(c) hereof. [break added for
my emphasis]

In the event of a Change of Control of Seller (as defined in Section 6.6 hereof,
the license granted pursuant to the license agreement shall be limited to
Seller's products either developed or substantially developed as of the time of
the Change of Control.
</excerpt>

So, Section 1.6 of the APA, which dictates the principal terms of the TLA agreed
upon by the Buyer and Seller explicitly refers to two separate sections of the
APA for meanings of "Change of Control". Before even going to those
two sections it is clear that in the context of the TLA, the APA makes a
distiction between Buyer versus Seller regarding Change of Control. This is
important because, remember, the TLA states that Change of Control, inter alia,
"shall have the respective meanings attributed to such terms in the Asset
Purchase Agreement".

Because the TLA uses "meaning" and the APA uses two meanings (which
for the Buyer is "described" and for the Seller is
"defined"), Change of Control either has two meanings that can not be
contested or one meaning that can. This is what I referred to as ambiguous.

Here are the two meanings:

<excerpt>
6.3 Right of First Refusal on Change of Control
[snipped subsections (a) and (b) for being unrelated to TLA]
(c) Expansion of Seller's Rights Relating to the Licensed Technology upon a
Change of Control. Until two (2) years from the Closing Date, in then event
Buyer has merged with, sold shares representing 50% or more of the voting power
of Buyer to, sold all or substantially all of Buyer's assets to, or engaged
voluntarily in any other change of control transaction with *any party
identified by Seller on schedule 6.3(a) hereof, or in the event any party
identified by Seller on Schedule 6.3(a) hereof*, shall acquire shares
representing 50% or more of the voting power of Buyer.

Schedule 6.3(a)

The proposed merger with or sales of shares representing 50% or more of the
voting power of Buyer to any of the following parties, or any affiliates or
successors to the business thereof, would give rise to the *respective rights
and obligations contained in Section 6.3(c) of the Agreement:*

Sun Microsystems
Microsoft
Hewlett-Packard
IBM
Digital
Fujitsu


6.6 Buyers Right of First Refusal
(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.
</excerpt>

It seems like Novell would have to argue that Change of Control in the TLA has
the meaning "defined" in the section (6.6) of the APA that relates to
the Seller, not the Buyer (6.3). And although the definition is worded in a way
that can be applied to either the Buyer or the Seller, Novell would also have to
argue that Change of Control in the TLA does NOT refer to the meaning
"described" for the Buyer that the TLA section (1.6) of the APA -
which dictates the terms of the eventual TLA - and refers to (section 6.3).

Not saying this is wrong, I just don't think it's clear and certainly it is not
unarguable.

If I am missing something here (or from documents other than the APA and TLA) I
would love to hear it. I welcome any comments about this issue because I want
to believe it makes SCO's claims moot, despite my doubts.

[ Reply to This | # ]

A question,
Authored by: Anonymous on Thursday, February 12 2004 @ 07:10 AM EST
Is it normal for agreements to be amended almost a year after they are signed?

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: Anonymous on Thursday, February 12 2004 @ 09:58 AM EST
Can SCO prove that copyrights were transfered from oldSCO to Caldera? I would
really like to see the APA between oldSCO and Caldera.

This seems to be a very important document in both the IBM case and the Novell
case to have gone missing.

Where is the APA???

[ Reply to This | # ]

What *Is* Slander of Title, Anyway?
Authored by: henrik on Thursday, February 12 2004 @ 10:39 AM EST
An article from Computerworld Weirder & Weirder comments on the lawsuit

[ Reply to This | # ]

effectuate?
Authored by: Anonymous on Thursday, February 12 2004 @ 05:34 PM EST

So is Amendment 2 a contract? Well, it's an amendment to one, yes. Is a contract enough to transfer a copyright? Yes. Is it clear on its face that it did mean to effectuate such a transfer? Obviously Novell doesn't think so.

Is "effectuate" a real word?

sorry... I just had to ask. :)

[ Reply to This | # ]

  • effectuate? - Authored by: Anonymous on Thursday, February 12 2004 @ 07:13 PM EST
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