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Novell's Memorandum in Support of Motion to Dismiss - as text
Wednesday, August 11 2004 @ 02:07 PM EDT

Here is Novell's Memorandum in Support of Motion to Dismiss as text.

If you notice, the issue on the table here is slander of title, not who owns the copyright. As Novell points out, the judge can dismiss SCO's claim against Novell on the slander issue based on the fact that there is a genuine dispute about ownership, without having to decide who actually owns the UNIX copyrights. It's not slander, Novell asserts, to say you own the copyright if you really do or have a reasonable basis for thinking that you do. SCO never really put the ownership matter directly in front of the judge. They defined their case as slander of title, and Novell plays right along.

Novell sums up its position quite simply: "a meritorious legal position precludes liability and obviates the need for further inquiry."

This is saying simply this: that if you own the copyright in something, and another company publicly asserts *it* owns your property, you are allowed to defend your ownership, even publicly, without having to fear being sued for slander of title. It *is*, after all, your property they are publicly claiming. Failure to protest could even be viewed as acquiesance. Even if later it is determined the copyrights are not yours, as long as you had a good faith belief that they belonged to you, no one can justly accuse you of slander.

I suppose the Judge could decide he is crazy wild to decide the issue of ownership despite neither party asking him to, and one telling him he doesn't need to, but it would be surprising. Judges are not normally known for asking to have more work heaped upon them. Judge Kimball is an unusually thorough jurist, however, so if he thinks he needs to settle the matter at this junction, in order to get everything else settled too, he may find a way. I just don't see how at this point. Or even why he'd want to.

Assuming Novell wins a dismissal, where does that leave SCO? In chess, sometimes your opponent makes a move and you sit there quite a while, with your chin in your hand, pondering all the moves he could make deeper into the game, so you can discern his strategy. You know it's conceivable but unlikely that he moved that knight for no particular reason. Law is the same. What is the reason your opponent chose to do this and not that? SCO's strategy isn't hard to figure. But Novell's, frankly, had me puzzling a while. The heavy dose of media clippings made me wonder if there may not be some later moves planned. I understand they were presented to show that the issue was already public before Novell said a word, and that it was SCO that made it a public issue. But certainly it's a fine collection for others with Lanham Act claims. I couldn't figure out what the strategy was for Novell, so I asked a lawyer who is a member of Groklaw, Webster Knight, which is what I do when I am stumped.

He was in the middle of writing up some briefs on a case, but he did take time to tell me this much for now. He sees it as a move that leaves SCO in a "what do I do now?" position. Do they next sue Novell to enforce copyright contract conveyance or what? If they do, it's an admission they don't already have clear ownership of the copyrights. If they don't currently have ownership, then they started a lot of lawsuits inappropriately, not to mention accusing companies like IBM -- and Linus and the gang -- without any basis, of infringement. But if they don't press to get the copyrights definitively transferred to them, it's undecided who owns these copyrights. How do they sue end users now under the DMCA or anything else? One requirement of any copyright infringement action is that you prove you own the copyright. No matter what they do next, they thereby lose something.

"This is from chess," he told me. "You move your knight where it can take two pieces. The opponent has to choose which one to lose. Naturally losing one weakens you and soon you lose the other too." In other words, Novell attacked them upstream.

There is one other thing that struck me as I worked on the transcript. I like to do that myself, when I can't understand a legal document fully. Then it hit me. If it is unclear whether a copyright transfer happened, my understanding is that the prior owner, in this case, Novell, remains the owner. Copyrights can't transfer without a sufficient writing, so if the judge dismisses on the basis that the APA plus Amendment A are insufficient and they didn't transfer the copyright or it's not clear that they did, that's the ball game as far as ownership, and SCO can't do a thing about copyright infringement without a copyright. They'd have to do something to try to get ownership, and there you are, back in the loop, with Lanham Act claims heading right at them.

This document is also of great interest because it provides us with the declarations Novell submitted to the Copyright Office for recordation against SCO's UNIX copyright registration. And I note in a footnote that Darl McBride is quoted from a video interview Dan Farber did with him. You remember. The one we transcribed for Groklaw.

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

MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Matthew I. Kreeger (pro hac vice)
David E. Melaugh (pro hac vice)
[address, phone, fax]

ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
John P. Mullen, #4097
Heather M. Sneddon, #9520
[address, phone, fax]

Attorneys for Defendant Novell, Inc.

____________________________

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

________________________________

THE SCO GROUP, INC.,

a Delaware corporation,

Plaintiff,

vs.

NOVELL, INC., a Delaware corporation,

Defendant.

__________________________________

MEMORANDUM IN SUPPORT OF
NOVELL, INC.'S MOTION TO DISMISS

Case No. 2:04CV00139

Judge Dale A. Kimball

________________________________

TABLE OF CONTENTS

STATEMENT OF ISSUES . . . . . . . . . 1

STATEMENT OF FACTS . . . . . . . . . .2

A. SCO's Amended Complaint and Attached Documents . . . . . 2

B. The Public Controversy Surrounding SCO's Claim to the UNIX Copyrights . . . . 3

C. Novell Statements Identified in SCO's Amended Complaint . . . . . . .5

1. Initial Press Releases . . . . . . 6

2. Subsequent Private Correspondence on Copyright Ownership . . . . 8

3. Novell's Public Response to SCO's Copyright Registrations . . . . . . . 10

SUMMARY OF ARGUMENT . . . . . . . . . ..13

ARGUMENT . . . . . . . . . . .14

I. DISMISSAL IS APPROPRIATE BECAUSE NOVELL'S STATEMENTS ARE PRIVILEGED . . . . 14

A. Novell's Privileges and SCO's Inability to Overcome Them Are Appropriate for Adjudication on a Motion To Dismiss . . . . . . 15

1. Novell Has a Privilege to Publicly Assert a Rival Claim to the UNIX Copyrights . . . . 16

2. Novell Has a Privilege to Publish Its Rival Claim to Parties With a Common Interest in the UNIX Copyrights . . . . . 20

B. In Light of the Court's June 9 Order, SCO Cannot Allege Malice Sufficient to Ground a Claim for Slander of Title, Let Alone Sufficient to Overcome Novell's Privileges . . . . . . 22

1. This Court's June 9 Order Indicates That Novell Has a Meritorious Claim to the UNIX Copyrights. . . 23

2. The Statements Identified in the Complaint Do Not Evidence Malice . . . . 25

II. DISMISSAL WITH PREJUDICE IS WARRANTED . . . . . 27

CONCLUSION . . . . . . 28

---------------------------

STATEMENT OF ISSUES

Notwithstanding the Court's ruling that this case presents a significant copyright ownership issue, SCO continues to assert as an unassailable fact that it owns the UNIX copyrights and that Novell has "slandered" its title by asserting Novell's competing ownership position. To proceed, however, SCO must adequately plead the element of malice and must overcome the privileges the law accords to Novell. As the Court noted in its ruling, "in order for [a] statement regarding copyright ownership to be malicious, it would have to be knowingly false." (Mem. Decision and Order, issued June 9, 2004 ("Order"), at 5.) In light of the Court's ruling, and in view of the substantial record available to the Court even at this early stage of the litigation, SCO's Amended Complaint cannot surmount these hurdles.

What we really have here—and what the Court can take cognizance of even on a motion to dismiss—is a legal issue of considerable industry and public interest. The dispute is public because SCO made it so, bringing suit against IBM and other parties, threatening 1,500 major corporate users of Linux with a copyright claim, and making broad accusations in the press.

Under these circumstances, the law permits Novell to assert its "rival claim" and to share its legal position with interested parties without facing the chilling threat of litigation. The only way SCO can overcome such a privilege, even on a motion to dismiss, is to adequately plead that Novell acted with the requisite level of malice. But no pleading can be sustained when the Court (by its own analysis and ruling) has before it the existence of a genuine property dispute in which the alleged slanderer is simply asserting its claim to the disputed property. Nor can SCO cure these flaws in its claim by amendment. It is therefore appropriate, as a matter of law, to dismiss SCO's Amended Complaint with prejudice.

STATEMENT OF FACTS

On this motion to dismiss, the Court properly has before it:

(i) SCO's Amended Complaint and the attached documents;

(ii) The existence of a public controversy concerning the UNIX copyrights, including SCO's suits against other parties brought based on its claim to own those copyrights; and

(iii) The full text of the Novell statements identified in the Amended Complaint. When this record is taken into consideration, dismissal is required.

A. SCO's Amended Complaint and Attached Documents.

SCO's Amended Complaint contains no request for declaratory judgment that SCO owns the UNIX copyrights. SCO presses only a claim that Novell has slandered SCO's purported title to these copyrights. SCO claims title to these copyrights by way of the Asset Purchase Agreement and "Amendment No. 2," which are attached to SCO's complaint.

The Court has already conducted a detailed evaluation of these documents in denying SCO's motion to remand this case to state court. Citing the Second Circuit's decision in Jasper v. Bovina Music, Inc., 314 F.3d 42, 47 (2d Cir. 2002), the Court noted that "the determination of copyright ownership controls necessary elements of [SCO's] claim" and that "federal law standards created to further the federal interest established in [17 U.S.C. § 204(a)] control the disposition of whether Section 204(a)'s requirements" to effectuate a transfer have been met. (Order at 13.) The Court examined the documents to determine whether they gave rise to "substantial Section 204(a) issues." (Id. at 8.) The Court concluded that they did, holding that "the agreements raise substantial doubt as to whether the [Asset Purchase Agreement] as amended by Amendment No. 2 qualifies as a Section 204(a) writing." (Id. at 10.)

The Court emphasized its "substantial doubt" over whether Novell had transferred copyright ownership to SCO in adjudicating Novell's motion to dismiss. Novell moved to dismiss on the ground that SCO had not properly pled that Novell's statements were false and that it had not properly pled special damages. Though the Court elected to grant Novell's motion only on the latter ground, the Court nevertheless noted that "Novell has raised persuasive arguments as to whether a sufficient writing exists and whether there was any intent to transfer copyrights under the [Asset Purchase Agreement] as amended or under a separate agreement." (Id. at 15.)

B. The Public Controversy Surrounding SCO's Claim to the UNIX Copyrights.

In March 2003, SCO sued IBM, claiming "SCO is the present owner of both UNIX and SCO/UNIX software." (The SCO Group, Inc. v. Int'l Bus. Machines Corp., Compl. filed Mar. 6, 2003, ¶ 2, attached as Ex. A to Decl. of David E. Melaugh in Support of Novell's Mot. to Dismiss ("Melaugh Decl."), filed with this motion.) SCO subsequently clarified its complaint to make explicit its claim to the UNIX copyrights: "SCO presently owns all right, title and interest in and to UNIX and UnixWare operating system source code, software and sublicensing agreements, together with copyrights [and] additional licensing rights in and to UNIX and UnixWare . . . ." (Id., Am. Compl., filed July 22, 2003, ¶ 2, attached as Ex. B to Melaugh Decl.; see also id., ¶29.) SCO claimed to have acquired these rights from Novell. (Id. at ¶ 49.)

