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Report from Today's Hearing in SCO v. Novell - Updated 4Xs
Tuesday, January 23 2007 @ 07:19 PM EST

Chris Brown just let me know that he made it to the hearing today in SCO v. Novell. This is the Novell "give us our money before it's all gone" motion. Chris'll file a full report in a bit, but here's what he tells me so far:
Having returned from the SCO v. Novell hearing today on Novell's Motion for Partial Summary Judgment or Preliminary Injunction and SCO's Cross Motion for Summary Judgment or Partial Summary Judgment, my eyes are glazed over and my brain is awash in contracts, clauses, contracts, and more clauses. It was a hearing only a lawyer could love.

The bottom line however, is that Judge Kimball took it under advisement.

I will expand on the hearing, as best I can, in the next email.

Here's Novell's motion and SCO's Cross Motion [PDF] which had 46 sealed exhibits filed with it, which may explain Chris's poor brain.

Update: Here we go, the full report from Chris, below, after the row of stars.

Update 2: We also now have Bob Mims' article in the Salt Lake Tribune and the article in the Deseret News by Brice Wallace.

Update 3: Also I notice a fair amount of misunderstanding about the difference between a preliminary injunction and summary judgment motions in comments and in my email. If you go to our permanent Legal Research page, you'll find links to explanations of each. But just so you are clear on this hearing, here's part of 'Lectric Library's definition of preliminary injunction:

A preliminary injunction is appropriate if the moving party demonstrates either (1) a probability of success on the merits and a possibility of irreparable injury, or (2) serious questions going to the merits and the balance of hardships tipping sharply in his favor.

It continues by explaining that it's a discretion matter, meaning the judge has a lot of room to decide:

"The grant or denial of a motion for a preliminary injunction lies within the discretion of the district court, and its order will be reversed only if the court relied on an erroneous legal premise or otherwise abused its discretion." ... An "abuse of discretion" occurs if the district court misapprehends the applicable legal issues or rests its conclusions on clearly erroneous findings of fact.

So, it's pretty hard for the judge to go wrong. Here's a case from the 6th Circuit where the court explained in some detail how it decided a preliminary injunction case:

II. STANDARD OF REVIEW

This court reviews the grant of a preliminary injunction for an abuse of discretion. See Washington v. Reno, 35 F.3d 1093, 1098 (6th Cir. 1994). A "district court's findings of fact underlying its decision to grant a preliminary injunction are reviewed for clear error and the legal conclusions underpinning its decision are reviewed de novo." In re Eagle- Picher Indus., Inc., 963 F.2d 855, 858 (6th Cir. 1992). Because a trial court's decision to grant a preliminary injunction is accorded great deference, this court should disturb such a decision only if the district court "relied upon clearly erroneous findings of fact, improperly applied the governing law, or used an erroneous legal standard." Washington, 35 F.3d at 1098.

The preliminary injunction factors are: "(1) the likelihood that the party seeking the preliminary injunction will succeed on the merits of the claim; (2) whether the party seeking the injunction will suffer irreparable harm without the grant of the extraordinary relief; (3) the probability that granting the injunction will cause substantial harm to others; and (4) whether the public interest is advanced by the issuance of the injunction." Id. at 1099. These are factors to be balanced, not prerequisites that must be met. Id. "[T]he district court's weighing and balancing of the equities is overruled only in the rarest of cases." In re Eagle-Picher, 963 F.2d at 858 (internal quotation marks omitted). The purpose of a preliminary injunction is simply to preserve the status quo; thus, findings of fact and conclusions of law made by a district court in granting a preliminary injunction are not binding at a trial on the merits. University of Texas v. Camenisch, 451 U.S. 390, 395 (1981).

The reason I wanted to highlight all this is because as you can see, the standard for his decision has nothing to do with if it's a matter of law or fact for a jury for that part of the motion, the preliminary injunction part. That's summary judgment motion thinking. Here's the definition of a motion for summary judgment, just to review or for anyone new:

A request made by the defendant in a civil case. Asserts that the plaintiff has raised no genuine issue to be tried and asks the judge to rule in favor of the defense. Typically made before the trial.

