decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


Contact PJ

Click here to email PJ. You won't find me on Facebook Donate Paypal


User Functions

Username:

Password:

Don't have an account yet? Sign up as a New User

No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.


What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments


Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
Judge Kimball's MEMORANDUM DECISION AND ORDER in SCO v. Novell - as text
Thursday, June 10 2004 @ 08:28 PM EDT

Here it is, gang. And thanks go to Frank Sorenson, as always, inode_buddha, fjaffe, Bob Niederman, and this time l'il ole me. We're going to end up with carpal tunnel syndrome for sure, if we keep this up.

We've been fortunate in three ways -- that SCO was foolish enough to sue IBM, that Novell was willing to stand up and be counted, and that we ended up with a judge who knows the law, is capable of comprehending all the fine details and is willing to do take the time to do so.

The bottom line of all this complexity to me is this: while the judge has instructed both sides on what they could do next, it seems impossible to me that SCO will want to try to go forward now with a slander of title action. If the judge can't make heads or tails out of the agreement as amended (although he obviously is finding Novell's arguments the more persuasive) and he has said publicly that SCO's ownership of the copyrights is unclear at best, and he just did exactly that, how could Novell ever be found guilty of slander of title, which requires that you must have known what you said was false? This one seems dead in the water, and if Novell doesn't catch his hint as to bringing a summary judgment action soon, I'll be mighty surprised. What all this could mean to AutoZone, Red Hat, etc., is a lot, so I wouldn't be surprised to see a whole lot of legal documents filed making sure judges all over the place hear about this decision. Here's what the judge says:

"The Amendment also contains no transfer language in the form of 'seller hereby conveys to buyer.' Given the similarly ambiguous language in the APA with respect to the transfer of assets -- seller 'will' sell, convey, assign, and buyer 'will' purchase and acquire -- it is questionable on the face of the documents whether there was any intention to transfer the copyrights as of the date the amendment was executed. Moreover, the use of the term 'required' in Amendment No. 2 without any accompanying list or definition of which copyrights would be required for SCO to exercise its rights in the technology is troublesome given the number of copyrighted works involved in the transaction. There is enough ambiguity in the language of Amendment No. 2 that, at this point in the litigation, it is questionable whether Amendment No. 2 was meant to convey the required copyrights or whether the parties contemplated a separate writing to actually transfer the copyrights after the 'required' copyrights were identified. Therefore, this is not a case where the court can immediately conclude that there is a writing under Section 204(a).

"Although the case will obviously require contract interpretation, at this stage of the litigation, the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a Section 204(a) writing."

The short version of that is, Novell is probably correct that they still hold the copyright. The elephant that puts on the table is: on what basis, then, is SCO suing anyone for copyright infringement?

I'm putting our text version up now, but with the caveat that I am still proofing, so by all means help me do so. Here is the PDF so you can compare. For anything that really matters, go by the PDF.

***********************************

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

CENTRAL DIVISION

______________________________

THE SCO GROUP, INC.,

Plaintiff,

vs.

NOVELL, INC.,

Defendant.

_____________________________

MEMORANDUM DECISION AND ORDER

Civil Case No. 2:04CV139DAK

____________________________

Defendant Novell, Inc. ("Novell") removed this case from Utah state court and then filed a motion to dismiss. In response to Novell's motion to dismiss, Plaintiff The SCO Group, Inc. ("SCO") filed a motion to remand the case to state court and opposed Novell's motion to dismiss. After the motions were fully briefed, the court held a hearing on both motions on May 11, 2004. At the hearing, Defendant was represented by Michael A. Jacobs and John P. Mullen, and Plaintiff was represented by Brent O. Hatch and Mark R. Clements. The court took both motions under advisement. The court has considered carefully the memoranda and other materials submitted by the parties as well as the law and facts relating to the motions. Now being fully advised, the court renders the following Memorandum Decision and Order.

BACKGROUND

In its Complaint, SCO brought a single cause of action against Novell for slander of title. SCO alleges that Novell has publicly and falsely represented that it owns the UNIX and UnixWare copyrights and that such false representations have caused it damage.

SCO's predecessor in interest, Santa Cruz Operations, Inc., and Novell entered into an Asset Purchase Agreement ("APA") dated September 19, 1995. Under the APA, SCO alleges that its predecessor paid Novell 6.1 million shares of SCO common stock, valued at over $100 million at that time, to acquire from Novell "all right, title, and interest in and to the UNIX and UnixWare business, operating system, source code, and all copyrights related thereto." Compl. ¶ 1. Novell disputes that any copyrights were transferred.

The relevant language from the APA states:

On the terms and subject to the conditions set forth in this Agreement, Seller will sell, convey, transfer, assign and deliver to Buyer and Buyer will purchase and acquire from Seller on the Closing Date (as defined in Section 1.7) all of Seller's right, title, and interest in and to the assets and properties of Seller relating to the Business (collectively the "Assets") identified on Schedule 1.1(a) hereto. Notwithstanding the foregoing, the Assets to be so purchased shall not include those assets (the "Excluded Assets") set forth on Schedule 1.1(b).

Compl. Ex. A, APA Secton 1.1(a), Schedule 1.1(b) sets forth as Excluded Assets"[a]ll copyrights and trademarks, except for the trademarks UNIX and Unixware." Id., APA Schedule 1.1(B) Section V.A. Therefore, the APA specifically excluded all copyrights from the assets transferred from Novell to SCO's predecessor.

Approximately a year later, on October 16, 1996, Novell and SCO's predecessor executed Amendment No. 2 to the APA. APA Amendment No. 2 amends the Schedule of Excluded Assets to exclude "[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [APA] required for [SCO's predecessor] to exercise its rights with respect to the acquisition of UNIX and Unixware technologies." Id., APA Amendment No. 2.

Because SCO claims that it owns the copyrights to UNIX and UnixWare, it alleges in its Complaint that

Novell's wrongful claims of copyrights and ownership in UNIX and UnixWare have caused, and continue to cause, irreparable harm to SCO, in the following particulars:
a) Customers and potential customers of SCO are unable to ascertain the truth of ownership in UNIX and UnixWare, and make decisions based thereon; and

b) SCO's efforts to protect its ownership of UNIX and UnixWarer, and copyrights therein, are subject to a false cloud of ownership created by Novell.

Compl. ¶21.

Before this action was filed, the parties publicly disputed whether the copyrights were transferred. On June 6, 2003, Novell issued a press release stating as follows:

In a May 28th letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. [APA Amendment No. 2] was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. The amendment does not address ownership of patents, however, which clearly remain with Novell.

Pl.'s Reply Mem. Supp. Mot.Remand, Ex. I. However, in this action, Novell argues that the language of the APA Amendment No. 2 does not automatically convey the copyrights but required SCO to identify which copyrights were required before an actual transfer occurred.

DISCUSSION

When a district court is faced with a motion to remand and a motion to dismiss, the court should "rule first on the motion to remand," and, if granted, send "the motion to dismiss back to state court." Bear River Drainage District, 267 F.2d 849 (10th Cir. 1959).