In its suit against IBM, SCO claimed that IBM had conspired with others to misappropriate intellectual property owned by SCO and to include it in the Linux operating system. (See generally id. at ¶ ¶ 87-103.) SCO's broadside attack against IBM and the Linux community started a firestorm of controversy. Since its filing, thousands of articles have been written about the suit. (Melaugh Decl.¶ 4 & Ex. C.)1 Indeed, between the filing of the suit and the first public statement alleged in SCO's Amended Complaint against Novell, over 300 articles were written about the suit. (Id ¶ 5 & Ex. D.) SCO has done everything it can to stoke that firestorm. In total, SCO has initiated or is defending itself in at least six lawsuits before five judges in four states and two countries.2 SCO's Amended Complaint against Novell affirmatively asserts the relationship between this suit and SCO's other litigation. When ordered by this Court to state its special damages more precisely, the principal allegation SCO added is that parties in SCO's other lawsuits have relied on Novell's rival claim to the UNIX copyrights to SCO's alleged detriment (Am. Compl. ¶ 21(c).)

Beyond the cases it has already filed, SCO has threatened 1,500 "of the world's largest corporations" with liability. (See SCO's Answer to IBM's Am. Countercl., filed Oct. 24, 2003, ¶ 55 (admitting having sent "letters to 1500 of the world's largest corporations"), attached as Ex. E to Melaugh Decl.; see also SCO July 21, 2004 Press Release (indicating that SCO sent letters to all "Fortune 1000 and Global 500" companies informing them that they "could face liability for running [Linux] in their organization.").)3 SCO has implied that all Linux users infringe on SCO's ownership rights. (Id., stating that "[w]ith more than 2.4 million Linux servers running our software, and thousands more running Linux every day, we expect SCO to be compensated for the benefits realized by tens of thousands of customers.").

It is against this backdrop that Novell made the statements alleged in the Amended Complaint.

C. Novell Statements Identified in SCO's Amended Complaint

As discussed above, in the course of denying SCO's motion to remand and granting Novell's motion to dismiss, the court noted that "[f]alsity also pervades the malice element because in order for the statement regarding copyright ownership to be malicious, it would have to be knowingly false." (Order at 5.) Presented with this requirement of pleading and proof, SCO has not even attempted to strengthen its allegations of malice.

The Amended Complaint alleges that Novell made ten "false oaths," "misleading public representations," and "wrongful assertions of ownership rights." (Am. Compl.¶ 19.) As the Amended Complaint quotes selectively and misleadingly from the statements, we detail below the full text and context for each statement, and attach complete copies of the statements to an accompanying declaration. See Declaration of Bruce Lowry in Support of Novell's Motion to Dismiss ("Lowry Decl."), filed with this motion, Exs. A - I; see also GFF Corp, v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir. 1997) (allowing reference to and attachment of documents cited by plaintiff's complaint)

1. Initial Press Releases

a) Novell's May 28 2003 Press Release

In the wake of the public controversy discussed above, Jack Messman, Novell's Chairman, President, and CEO, issued a press release stating:

Defending its interests in developing services to operate on the Linux platform, Novell today issued a dual challenge to The SCO Group over its recent statements regarding its UNIX ownership and potential intellectual property rights claims over Linux.

First, Novell challenged SCO's assertion that it owns the copyrights and patents to UNIX System V, pointing out that the asset purchase agreement entered into between Novell and SCO in 1995 did not transfer these rights to SCO. Second, Novell sought from SCO facts to back up its assertion that certain UNIX System V code has been copied into Linux. Novell communicated these concerns to SCO via a letter (text below) from Novell® Chairman and CEO Jack Messman in response to SCO making these claims.

(Am. Compl. ¶ 19(a); Lowry Decl. Ex. A.) The press release continued with the text of a letter sent by Mr. Messman to SCO on the same day. The letter included the following text:

Importantly, and contrary to SCO's assertions, SCO is not the owner of the UNIX copyrights. Not only would a quick check of U.S. Copyright Office records reveal this fact, but a review of the asset transfer agreement between Novell and SCO confirms it. To Novell's knowledge, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights.

The letter noted that SCO itself had repeatedly asked Novell to transfer the UNIX copyrights to SCO:

We believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights. Apparently, you share this view, since over the last few months you have repeatedly asked Novell to transfer the copyrights to SCO, requests that Novell has rejected. Finally, we find it telling that SCO failed to assert a claim for copyright or patent infringement against IBM.

The letter concluded:

[W]e demand that SCO retract its false and unsupported assertions of ownership in UNIX patents and copyrights or provide us with conclusive information regarding SCO's ownership claims.

b) SCO's June 6, 2003 Letter

As the Amended Complaint alleges, on June 6, 2003, SCO sent Novell a letter in which it "brought to Novell's attention Amendment No. 2 to the Asset Purchase Agreement." (Am. Compl. ¶ 19(b); see also Lowry Decl. Ex. B.) In the letter, SCO threatened to sue Novell for federal securities fraud and demanded an immediate response.

c) Novell's June 6, 2003 Press Release

Novell immediately issued the following press release:

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. Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement 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.

(Am. Compl. ¶ 19(c); see also Lowry Decl. Ex. C.)

d) Novell's June 6, 2003 Letter

In a letter sent June 6, Novell responded to certain accusations in SCO's June 6 letter:

Your letter contains absurd and unfounded accusations against Novell and others, coupled with a veiled threat to publicly state those allegations in a SCO press call to be held today at 11:00 am EST. Novell continues to demand that SCO cease and desist its practice of making unsubstantiated allegations, including the allegations contained in your letter of June 6, 2003.

(Am. Compl. ¶ 19(d); see also Lowry Decl. Ex, D.) Contrary to the characterization in the Amended Complaint, the phrase "absurd and unfounded accusations" does not refer to "SCO's claims of copyright ownership," but rather to the only "accusation" included in SCO's June 6 letter: that Novell had engaged in federal securities fraud by asserting its rival claim to the UNIX copyrights. Novell found, and continues to find, such an accusation absurd, but in any case, it is irrelevant to the slander of title claim.

2. Subsequent Private Correspondence on Copyright Ownership

After the two initial press releases, in private correspondence between the parties, Novell continued to assert its claim to the UNIX copyrights and sought to elicit the basis for SCO's assertion of a contrary claim.

a) Novell's June 26, 2003 Letter

On June 26, 2003, Novell wrote to SCO:

SCO's statements [claiming to own "the patents, copyrights, and core technology associated with the UNIX system"] are simply wrong. We acknowledge, as noted in our June 6 public statement, that Amendment No. 2 to the Asset Purchase Agreement appears to support a claim that Santa Cruz Operation had the right to acquire some copyrights from Novell. Upon closer scrutiny, however, Amendment No. 2 raises as many questions as it answers. Indeed, what is most certainly not the case is that "any question of whether UNIX copyrights were transferred to SCO as part of the Asset Purchase Agreement was clarified in Amendment No. 2" (as SCO stated in its June 6 press release). And there is no indication whatsoever that SCO owns all the patents associated with UNIX or UnixWare.

We are still reviewing the Asset Purchase Agreement and other materials to determine the actual scope of rights transferred to SCO. In the meantime, we wish to make clear that we do not agree with SCO's public statement on this matter.

(Am. Compl. ¶ 19(e); see also Lowry Decl. Ex. E.)4

b) Novell's August 4, 2003 Letter

As the Amended Complaint acknowledges, SCO subsequently registered its claim to the UNIX copyrights with the United States Copyright Office. (Am. Comp. ¶ 3.) Responding by letter, Novell stated:

This . . . follows your recent announcement that SCO has registered its claim to copyrights in UNIX System V with the U.S. Copyright Office.

We dispute SCO's claim to ownership of these copyrights. The Asset Purchase Agreement, in Schedule 1.1 (b), contains a general exclusion of copyrights from the assets transferred to Santa Cruz Operation. Amendment No. 2 provides an exception to that exclusion, but only for "copyrights...required for [Santa Cruz Operation] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies."

In other words, under the Asset Purchase Agreement and Amendment No. 2, copyrights were not transferred to Santa Cruz Operation unless SCO could demonstrate that such a right was "required for [Santa Cruz Operation]" to exercise the rights granted to it in the APA. Santa Cruz Operation has never made such a demonstration, and we certainly see no reason why Santa Cruz Operation would have needed ownership of copyrights in UNIX System V in order to exercise the limited rights granted SCO under the APA. Nor is there any reason to think that a transfer of the copyrights required for SCO to exercise its APA rights necessarily entails transfer of the entire set of exclusive rights associated with a particular copyrighted computer program.

Unless and until SCO is able to establish that some particular copyright right is "required" for SCO to exercise its rights under the APA, SCO's claim to ownership of any copyrights in UNIX technologies must be rejected, and ownership of such rights instead remains with Novell.

(Am. Compl. ¶ 19(f); see also Lowry Decl. Ex. F.)

3. Novell's Public Response to SCO's Copyright Registrations

a) Novell's Copyright Registrations and Declarations

After SCO filed copyright registrations asserting ownership over the UNIX copyrights, Novell filed applications for its own such registrations, (Am. Compl. ¶ 19(g).) Such competing registrations are specifically contemplated by copyright regulations and are filed in circumstances in which a party disputes a prior copyright registration filed by another party. See 37C.F.R. § 202.3(b)(10)(iii).

In addition, Novell submitted declarations to the Copyright Office for recordation against SCO's UNIX copyright registrations averring that Novell "retains all or substantially all of the ownership of the copyrights in UNIX, including the U.S. Copyright Registration referenced above." (Am. Compl. ¶ 19(h); see also Lowry Decl. Ex, G.) Such declarations are also specifically allowed by copyright regulations and are typically filed when a registration is disputed. See Compendium II; Copyright Office Practices, § 1603.02 (available at http://www.copyright.gov/compendium/1600.htm. The declarations each stated:

WHEREAS, pursuant to an Agreement and Plan of Reorganization entered into between UNIX System Laboratories, Inc, a Delaware corporation, American Telephone and Telegraph Company, a New York corporation, Novell Acquisition Corp., a Delaware corporation, and Novell, Inc. ("Novell"), a Delaware corporation, Novell became the owner of all right, title, and interest, including all copyrights, in that certain computer operating system and related systems software known as UNIX;

WHEREAS, pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement") between Novell and the Santa Cruz Operation Inc., a California corporation ("SCO, Inc."), SCO, Inc. acquired certain rights to, inter alia, carry out the business of licensing of UNIX, subject to various obligations to Novell;

WHEREAS, pursuant to Section 1.1(a) and Schedule 1.1(b), Excluded Assets, to the Asset Purchase Agreement, "[a]ll copyrights" were excluded from the assets purchased by SCO, Inc.