Either side in litigation can bring one, if there are counterclaims. Novell asked for a partial summary judgment OR a preliminary injunction and SCO cross moved for its own version of the same. Specifically, Novell asked for this relief:

For the foregoing reasons, Novell respectfully requests that this Court grant partial summary judgment as to Novell's Sixth, Seventh, Eighth, and Ninth Claims for Relief and impose a constructive trust on the monies SCO received and improperly retained from the 2003 Sun and Microsoft Agreements. If summary judgment is denied, Novell requests in the alternative that this Court issue a preliminary injunction requiring an accounting and establishing a constructive trust.

The whole idea of an injunction is to prevent future harm, not to compensate for prior damage. That's why Novell is talking about bankruptcy and the rate of money flying to the heavens, because it's asking the judge, if he doesn't grant summary judgment, to please put the money in a safe place where SCO can't spend it all suing them instead of paying them what Novell argues it is owed. I hope that makes it clearer.

Update 4: Some more references for you:

(1) Law.com's definition

(2) Answers.com's definition

(3) Findlaw

(4)Another case [PDF], one from North Dakota, that provides a definition on pages 11 and 12 of the decision:

An injunction is a court order that either prohibits or compels a party to do a specific act. A preliminary injunction is a provisional remedy granted to restrain action temporarily until the court can render a final decision on the merits. A preliminary injunction is an extraordinary and drastic remedy that is not granted routinely.... However, “a preliminary injunction may issue if the movant has raised questions so serious and difficult as to call for more deliberative investigation.”... The moving party bears the burden of persuasion “by a clear showing.” ... A trial court has discretion to grant or deny a request for preliminary injunctive relief, and that discretion is based on the following factors: (1) substantial probability of succeeding on the merits; (2) irreparable injury; (3) harm to other interested parties; and (4) effect on the public interest.... No single factor is dispositive; the trial court must balance all factors to determine whether an injunction is appropriate.

“A preliminary injunction will usually be denied if the applicant has an adequate alternative remedy in the form of damages or other relief.” ...(“An injury is irreparable when it cannot be adequately compensated in damages, and it is not necessary that the pecuniary damage be shown to be great. ... Acts which result in a serious change of, or are destructive to, the property affected either physically or in the character in which it ha been held or enjoyed, ... do an irreparable injury”). The trial court must also balance the irreparability of injuries and inadequacy of damages if an injunction were not granted against the damages that granting an injunction would cause.

(Citations omitted).

Here's Chris's full report:

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

The courtroom was packed today, mostly with SCO folk including Darl McBride. Both of Salt Lake's main newspapers had reporters there -- Bob Mimms from The Salt Lake Tribune and Brice Wallace from the Deseret Morning News. IBM had a reporter there (I believe it was Snell & Wilmer's Curtis Drake). I attribute the turnout to a combination of this being, as far as I know, the first summary judgment motion to go to a hearing and the fact that a negative verdict for SCO could be devastating to SCO financially, possibly spelling an early end to the litigation.

Appearing for Novell was Thomas Karrenberg, Heather Sneddon, with Michael Jacobs arguing. SCO was represented by Brent Hatch, Edward Normand, with Stuart Singer arguing.

Since Michael Jacobs and Stuart Singer were going to be arguing on both motions, Judge Kimball asked them to argue both together with Mr. Jacobs first.

I'll predicate my report with the disclaimer that there were frequent quotes from the Novell/Santa Cruz APA and amendments throughout the hearing, particularly by SCO, which quoted verbiage I failed to document properly. As SCO's arguments hinged primarily on two things -- the shall I say "hairsplitting" reading of the contract and upon the still-sealed declarations of numerous individuals -- I can only give overviews rather than specifics.

To summarize, Novell seemed to focus their argument on three points:

1) The Microsoft and Sun agreements, by their wording, references, and attachments, are SVRx agreements.

2) The Novell/Santa Cruz APA and amendments specifically state Novell is due 100% of the SVRx revenue stream (with 5% back to Santa Cruz).