SCO's Motion to Remand

SCO moves this court to remand this action to state court, arguing that this court lacks subject matter jurisdiction because its slander of title claim is a state common law action that involves only the interpretation of the parties' contractual agreements. Novell argues that this court has subject matter jurisdiction over SCO's slander of title action because in order for SCO to prevail SCO must prove that it owns the copyrights at issue, and the determination of copyright ownership in this case requires the application and interpretation of federal copyright law.

The burden of establishing federal jurisdiction lies with the removing defendant, who must establish jurisdiction based on a preponderance of the evidence. Martin v. Franklin Capital Corp., 251 F.3d 1284, 1290 (10th Cir. 2001). There is no assertion in this case that there is diversity jurisdiction. Therefore, the only basis for jurisdiction is federal question jurisdiction under 28 U.S.C. Section 1331 and Secton 1338(a). A case may be validly removed from state to federal court if a claim "arising under" federal law appears on the face of the well pleaded complaint. Greeshileds v. Warren Petroleum Corp., 248 F.2d 61, 64 (10th Cir. 1957). "It is fundamental that the action is not one arising under federal law where the federal question is supplied by way of defense." Warner Bros. Recors, Inc v. R.A. Ridges Dist. Co., Inc. , 475 F.2d 262, 264 (1973).

SCO's Complaint alleges a state law cause of action for slander of title based on Novell's allegations of ownership of the copyrights to UNIX and UnixWare. "Even though the claim is created by state law, a case may 'arise under' a law of the United States if the complaint discloses a need for determining the meaning or application of such a law." T.B. Harms Co. v. Eliscu, 339 F.2d 823, 827 (2d Cir. 1964), cert. denied, 381 U.S. 915 (1965). A slander of title cause of action requires a plaintiff to establish 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." First Sec. Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1256-57 (Utah 1989). Therefore, to establish a claim for slander of title, SCO must establish that Novell'ls claims of copyright ownership are false. Falsity also pervades the malice element because in order for the statement regarding copyright ownership to be malicious, it would have to be knowingly false. First Sec. Bank , 780 P.2d at 1257. Moreover, the issue of copyright ownership is relevant to the first element as well because in order to demonstrate that the statement was slanderous, the statement must be "injurious to the legal validity of an owner's title." Bass v. Planned Mgt Serv., Inc., 761 P.2d 566, 568 (Utah 1988). Therefore, there appears to be no dispute that the question of copyright ownership is a central dispute that will control the outcome of the claim.

Federal courts have exclusive jurisdiction over actions "arising under" the federal copyright laws. See 28 U.S.C. Section 1338(a). However, "the fact that a case concerns a copyright does not necessarily mean that it is within the jurisdiction of a federal district court." Jasper v. Bovina Music, Inc., 314 F.3d 42, 46 (2d Cir. 2002). "[T]he federal grant of a . . . copyright has not been thought to infuse with any national interest a dispute as to ownership or contractual enforcement turning on the facts or on ordinary principles of contract law." T.B. Harms, 339 F.2d at 826.

The Tenth Circuit has no specific test for determining whether a case arises under the federal Copyright Act. However, the Second Circuit established a test in T.B. Harms that has been adopted by several courts across the country, including at least one other district court in this Circuit. See Gerig v. Krause Publications, Inc., 58 F. Supp. 2d 1261, 1267 & n.5 (D. Kan. 1999). The T.B. Harms court determined that "[a]n action `arises under' the Copyright Act if and only if the complaint is for a remedy expressly granted by the Act, e.g. a suit for infringement or for the statutory royalties for record reproduction, or asserts a claim requiring construction of the Act …or … presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim." TB. Harms, 339 F.2d at 828. SCO's slander of title claim does not seek a remedy expressly granted by the Copyright Act. Therefore, for federal question jurisdiction to exist, SCO's claim must require construction of the Copyright Act or present a question with respect to a distinctive policy of the Act that requires federal principles to control the disposition of the claim.

Determining whether a claim requires construction or interpretation of the Copyright Act rather than just contract interpretation may be a discrete issue but it is not a simple task. "Whether a complaint asserting factually related copyright and contract claims `arises under' the federal copyright laws for purposes of Section 1338(a) `poses among the knottiest procedural problems in copyright jurisprudence." Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 347 (2d Cir. 2000) (quoting 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.01 [A], at 12-4 (1999)); Schoenberg v. Shapolsky Publishers, Inc., 971 F.2d 926, 931 (2d Cir. 1992) ("The question of whether the breach of a contract licensing or assigning a copyright gives rise to a federal cause of action under the Copyright Act is a complex issue in a `murky' area.").

Novell argues that in order to determine copyright ownership in this case the court must determine whether the APA as amended by Amendment No. 2 satisfies the requirements of a writing to transfer ownership of a copyright under Section 204(a) of the Copyright Act. Section 204(a) of the Copyright Act provides that "[a] transfer of 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." 17 U.S.C. § 204(a).

In Jasper, the Second Circuit recognized that "[t]he difficulty is that almost every case involving contract interpretation, appropriate for state court determination, could be recharacterized as a case appropriate for a federal court simply by framing the issue to be whether the disputed contract qualified as a writing within the meaning of section 204(a)." 314 F.3d at 47. However, "[t]he need for interpretation of a contract does not necessarily mean there is a bona fide issue as to whether the contract is a writing for purposes of section 204(a)." Id.

The Jasper court analyzed the Harms criteria as follows:

Specifically, if the case concerns a dispute as to ownership of a copyright, and the issue of ownership turns on the interpretation of a contract, the case presents only a state law issue, and, unless the complaint asserts a remedy expressly granted by the Copyright Act, federal jurisdiction is lacking.... On the other hand, if interpretation of the Copyright Act is required (or if a remedy available under the Act, such as damages for infringement, is sought) then federal jurisdiction is available.

Id. at 46. The Jasper court acknowledged that "the line between contract interpretation and statutory interpretation is not always clear." Id.

In Jasper, the court was faced with an agreement transferring ownership of the copyrights in a musical group's songs that was signed by three of the six co-authors of the songs through a corporation owned by the three signatories. Id. at 45. An addendum was later attached to the agreement signed by all six co-authors in which each "assented to the execution of [the] agreement and agreed to be bound by the terms and conditions thereof." Id. The Jasper court concluded that the issue "as to whether an addendum agreeing to a contract that purports to transfer a copyright owner's rights is a section 204(a) writing … suffices to render this case within federal court jurisdiction." Id. at 47. The court found that it was "the rare contract interpretation case that does present a substantial issue as to whether the contract qualifies as a section 204(a) writing." Id. [1]

Novell argues that this case presents more substantial Section 204(a) issues than Jasper. Novell argues that on its face, there is no instrument that purports to convey copyrights, and the only instrument that SCO contends is an instrument of conveyance, the APA Amendment No. 2, is so indeterminate as to fail the requirements of Section 204(a). SCO, however, asserts that Amendment No. 2 is clearly a section 204(a) writing and the only issue for the court is contract interpretation as to which copyrights were conveyed.