WHEREAS, pursuant to Amendment No. 2 to the Asset Purchase Agreement, Schedule 1.1 (b) was revised to read, in relevant part, "All copyrights . . . except for the copyrights . . . owned by Novell as of the date of the [Asset Purchase] Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies" and

WHEREAS, The SCO Group, Inc. ("SCO"), the successor to SCO, Inc., has failed as of the date of this Declaration to demonstrate that any of the UNIX copyrights owned by Novell are required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies, despite Novell's request that SCO do so.

NOW, THEREFORE, Novell hereby declares that it retains all or substantially all of the ownership of the copyrights in UNIX, including the U.S. Copyright Registration referenced above.

(Am. Compl. ¶19(h); see also Lowry Decl. Ex, G.)

b) Novell's December 22, 2003 Press Release

Upon the Copyright Office's issuance of Novell's copyright registrations, Novell made the following press release:

Novell believes it owns the copyrights in UNIX, and has applied for and received copyright registrations pertaining to UNIX consistent with that position. Novell detailed the basis for its ownership position in correspondence with SCO. Copies of our correspondence, and SCO's reply, are available here. Contrary to SCO's public statements, as demonstrated by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

(Am. Compl. ¶ 19(i); see also Lowry Decl. Ex. H.) As the press release indicates, Novell was responding to SCO's public assertions that Novell had acquiesced to SCO's claim to the UNIX copyrights. (See supra, n.4) As also noted in the press release, Novell simultaneously made available correspondence between Novell and SCO, including that quoted above, which made clear that Novell continued to contest SCO's claims and set forth Novell's copyright ownership position and the basis therefor.

c) Novell's January 13, 2004 Press Release

To promote public confidence in Novell's SUSE Linux Enterprise Server product and address accusations that the use of that product might give rise to liability on a customer's part, Novell announced a Linux Indemnification Program. In connection with this offer, Novell set forth its view of its legal rights regarding UNIX, including its claim of ownership of UNIX copyrights:

Novell also made available today additional information on the unique contractual and intellectual property rights it holds because of its position in the historical ownership chain of UNIX and UnixWare. These rights include:

  • Novell's rights to license UNIX technology pursuant to a Technology License Agreement between SCO and Novell, including Novell's right to authorize its customers to use that UNIX technology in their internal business operations.

  • Novell's rights to take action on behalf of SCO under legacy UNIX SVRX licenses pursuant to the Asset Purchase Agreement between SCO and Novell.

  • As previously confirmed by Novell, copyright registrations on UNIX SVRX releases, consistent with Novell's position that it retained ownership of these copyrights.

Copies of relevant correspondence between Novell and SCO are available at http://www.novell.com/licensing/indemnity/legal.html. The rights reflected in these documents are part of the foundation for the indemnification program Novell is announcing today.

(Am. Compl. ¶ 19(j); see also Lowry Decl. Ex. I.)

d) Novell's March 2004 Statement

The Amended Complaint alleges that at the March 2004 Open Source Business Conference, Novell's Vice Chairman Chris Stone stated, Novell "still own[s] UNIX.'" (Am. Compl. ¶ 19(k).)

SUMMARY OF ARGUMENT

Novell has a privilege to assert a rival claim to the UNIX copyrights. Novell also has a privilege to inform interested parties of its claim of ownership, especially in light of the considerable public controversy SCO has generated surrounding its claim to these copyrights. To state a claim for slander of title, SCO must plead and prove that Novell's statements were "knowingly false." To overcome Novell's privileges, SCO must plead and prove that Novell's statements were "made from spite, ill will or hatred." In the course of ruling on SCO's motion for remand and Novell's motion to dismiss on the ground that SCO had not adequately pled falsity, this Court evaluated Novell's claim to the UNIX copyrights and the documents upon which that claim is based. Though it declined to grant either motion, the Court concluded that the documents SCO claims transfers title to the UNIX copyrights are ambiguous, that there is "substantial doubt" as to whether they qualify as Section 204(a) writings, and that Novell offered "persuasive arguments" in support of its claim. Examination of the statements themselves makes clear they are not evidence of any malice. This precludes a finding that Novell acted with the requisite malice. This fatal flaw cannot be cured by amendment. Dismissal with prejudice is therefore appropriate.

ARGUMENT

I. DISMISSAL IS APPROPRIATE BECAUSE NOVELL'S STATEMENTS ARE PRIVILEGED.

On this motion, the Court has available the content of Novell's statements, the highly charged public context in which they were made, and the underlying legal basis for Novell's assertion of copyright ownership. Having already determined that "persuasive" arguments support Novell's claims of copyright ownership, the Court is well-positioned to review the remainder of the record even at this early stage and determine whether SCO can possibly overcome its pleading burden.

In this regard, SCO's slander of title claim is similar to defamation suits, which are unusual in their susceptibility to evaluation at the pleading stage. As one commentator notes:

Dismissal of defamation suits for failure of the complaint to state a cause of action or to state a claim upon which relief may be granted occurs with relative frequency. One substantial factor is that the communication complained of is usually before the court at the outset. . . . Thus, unlike most litigation, in a libel suit the central event—the communication about which suit has been brought—is literally before the judge at the pleading stage. He or she may assess it upon a motion to dismiss, firsthand and in context. . . . The trial court may therefore at the earliest stages make sound determinations as to issues relating to the communication of which complaint is made. Thus courts routinely consider, on motions to dismiss . . . issues such as whether the statement at bar is capable of bearing a defamatory meaning, . . . and whether the suit is barred by privilege . . . and they frequently grant motions on these grounds and others.

Robert D. Sack, Sack on Defamation (Practicing Law Institute, 3d ed.) (2004), 16-3 - 16-4.5

On the basis of the record before the Court, Novell contends that it cannot be liable for slander of title because Novell has a legal privilege to make a good-faith assertion of a rival property claim and to protect the legitimate interests of Novell's potential and actual Linux customers. In addition, SCO cannot show that Novell acted with malice, let alone malice sufficient to overcome these privileges.

A. Novell's Privileges and SCO's Inability to Overcome Them Are Appropriate for Adjudication on a Motion To Dismiss.

The existence of a privilege is a matter of law. See Brehany v. Nordstrom, Inc., 812 P.2d 49, 57 (Utah 1991) ("Whether a publication is conditionally privileged is a question of law to be determined by the trial court, unless a genuine factual issue exists regarding whether the scope of the qualified privilege has been transcended or the defendant acted with malice."). Where, as here, a privilege appears on the face of the pleadings and the plaintiff presents only conclusory allegations in an effort to overcome that privilege, dismissal is appropriate. SCO's Amended Complaint baldly asserts that Novell's statements were made "intentionally, maliciously, and with utter disregard for the truthfulness thereof" (¶ 25), and in "bad faith" with "the intent to cause customers and potential customers of SCO to not do business with SCO" (¶ 6), but SCO cannot sustain these allegations.

The court in Echtenkamp v. Loudon County Pub. Schs., 263 F. Supp, 2d 1043 (E.D. Va. 2003), was faced with similarly superficial allegations. The plaintiff brought a defamation claim against her employer concerning a series of damaging statements she alleged were made in the course of her evaluations. Id. at 1052 (plaintiff complained of statements that she was "abrasive," "unprofessional," "rude," "insulting," and "inept"). The court first found that statements identified in plaintiff's complaint were privileged because they were made by "co-employees and employers in the course of employee disciplinary or discharge matters." The court then found that dismissal was appropriate because plaintiff had failed to overcome this privilege even though she had alleged malice:

[T]his privilege is qualified and is lost if a plaintiff proves by clear and convincing evidence that the defamatory words were spoken with common-law malice. . . . Thus, in order to state a claim for defamation, plaintiff must allege facts sufficient ultimately to support a finding by clear and convincing evidence that the statements of her supervisors and co-workers were made with actual, common-law malice.

In considering whether [plaintiff's] complaint meets that burden, it must first be noted that plaintiff's repeated assertions that each defendant charged with defamation acted "with malice" and with a "motive of personal spite and revenge" are not, by themselves, sufficient to state a claim of malice sufficient to overcome the qualified privilege. Although the facts as alleged in the complaint must be taken as true for the purpose of this motion to dismiss, such conclusory allegations do not state a claim for malice if the facts as alleged cannot otherwise support a finding of malice. . . . Were such bare allegations sufficient to state a claim of malice, virtually every claim of defamation . . . would survive a motion to dismiss. Neither precedent nor common sense approve of such a result.

Id. at 1061-62. Because SCO's Amended Complaint cannot overcome Novell's privileges, it fails to state a claim and should therefore be dismissed.

1. Novell Has a Privilege to Publicly Assert a Rival Claim to the UNIX Copyrights.

Novell is protected from SCO's slander claim by a legal privilege to assert its rival claim to the UNIX copyrights. "The law has long recognized that a publication is conditionally privileged if made to protect a legitimate interest of the publisher."Brehany, 812 P.2d at 58 (citing Restatement (Second) of Torts § 594); see also Thomas v. Pacificorp, 324 F.3d 1176, 1181 (10th Cir. 2003) (quoting same language from Brehany). In the context of slander of title, this privilege allows "[a] rival claimant . . . to disparage another's property . . . by an assertion of an inconsistent legally protected interest in himself." Restatement (Second) Torts, § 647.6 All that is required to assert this privilege is a belief in "good-faith that there is a substantial chance of [the rival claim] being sustained." Id., Cmt. d. This privilege exists so that a rival claimant will not be deemed to have waived his claim by his silence. Id., Cmt f.

Fischer v. Bar Harbor Banking & Trust Co., 857 F.2d 4 (1st Cir. 1988), illustrates the application of this privilege. Fischer holds that the privilege still protects a defendant even where, unlike here, the defendant's assertion of a rival ownership interest has been adjudicated to have been incorrect. In Fischer, the plaintiff sued a bank for mistakenly filing a lien against property the plaintiff had bought from a debtor in ordinary course. The bank responded that its lien was protected because it "possessed the conditional privilege of a rival claimant." Id. at 6, The court held that even though the bank ultimately conceded that it was not entitled to a lien, the bank's original claims were nevertheless privileged:

Whether Fischer is a buyer in ordinary course is not the issue. The issue is whether the answer to that question was so obvious as to constitute a finding that the Bank acted with actual malice. For both legal and factual reasons, the answer to this inquiry is no. Though a review of the authorities cited in the district court opinion indicates that in a contest for possession of the [property] Fischer could have won on the merits, there is support for the Bank's position. . . . What existed [when the Bank filed its lien] were competing claims to a superior interest between the two parties. The Bank, like Fischer, was at least entitled to press its right to superiority before relinquishing it in the judicial setting.

Id. at 8-9.