3) The contract forms a fiduciary relationship, under which SCO has obligations.

SCO's argument was focused on various subclauses of the APA along with the (sealed) declarations of 9 individuals. While their words were not read, I believe their substance was to the effect that it was "normal" for a party purchasing UnixWare (the "merged product") to incidentally receive "legacy" SVRx source-code licenses. That the wording of the APA excluded revenue from SVRx licenses that were sold incidentally to the sale of UnixWare and that the Microsoft and Sun agreements were for UnixWare and only incidentally included SVRx.

Mr. Jacobs opened his argument by saying that they have two powerful things going for them: that SCO admits their fiduciary obligations to Novell (Judge Kimball interjected that there's a question as to what those obligations cover), and that Novell is the equitable owner of the property in question. He said that the fiduciary relationship between the two companies imposes duty for SCO to act in the utmost good faith and to put Novell's interests beyond their own.

Mr. Jacobs related how when the lawyers were preparing this motion they referred to it as "The Three Alls". He said that the Novell/Santa Cruz agreements referred to "ALL royalties, fees, & other amounts due for SVRx licenses", "ALL SVRx licenses", and "ALL contracts relating to SVRx licenses". He stressed that "all" meant "ALL", not just binary licenses.

He said that he doesn't believe he needs to argue this under contract law to win this motion as that would be a "harder row to hoe", but rather through SCO's fiduciary obligations.

He described how the parties to an agreement discuss what the agreement will be and that it then goes to the lawyers who craft a document to reflect those understandings, and that it then goes back to the parties to examine and sign. He continued by saying that the plain language of the agreement is in Novell's favor. But while it's possible for Novell to have had an unfair influence in the crafting of the contract, or that the contract didn't actually reflect the desires of the party, SCO never said that that was the case. SCO has not asked to reform the contract; SCO has not asked that the contract be renegotiated.

Mr. Jacobs outlined how the list of applications in the Microsoft agreement's Appendix B matches up almost exactly with the APA list of SVRx products. After Judge Kimball asked what "almost" means, Mr. Jacobs said that there were an additional two items at the top of the list (the first of which was UnixWare) with the remainder of the list looking like it came almost exactly from the Novell/Santa Cruz APA.

He pointed out that the Sun and Microsoft agreements state that they "amend and restate" a 1994 agreement, which is a SVRx agreement.

Noting that the agreements included both UnixWare and SVRx products, he asked rhetorically if it was possible that somehow the agreements could be carved up to allocate some fees be retained by SCO? Possibly, but it demonstrates the wording of the agreements, that they were for SVRx.

Mr. Singer next argued that it is extraordinary that Novell would ask to interpret the agreement in direct opposition to the intent of all the people involved in the agreement.

Judge Kimball asked, hypothetically, if a contract clearly says A B C, and the parties said it means X Y Z, what should a judge do about it?

Mr. Singer gave an answer I missed, but he quickly noted that the hypothetical doesn't match this situation.

He continues to argue that the SVRx licenses sold were incidental to the sale of the "merged product" (UnixWare). He pointed to an amendment saying source code license revenue for "additional CPUs" is retained by SCO, and revenue for "additional copies of source code" is retained by SCO.

Any licensing of SVRx that goes along with UnixWare came under a different provision (Ammendment 'E') where SCO does not require approval of Novell.

He referenced the nine declarations saying it was "normal practice" when selling the "merged product" that licenses to the "legacy product" (SVRx) would be included.

He claimed that Novell was only interested in binary license revenue rather than souce code, that when Novell audited SCO in 1998 they only asked about binary revenue from SVRx agreements in place at the time of the APA. He cited this as powerful evidence of how Novell interpreted the APA.

Mr. Singer said that the Sun agreement was not in place at the time of the APA. That it's a UnixWare license with the SVRx only incidental to the licensing of UnixWare.

He further argued that the fiduciary relationship does not extend beyond the scope of the contract.

Mr. Singer, referencing Novell's position that SCO is about to go bankrupt, said that they are not, that it's true SCO is lean on cash, but that they have experience with this and fully plan to continue in business through the end of this litigation.