It is undisputed that the APA did not transfer any copyrights. Under the APA, Novell agreed that on the Closing Date (December 6, 1995) it would assign all assets on Schedule 1.1(a) but that it would transfer no assets listed on the Excluded Assets schedule, Schedule 1.1(b). There is no dispute that all copyrights were excluded on Schedule 1.1(b) and, therefore, no copyrights transferred on the Closing Date under the terms of the APA. Also, Amendment No. 2 merely amends the schedule of excluded assets and does not constitute a transfer of copyrights on its own. Therefore, the issue raised by Novell is whether the APA as amended by Amendment No. 2 is a sufficient writing under Section 204(a) to transfer ownership of copyrights. For purposes of SCO's motion to remand, the issue is not whether copyrights were in fact transferred under the APA as amended, but whether the Section 204(a) determination raises a federal question sufficient for this court to exercise jurisdiction over the case.

The APA Amendment No. 2 excludes from transfer "[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [APA] required for [SCO's predecessor] to exercise its rights with respect to the acquisition of UNIX and Unixware technologies." The Amendment does not identify which copyrights are required for SCO to exercise its rights with respect to the acquisition of UNIX and Unixware and provides no date for the transfer. The Amendment mentions copyrights owned by Novell as of the date of the APA but it is not retroactive to the date of the APA. Furthermore, although Amendment No. 2 states that its effective date is the date of the amendment, the language of Amendment No. 2 does not state that a transfer of the copyrights is to occur as of the date of the amendment.

The Amendment also contains no transfer language in the form of "seller hereby conveys to buyer." Given the similarly ambiguous language in the APA with respect to the transfer of assets-seller "will" sell, convey, assign, and buyer "will" purchase and acquire-it is questionable on the face of the documents whether there was any intention to transfer the copyrights as of the date the amendment was executed. Moreover, the use of the term "required" in Amendment No. 2 without any accompanying list or definition of which copyrights would be required for SCO to exercise its rights in the technology is troublesome given the number of copyrighted works involved in the transaction. There is enough ambiguity in the language of Amendment No. 2 that, at this point in the litigation, it is questionable whether Amendment No. 2 was meant to convey the required copyrights or whether the parties contemplated a separate writing to actually transfer the copyrights after the "required" copyrights were identified. Therefore, this is not a case where the court can immediately conclude that there is a writing under Section 204(a).

Although the case will obviously require contract interpretation, at this stage of the litigation, the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a Section 204(a) writing. This court will be required to analyze the requirements of Section 204(a) and the cases interpreting that law in order to determine whether the Amendment No. 2 qualifies as a writing under Section 204(a). In this regard, the case presents an issue that does not turn solely on regular contract principles. Because there is a substantial issue as to whether Amendment No. 2 is a Section 204(a) writing, this case is similar to Jasper. Here, like Jasper, there are two documents but neither alone appear to satisfy the requirements of Section 204(a). The facts of the instant case raise an equally, or even more, substantial question of whether Section 204(a) has been satisfied. Therefore, this court finds Jasper's finding of federal jurisdiction persuasive.

SCO claims that there is no question as to whether a sufficient writing exists because Novell's June 6, 2003 Press Release stating that Amendment No. 2 "appears to support" SCO's claim of ownership acknowledged that Amendment No. 2 transferred the copyrights to SCO. Although the press release may argue in favor of a finding that the copyrights were in fact transferred under Amendment No. 2, this argument focuses on the merits of the action rather than the threshold question of whether Section 204(a) is sufficiently implicated such that federal jurisdiction exists. The press release may indicate that Novell initially believed that the APA as amended appeared to be a sufficient Section 204(a) writing, but the press release, alone, does not clearly establish that a Section 204(a) writing exists or dispose of the Section 204(a) issue that Novell has subsequently raised in this case.

SCO also cites to several cases that it claims supports its position that the issue presented is only based on state law. However, the cases relied on by SCO involve agreements that were undoubtedly a Section 204(a) writing and only required the court to determine the terms of the agreement. Yount v. Acuff Rose-Opryland, 103 F.3d 830, 835 (9th Cir. 1996)(finding that royalty interests in contract assigning copyright arose out of the contract itself and are governed by state law); Dolch v. United California Bank, 702 F.2d 178, (9th Cir. 1983) (finding determination of whether consideration existed in an otherwise valid assignment of renewal rights was a contract question that depends on common law). Determining specific royalty rights or renewal rights under a contract that has clearly transferred rights is not the same as determining whether an agreement intended to transfer any rights and is a sufficient Section 204(a) writing.

SCO also cites to Noble v. Great Brands of Europe, Inc., 949 F. Supp. 183, 185 (S.D.N.Y. 1996) for the proposition that "federal jurisdiction does not attach to a claim involving only the breach of a copyright agreement or the ownership of a copyright." However, the Noble case did not involve a copyright ownership dispute and the court did not do an in-depth analysis of that area of the law or discuss section 204(a) of the Copyright Act. The Noble court concluded that the copyright infringement action before it was a cause of action arising under the Copyright Act and found the Defendant's arguments that the infringement dispute was merely a contractual dispute without merit. Id. at 186. The court's preliminary statement as to the state law basis for copyright ownership cases appears to be a truncated summary of the rule from T.B. Harms that was focused only on whether a remedy was sought under the Copyright Act. See id. at 185. Noble's lack of analysis on the issue before this court makes its truncated statement as to copyright ownership causes of action unpersuasive.

SCO has not cited to this court any state law contract cases that would govern the issue in this case. Rather, SCO cites to Section 204(a) cases holding that the requirements for section 204(a) are quite simple. See Effects Associates, Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990). Although these cases may be relevant once the court must decide the Section 204(a) issue, they do not address the threshold issue of whether this court must look to Section 204(a)'s requirements rather than state law to address the issue before it. Moreover, the fact that SCO cites federal case law, rather than state case law, to give this court the proper standard underscores that the issue turns on federal law.

None of the cases cited by SCO present a section 204(a) issue similar to the issue in the present case. The Jasper court specifically found federal jurisdiction exists where there is "a substantial issue as to whether the contract qualifies as a section 204(a) writing." 314 F.3d at 46-47. To determine whether the APA as amended by Amendment No. 2 qualifies as a Section 204(a) writing will require this court to apply the standards of Section 204(a) and federal case law interpreting Section 204(a). Therefore, this case does not turn merely on ordinary principles of contract law, but presents "a need for determining the ... application of [federal] law" sufficient for this court to retain jurisdiction. See T.B. Harms, 339 F.2d at 827.

Moreover, the T.B. Harms court also acknowledged that federal jurisdiction exists when "a distinctive policy of the [Copyright] Act requires that federal principles control the disposition of the claim." 339 F.2d at 828. Section 204(a)'s writing requirement is to "ensure that the creator of a work will not give away his copyright inadvertently and [to] force[] a party who wants to use the copyrighted work to negotiate with the creator to determine precisely what rights are being transferred and at what price." Effects Associates, Inc., 908 F.2d at 557. Although SCO's slander of title claim is a state law claim, the determination of copyright ownership controls necessary elements of the claim. The federal law standards created to further the federal interest established in section 204(a) control the disposition of whether Section 204(a)'s requirements have been met. SCO has failed to cite any relevant state common law that would control the disposition of this issue. Accordingly, this court concludes that it has subject matter jurisdiction over SCO's slander of title action. SCO's motion to remand the case to state court is, therefore, denied.