Just as the bank in Fischer, Novell has a good-faith basis to assert its rival claim, and the Court can sustain this motion to dismiss even without making an ultimate determination of whether Novell or SCO owns the UNIX copyrights. As discussed in more detail below, this Court has already determined that there are significant legal questions about who owns the copyrights, and thus has made an objective determination that Novell's statements were made in good-faith. Nor can there be any serious question about the context for Novell's statements and whether they are protected by the "rival claim" privilege: each of the statements was made in direct furtherance of Novell's belief that it owns UNIX and that SCO's contrary claim called for rebuttal, not silence.

SCO began this controversy by publicly claiming to own the UNIX copyrights, asserting them in its suit against IBM. Novell's response—the May 28, 2003 press release—stated Novell's belief that the Asset Purchase Agreement did not transfer the UNIX copyrights, a position this Court characterizes as "undisputed." (Order at 8.) Novell's release noted that SCO had itself asked Novell to transfer the copyrights to SCO, thereby lending strong support to Novell's view that no transfer had previously occurred.

SCO then informed Novell of its belief that Amendment No. 2 acted to transfer the copyrights and demanded a retraction of the May 28 press release. (Am. Compl. ¶ 19(b).) Novell immediately responded that Amendment No. 2 "appears to support SCO's claim." (Am. Compl. ¶ 19(c); Lowry Decl. Ex. C.) SCO's Amended Complaint acknowledges that Novell's June 6 release amounted to a retraction, characterizing the release as "recant[ing]" its prior statements. (Id. at ¶ 19(c).)

The sequence in this initial phase, therefore, is:

  • SCO creates a public dispute about UNIX copyrights and copyright ownership as it relates, in particular, to Linux.

  • Novell, "[d]efending its interests in developing services to operate on the Linux platform," notes that SCO had asked Novell to transfer the copyrights to it, and asserts that, "to its knowledge" the Asset Purchase Agreement did not transfer ownership to SCO. (Am. Compl. ¶ 19(a); Lowry Decl. Ex. A.)

  • SCO sends Novell a copy of Amendment No. 2. (Am. Compl. ¶ 19(b); Lowry Decl. Ex. B.)

  • By SCO's own characterization, Novell "recants" its prior release. (Am. Compl. ¶ 19(c); Lowry Decl. Ex. C.)

The parties then exchanged private correspondence in which Novell expressed its belief that Amendment No. 2 had not necessarily effected a transfer, particularly because SCO had not demonstrated that it had met the "required for" standard necessary to trigger Novell's alleged obligation to transfer the copyrights. In the face of this ambiguity, SCO nevertheless persisted, registering its purported claims to the UNIX copyrights with the United States Copyright Office. In order to protect its rights, Novell responded by registering its own claim. Novell then publicized its letters, SCO's responses, and Novell's copyright registrations, noting that SCO had publicly claimed that Novell was no longer asserting that it owned the UNIX copyrights:

Contrary to SCO's public statements, as demonstrated by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

(Am. Compl. ¶ 19(1); Lowry Decl. Ex. H.) Novell has also made limited public statements confirming that it continues to claim an ownership interest in the UNIX copyrights. (Am. Compl. ¶ 19(j)-(k); Lowry Decl. Exs. H - I.)

This sequence of events demonstrates that Novell's statements fall squarely within the privilege to assert a rival claim of ownership. Indeed, the policy behind this privileg -- to protect a party concerned about a finding of waiver by silence -- is directly applicable here, where Novell was responding first to SCO's public claim of ownership, and then to SCO's claim that Novell had acquiesced in SCO's claim of ownership. That Novell went the extra distance first to write to SCO privately and then published not only its own letters but SCO's responses, demonstrates that Novell was seeking only to ensure that the full picture was before the relevant public and that SCO's claims were not left unaddressed.

2. Novell Has a Privilege to Publish Its Rival Claim to Parties With a Common Interest in the UNIX Copyrights.

Novell is also protected from SCO's slander claim by the privilege to inform interested parties of its claim of ownership. "[A] publication [is] conditionally privileged if the circumstances lead any one of several persons having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing the common interest is entitled to know." See Restatement (Second) of Torts § 596; see also Brehany, 812 P.2d at 58 ("A conditional privilege may also protect a legitimate interest of. . . a third person," citing Restatement (Second) of Torts § 595)).7

As discussed above, SCO has threatened a wide community with suit based on its claim of ownership. These threats are not idle; invoking various theories, SCO has filed suit against three companies, and has admitted to sending letters threatening an additional 1,500 major corporations with liability. (See Melaugh Decl. Ex. E at ¶ 55 (SCO's Answer to IBM's Amended Countercl.).) The Amended Complaint acknowledges that Novell directed its statements at this community. In fact, when pressed to amend its complaint specifically to allege the harm Novell's statements have purportedly caused, SCO added only that parties sued by SCO have relied upon Novell's statements. (Compare SCO's original Complaint, ¶ 21, with Am. Compl. ¶ 21.)

SCO bases its threats in part on its claim to own the UNIX copyrights. As this Court has recognized, Novell has good arguments supporting its dispute of this claim. Novell is therefore privileged to inform the third parties threatened by SCO of Novell's competing property claim. The breadth and number of parties interested in this dispute, coupled with SCO's decision to make this dispute very public, permits Novell to choose means such as press releases and its website to inform interested parties of Novell's competing claim.

B. In Light of the Court's June 9 Order, SCO Cannot Allege Malice Sufficient to Ground a Claim for Slander of Title, Let Alone Sufficient to Overcome Novell's Privileges.

Malice is a necessary element in any action for slander of title. See First Sec. Bank, N.A. v. Banberry Crossing, 780 P.2d 1253, 1257 (Utah 1989) ("A published false statement. . . does not constitute slander of title without the element of malice."). As this Court recognized in its June 9 Order, "in order for [a] statement regarding copyright ownership to be malicious, it would have to be knowingly false." (Order at 5 (citing First Sec. Bank, 780 P.2d at 1257).)

Malice also figures in the privileges that protect Novell from SCO's claim.8 These privileges may be overcome if "the plaintiff pleads and proves facts which indicate actual malice in that the utterances were made from spite, ill will or hatred toward him . . . ." Combes v. Montgomery Ward & Co., 119 Utah 407, 416 (Utah 1951) (upholding directed verdict because the plaintiff had not pled or proven malice sufficient to overcome the defendant's privilege). In light of this Court's Order, SCO cannot possibly demonstrate that Novell's statements were "knowingly false" or that they "were made from spite, ill will or hatred."

1. This Court's June 9 Order Indicates That Novell Has a Meritorious Claim to the UNIX Copyrights.

SCO's Motion for Remand and Novell's Motion to Dismiss both addressed SCO's claim that Novell transferred the UNIX copyrights. In support of its Motion and in opposition to Novell's motion, SCO argued that the Asset Purchase Agreement and Amendment No. 2 transferred the copyrights. Novell responded that an examination of the actual language of those documents does not support SCO's claim. In its June 9 Order, this Court stated:

  • "It is undisputed that the [Asset Purchase Agreement] did not transfer any copyrights." (Order at 8.)

  • "Amendment No. 2 ... does not constitute a transfer of copyrights on its own." (Id.)

  • "There is enough ambiguity in the language of Amendment No. 2 that ... it is questionable whether [it] 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." (Id. at 9-10.)

  • "The agreements raise substantial doubt as to whether the [Asset Purchase Agreement] as amended by Amendment No. 2 qualifies as a Section 204(a) writing." (Id. at 10.)

  • "Novell has raised persuasive arguments as to whether a sufficient writing exists and whether there was any intent to transfer copyrights under the [Asset Purchase Agreement] as amended or under a separate agreement." (Id. at 15.)

The sum of these findings is that Novell's claims of ownership to the UNIX copyrights have merit even when weighed against the most persuasive arguments SCO could advance on its behalf. Novell's public assertion of such claims cannot represent the sort of knowing falsehood sufficient to constitute malice. Because this Court has indicated that Novell has meritorious legal arguments, it has made a sufficient determination to reject any claim that Novell lacked a good-faith basis to make its rival claim to the UNIX copyrights. See, e.g., Timpanogos Highlands, Inc. v. Harper, 544 P.2d 481, 486 (Utah 1975) ("[Where a party] had sufficient basis for believing that it had rights under the contract . . . there is no foundation upon which it could be found that it willfully and knowingly recorded a false or fraudulent instrument for the purpose of slandering the defendants' title.").

Indeed, SCO itself has asserted likewise when faced with a similar accusation made against it in other proceedings. On August 4, 2003, Red Hat filed a complaint in the United States District Court for the District of Delaware alleging, inter alia, that SCO committed trade libel and disparagement by publicly asserting an ownership interest in certain intellectual property. SCO moved to dismiss this count, arguing that it had a good-faith basis to make its ownership claims because "bad faith is not supported when the information is objectively accurate" and that inquiry into any subjective motivation SCO might have had was unnecessary. (Melaugh Decl. Ex. G at 20, quoting Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 897 (Fed. Cir. 1998).)9

Caselaw from a variety of analogous circumstances supports the proposition that a meritorious legal position precludes liability and obviates the need for further inquiry. For example, in Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-62 (1993), the Court considered whether the defendants' ultimately unsuccessful copyright suit could give rise to liability as an antitrust violation. The Court held that an objectively reasonable belief in the validity of the suit precluded liability and that in such circumstances inquiry into the litigant's subjective intent was unnecessary. Id. at 60. Similarly, communications pertaining to copyright or patent infringement are not actionable if objectively reasonable. Golan v. Pingel Enter., Inc., 310 F.3d 1360, 1371 (Fed. Or. 2002) ("[B]ad faith is not supported when the information is objectively accurate."); see also Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367, 1377 (Fed. Cir. 2004); On Command Video Corp. v. Columbia Pictures Indus., Inc., 764 F. Supp. 1372, 1374 (N.D. Cal. 1991) (approving notification letter without inquiry into subjective intent of drafter, examining only tenor of letter's text). Here, this Court's findings lead to the conclusion that the "answer to [the] question" whether SCO owns the UNIX copyrights is not "obvious," and therefore Novell cannot be held to have acted with malice in asserting its opinion on that question. Fischer, 857 F.2d at 8-9.

2. The Statements Identified in the Complaint Do Not Evidence Malice.

Lest there be any remaining doubt that Novell lacked malice, the Court need look no further than the statements themselves. If anything, they are a model of equanimity. SCO began this controversy by suing IBM based, inter alia, on SCO's claim to own UNIX. In its initial May 28 press release, Novell responded to this controversy by stating its belief that the 1995 Asset Purchase Agreement did not transfer copyrights to SCO, a point that SCO now acknowledges and that this Court has conclusively confirmed. (Order at 8 ("It is undisputed that the [Asset Purchase Agreement] did not transfer any copyrights.").) SCO replied by letter on June 6, claiming that, "Any question of whether the UNIX copyrights were transferred under the [Asset Purchase Agreement] was clarified in Amendment No. 2." (Am. Compl. ¶ 19(b); Lowry Decl. Ex. B.) SCO demanded an immediate response and suggested that it would sue for securities fraud if Novell continued to assert its rival claim to the UNIX copyrights.