Mr. Jacobs replied that the reason SCO has no declarations covering Novell's position is because Section 4.16 of the APA prohibited SCO from entering into any new agreements without Novell's approval.

He went on to say that the contract was not crafted to cover this situation. He "offered to stipulate for the purposes of this motion, in fact [he's] willing to stipulate for society at large, that the course of conduct of SCO over the last few years was not contemplated at the time of these agreements". He said they did not think Santa Cruz would sell off their business to SCO, who would change their business to one of litigation.

Judge Kimball opined it was probably beyond Mr. Jacob's ability to stipulate for society at large.

Mr. Jacobs summarized his position and asked that judgement be entered in his favor.

Mr. Singer replied again, summarized his position and asked the same.

(I suspect Mr. Singer got the last word in this hearing because of how they were arguing both parties' motions simultaneously, so it didn't follow the normal number of "times at bat").

Well, there you have it. Pretty vague without all the details, especially SCO's, of the APA language. Still, it went pretty much along the lines of what was presented in each party's motion papers.

Chris Brown


  


Report from Today's Hearing in SCO v. Novell - Updated 4Xs | 456 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Thanks Chris.
Authored by: Anonymous on Tuesday, January 23 2007 @ 07:33 PM EST
Well done.

[ Reply to This | # ]

Corrections here
Authored by: webster on Tuesday, January 23 2007 @ 07:34 PM EST
.
If you are smart and it is necessary.

---
webster

[ Reply to This | # ]

OT Stuff here
Authored by: cmcnabb on Tuesday, January 23 2007 @ 07:55 PM EST
OT Stuff here, especially stuff that will revive ChrisBrown's brain from the
stupor cause by listening to contract clauses

---
"When governments fear the people, there is liberty. When the people fear the
government, there is tyranny." - Thomas Jefferson

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell
Authored by: entre on Tuesday, January 23 2007 @ 08:06 PM EST
PJ?

Does this mean that JK could spend a month before a judgement?

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell
Authored by: Ed L. on Tuesday, January 23 2007 @ 08:17 PM EST
Well, if it will help Chris feel any better, I couldn't help but notice The Register and The Inquirer both linked the "Judge Wells Rules: IBM Did *Not* Destroy Evidence" hearing coverage that you provided and PJ published.

Yeah, neither of those two rags get much respect. What they do get is widely read.

Good work, the lot.

---
"Just what part of 'Final Disclosures' do you not understand?" ~ The Hon. Brooke C. Wells in a Nutshell

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell - Updated
Authored by: jsusanka on Tuesday, January 23 2007 @ 09:32 PM EST
why does novell make deals with other companies like this one with sco and now
they continue to do it with the microsoft deal.

I don't get it - they have/had good products they don't need deals.

it doesn't look like they get a lot from these deals except more paperwork for
the lawyers.

here is a notion - how about just sticking to business and quit with the deals.

[ Reply to This | # ]

SCO contradicting themselves (again)
Authored by: Anonymous on Tuesday, January 23 2007 @ 09:33 PM EST
In the Novell case, they claim that they sold UnixWare and gave away SVRx
licenses. That would make UnixWare an independant product from SVRx.

Yet, in the IBM case, they claim that AIX code is all SVRx code, even the parts
like JFS that IBM wrote themselves.

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell - Updated
Authored by: Anonymous on Tuesday, January 23 2007 @ 09:58 PM EST
...Judge Kimball asked, hypothetically, if a contract clearly says A B C, and
the parties said it means X Y Z, what should a judge do about it?...

Kimball obviously knows the law on that one. In Australia, at least, contract
terms are interpreted per their ordinary English meaning, in the context of the
whole contract. Only if the words are ambiguous will the the behaviour of the
parties and other facts be considered.

So down here, the terms of the contract would be A B C. Even though it is
generally easy to find some ambiguity, the terms will never be X Y Z, unless A
is very similar to X and so on.