Novell's Motion to Dismiss

Because this court finds that it has subject matter jurisdiction over this action, it may now properly consider Novell's pending motion to dismiss. See Bear River Drainage District, 267 F.2d 849 (10th Cir. 1959). Novell argues that SCO's slander of title claim should be dismissed because SCO has not pleaded sufficient facts demonstrating falsity and has not adequately pleaded special damages.

On a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must accept all well pleaded facts as true and construe them in the light most favorable to the non-moving party. Cotrell v. Biotrol Int'l, Inc., 191 F.3d 1248, 1251 (10th Cir. 1999); Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 1251 (10th Cir. 1997). In this context, dismissal is appropriate only when it appears that the plaintiff can prove no set of facts in support of the claims asserted. Grossman v. Novell, Inc., 120 F.3d 1112, 1118 (10th Cir. 1997). The Federal Rules of Civil Procedure "erect a powerful presumption against rejecting pleadings for failure to state a claim." Cotrell, 191 F.3d at 1251.

A. Falsity

Novell argues that as a matter of law the APA as amended fails to meet the requirements for a valid transfer of copyright ownership under Section 204(a) of the Copyright Act. Because, Novell contends, the APA as amended constitutes only a promise to transfer the copyrights, SCO cannot prove ownership of the copyrights at issue and the case should be dismissed. A mere promise to assign rights in the future is not an actual assignment and is insufficient under Section 204(a). Monarch Licensing Ltd. v. Ritam Int'l Ltd., 24 U.S.P.Q.2d 1456, 1459 (S.D.N.Y. 1992); Arachnid Inc v. Merit Indus., Inc., 939 F.2d 1574, 1580-81 (Fed. Cir. 1991); Li 'l Red Barn, Inc. v. The Red Barn Sys., Inc., 322 F. Supp. 98, 107 (N.D. Ind. 1970). SCO, however, argues that the allegations in its Complaint that it is the sole owner of the copyrights along with the language of the APA stating that the assets will transfer on the date of the closing are enough under the standards of notice pleading to establish SCO's ownership of UNIX and UnixWare copyrights and the falsity of Novell's statements to the contrary.

As discussed above, Section 204(a) has certain standards that must be met. Even though the standards may be quite simple, the parties' writing must at least clarify to the parties what, in fact, is being transferred. See Effects Associates, Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990). In Radio Television Espanola S.A. v. New World Entertainment, Ltd., the court analyzed the issue of whether writings were sufficient under Section 204(a) and observed that "the writing should `serve as a guidepost for the parties to resolve their disputes.' 183 F.3d 922, 927-28 (9th Cir. 1999).

Novell contends that the written documents in this case do not serve as guideposts and because of such failure they do not satisfy Section 204(a) as a matter of law. Despite the court's analysis above that the ambiguities of the APA as amended raise questions as to whether a Section 204(a) writing exists, the court cannot conclude at this point in the litigation that those ambiguities warrant a dismissal of the claim. Novell has raised persuasive arguments as to whether a sufficient writing exists and whether there was any intent to transfer copyrights under the APA as amended or under a separate agreement. Although questions exist as to whether the APA as amended is indeed a proper guidepost, the agreement in this case appears on its face to be a more substantial attempt at conveyance than the facsimiles involved in Radio Television that merely negotiated terms.

The court recognizes that in this case there are multiple works potentially at issue because UNIX and UnixWare had many versions and releases and that without specificity as to which copyrighted works and which rights within each copyrighted work were purportedly transferred, the purported assignment may be insufficient under Section 204(a). However, because there are conflicting arguments as to the parties understandings with respect to the agreements, this court cannot conclude as a matter of law at the motion to dismiss stage that the APA as amended is too vague to act as a guidepost as to what rights were transferred. The parties each have their own divergent interpretations of the agreements at issue in this case. However, the court agrees with SCO and concludes that all of these arguments as to the parties' understandings and interpretations of the agreements would more properly be before the court on motions for summary judgment or trial. Drawing all inferences in favor of SCO as this court must do on a motion to dismiss, this court cannot conclude that SCO can present no set of facts that would prove its claim. Accordingly, Novell's motion to dismiss as to SCO's pleading of falsity is denied.

B. Special Damages

Novell also argues that SCO's slander of title claim should be dismissed because SCO has pleaded only general damages and has failed to plead special damages with specificity as is required under Rule 9(g) of the Federal Rules of Civil Procedure. Valley Colour, Inc. v. Beuchert Builders, Inc., 944 P.2d 361, 364 (Utah 1997). Because special damages are an essential element to a slander of title claim, Novell asserts that SCO has failed to state a cause of action and asks this court to dismiss the claim. SCO argues that Novell has overstated the Rule 9(g) pleading requirement and that it has specifically pleaded special damages by setting forth its loss of pecuniary advantage resulting from customer confusion as to copyright ownership and from its accrual of legal fees.

Rule 9(g) of the Federal Rules of Civil Procedure states that "when items of special damage are claimed, they shall be specifically stated." Fed. R. Civ. P. 9(g). Special damages "are a particular type of damages which are a natural consequence of the injury caused but are not the type of damages that necessarily flow from the harmful act." Hodges v. Gibson Products Co., 811 P.2d 151, 162 (Utah 1991). In Bass v. Planned Mgt Servs. Inc., 761 P.2d 586, 568 (Utah 1981), the court explained the difference between a slander of title claim and a slander or defamation claim as they relate to damages. The court distinguished the types of claims by recognizing that the tort of slander of title is "based on an intentional interference with economic relations. They are not personal torts; unlike slander of the person, they do not protect a person's reputation." Id. The court further explained that "[s]lander of title actions are based only on palpable economic injury and require a plaintiff to prove special damages, whereas injury to personal reputation may be based on both tangible and intangible losses and give rise to presumed and general damages. There are no general or presumed damages in slander of title actions." Id.

A slander of title action requires a plaintiff to establish special damages that consist of "a realized or liquidated" pecuniary loss. Hodges, 811 P.2d at 162. "Special damages are ordinarily proved in a slander of title action by evidence of a lost sale or the loss of some other pecuniary advantage. Absent a specific monetary loss flowing from a slander affecting the saleability or use of the property, there is no damage." See Bass, 761 P.2d at 569. "It is not sufficient to show that the [property]'s value has dropped on the market, as this is general damage, not a realized or liquidated loss." Valley Colour, 944 P.2d at 364.