In response to SCO's request for an immediate reply, Novell issued a press release stating that same day, "Amendment No. 2 . . . appears to support a claim that Santa Cruz Operation had the right to acquire some copyrights from Novell." (Am. Compl. ¶ 19(c); Lowry Decl. Ex. C.)

After further investigation, however, Novell noted, "Amendment No. 2 raises as many questions about copyright transfers as it answers," and indicated that:

We are still reviewing the Asset Purchase Agreement and other materials to determine the actual scope of rights transferred to SCO. In the meantime, we wish to make clear that we do not agree with SCO's public statement on this matter.

(Am. Compl. ¶ 19(d); Lowry Decl. Ex. D.) On August 4, 2004, following its promised review of Amendment No. 2, Novell responded that, at most, the Amendment was a promise of a future transfer of copyrights "required for [Santa Cruz Operation]" to exercise the rights otherwise granted to it in the Asset Purchase Agreement. Novell invited SCO to provide evidence "establish[ing] that some particular copyright is 'required' for SCO to exercise its rights under the [Asset Purchase Agreement]." (Am. Compl. ¶ 19(f); Lowry Decl. Ex. F.)

SCO does not allege it provided any such evidence to Novell, Instead, SCO registered its claim to the UNIX copyrights with the United States Copyright Office. (Am. Compl. ¶ 3.) Novell filed its own registration and, contradicting SCO's claim that Novell now agreed with SCO as to UNIX ownership, publicly stated that "Novell believes it owns the copyrights in UNIX, and has applied for and received copyright registrations pertaining to UNIX consistent with that position." (Am. Compl. ¶ 19(g)-(i); Lowry Decl. Exs. H - I.)

Novell's statements demonstrate its good-faith belief in the validity of its claim. During the course of these exchanges, Novell inquired into the basis for SCO's claim to the UNIX copyrights. Even facing a motion to dismiss, SCO never alleged anything more but instead pointed only to the Asset Purchase Agreement and Amendment No. 2 -- documents this Court has already concluded are ambiguous and arguably support Novell's claims of ownership. Given the Court's finding, Novell's statements cannot possibly be said to be "knowingly false" or made with "spite, ill will or hatred."10

II. DISMISSAL WITH PREJUDICE IS WARRANTED.

As discussed above, the record establishes that meritorious arguments support Novell's claim to the UNIX copyrights. The assertion of this claim is privileged, and this Court's conclusion that Novell has raised "persuasive arguments" in favor of its claim precludes a finding of malice sufficient to state a cause of action for slander or to overcome Novell's privileges. No amount of amendment will save SCO's complaint from these fatal flaws, as case law holds that the assertion of a meritorious claim -- even one later proven mistaken -- is not slander. Dismissal with prejudice is therefore appropriate, as "it is patently obvious that the plaintiff [cannot] prevail on the facts alleged," and therefore allowing SCO "an opportunity to amend [its] complaint would be futile." McKinney v. Oklahoma Dep't of Human Servs., 925 F.2d 363, 365 (10th Cir. 1991); see also Lybrook v. Members of Farmington Mun. Sch. Bd of Educ., 232 F.3d 1334, 1341-42 (10th Cir. 2000) (affirming dismissal with prejudice where facts alleged in complaint made clear that defendant school was entitled to qualified privilege shielding it from defamation claim).

CONCLUSION

For the foregoing reasons, Novell respectfully requests that this Court dismiss SCO's Amended Complaint with prejudice.

DATED: August 6, 2004.

ANDERSON & KARRENBERG

______[signature]________
Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon
Attorneys for Defendant Novell, Inc.


CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 6th day of August, 2004, I caused a true and correct copy of the foregoing MEMORANDUM IN SUPPORT OF NOVELL, INC.'S MOTION TO DISMISS to be served via first class mail, postage prepaid, to the following:

Brent O. Hatch
Mark R. Clements
HATCH JAMES & DODGE, P.C.
[address]

Kevin P. McBride
[address]

Stephen N.Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER, LLP
[address]

______[signature]_______


1 Novell asks that the Court "not look to the substance of the articles to resolve any disputed issue on defendant's motion, but [instead to] consider the fact of the publication of these articles as evidence of the media frenzy, and thus [take] judicial notice of the widespread publicity . . . ." See Condit v. Dunne, No. 02 Civ. 9910 (PKL), 2004 U.S. Dist. LEXIS 7247, *30-31 (S.D.N.Y. Apr. 27, 2004) (taking judicial notice of publicity in defamation case, citing additional cases); see also Cerasani v. Sony Corp., 991 F. Supp. 343, 354 n.3 (S.D.N.Y. 1998) (taking judicial notice of "widespread newspaper coverage"); Cochran v. NYP Holdings, Inc., 58 F. Supp. 2d 1113, 1123 n.5 (CD. CaL 1998), aff'd, 210 F.3d 1036 (9th Cir. 2000) (taking judicial notice of "the overwhelming deluge of publicity attendant to and extensive public discussion of the O.J. Simpson criminal trial"). It also bears noting that SCO's suit against IBM has been classified as a "high profile" case on the Court's website. See http://www.utd.uscourts.gov/documents/ibm.html

2 In addition to IBM and Novell, SCO has sued AutoZone and DaimlerChrysler. See The SCO Group, Inc. v. AutoZone, Inc., No. CV-S-04-0237-RCJ-LRL (D. Nev.); The SCO Group, Inc. v. DaimlerChrysler Corp., No. 04-056587-CKB (Mich. Cir. Ct). In response to threats of suit, Red Hat Inc. brought a preemptive declaratory judgment action against SCO. See Red Hat Inc. v. The SCO Group, Inc., No. 03-772-SLR (D. Del.). Tarent GmbH brought a similar action against SCO in Germany, and obtained a preliminary injunction preventing SCO from claiming that Linux contains SCO intellectual property. See Tarent v. SCO-Germany, No. 12-0247/03, LG 1 (Dist. Ct. Munich).

3 SCO's July 21, 2004 press release is attached as Ex. F to Melaugh Decl. and available at: http://ir.scoxom/ReleaseDetail.cfin?ReleaseID=114170.

4 Notwithstanding this letter, SCO continued to stoke the fires of the ownership controversy, going so far as to suggest that Novell had acquiesced in SCO's claim of ownership. For example, SCO CEO Darl McBride conducted an interview in which he stated:

Interviewer: Well, Novell would say that you actually don't own those copyrights fully.

McBride: Yeah, well, the Novell thing, they, they came out and made a claim that held up for about four days and then we put that one to bed. If you go talk to Novell today, I'll guarantee you what they'll say, which is they don't have a claim on those copyrights.

The full video is available at http://news.com.com/1606-2-740902.html (emphasis added). See also http://www.eweek.com/article2/0,1759,1496552,00.asp ("In regard to Novell's recent claim that it still owns the copyright to Unix, McBride said it took SCO just four days to press the eject button on that claim.").

5This brief relies on both slander of title and defamation case law. Some courts have noted distinctions between the two. See, e.g., Bass v. Planned Mgmt. Servs., Inc., 761 P.2d 566, 568 (Utah 1988). However, the primary differences are not relevant on this motion. See id. (noting main difference is requirement to prove special damages in slander of title action). Indeed, the Restatement of Torts, when discussing conditional privileges applicable to slander of title actions, simply refers generally to the privileges applicable to defamation actions. See Restatement (Second) of Torts § 646A ("Under any circumstance that would give rise to a conditional privilege for the publication of defamation, there is likewise a conditional privilege for the publication of [a slander of title].").

6 Novell could not locate a Utah case citing this Restatement section, but Utah courts have adopted other portions of the Restatement applicable to conditional privileges. See, e.g., Brehany, 812 P.2d at 58 (recognizing conditional privilege to make statements protecting third parties, citing Restatement § 595). Other courts have adopted this section; indeed, the First Circuit has noted that there is "no real debate in the law" over the privilege described in § 647. Fischer v. Bar Harbor Banking & Trust Co., 857 F.2d 4, 7 (1st Cir. 1988).

7 Restatement (Second) of Torts §§ 595-96 are explicitly incorporated into the Restatement's treatment of slander of title. See Restatement (Second) of Torts §§ 646A & 650. Section 596 has not been cited yet in Utah but has been cited favorably by other courts. See, e.g., Kennedy v. Children's Serv. Soc'y, 17 F.3d 980, 985 (7th Cir. 1994); Zinda v. Louisiana Pac. Corp., 149 Wis. 2d 913, 922-23 (1989).

8 Sack on Defamation discusses the interaction between malice as an element of the cause of action and malice as an additional requirement to overcome a conditional privilege at 13-25, noting that this overlap can cause confusion in slander of title actions. He goes on to note that the distinction is irrelevant where a state resorts to the same standard for both applications of malice, but that it is appropriate to apply both standards where a state has chosen to define them differently. Here, it appears that Utah requires a plaintiff to demonstrate that the statement was "knowingly false" to state a cause of action, and "made from spite, ill will or hatred" to defeat a conditional privilege. (Compare Order at 5 with Combes v. Montgomery Ward & Co., 119 Utah 407, 416 (Utah 1951).) However, cases discussing the fair reporting privilege afforded by Utah statute have held that that privilege can be overcome by a showing that the defendant did not reasonably believe his or her statements were true, a standard similar to the standard this Court articulated when describing the malice necessary to state a cause of action. See, e.g., Russell v. Thomson Newspapers, Inc., 842 P.2d 896, 905 (Utah 1992). It is unnecessary here to conclusively determine the precise standard of malice a Utah court would apply, as under any applicable standard, SCO has not and cannot state a claim.

9 The court did not address this portion of SCO's motion to dismiss, holding only that Red Hat had stated a claim for declaratory relief and that it was appropriate to stay the case pending the outcome of SCO's litigation with IBM.

10 As SCO recites in its Amended Complaint, one of the letters did use the phrase "absurd." (Am. Compl. ¶ 19(d); Lowry Decl. Ex. D.) The full sentence makes clear that this phrase pertained to SCO's claim that Novell has engaged in securities fraud by asserting its rival copyright claims, something SCO has chosen to omit from its Complaint and Amended Complaint, and which Novell continues to find absurd. (See discussion supra p.6.)


  


Novell's Memorandum in Support of Motion to Dismiss - as text | 380 comments | Create New Account
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corrections and the usual...
Authored by: rick_2g on Wednesday, August 11 2004 @ 02:17 PM EDT
nice analysis... i was wondering if that was what novell was after.

[ Reply to This | # ]

I don't think this is the summing up
Authored by: Anonymous on Wednesday, August 11 2004 @ 02:18 PM EDT
Novell sums up its position quite simply: "a meritorious legal position precludes liability and obviates the need for further inquiry."

I think this is their strongest argument, but not their only argument.