Sorry TSCOG.


asifyoucare not logged in.
IANAL IAAHB

[ Reply to This | # ]

Behavior not contemplated in the contract?
Authored by: Placid on Tuesday, January 23 2007 @ 10:00 PM EST
He [Jacobs] went on to say that the contract was not crafted to cover this situation. He "offerred to stipulate for the purposes of this motion, in fact [he's] willing to stipulate for society at large, that the course of conduct of SCO over the last few years was not contemplated at the time of these agreements"

What does this mean? Where a judge should look for directions in such a situation - in the plain language of the conract (Novell wants this) or in extra evidence of behavior/understanding (SCO wants this)?

[ Reply to This | # ]

I believe SCO are safe
Authored by: devil's advocate on Tuesday, January 23 2007 @ 10:07 PM EST

If the report from the court room is correct both the Sun and Microsoft agreements included at least some UnixWare. For this SCO doesn't have to negotiate with Novell or pay them a bean.

APA section 4.16b:

Buyer shall have the right to enter into amendments of the SVRX Licenses (i) as may be incidentally involved through its rights to sell and license UnixWare software or the Merged Product ... or future versions of the Merged Product, or (ii) to allow a licensee under a particular SVRX License to use the source code of the relevant SVRX product(s) on additional CPU's or to receive an additional distribution, from Buyer, of such source code.

[ Reply to This | # ]

I think I see what TSG is getting after.
Authored by: Anonymous on Tuesday, January 23 2007 @ 10:24 PM EST

They're allowed to amend SVRX licenses pursuant to selling Unixware (4.16(b) of the merged APA), and 1.2 suggests they can create new ones as well. I think there might be a hangup about whether Novell is required to give prior written approval, but that's not a point of emphasis apparently. Provided that the source code license is attributable to a new SVRX license pursuant to a Unixware license, TSG is allowed to retain the revenue (1.2(e)(3)).

The challenge, then, is for them to show that this is primarily a Unixware license, and not primarily a SVRX license, which I presume gets to the sealed agreements and declarations. But it may very well move it from a matter of law and plain contracts to a matter of facts, although one of the more salient sets of facts (how much a typical Unixware license goes for, vs. how much Sun and Microsoft paid) is probably not up for dispute.

I don't, personally, think that the Sun and Microsoft agreements are likely to be primarily about Unixware, but I also don't think that can be addressed without a trial.

[ Reply to This | # ]

Sun's earlier contract?
Authored by: rao on Tuesday, January 23 2007 @ 10:27 PM EST
"Mr. Singer said that the Sun agreement was not in place at the time of the APA."

So what happened to Sun's money when the original agreement was made? Shouldn't money from the new agreement be treated the same?

[ Reply to This | # ]

What does SCO mean by the word 'ALL'?
Authored by: sk43 on Tuesday, January 23 2007 @ 11:08 PM EST
Dictionary definition:

all

adj.

1. Being or representing the entire or total number, amount, or quantity;
e.g., "Final Deadline for Parties to Identify with Specificity ALL
Allegedly Misused Material"

2. The whole number or sum of; e.g., "Interrogatory 8: Please identify ALL
agreements with which plaintiff alleges IBM interfered ..."

3. any whatever; e.g., Novell/SCO APA "ALL royalties, fees, & other
amounts due for SVRx licenses ... ALL SVRx licenses ... ALL contracts
relating to SVRx licenses."

--------

SCO definition:

all

adj.

1. ALL; e.g., [524] "The Court's order at that time says, ALL, nonpublic
Linux contribution information. Again, we're dealing just with the
language of that. To us, `all' means ALL, ..."

2. Not the entirety, an example of; e.g., [707] "IBM attempts to misdirect
the Court by omitting the first half of the sentence - that Tab 425 is AN
EXAMPLE of proof that the AIX JFS is copied from UNIX System V."

3. Not the totality of, a percentage of; e.g., [707] "Specifically,
in the December Submission, SCO identified header files that contain
approximately 25 PERCENT of the 112 system calls discussed in Dr.
Cargill's report."