Although a realized or liquidated pecuniary loss must be established at trial, that does not necessarily answer the question as to the amount of detail a plaintiff must use in pleading such loss in its Complaint. "In Utah there does not seem to be an inflexible rule regarding the pleading of special damages." Cohn v. J.C. Penney Co., 537 P.2d 306, 311 (Utah 1975). Rather, it is simply "a question of whether the pleadings contain such information as will apprise the defendant of such damages as must of necessity flow from that which is alleged." Id. Therefore, "the law does not require that the exact dollar amount of special damages be specifically pleaded." Hodges, 811 P.2d at 162.

However, a "plaintiff must present the circumstances giving rise to the special damages and the elements of injury [it] allegedly suffered." 5 Charles A. Write & Arthur R. Miller, Federal Practice and Procedure, § 1311, at 706 (2d ed. 1990). Commentators have noted that there is no reducible formula for the requirements of Rule 9(g), rather "it will depend upon the nature of the claim, the type of injury sustained, and the causal connection between defendant's conduct and the damage." Id.

SCO alleges in its Complaint that

Novell's wrongful claims of copyrights and ownership in UNIX and UnixWare have caused, and continue to cause, irreparable harm to SCO, in the following particulars:

a) Customers and potential customers of SCO are unable to ascertain the truth of ownership in UNIX and UnixWare, and make decisions based thereon; and

b) SCO's efforts to protect its ownership of UNIX and UnixWare, and copyrights therein, are subject to a false cloud of ownership created by Novell.

Compl. ¶ 21. The Complaint then states that as a consequence of Novell's conduct, SCO has incurred special damages in an amount to be proven at trial. Compl. ¶ 26.

Although the Complaint alleges harm, it does not specifically set forth any type of realized pecuniary loss. To the extent that SCO's Complaint can be read to allege that Novell has caused irreparable harm to SCO's reputation, such damages are general damages. At the oral argument on this motion, SCO argued that because of the alleged customer confusion, customers did not want to enter into license agreements with it. This is a natural consequence of the alleged cloud of ownership and customer confusion and would amount to a realized pecuniary loss. However, SCO did not make such allegations of special damages in its Complaint. In addition, SCO has argued that it is entitled to attorney fees as special damages. However, regardless of whether attorney fees would be available as special damages in this case, SCO did not allege attorney fees as special damages in its Complaint. Rather, SCO alleged only generally that there is a cloud of confusion and that "as a consequence of Novell's conduct alleged herein, SCO has incurred actual and special damages in an amount to be proven at trial."

If this court were to find SCO's pleading of special damages sufficient, it would turn Rule 9(g)'s requirements into mere notice pleading. This court cannot conclude that SCO has given Novell enough information to apprise Novell of the types of damages that flow fromthe alleged cloud of confusion--such as lost sales, lost licenses, attorney fees, or any other it may be seeking. Although a specific amount of damages is not necessary and a specific identification of customers may be impossible, SCO has not given Novell or this court any information as to the scope of customer confusion, its lost business, or made any allegation that there, in fact, has been a realized pecuniary loss as a result of Novell's statements. Accordingly, Novell's motion to dismiss SCO's slander of title claim for failure to specifically plead special damages is granted without prejudice. The court grants SCO thirty days leave to amend its Complaint to plead special damages specifically in accord with Rule 9(g) of the Federal Rules of Civil Procedure.

CONCLUSION

For the reasons stated above, Plaintiff's Motion to Remand is DENIED, and Defendant's Motion to Dismiss is DENIED as to Plaintiff's pleading of falsity and GRANTED as to Plaintiff's pleading of special damages. Plaintiff is granted 30 days from the date of this Order to amend its Complaint to more specifically plead special damages.

DATED this 9th day of June, 2004.

BY THE COURT:

[signature of Dale A. Kimball]
DALE A. KIMBALL,
United States District Judge


[1] SCO argues that the Jasper court had an incentive to find federal jurisdiction because a full bench trial on the merits had occurred below. However, there is no reason to believe that the court would have raised the issue and analyzed it as it did in order to merely affirm jurisdiction. Moreover, this court does not believe that on an issue that can be raised and decided at any time, a court of appeals would be so influenced by the circumstances at the district court level that it would render a decision analyzing the issue incorrectly.


  


Judge Kimball's MEMORANDUM DECISION AND ORDER in SCO v. Novell - as text | 257 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
OT: Bifurcation denied, but trial now 2005-11-01
Authored by: Anonymous on Thursday, June 10 2004 @ 10:45 PM EDT

See sco.petrofsky.org for IBM case docket item 177, Kimball's order denying motion to bifurcate and partially granting motion to amend scheduling order.

He amended the case schedule in several ways, moving some things more than SCO asked and other things less. He only extended fact discovery to February, vs. SCO's request that it be extended to next May. Similarly, the deadline for dispositive motions was extended to May, rather than to July. On the other hand, he moved the trial date from April 2005 all the way to November 2005, vs. SCO's request that it be moved to September.

If most of the case is decided on summary judgment, as IBM predicts, then the discovery and dispositive motion deadlines are more significant than the trial date.

[ Reply to This | # ]

Corrections here please
Authored by: WhiteFang on Thursday, June 10 2004 @ 10:54 PM EDT
So PJ can find them quick!

[ Reply to This | # ]

Funny business in today's SCO conference call?
Authored by: Anonymous on Thursday, June 10 2004 @ 11:02 PM EDT
This Novell decision was dated 9th June

The certificate of service saying it was emailed and faxed, is dated 10th June

SCO conference call of 10th June, began about 10 minutes late


QUESTION #1

Did SCO know about this ruling BEFORE the conference call?



QUESTION #2

There is a guy in the conference call who asked a question. I think his name was
Larry Solomon but I didn't clearly hear it or catch the organization he was with
(there is a Larry Solomon with SBC who was an investor in various Caldera
offerings so it is just possible this might be the guy)

Anyway he asked several questions about the Novell thing

His questions basically began with the premise that it's absolute clear the
contracts required Novell to transfer the copyrights, and that Novell was
claiming it just hadn't done so because the records at the copyright office
didn't record a transfer (he actually said this more than once at the beginning
of his follow-up questions too, the constant re-emphasis made me a little
suspicious)

Darl didn't really comment except to say SCO totally disagrees with Novell.
Darl didn't correct Larry's misinterpretation of Novell's position.

It seems to me that Larry left other listeners to the call with a
misinterpretation of what Novell is saying, and Darl allowed it to stand.

I even wondered at the time if the question was a planted question. If it was
(and I don't know that it is, just I was surprised by Larry's constant
reiteration of an incorrect interpretation) that it got a SCOargument across,
but didn't leave any DarlTracks behind.

Thoughts?

[ Reply to This | # ]

carpal tunnel syndrome
Authored by: star-dot-h on Thursday, June 10 2004 @ 11:19 PM EDT
as opposed to SCO who will soon end up with "crapal syndrome".

Sometimes it helps to be dyslexic.

Great work BTW.

[ Reply to This | # ]

Judge Kimball's MEMORANDUM DECISION AND ORDER in SCO v. Novell - as text
Authored by: Anonymous on Thursday, June 10 2004 @ 11:28 PM EDT
This looks to be one intelligent and hard working judge. Methinks that bodes
well for Novell et all.