I think they argued 3 things:

1. Privilege
(a) To state their rival claim
(b) To inform third parties

2. SCO unable to prove malice, because of both privileges cited in #1.

3. SCO unable to prove malice, because: "a meritorious legal position precludes liability and obviates the need for further inquiry."

For point 1+2, they seem to be struggling to find Utah cases.

For point 3 they have a Utah case on pp26 of the PDF (Timpanogos Highlands Inc. case with quotation), plus Kimball's earlier ruling in this case.

Quatermass
IANAL IMHO etc

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: sef on Wednesday, August 11 2004 @ 02:18 PM EDT

I am still confused by the judge's original ruling. I think we all agree that he said there was some ambiguity; that would seem to be enough to dismiss a "slander of title" case. So why did he not dismiss it before?

[ Reply to This | # ]

OT & URLs here please
Authored by: jbeadle on Wednesday, August 11 2004 @ 02:18 PM EDT
Thanks,

-jb

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Anonymous on Wednesday, August 11 2004 @ 02:28 PM EDT
"This is from chess," he told me. "You move your knight where it can take two pieces. The opponent has to choose which one to lose. Naturally losing one weakens you and soon you lose the other too."

It's called that a "pair of pants". You can attack in one of many directions, but it always leaves them without legs...

[ Reply to This | # ]

Typo's go here
Authored by: snorpus on Wednesday, August 11 2004 @ 02:40 PM EDT
Such as this one:

In the Argument section, I.A.1, last paragraph:

priveleg --> privelege

---
73/88 de KQ3T ---
Montani Semper Liberi

[ Reply to This | # ]

  • acquiescence - Authored by: _Arthur on Wednesday, August 11 2004 @ 02:45 PM EDT
  • "is crazy wild"? - Authored by: Anonymous on Wednesday, August 11 2004 @ 02:49 PM EDT
  • Typo's go here - Authored by: Anonymous on Wednesday, August 11 2004 @ 03:32 PM EDT
  • Typo's go here - Authored by: Anonymous on Wednesday, August 11 2004 @ 03:40 PM EDT
Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: elcorton on Wednesday, August 11 2004 @ 02:43 PM EDT
<
If it is unclear whether a copyright transfer happened, my understanding is
that the prior owner, in this case, Novell, remains the owner. Copyrights
can't transfer without a sufficient writing, so if the judge dismisses on the
basis that the APA plus Amendment A are insufficient and they didn't transfer
the copyright or it's not clear that they did, that's the ball game as far as
ownership, and SCO can't do a thing about copyright infringement without a
copyright.
>

If the case is dismissed on malice, the falsity issue will remain undecided,
unless Novell files a countersuit for declaratory judgment.

The remand ruling did not decide the merits of the falsity issue. It only
decided the threshold issue of whether SCO's complaint raised a substantial
question under copyright law. The mere fact that there is bona fide doubt
about whether copyrights were conveyed doesn't mean that it's res judicata
that they were not conveyed. A court would have to rule on that question,
and it doesn't look like that's going to happen in the Novell case.

[ Reply to This | # ]

noticed from dan farber interview
Authored by: Rad59 on Wednesday, August 11 2004 @ 02:48 PM EDT
I noticed in re-reading the Dan Farber interview the Daryl states "McBride:
Well, so these were the issues that were coming up in the May time frame. Right
after we sent out our letters to the CIO's, we had a lot of demand coming in
saying, "We'd really like to see the code." We opened up our offices
in Lindon, UT for code-viewing sessions. As I said, we've had dozens of folks
that made the trek out to Lindon and we haven't had anybody yet that's walked
away not a believer. So to the extent that you wanted to come and see it, you're
more than welcome to. Anybody else that wants to come in. What we are doing to
open it up more to the world, to more of an open session: We have our annual
event that's coming up in Las Vegas on August 18, and we will in fact be doing a
full show-and-tell session at that point in time."
Does this mean the SCO did the "Show-and-tell" session? or just more
vaporware from the master of such.

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Nick_UK on Wednesday, August 11 2004 @ 02:53 PM EDT
Heh. If any of the SCO guys played GNUChess*, they would
have realised what a bloody mess they would get in.

Nick
* I can't beat the thing (and I consider myself above
average IQ - but not a chess player at heart) - it
stitches me up every damn game!

[ Reply to This | # ]

Is copyright holding necessary for SCO's lawsuits?
Authored by: mk270 on Wednesday, August 11 2004 @ 02:56 PM EDT
Let's suppose Novell is right and copyrights never transferred from them to
SCO's predecessor. Does that even matter?

If SCO has the exclusive right to reproduce and distribute (some part of) UNIX,
isn't this sufficient for them to bring their claims against supposed
infringers?

It's my belief that the SCO v Novell litigation is something SCO did to keep its
investors at Baystar and RBC happy, as their PIPE agreement said that SCO
certified that it had all the IP rights necessary to conduct its litigation
business". (though I guess by my own argument this means SCO could just
have told Baystar "our rights are sufficient; we don't need the copyrights
themselves").

Alternatively, the case could be a media smokescreen to shut Novell up, or it
could be a mechanism for getting out of Novell's right to override SCO's
termination of IBM's UNIX licence, without which their suit against IBM can no
longer be characterised as a copyright suit with any bearing on Linux.

[ Reply to This | # ]

good-bye slander of title - hello IBM tenth counter claim
Authored by: Anonymous on Wednesday, August 11 2004 @ 03:22 PM EDT
I can't see how a judge won't dismiss the slander of title suit. Novell
obviously has a valid right to assert that it believes it did not transfer the
copyrights to SCO.

In fact, I can't wait til SCO tries to bring copyright ownership claims to
court. I guess the IBM tenth counter claim will be the first test.

IBM: Your honor, we don't believe SCO has any copyright rights in UNIX.

SCO: Yes we do. We own them all.

IBM: Prove it.

SCO: Uh - We don't have to we just own them.

Judge: What?

SCO: We bought them from Novell and so we own them all.

Novell: Your honor, we sold our UNIX business to Santa Cruz Operations, not SCO
Group. SCO Group claims to be their successors in interest. We believed that
occurred through a defunct company called Caldera. We don't know what SCO Group
purchased. But, I can definitely tell you we haven't sold or transferred any
UNIX copyrights to SCO Group or to Santa Cruz Operations - that is except some
copyrights assosicated with SVR4 documentation.

SCO: Well, we bought them.

Novell: You bought what?

SCO: All of UNIX and the copyrights of all the source code that came with it.

Novell: But your honor, they couldn't have because we don't and have never
owned all of the copyrights in UNIX.

SCO: What?

Novell: That's right. Most of the copyrights were lost in the USL/Berkley case
and we've never claimed ownership to the entirety of the UNIX copyrights. We
knew we owned some, but certainly not everything. And besides, we never
assigned any of the source code copyrights to SCO - they've asked but never in
reference to their SVR4 rights and never with specificity and we refused.

SCO: But...

Judge: The question before the court is whether or not IBM has violated SCO's
copyrights in UNIX through its contributions to Linux. Before I can answer that
question we need to figure out exactly what SCO owns.

SCO: But we own it all.

Judge: That's not going to fly. Exactly what do you own?

SCO: Everything.

Judge: I need specificity.

SCO: Give me a moment to think......We own the copyright to errno.h. Yeah, we
own that.

Judge: How did you acquire it?

SCO: Through Amendment 2 of the APA.

Judge: I don't see it listed anywhere.

SCO: Right here where it says "copyrights owned by Novell at the time of
the APA"

Judge: Did Novell own the copyright to errno.h?

SCO: Yes

Novell: No, your honor, we did not. And besides, Amendment 2 was excluding
assets from the APA, not including them. So it's kind of a double negative -
Amendment 2 excludes copyrights except those owned by Novell which are required
for SCO to enforce its SVR4 licensing rights. Basically, Amendment 2 lists
what's not in the APA list of assets to be transferred. Amendment 2 does not
make the list of assets longer.

Judge: OK. SCO, you don't seem to own the copyright to errno.h. What else do
you think that you own?

SCO: Everything?

Judge: OK. I've had enough. Partial Summary Judgment on Claim for Declaratory
Judgment of Non-Infringement IS HEREBY GRANTED WITH PREJUDICE.

IBM: Thank you your honor.

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Anonymous on Wednesday, August 11 2004 @ 03:44 PM EDT
Because of the recent ruling requiring juries be called in for any part of a
case that has factual dispute, I understood this filing to go:

"We (Novell) ask that the case be dismissed because SCO has only claimed we
made certain statements; it hasn't claimed those statements had malice. Since
Slander of Title requires malice, it is impossible for SCO to prove Slander of
Title.

"Further, we wish to show that there were reasons for us to act how we did.
Because these reasons are enough to prove absense of malice, it is impossible
for SCO to add the words 'with malice' to its complaint and then win.

"SCO has the burden of proof (i.e., we are innocent until proven guilty)
and we aren't required to go into more detail, however, we will go into more
detail and show lots of things that hurt SCO's case because it is reasonable for
us to, and we really don't want to waste our time when SCO counters with claims
that are clearly false."

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Anonymous on Wednesday, August 11 2004 @ 03:47 PM EDT
I think this is why SCO is trying to frighten the world into buying SCOSource
licenses now, at the current rates, rather than later, for much, much more.

SCO knows they are going to lose on the Dismissal with Prejudice action, so they
want to try to get anyone sitting on the fence about buying one of these
ill-advised licenses to Pay Up Now.

jeff

[ Reply to This | # ]

OT: SCOX
Authored by: Anonymous on Wednesday, August 11 2004 @ 04:01 PM EDT
You know, SCO's stock is nearly as low as it was before their whole attack-linux
campaign. One more good shove, and maybe it will be.

[ Reply to This | # ]

  • OT: SCOX - Authored by: Anonymous on Wednesday, August 11 2004 @ 04:36 PM EDT
    • OT: SCOX - Authored by: J.F. on Wednesday, August 11 2004 @ 08:51 PM EDT
  • OT: SCOX - Authored by: Anonymous on Wednesday, August 11 2004 @ 10:00 PM EDT
The Dog That Didn't Bark
Authored by: overshoot on Wednesday, August 11 2004 @ 04:01 PM EDT
I consider it quite interesting that Novell didn't go for the "special damages" again, since from reading the earlier ruling it certainly appears that SCOX hasn't pled them specifically enough -- they're still speculative, for one thing, and no amounts stated.

From that, I read that Novell isn't primarily interested in ending the case quickly. I'm not sure what their plan actually is, mind -- just that it doesn't seem to be a mercifully quick end for SCOX.

Maybe they're playing with their food?

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Anonymous on Wednesday, August 11 2004 @ 04:04 PM EDT
If Novell wins their motion (and I assume they will, although IANAL), I think
this is pretty much bye-bye for SCO Source licensing in the near future. Since
ownership is (will be) legally disputed, there is no real basis to sue users of
Linux when SCO cannot prove they own the code they claim is in Linux, thus they
have no rights to infringe.