4. A substantial portion of, much; e.g. [707] "... MUCH of the material
on which Dr. Cargill relies in forming his analysis and opinion of
structural copyright infringement is included in the December submission."

5. Excluding that which is identified in a magazine article; e.g. [707]
"[T]he ARTICLE "Gunning for Linux" from the May 17, 2004
issue of Fortune Magazine ... states: "SCO is complaining
not just about verbatim copying but also about the
purloining of its code's 'structure, sequence, and/or
organization'" -- the precise opinion Dr. Cargill asserts."

6. In addition to, representative of; e.g., [908] "The additional entities
identified by SCO were REPRESENTATIVE OF business relationships or
prospective business relationships ..."

7. Not any, binary only; e.g., Singer, to Judge Kimball (Jan 23, 2007):
"Novell was ONLY interested in BINARY license revenue rather
than SOURCE CODE"

[ Reply to This | # ]

Gotta love it
Authored by: Anonymous on Wednesday, January 24 2007 @ 01:35 AM EST
No we're not going bankrupt...

Broke as all get out and bleeding cash like you wouldn't believe, but we're used
to that.

[ Reply to This | # ]

  • Gotta love it - Authored by: Anonymous on Wednesday, January 24 2007 @ 08:53 AM EST
What's the update?
Authored by: Anonymous on Wednesday, January 24 2007 @ 05:04 AM EST
Is the "full report" the update you're speaking of?

[ Reply to This | # ]

Bob Mims Salt Lake Tribune reports
Authored by: Chris Lingard on Wednesday, January 24 2007 @ 05:38 AM EST

A nice report of the hearing here

The fate the SCO Group's Linux-related lawsuits, as well as the Lindon software company's very future, could ride on how a federal judge interprets the word "all."

“ 'All' means all. It can only mean all,” Novell attorney Michael Jacobs argued, referring to the sale's contractual wording in reference to his company's rights to Unix. "No one in 1995 contemplated what SCO has wrought" in its interpretation of the deal.

SCO attorney Stuart Singer insisted "all" was, well, not all. The contract signed 12 years ago limited Novell's Unix interests only to licenses in existence at the time - not "incidental" product development by SCO, as in its later licensing of Unix to IBM and Sun Microsystems.

[ Reply to This | # ]

I have a few questions
Authored by: mossc on Wednesday, January 24 2007 @ 06:40 AM EST

1. Did MS or Sun have access to Unixware SOURCE before their latest deals with TSG?

2. Did they get the SOURCE to Unixware as part of these deals?

3. Are they re-selling or using Unixware binaries internally?

If the answer to all three is no then I would think Novell's position is a slam dunk.

Chuck

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell - Updated
Authored by: skip on Wednesday, January 24 2007 @ 07:10 AM EST
"Mr. Singer, referencing Novell's position that SCO is about to go
bankrupt, said that they are not, that it's true SCO is lean on cash, but that
they have experience with this and fully plan to continue in business through
the end of this litigation."

And here I was thinking theey were 'innovating'. This doesn't sound like much of
a long term plan to me.

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell - Updated
Authored by: Anonymous on Wednesday, January 24 2007 @ 07:58 AM EST
Wow, Bob Mimms completely misunderstood what yesterday's hearing was about. It
looks like he went in with the preconceived notion that this hearing was about
the copyright ownership issue, and didn't understand what was going on well
enough to have that belief shaken.

[ Reply to This | # ]

Report from Today's Hearing in SCO v. Novell - Updated
Authored by: Anonymous on Wednesday, January 24 2007 @ 08:40 AM EST
Update 2: We also

Where is "Update 1" ?

[ Reply to This | # ]

My guess
Authored by: Anonymous on Wednesday, January 24 2007 @ 10:26 AM EST
The judge wants to rule on the PSJ's in the IBM case before SCO goes BK. It's
only about 6 weeks away.