[ Reply to This | # ]

OT: I guess we all better switch to Unixware!?! :-)
Authored by: Anonymous on Thursday, June 10 2004 @ 11:31 PM EDT
See http://www.eweek.com/article2/0,1759,1610552,00.asp

(1) If SCO wins against IBM the license fees will be so high as to kill Linux
(says SCO)

I wonder how much the license fees will be if SCO lose? :-) Yeh that's right - a
bit fat zero

It seems to me that SCO has essentially give up on their multi billion Linux
licensing revenue opportunity. Both outcomes imply no SCOsource Linux license
revenue in the long term

Just my ill-informed opinion: but I think it's time to sell their stock, it's
overvalued if SCOsource is dead regardless of outcome of the cases.


(2) I wonder if this is another SCOthreat (just like we want every copy of AIX
destroyed) to try to pressure IBM to settle, possibly via applying pressure via
IBM customers.

Earth to Darl: I don't think IBM or IBM's customers are scared.


(3) I wonder if this idea indicates a small degree of learning behavior on the
part of SCO

AutoZone seems to have strongly argued that SCO demanding license fees is not
irreperable harm

So, next day, SCO changes their PR to "we don't want license fees we want
Linux dead" (unfortunately the greed pixie in Darl's brain couldn't resist
adding - "or maybe really high license fees" - which makes their
modified argument DOA).

[ Reply to This | # ]

What stops SCOG now from doing what they wanted?
Authored by: skidrash on Thursday, June 10 2004 @ 11:33 PM EDT
Remember there was a lot of comment that a slander of title claim was bought
because RBC & Baystar could withdraw their money for SCOG lying, and if SCOG
sued for contract breach that would be an admission that they did not have the
copyrights.

There was also lots of comment that SCOG wanted this in state court so they
could bring in testimony from executives who were involved in writing the
contracts & SCOG hoped to win that in state court.

So what prevents SCOG now from dropping the claim in front of Kimball and
charging Novell in state court on contract issues?

The thing holding SCOG back before (RBC & Baystar) is gone.

From at least one angle it looks good for SCOG. They can go back to the court
they wanted and introduce the testimony they wanted.

So what am I missing?

[ Reply to This | # ]

Summary Judgement
Authored by: Anonymous on Thursday, June 10 2004 @ 11:34 PM EDT
I see one reason why Novell might not want to ask for summary judgement. With
summary judgement, the issue of copyright would still be in question. To
legally determine who has copyright to which portions, more then just summary
judgement would be needed.

Or would that still not be answereable in this case? (how much scope-creep is
possible is case like this??? I assume there are some ways to do it by
counter-sue or somesuch at the start of the case? are we past that point yet?).


Or would it be safest for Novell to request and obtain summary judgement, and
then, if so choosing file a new case to establish copyright ownership? (just on
the unlikely chance Novell lost the copyright issues if this case moves forward,
it may risk Novell's chances in the slander portion of the case which is clearly
an easy win right now).

[ Reply to This | # ]

It's only MOSTLY dead...
Authored by: Anonymous on Thursday, June 10 2004 @ 11:38 PM EDT
So am I correct in assuming that the Novell case is dead and buried unless SCO decides to refile with some special damages?

Let's see - the judge strongly hints to SCO that malice, falsity, and other issues are going to get very far. And SCO's pleadings on special damages (the oral ones they might want to include in an amended filing) sound weak...

  • Um - we were forced to spend money on attorneys so that we could bring this farce before you...
  • AND the perceived lack of control of Copyright has lost us customers on our royalty-collection business for the Defendant, who claims to own the Copyright...
Yep - that's what I would want to hear if I was Novell in the next 30 days... Change it from dismissal without prejudice into dismissal with prejudice and pony up those attorney fees to Novell, SCO...

And that doesn't even get to the main question - why does SCO need Copyright ownership to collect royalties or sell licenses for which it is contractually entitled to do so?

[ Reply to This | # ]

SCO's next move.
Authored by: kawabago on Thursday, June 10 2004 @ 11:46 PM EDT
They don't own the copyrights and I can't imagine that Novell would be willing
transfer them now. So SCO has no choice but to sue Novell to force the transfer
of the copyrights. I don't know if they could prove the need for them since
there doesn't seem to be any proof of infringing activity anywhere. So they
might never get their hands on the copyrights anyway.

"It's a fine mess you've got me into!", Olie Hardy

[ Reply to This | # ]

Gotta love it...
Authored by: MikeA on Thursday, June 10 2004 @ 11:51 PM EDT
"Moreover, the fact that SCO cites federal case law, rather than state case law, to give this court the proper standard underscores that the issue turns on federal law."

It seems live EVERYBODY, including the judges, can use SCO's own court filings against them!

I laughed out loud when I read that....

Thanks PJ & Team, you (along with SCO) make me laugh.

On a side note, I have to say that I am finding the law to be quite interesting, and sometimes counter-intuitive. The fact that the judge AGREES that the APA Ammendment #2 does not act as an article of transferrence seems....against common sense, I guess. To me, (IANAL) that would change the original contract, which WAS a valid sale, to include the copyrights. (Granted, it doesn't specify which ones, though, among other problems) The fact that the Ammendment would need to spell everything out again is something that I would never have considered. The more I read these contracts, the more I think they were terribly written. Learning more and more every day.

---
Change is merely the opportunity for improvement.

[ Reply to This | # ]

The court agrees with SCO
Authored by: Anonymous on Thursday, June 10 2004 @ 11:56 PM EDT
I can see the press release now.. "The Court agrees with SCO"

Quoting out of context of course from the 4th paragraph of Falsity

[ Reply to This | # ]

Transfer to SCO
Authored by: Anonymous on Friday, June 11 2004 @ 12:00 AM EDT
The Judge made it clear the APA was about a transfer from Novell to Santa Cruz
Operations. Has SCO ever presented any documents showing transfer of copyright
from Santa Cruz Operations to Caldera? That would seem to be a very very big
missing step in the process.

[ Reply to This | # ]

OT: EFF offers a competition for "BAD" patents!
Authored by: John on Friday, June 11 2004 @ 12:00 AM EDT

In the 293rd Issue of EFFector:

Organization Seeks Ten Patents to Challenge

EFF is calling on the public to help identify patents that are having negative effects on Internet innovation and free expression. As part of EFF's Patent Busting Project, EFF seeks nominations for the ten worst offenders in the world of intellectual property. Winners will become the first targets for the project's team of attorneys, technologists and experts, who will file "re-examination" requests with the United States Patent and Trademark Office (PTO), asking the agency to revoke the patents.

EFF Staff Attorney Jason Schultz, who heads the project, said he can't wait to see what the contest turns up. "We have seen illegitimate patents asserted on such simple technologies as one-click online shopping, video streaming, and paying with credit cards online. When individuals and small businesses are faced with million-dollar legal demands, they have no choice but to capitulate and pay license fees. We aim to change that."