SCO would be, I think, forced to clear this up in court or they will officially
need to fold up SCO Source licensing as a revenue stream and tell people this. I
mean it's certainly a disclosable risk to the SEC that your ownership of an IP
asset is legally in dispute!

Any possibilities of SCO licensees coming back and demanding a refund? I know
the stupid license is one of those "no refunds" types however the
entire license is based on a premise that SCO owns something you need a license
for. This would seem to negate that entirely.

Just some random thoughts...

-pooky

[ Reply to This | # ]

End of issue
Authored by: Anonymous on Wednesday, August 11 2004 @ 04:05 PM EDT
When SCO filed the slander of copyright suit, it became
clear to me that they didn't have anything on anyone.

It was obvious to me as a layman that reasonable people
could question whether Novell did transfer the copyrights.
Then Darl would say something very stupid like 'we paid
all this money, we must own them'. There is a disagreement
over the contract. No question. So why file for slander?

This had everything to do with what they were selling to
investors and possible licensees. Remember that at the
time there were tough questions starting to be asked. When
Novell publicly questioned the copyrights, what could they
do? File breach of contract suit, which would take years
at best, leaving the question open who owned what? Or
bluster. This filing gained them a few weeks breathing
time with nervous investors. Then more bad news inevitably
came.

There is no strategy here, except what is hatched at
coffee break, or in response to RBC or Baystar yelling
over the phone. Novell doesn't need to get a strong
decision one way or another, so why spend the money. SCO
definitely does, but will lose immediately, and possibly
all in time. All Novell did was call their bluff, and SCO
reacted with more bluffing. It is coming to an end soon.

Derek

[ Reply to This | # ]

OT: Enderle Speaks!
Authored by: geoff lane on Wednesday, August 11 2004 @ 04:54 PM EDT
http://www.linuxinsider.com/story/news/35732.html

Apparently we all misunderstood.

Wouldn't it be a lot simpler if Rob were to correct all our errors here rather
than on LinuxInsider?
That way we could have a proper dialog.

---
Ten Truths Of Linux -- http://zoe.mcc.ac.uk/tentruths.html

[ Reply to This | # ]

Novell's next move: suing SCO for slander of title?
Authored by: piskozub on Wednesday, August 11 2004 @ 05:06 PM EDT
PJ writes:

"SCO's strategy isn't hard to figure. But Novell's, frankly, had me puzzling a while. The heavy dose of media clippings made me wonder if there may not be some later moves planned."

I wonder whether what Novell plans to do next is to sue SCO for slander of title after the present SCO claim is dismissed. Maybe the articles Novell attaches to its memorandum are preparing ground for exacly that. It seems that SCO did claim title to the copyrights long after it became obvious they were never transferred. The long chain of lies presented to the media may be evidence of malice on SCO's part.

Of course IANAL etc. etc.

[ Reply to This | # ]

On Jasper
Authored by: MadScientist on Wednesday, August 11 2004 @ 05:16 PM EDT
This case was posted earlier in GL and the appeal judges there outlined a number
of tests to determine if the copyrights had in fact been transfered. There were
three parts to the test there that seemed relevent here. (Apologies to any old
timers reading this post. We do have a few newbies here from time to time.)

First as PJ noted was the requirement that the transfer be clear. Second the
transfer must be in the past or present tense. And finally that there must be no
possibility of the original copyright holder "accidentally"
transfering the copyrights.

The point about "clear" is that the appeal judges did not make it
explicit to who the term 'clear' should apply. I presume they meant it should be
"clear to a third party" as opposed to clear to either the seller or
the buyer seperately - because that way lies a lot of potential trouble. (The
rest of the ruling was very straight forward) The APA + Amend 2 is certainly not
clear to a third party - and that includes newSCO.

Secondly the APA + Amend 2 used the future tense in the 'copyright transfer'.
This is not acceptable in a copyright transfer under Jasper.

Finally if there was any possibility that the copyright holder did not
understand what was being transfered then the transfer is void and the copyright
remians with the original holder.

Using Jasper as the test of a transfer of copyright, it is extremely unlikely
that oldSCO ever received a valid 204.

We know that the 204 transfering the copyrights from oldSCO to newSCO is
'missing'. The silence on this point has been deafening.

Even more interesting would be to see the 204 Novell received from USL. This
might clarify some of the onfusion up further. If Novell did not recieve a
listing of the copyrights they brought then the copyrights (such as they are)
remain with USL/AT&T. Its is surprising that we have not seen a statement to
this effect either.

Im sure Novell have their reasons too.

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: Anonymous on Wednesday, August 11 2004 @ 05:18 PM EDT
There is a term in chess that seems appropriate for SCO's trouble: zugswang.

It's a german word that means, in chess anyway, a position where you have to
move but any move you can legally make is bad for you.

[ Reply to This | # ]

How Solid is Ammendment 2?
Authored by: Anonymous on Wednesday, August 11 2004 @ 05:31 PM EDT
I don't recall seeing anything that says Ammendment 2 has been accepted as valid
by Novell. Can one assume they are accepting it as valid or can it be
challenged later if need be? I grant they are using it in their arguement but
wonder if that is an implicit acceptance in the legal arena.

[ Reply to This | # ]

Compulsory Counterclaims keep tickling the edges of my perception
Authored by: AllParadox on Wednesday, August 11 2004 @ 06:19 PM EDT
Unfortunately, my recollection of this very arcane rule is vague, just when I
want clarity, so loyal readers looking for a concise explanation should skip
this one.

Federal Rules of Civil Procedure, Rule 13(a) requires that a defendant must file
certain counterclaims. If the defendant fails to file the counterclaims, then
the matter is "res judicata", "It has been decided". The
defendant may never bring up the claim against the plaintiff, anywhere. It is
final.

Slander of title, by its nature, includes at least some minimal determination of
ownership, of the title to the copyrights.

Thus, title copyright ownership comes under the rule. If Novell wants to
establish clear ownership in themselves, they must file a crossclaim alleging
ownership. Novell does not want that trial, because they know the contents of
the USL vs. BSD settlement, and probably do not own much of Unix.

It seems odd, but Rule 13 also applies to plaintiffs and co-claims. TSG must
also allege the copyright ownership issue, or lose forever the right to raise
them in court.

TSG, however, have pinned themselves. If they filed a claim that the title was
in dispute, then it kills the slander of title action, perhaps even opens TSG up
to sanctions.

Once again, waist deep in the Big Muddy. Cannot go forward, but cannot go
back.

If my shaky analysis is correct, then when Judge Kimball dismisses the slander
of title action, TSG is stuck. Novell can claim ownership of Unix copyrights,
and TSG cannot deny it or come into court to fight about it. The same applies
to Novell, but they do not care. The Unix copyrights are so inconclusive that
the copyrights are not worth fighting for.

---
All is paradox: I no longer practice law, so this is just another layman's
opinion. For a Real Legal Opinion, buy one from a licensed Attorney

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: jim Reiter on Wednesday, August 11 2004 @ 07:25 PM EDT
Looking down the road to IBM.

If SCO doesn't own the patents to UNIX and no copyrights
have been transferred, then who owns the derivative works?

My guess is that Novell owns the derivate works, afterall,
the derivative works are based on original works covered by
Novell patents and copyrights.

If you don't own the cow and you don't own the hay, then
you don't own the milk. All SCO is left with is the McBS.

You have to love it.

[ Reply to This | # ]

OK, so Novel made a chess move, but will SCO use it as another delay opportunity?
Authored by: boban on Wednesday, August 11 2004 @ 09:34 PM EDT
If SCO now starts a new trial about copyright ownership, does that mean they go
to discovery, and in their style get to write fiftienth amended motion to (fill
in the blanks) and drag this on for couple more years?

[ Reply to This | # ]

SCO - We love open source and the GPL
Authored by: Anonymous on Wednesday, August 11 2004 @ 09:43 PM EDT
In a nod toward SCO's ongoing lawsuits, Stowell added that the company views open source as "a good thing," as long as the code used is not part of a company's proprietary license, and does not include proprietary software.

...

More recently, some of the company's developers have been trying to contribute to Samba, a free open-source software suite that provides file and print services to SMB/CIFS clients. Samba is freely available under the GNU General Public License.

...

"Frankly, there's been confusion about our stance on open source," said Stowell. "Many people think that because we're part of this Linux dispute, we've declared war on open source itself. But that simply isn't the case."


Compare

http://www.thescogroup.com/copyright/

SCO asserts that the GPL, under which Linux is distributed, violates the United States Constitution and the U.S. copyright and patent laws. Constitutional authority to enact patent and copyright laws was granted to Congress by the Founding Fathers under Article I, § 8 of the United States Constitution:

...

However, there is a group of software developers in the United States, and other parts of the world, that do not believe in the approach to copyright protection mandated by Congress. In the past 20 years, the Free Software Foundation and others in the Open Source software movement have set out to actively and intentionally undermine the U.S. and European systems of copyrights and patents. Leaders of the FSF have spent great efforts, written numerous articles and sometimes enforced the provisions of the GPL as part of a deeply held belief in the need to undermine or eliminate software patent and copyright laws.

Based on the views of the U.S. Congress and the U.S. Supreme Court, we believe that adoption and use of the GPL by significant parts of the software industry was a mistake. The positions of the Free Software Foundation and Red Hat against proprietary software are ill-founded and are contrary to our system of copyright and patent laws. We believe that responsible corporations throughout the IT industry have advocated use of the GPL without full analysis of its long-term detriment to our economy. We are confident that these corporations will ultimately reverse support for the GPL, and will pursue a more responsible direction.


Compare Also

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STOR Y=/www/story/09-29-2003/0002025751&EDATE=

[ Reply to This | # ]

What does this do to the IBM case?
Authored by: Anonymous on Wednesday, August 11 2004 @ 10:29 PM EDT
As far as I can tell, SCO's 5th and 8th causes of action are directly based on
the UNIX copyrights. The 5th cause of action is the copyright infringement
claim, the 8th cause of action is tortous interference via the actions on
Novell's "false" claims.

Novell winning a dismissal I think undercuts both of these claims, SCO is left
with their derivative works claims against IBM, and the 9th claim of interfering
with SCO's existing business.

However there's another issue. The whole case is hung up on the direct copying
into Linux issue that SCO claimed in the press and IBM pressed in the courtroom.
The 10th counter claim is based on SCO's failure to produce what they publicly
said they had, which by definition is a copyright issue.

Without clear ownership, doesn't this add to the weight of IBM's counterclaim to
state there is no infringing code in Linux? How can you infringe the rights of
SCO if they don't have clear ownership and thus rights to infringe?