[ Reply to This | # ]

  • My guess - Authored by: jmc on Wednesday, January 24 2007 @ 10:44 AM EST
  • I don't think so. - Authored by: Anonymous on Wednesday, January 24 2007 @ 10:56 AM EST
  • My guess - Authored by: Anonymous on Wednesday, January 24 2007 @ 01:08 PM EST
    • My guess - Authored by: Anonymous on Wednesday, January 24 2007 @ 02:03 PM EST
Expectations for encyclopedias
Authored by: mexaly on Wednesday, January 24 2007 @ 10:52 AM EST
Back when encyclopedias were books, I was educated to understand that, no matter
how the publisher tries, their encyclopedia will be biased.

To use an encyclopedia as a document of absolute truth is, in fact, to abuse
it.

The best use is to get enough background on a topic to do your own research and
find your own truth.

Besides, Wikipedia will always have some histeresis (sp) on some topics.

---
My thanks go out to PJ and the legal experts that make Groklaw great.

[ Reply to This | # ]

If Novell is right, then SCO is already bankrupt.
Authored by: Anonymous on Wednesday, January 24 2007 @ 10:59 AM EST
Itjust hit me. If Novell's arguments about the Sun and MS deals are correct, and
it has been Novell's money all along, then it was never SCO's money in the first
place, so SCO has technically been bankrupt for the last 6 months at least, and
they have been using Novell's money to stay afloat. They have been lying to
their shareholders and the SEC by holding up fistfuls of Novell's money and
claiming it is their own. Who gets to go to jail for that?

[ Reply to This | # ]

  • Intent - Authored by: Anonymous on Wednesday, January 24 2007 @ 11:18 AM EST
    • Intent - Authored by: Anonymous on Wednesday, January 24 2007 @ 12:36 PM EST
    • Intent - Authored by: Wardo on Wednesday, January 24 2007 @ 01:32 PM EST
      • Intent - Authored by: Anonymous on Wednesday, January 24 2007 @ 02:05 PM EST
    • Intent - Authored by: ThrPilgrim on Thursday, January 25 2007 @ 12:46 PM EST
      • Intent - Authored by: jdg on Thursday, January 25 2007 @ 03:39 PM EST
Why no quotes from 10Ks?
Authored by: Anonymous on Wednesday, January 24 2007 @ 11:18 AM EST
Didn't SCO characterize the MS/Sun deals as SVRx licenses in their 10ks and
other legally-binding statements? Would introducing those raise an issue of
fact somehow?

[ Reply to This | # ]

Pipe Fairy?
Authored by: stites on Wednesday, January 24 2007 @ 12:32 PM EST
It would be interesting to know if the Pipe Fairy is setting up a new money
conduit to SCO in case they have to quickly funnel the money to SCO if there is
a preliminary injunction or summary judgment against SCO.

If there is a preliminary judgment or summary judgment against SCO how long
would they have to post the money? I suspect that the time would be shorter for
a preliminary judgment.

-----------------
Steve Stites

[ Reply to This | # ]

  • Pipe Fairy? - Authored by: Wardo on Wednesday, January 24 2007 @ 01:47 PM EST
    • Pipe Fairy? - Authored by: Anonymous on Wednesday, January 24 2007 @ 04:21 PM EST
  • Pipe Fairy? - Authored by: Anonymous on Thursday, January 25 2007 @ 01:14 AM EST
It's sad that this has to be explained ...
Authored by: Anonymous on Wednesday, January 24 2007 @ 01:30 PM EST
Of course the IRS would be interested in a case that established SCO's money
tracing theory as law. They are never going to accept "sorry, we spent the
money that you're trying to tax, this money comes from totally different
business...". Remember that a court ruling on legal theory becomes law
itself (sometimes called precedent).

As I read the OP ofn this thread, he/she/whatever was not commenting on possible
IRS interest in SCO, but possible IRS interest in the more general implications
of SCO's dingbat legal theories, which is a whole different kettle of fish.

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What if JK rules that SCOG is not SCO?
Authored by: Anonymous on Wednesday, January 24 2007 @ 01:39 PM EST
What if Judge Kimball rules that SCOG is not SCO?

He could deny the constructive trust on the grounds that the "SCO
Group" AKA Caldera is not the Santa Cruz Operation.

This would solve the constructive trust problem for the "SCO Group",
but then of course the IBM and Novell cases would collapse for them.