To qualify for the contest, a bad patent has to be more than just stupid and invalid. It must be issued in the United States and be software or Internet-related. Contest judges are particularly interested in patents for technologies that enable free expression, such as streaming video, blogging tools, and voice over IP (VoIP). Equally important, the patent owner must be actively threatening or suing people for licensing fees. "Patent owners who claim control over communication tools can threaten anyone who uses them, even for personal or non-commercial purposes," explained Schultz. "Overreaching patent claims unfairly reduce the tremendous benefits that software and technology bring to freedom of expression."

The contest opens today and closes on June 23. Winners will be announced on June 30.

Enter the contest: http://www.eff.org/patent/

---
JJJ

[ Reply to This | # ]

I say again, "Where is D'idiot and Underly"?!
Authored by: ray08 on Friday, June 11 2004 @ 12:04 AM EDT
The sounds of silence, how deadening. $45/share, strong buy!

Seems they've lost their appetitie for SCOFUD, huh?

And KB, still think M$ has a chance to profit by *your* FUD?

It's been debunked, let's move on to the rest of the world...GNU/Linux lives!

---
Caldera is toast! And Groklaw is the toaster! (with toast level set to BURN)

[ Reply to This | # ]

The Score So Far
Authored by: Rhys Weatherley on Friday, June 11 2004 @ 12:06 AM EDT
So, let's see if we can sum up the score so far:

1. If Novell owns the Copyright (likely according to the
judge), then IBM files for dismissal on the grounds that
SCO has no standing to bring the case.

2. If SCO owns the Copyright, then IBM points to
the $echo newsletter (which SCO is now the successor
in interest to).

3. If $echo is valid, then IBM files for dismissal as
SCO has no standing to enforce the contract over code
that isn't part of the original System V.

So, at this point, SCO needs to hope that (a) the judge
agrees that SCO owns the Copyright, and (b) the judge
agrees that $echo does not apply and buys the "it was
in the same room at the same time" derivative works theory.

Stick a fork in them. They're done.

[ Reply to This | # ]

OK, why don't the other cases simply collapse?
Authored by: Anonymous on Friday, June 11 2004 @ 12:08 AM EDT

You all gotta help me out here.

Everyone seems to think this ruling proves SCO has no copyrights. So, why
wouldn't this mean EVERY other SCO lawsuit would be subject to summary dismissal
due to lack of standing?

[ Reply to This | # ]

Put up or shut up
Authored by: RedBarchetta on Friday, June 11 2004 @ 12:17 AM EDT
From the court order text:
"Plaintiff is granted 30 days from the date of this Order to amend its Complaint to more specifically plead special damages."
In other words, the court is giving SCOG 30 days to either produce evidence of "special damages" or, if Novell is awake an listening, face a summary judgement.

I very much admire Kimball's style. He's to the point and writes in understandable English. Not pages of seemingly rambling statements, for the purposes of incontrovertability, which the Supreme Court justices so often do.


---
Collaborative efforts synergise.

[ Reply to This | # ]

Suppose SCO Re-files... will they get the same Judge?
Authored by: penfold on Friday, June 11 2004 @ 01:19 AM EDT
I take it as a concenus that if SCO amends their complaint and tries to pick up
this fight again, they are on legally shakey ground before they even begin.

But I will assume that they HAVE to file something against Novell. It's obvious
that no one they are litigating even wants to settle out of court, and the
chances of winning are not in SCO's favor at this point. SCO slinking away from
this fight would be blood in the water for everyone else.

Darl said in a press release sometime ago that they filed this case to protect
their copyrights or some such. He made it sound like SCO didn't want to sue
Novell, but simply couldn't avoid it because Novell's actions were interfering
with SCO "business". (Probably the most accurate statement that he
ever made.)

So, my big question is suppose SCO does refile against Novell. Either a slander
of title claim, or something completely different.

Do they automatically get Kimball again? (Assuming federal jurisdiction)

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

[ Reply to This | # ]

  • Yes. Same judge - Authored by: Anonymous on Friday, June 11 2004 @ 05:00 AM EDT
    • Yes. Same judge - Authored by: Anonymous on Saturday, June 12 2004 @ 12:15 AM EDT
Negligent Ignorance == Slander?
Authored by: Anonymous on Friday, June 11 2004 @ 01:24 AM EDT
Lets say the court does find that there was a transfer of title. If so, I am
not sure that the Defendant cant be held liable. Novell ***did*** acknowledge
in the press release that the amendment "appeared to" transfer some
copyrights. If so, it may be that they did not know before the discovery of the
amendment that copyrights had been transferred but do you really need to
"knowingly" make a false statement in order to be found guilty of
slander or is it merely enough to be negligently ignorant of the falsehood (they
***did*** sign the agreement after all).

[ Reply to This | # ]

Automated PDF to TEXT
Authored by: Anonymous on Friday, June 11 2004 @ 01:37 AM EDT
I've been working with converting PDF manuals to PDFs with text recently using
Scansoft OmniPage Pro. I took the PDF for this court order, ran it through
OmniPage and in less than 5 minutes had a text version. The software performs
automated character recognition to read text, then guides you through a
spellcheck/proofreading step. Maybe this could help you guys transfer all these
documents to text.

While OmniPage is fairly expensive perhaps other software exists Open Source. I
know Adobe Acrobat Professional also has a similar feature.

[ Reply to This | # ]

NOVELL OWNS UNIX SYS V Copyrights
Authored by: dodger on Friday, June 11 2004 @ 03:53 AM EDT
This is the proper headline for this story.

p.s. SCO doesn't.

[ Reply to This | # ]

Don't pop the champagne just yet
Authored by: Anonymous on Friday, June 11 2004 @ 05:52 AM EDT
All the judge has said is that there is an actual controversy over whether the
APA is a written instrument.

And I'm sorry to tell you this, but to a fairly dispassionate observer, the
*intent* of the APA seems clear. Santa Cruz Operation clearly thought they were
purchasing the rights. Novell thought they were selling them. SCO seem more
than usually confident (i.e. *quietly* confident) that the witness testimony
will support this.

OK, let's say I'm wrong. What happens next? Well, then SCO get assigned the
rights anyway. As per the APA "will" clause, and their demand in this
case (although they don't have to go to court, they could just *ask* Novell for
them). And so they lose the slander of title, but get the rights anyway, all
official and court approved.

And if for some reason, the court doesn't approve their demand to have the
rights assigned? Well, no biggie. They just ask Novell for them, as per the
APA. And bring another contract case to enforce that. The slander of title is
their first gambit, not their last.

Try not to get too excited over this decision; it's only the beginning of the
rights issue.

[ Reply to This | # ]

SCO's conundrum : rock, or hard place?
Authored by: Anonymous on Friday, June 11 2004 @ 07:53 AM EDT

The judge has told SCO specifically how to repair its claim: ".. the Complaint .. does not specifically set forth .. realized pecuniary loss. .. At the oral argument .., SCO argued that .. customers did not want to enter into license agreements with it. This .. would amount to a realized pecuniary loss". Clearly, if they did this, he would accept it. Will they?