-pooky

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: blacklight on Thursday, August 12 2004 @ 12:18 AM EDT
It is pretty much a foregone conclusion that SCOG's slander of title lawsuit is
doomed. SCOG could have sued Novell for the transfer of the copyrights according
to SCOG's warped interpretation of the APA, that is. However, SCOG pretty much
understands that its interpretation of of terms of the APA won't fly in court -
and this is why SCOG sued for slander of title in the first place. At this point
in time, the only strategies that are available to SCOG are delay and evasion.

[ Reply to This | # ]

Unsure of legal point...
Authored by: Night Flyer on Thursday, August 12 2004 @ 12:27 AM EDT
2b) Titled "Novell's August 4, 2003 Letter"

Novell states "Unless and until SCO is able to establish that some
particular copyright right is "required" for SCO to exercise its
rights under the APA, SCO's claim to ownership of any copyrights in UNIX
technologies must be rejected, and ownership of such rights instead remains with
Novell."

I have been trying to think of a set of circumstances where SCO could show need
and compel Novell to transfer title under the 1995 APA, Ammendment 2. (Other
than to form the basis for current wave of litigations.)

My imagination is failing me... Maybe someone could suggest some sort of
scenerio.




[ Reply to This | # ]

No mystery - always take someone out quickly
Authored by: Anonymous on Thursday, August 12 2004 @ 01:14 AM EDT
With all due respect to PJ and her lawyer friend, I'm of the opinion that
there's no real mystery as to why Novell would ask for a dismissal a second time
without trying to litigate the copyright issue.

It simply boils down to taking the path of least resistance. Reading Novell's
argument, they have an open and shut case to end the current lawsuit. Why take a
chance that this particular judge or a jury would find against you in terms of
the copyright issue? Since it doesn't need to be litigated here don't do it.
Always present the best argument you can to win the current case. I don't see
why you'd do anything else.

Besides that, ending this case now, gives Novell the ability to continue to
assert that they own the copyrights. They also will have time to dig up any
information regarding Amendment 2 that they might need if SCO should file a
different lawsuit in the future.

Just my 2 cents.

[ Reply to This | # ]

The heart of the matter
Authored by: brian on Thursday, August 12 2004 @ 01:28 AM EDT
"It's not slander, Novell asserts, to say you own the
copyright if you really do or have a reasonable basis for
thinking that you do. SCO never really put the ownership
matter directly in front of the judge. They defined their
case as slander of title, and Novell plays right along."

There are 3 "why" type questions floating in the above PJ
statement...

1. Why did SCO 2 times file for "slander of title"
especially knowing that the judge is pre-disposed to trash
the second filing?

2. Why won't SCO face the copyright question head-on?

3. Why doesn't Novell go for a summary judgement on the
204(a) question?

The last 2 actions would put an end to the copyright
question once and for all time. In an effort to understand
those question fully (grok them I suppose) let's put them
in context:

SCO filed the original slander suit in the hopes to get it
to State court and try to force Novell to give them the
copyrights Novell filed in response to SCO's filing. They
failed at that and worse, were forced to refile the
slander suit in 30 days addressing the judges concerns or
lose all claim to it forever. And here is where I
conjecture that they filed the second time in the hopes
that Novell *WOULD* go for summary judgement forcing the
burden of proof onto Novell in the filing. The weakness of
the APA as ammended as an instrument of convayance is the
main reason SCO doesn't want to face the copyright
question head-on but more than that I believe that they
felt that they could side-step that issue and force Novell
to asign all the Sys-V copyrights to SCO "to exercise its
rights with respect to the acquisition of UNIX and
UnixWare technologies". I think they were going to argue
that the contract required Novell to assign them the
copyrights once SCO started their suits.Now the only
question reamining is why Novell didn't go for SJ? I think
someone here was hitting around this issue in a thread
above but I will try here. The burden of proof gets
shifted to Novell in the filing and it isn't a sure thing
since there is a contraversy concerning the APA. Loads of
work and an uphill battle IMO. It is far easier to go for
the dismissal and force SCO to face the real issue of
copyright transfer face on. The burden then is on SCO.

If I got anything worng, feel free to correct me but I
really think this is the thinking behind some of this.Any
thoughts and comments on this are welcome.

B.

---
#ifndef IANAL
#define IANAL
#endif

[ Reply to This | # ]

Novell doesn't have to do more
Authored by: kawabago on Thursday, August 12 2004 @ 02:29 AM EDT
I think SCO chose slander of title because when they lost they could claim it
did not mean that they don't have the copyrights. The judge already said there
is doubt that there was a transfer of copyrights. Where there is doubt, it must
be no transfer. That is why the requirement for a 204 writing. So Novell
doesn't have to do more, the judge already stated there is doubt therefore as a
matter of law the transfer did not take place.
So SCO is out of luck, there's only some paperwork left to do.

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: jim Reiter on Thursday, August 12 2004 @ 02:57 AM EDT
Too many lawyers. We all know the old story about the Accountant, the engineer
and the lawyer. I hear alot of what do you want it to be.

If you look at this as a simple contract dispute, the contract provides the
answers.

The various contracts/agreements hold the answers to:

what AT&T sold -> what Novell received

what Novell sold -> what old SCO received

what old SCO transferred -> what Caldera received

what Caldera transferred -> what TSG received

The agreements do make it clear the what AT&T sold is not what TSG
received.

The problem is that TSG thinks that it is AT&T (or is trying to make others
think that it is AT&T), when in fact it isn't even Novell. I personally
beleive that the TSG position is contrived in order to run a scam that made it
appear that TSG had value which did not exist. Salting the mine so to speak.

SCOX went to $20 per share when people thought TSG had something. that's $16 or
more of added value per share. At 14.5 million shares out shanding (14,500,0500
shares x $16 = $232,000,000.00).

Its the money stupid. Its all about money. $232,000,000.00 or more worth of
money.

Everything that TSG does points to the fact that TSG assumed that there would be
a buy out before any of this ever got to court.

Ask yourself why doesn't TSG go after the patents and copyrights? It is because
they know that suit would fail and the game will be over.

The good news is that the game is over.



[ Reply to This | # ]

stupid question time
Authored by: Anonymous on Thursday, August 12 2004 @ 05:08 AM EDT
sorry for that stupid question, but i didn't follow closely enough:

did sco ever proove the copyright transfer from sco to caldera? if not, why is
not anybody pointing at that? all copyright cases are dead without this one, or
not??

thanx

[ Reply to This | # ]

Novell's motivations
Authored by: Anonymous on Thursday, August 12 2004 @ 09:22 AM EDT
I think the explanation for Novell's actions is rather simple. Novell holds all
the legal cards here. Because of the APA and the rights Novell allegedly
retained they have taken only the necessary actions so far needed to protect
their interests.

SCO publicy asserted that SCO owned the copyrights, Novell challenged this. SCO
pretty much had to do something because I'm sure their potential licensees were
saying "Novell says they own what you are trying to license me, I won't pay
you."

Novell asserted publicly that they have the right to waive SCO's claims against
IBM and Sequent, and Novell directed SCO to this end. SCO rejected this claim
publicly, but the die is cast. IBM has an affirmative defense based on this
action by Novell, Novell needs to do nothing more unless SCO seeks legal
clarification of the APA.

Novell does not need to sue SCO, rather SCO is in the position of needing to sue
Novell which is a much better position for Novell to be in. SCO has all the
burden of proof in court as a plaintiff and has all the need to sue to support
their many claims. Novell just was to wait and see what SCO wants to do.

The next move will be SCO's and it will be interesting to see what they do. If
they sue Novell again to get the copyrights, they admit they don't have them
already and that may trigger a whole bunch of nastiness in other venues. If they
don't sue Novell, everyone else can say that it's not clear SCO owns the
copyrights because Novell is free to continue countering SCO's claims publicly.

IMHO, IANAL, SCO has to try an appeal and hope they can convince another judge
that Kimball made a legal mistake of some kind. This is unlikely, but it might
buy SCO a bit of time.

-pooky

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Novell is not done with TSG...
Authored by: frk3 on Thursday, August 12 2004 @ 10:48 AM EDT

Once this is done, TSG has the problem of the SUN and Microsoft license fees that they either 1) obtained fraudently or 2) obtained ligitimately and have not passed these fees onto Novell.

In either case, Novell, I am certain, will pursue these, as TSG was not very forth coming with Novell's audit request regarding license fees collected by TSG (where letters and references regarding this for most of 2003. I do not know where the linkes or articles are, but I do know they exist).

TSG is in for a world of hurt once TSG vs. Novell is done, then TSG vs. IBM vs. TSG has another round, RedHat vs. TSG gets moving again, etc.

On a side note, I cannot wait to hear the song and dance Rob Enderle (or is it "Enderele"?) is going to have to do once there is come closure on these bogus TSG claims. It will all be extremely funny. However, TSG's antics will probably make it into corporate ethics and intellectual property law text books for years and years to come, I just hope that something is learned from it all to help curb such in-your-face-outright-lies-and-deceit that TSG has been playing for over a year and a half now.

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Lanham Act? Help!
Authored by: Anonymous on Thursday, August 12 2004 @ 05:12 PM EDT
I keep seeing references here on Groklaw to "Lanham Act claims".
Following the links there on the left to the text of the act doesn't help --
what's the significance of the act in this context that everyone but me seems to
grasp?

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Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: jim Reiter on Thursday, August 12 2004 @ 07:45 PM EDT
What is at stake?

For Novell and IBM there is a business model that is not based on owning
"Unix/Linux". For Novell and IBM to win is to prevent TSG from
establishing ownership rights to anything.

The TSG business model is based on licensing IP properities. If TSG does not
own the IP properties TSG has nothing to license. For TSG to win they have to
establish their alleged ownership of the Unix code. If TSG wins, they are a
200 - 300 million dollar company, if they lose they are a 28 million dollar
company going bankrupt.

Things you will sell your mother for.

While it is hard to understand, TSG is really the defender. If TSG loses one
key battle they lose the war. TSG is looking for ways to win something without
losing a key battle.

TSG is SOL

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Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: jim Reiter on Friday, August 13 2004 @ 12:50 AM EDT
FYI

I had not realized that Santa Clara Operations is a
completely independent company, from Caldera/the SCO Group
(TSG). Santa Clara Operations sold its Unix and
Professional Services Group to Caldera. This is a change of
control/ownership which changes the Santa Clara
Operations/Novell purchase agreements. For example Novell
is no longer prohibited from competing directly with SCO's
Unix core products.

For a complete picture, I would want to see the
Caldera/Santa Clara Operations purchase agreements,
including schedules, exhibits, letters of understanding and
amendments. The question is did Santa Clara Operations
retain any rights?

Can Caldera/TSG force Novell to give them (Caldera/TSG)
Patents and copyrights if their "Contract" is not with
Novell, but with Santa Clara Operations?

[ Reply to This | # ]

Novell's Memorandum in Support of Motion to Dismiss - as text
Authored by: stephenry on Sunday, August 15 2004 @ 06:03 AM EDT
Test

[ Reply to This | # ]

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