Just a thought.

gnutechguy99

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Unixware licenses?
Authored by: GLJason on Wednesday, January 24 2007 @ 02:18 PM EST
SCO's argument was focused on various subclauses of the APA along with the (sealed) declarations of 9 individuals. While their words were not read, I believe their substance was to the effect that it was "normal" for a party purchasing UnixWare (the "merged product") to incidentally receive "legacy" SVRx source-code licenses.

Now I see. I wondered who would give 9 declarations to support SCO, but it looks like those declarations just stated the obvious, which doesn't support SCO's position. Of course Santa Cruz could develop the "merged product" (Eiger or UnixWare) and distribute it. That was the whole purpose of the APA (for Santa Cruz to merge OpenServer and Novell's UnixWare). Since it is a derivative of SVRX, it is spelled out in the APA that it is allowed since all other uses are specifically forbidden (i.e. buyer cannot enter into new SVRX licenses). If that clause allowing 'incidental' licenses wasn't there, the APA would be meaningless because Santa Cruz would lack the ability to license the merged product without Novell's approval for each licensee.

But does anyone actually believe that Microsoft and Sun are running UnixWare on thousands of computers? The "license" to SVRX incidentally involved in selling UnixWare isn't a carte blanc to sublicense UnixWare (and included SVRX code) for any use. If Microsoft and Sun are using their licenses to do anything but run copies of UnixWare, that goes against the APA.

SCO's interpretation is that the clauses forbidding entering into new SVRX licenses are meaningless. Since UnixWare includes SVRX, if they can license the source code to UnixWare in any way they wish, why would that clause even exist? In effect, they could license SVRX in any way they wished... The APA makes it clear however that they can sell UnixWare, but not enter into new source code agreements of the type that AT&T, USL, and Novell entered into. In essence, the actuality is the reverese of SCO's argument, SCO can only enter into binary sublicensing agreements and not source.

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Dilbert's a roar today (25.Jan.2007)
Authored by: Anonymous on Thursday, January 25 2007 @ 04:13 AM EST
Have a look at www.dilbert.com today.

"I Fired him before he started yammering on about Linux."

So funny.

Shane.

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Spirit of transactions
Authored by: Anonymous on Thursday, January 25 2007 @ 04:20 AM EST
What bothers me about this whole thing is that SCO may just get away with it.
What they have done goes completely in the face of the spirit (intent?) of the
agreement. It's like getting a special deal on boxes of apples as long as you
add these apples to your fruit bundles and don't sell the boxes by themselves.
There is a clause saying that if you sell the boxes themselves, you have to pay
back the discount you got.

So what do SCO do? Well, they add a grape to the box of apples and sell it as
it. Then they say they are selling fruit bundles.

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Report from Today's Hearing in SCO v. Novell - Updated 3Xs
Authored by: Anonymous on Thursday, January 25 2007 @ 08:50 AM EST
When Novell invokes California contract law, they've put SCO in a very difficult
corner, and SCO's attempt to bring in 'extrinsic', personal preceptions of the
contract as evidence will not be very convincing to the Judge.

SCO is trying to overcome this problem by trying to create the impression that
the declarants in SCO's favor were all present when the essence of the contract
was formed, i.e., the fundamental exchange of obligations and consideration was
agreed to.

This is almost never true in a commercial contract, except for the lawyers that
actually draft the contract. In reality, negotiations like this take place over
an extended period of time. The positions change as price, consideration, terms,
are offered, tweaked, etc, then due diligence may discover new facts, causing
the proposed contract terms to change, etc. All of this filters through the
lawyers, who fight over the precise wording to make their respective positions
and obligations as clear as possible.

This is all why the contract terms, once agreed to, control over 'perceptions'
that may have arisen from time to time from people involved in/out of the
discussions.

That's also why there is an integration clause in commercial contacts that says
"all prior verbal and written communication is superceded" -- it's
because what the parties FINALLY agree to, as reduced to writing, creates the
contract.

And of course, California contract law reflects this reasoning precisely.

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