If they do, we're straight into consideration of the merits on "sufficient writing", so the question of copyright ownership will be determined. If they don't, given they've been provided the join-the-dots version of how, it will be generally assumed they believe they'd lose on that and so don't want it determined yet. It's interesting that Novell didn't (yet) play lack of malice, which SCO would have had no way to repair and so would have resulted in dismissal without placing SCO in this damned-if-you-do/damned-if-you-don't position. Makes you wonder if they hoped all along that SCO would arrive here.

[ Reply to This | # ]

Judge Kimball's MEMORANDUM DECISION AND ORDER in SCO v. Novell - as text
Authored by: Nick Bridge on Friday, June 11 2004 @ 01:44 PM EDT
My favorite part:

... the fact that SCO cites federal case law, rather than state case law, to
give this court the proper standard underscores that the issue turns on federal
law.

Don't you just love it when SCO shoots themselves in the foot?

[ Reply to This | # ]

Did Amendment 2 Intend to Transfer Copyrights?
Authored by: Anonymous on Friday, June 11 2004 @ 02:14 PM EDT
I haven't actually read the APA or the amendments, only what is quoted in this
decision. I have two thoughts. First, it seems that the amendment only removed
"required" copyrights from the excluded list. It did not add them to
the purchased list. It merely opened the door for further negotiations. Second,
the APA clearly excluded all copyrights. Why would Novell later give the
copyrights away without payment? How can SCO argue the amendment transferred the
copyrights without payment and without adding them to the purchased list?

[ Reply to This | # ]

Novell file suit?
Authored by: Anonymous on Friday, June 11 2004 @ 03:16 PM EDT
I wonder if Novell is going to file a suit against SCO. It certainly seemed to
be getting ready to do that before SCO filed against Novell. I am thinking
about thing like selling Microsoft a license without getting prior approval from
Novell, and sueing companies when Novell sent it letters saying it couldn't. In
addition there are SCO's public claims that it owns the code. All these are
reasons for Novell to sue.

[ Reply to This | # ]

SCO's response
Authored by: Anonymous on Friday, June 11 2004 @ 06:01 PM EDT
There's an eweek article discussing the ruling (http://www.eweek.com/article2/0,1759,1610567,00.asp). It contains this choice tidbit:
Marc Modersitzki, SCO's public relations manager, said, "We're pleased with the ruling. We look forward to responding to the court's special damages request." This request gives SCO the chance to amend its complaint against Novell
Yeah, I'll bet they were pleased. Now let's see if they actually do refile.

[ Reply to This | # ]

What SCO bought.
Authored by: Anonymous on Saturday, June 12 2004 @ 04:01 PM EDT
SCO keeps going on about what they bought if not the copyrights.

What SCO bought in my opinion is the right to license Sys V code for their
own products and for licenses for Sys V code sold on to others within their
own products. This gives then no rights to control or restrict Sys V code
outside this narrow scope.

If the contract was for sale was for the copyrights themselves, then if
would have formed the core of the contract. It would have hardly have
been missed out and have had to be put in as an amendment.

If all rights to the Sys V code and licensing, revenue and administration of
rights therefrom had been transferred in the sale, how come there is a
requirement that Novell has the last say over licensing and copyright
litigation, and has rights to 95% of licensing revenue?

Lastly, new SCO is saying that they wouldn't have bought Sys V without full
rights to the copyrights. Maybe what they say is true, but you see new SCO
didn't buy Sys V from Novell. Old SCO did, and old SCO doesn't seem to
have been so keen on buying full rights the IP from Novell, either for
sub-licensing or litigation. New SCO may have been keen to get their hands
on the IP for litigation purposes (even if it is frivolous litigation), and
their
contract with old SCO may have insisted on transfer of all IP to them,
however it seems old SCO only had limited rights to IP that could be
transferred to them.

[ Reply to This | # ]

The real damage here.
Authored by: mobrien_12 on Saturday, June 12 2004 @ 05:12 PM EDT
IMHO, Darl's credibilty has taken another huge hit here. For almost a year now
he's been saying things like SCO(g) is the ownwer of "the UNIX operating
system" (note the use of the word "the") and that Novell once
said they still owned the copyrights but that they "stamped out the Novell
attack and put that one behind us."
(http://news.com.com/2008-1082-1017308.html)

Then our favorite fool Darl said:

"All rights and ownership of UNIX and UnixWare." Now if you go to the
one thing they will claim, 'Oh, you didn't get the copyrights'. OK? Well fair
enough. There is a part in there that says the copyrights didn't transfer over
in the first pass. But a year later, there is an Amendment 2 that shows up and
says, "Oh, in addition to everything you got a year ago, all copyrights are
now transferred over for UNIX and UnixWare."
(http://www.groklaw.net/article.php?story=20040315001609501).

Then, I think it was a several weeks ago, he said words to the effect that it
was obvious to anyone with sense that Amendment 2 transferred the copyrights of
SysV to SCO. (I can't find the exact quote, can anyone else?).

Well, the judge has clearly said that it isn't anywhere near as cut and dried as
Darl claims. This doesn't necessarily mean that SCOg isn't entitled to the UNIX
copyrights, but it does mean that Darl has been making very very important
statements that are, at best, grossly exaggerated.

How can SCOg now say that Novell's claims have destroyed their SCOsource
initiative? They have a serious problem with respect to the fact that they have
not proven anything about their IP being in Linux, or that they even own the
copyrighted code that they claim (but havn't proven) is in Linux.

[ Reply to This | # ]

Why the slander of title case must now die.
Authored by: Anonymous on Monday, June 14 2004 @ 08:58 AM EDT

So we now have:

On June 6, 2003, Novell issued a press release stating as follows:

In a May 28th letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. [APA Amendment No. 2] was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. ...

so Novell has a clear basis for saying that, even if this amendment did transfer title, its current officers acted in good faith when they asserted publicly that Novell never transferred ownership to (old) SCO. Darl has been eager to point out that he was at Novell at the time and none of its current officers were (as basis for his claim to know more about the intent of the agreements than they do): in the process, he's made it impossible to show that they're guilty of malice in making their pronouncements; and

A slander of title cause of action requires a plaintiff to establish 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 ..."

Thus the slander of title action must fail. Given that Novell have not tried to use this argument, I must suppose they specifically want to have it fail on ground (2) rather than ground (3) - i.e. they really want to prove that their statements were true and SCO doesn't own the copyrights in question. Presumably they'll still use failure of (3) as a fall-back position if the case goes to trial; but it's interesting to see that they'd sooner push (2) than take the easy way out. Good on 'em.

At the same time, Novell can argue that it did not have clear title to copyrights in all of SysV - it presumably had title to copyright in some of SysV, but much of what was in SysV wasn't theirs, as the BSDi case forced into the light of day. (We don't know what the sealed documents in the BSDi case may have said about the extent of this.) Nemo dat quod non habet, so Novell couldn't have transferred to SCO rights Novell never had; thus there is no way SCO could own rights in all of SysV. So, even if Novell fail to break (2) - i.e. show that Novell never transferred any copyrights - SCO can't use this to argue (what Darl has claimed repeatedly) that SCO owns all of everything.

[ Reply to This | # ]

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )