Here, thanks to Steve Martin once again, is Novell's Memorandum in Opposition to SCO's Motion for Partial Summary Judgment on SCO's First, Second, and Fifth Causes of Action as text. This is the SCO motion Novell is here opposing. SCO's Reply to this Novell opposition memorandum can be found here, along with supporting exhibits. This is mainly about slander of title and hence copyright ownership. On that, the parties are pointing fingers at each other.
And both of them are saying that the APA is clear as a bell as to which of them owns the copyrights, namely not the other guy. SCO has asked only for partial summary judgment on its claims in this motion, slander of title (1st claim), breach of contract (APA and TLA, the 2nd claim) and the unfair competition (5th), again all on the basis of its alleged copyright ownership. Novell, is asking for summary judgment on its slander of title counterclaim and specific performance claims, on the basis that the plain language of the agreements shows that it is the owner of the copyrights. Novell reveals in this memo many new details about the history of the Asset Purchase Agreement's drafting and execution and about Santa Cruz's and Caldera/SCO Group's conduct thereafter we haven't heard before. I think it would be fair to characterize it by saying that Novell is effectively saying that SCO has been willfully pretending to own the copyrights when it knew better all along.
In late 2002 and early 2003, Novell tells the court, SCO repeatedly contacted Novell asking it to amend the APA to transfer the copyrights: SCO's actions speak louder than its words: SCO was well aware that
no transfer of copyrights had occurred. One of the people who Novell says tried to get them was Darl McBride. Another was Ralph Yarro.
The persons McBride tried to get them from included Chris Stone, then at Novell. Here's what Novell says happened, and this is where Ralph Yarro comes into the story: 7. Beginning in late 2002, Darl McBride, SCO's CEO, contacted Novell repeatedly to seek copies of records concerning SCO's intellectual property rights to UNIX. McBride stated that he wanted this information to support possible efforts by SCO to assert claims against end users of Linux....
8. On January 4, 2003, McBride received an e-mail from Michael Anderer, a consultant for SCO retained to examine its intellectual property. Anderer stated that * * REDACTED * * Anderer noted that * * REDACTED * * Anderer * * REDACTED * * ...
9. On February 25, 2003, McBride called a Novell employee in business development, David Wright, and said, "SCO needs the copyrights." Wright passed McBride's request to Novell's in-house legal department. McBride's request was memorialized in an e-mail written that day by a Novell in-house attorney, Greg Jones....
10. In early 2003, McBride and Chris Sontag of SCO contacted Greg Jones at Novell several times to request transfer of the UNIX copyrights....McBride stated that "the asset purchase agreement excluded copyrights from being transferred" and that this was a "clerical error."... Sontag then requested that Jones sign a letter purportedly attempting to "clarify" that the APA did not transfer copyrights....
11. On February 4, 2003, McBride contacted Christopher Stone, vice chairman of Novell, and stated that he wanted Novell to "amend" the APA to give SCO "the copyrights to UNIX."...
12. Again, in March 2003, McBride called Stone to ask him if Novell would "amend" or "change" the APA so SCO "could have the copyrights."...
13. Ralph Yarro, chairman of SCO, requested an in-person meeting with Stone. In that meeting, on May 14, 2003, Yarro told Stone that he "would like for Novell to make changes to the agreement to give them [i.e., SCO] the copyrights." Stone refused.... In June 2003, Stone made notes memorializing that conversation....
14. On May 19, 2003, McBride called Stone and Joe LaSala, Novell's general counsel, and again requested that Novell convey the copyrights to SCO. Specifically, McBride said, "We only need you to amend the contract so that we can have the copyrights."...Stone made notes in June 2003 memorializing that conversation.
Each point is supported by testimony or deposition transcripts, which you can read in the full version, below, but right away, we can see that Novell is indicating that it thinks SCO had every reason to know that Novell thought it owned the copyrights and that SCO thought so too. Which party is guilty of slander of title then? And of course, that is Novell's point.
So it's all about copyright ownership and each says that the agreements are clear as can be that the copyrights are theirs, and that tells you the story right there.
Novell begins by pointing out that none of SCO's gaggle of witnesses who claim that copyrights were intended to transfer under the APA and Amendments had any part in drafting the agreement, and none has any personal knowledge of the copyright clause. Novell trashes everyone's testimony, one by one, but not unkindly. They don't trash the person, just show the testimony is not useful to SCO, which is how classy law firms do it. And I've no doubt that this document's contents were carefully crafted in the depositions' questions asked. Somehow Novell got each one to admit that there was no meaningful involvement in the drafting or negotiations about the copyrights. None of them had any involvement in or have any memory of drafting or negotiating it. As for the two ex-Novell people, Robert Frankenberg and Ed Chatlos, they had both left Novell before Amendment A was drafted. Getting the picture Novell is painting? I am not surprised that, after reading this document, SCO dug up an expert to opine on industry norms to try to hold back the tide, but everything he said in his declaration is answered right here.
But even if they did have personal knowledge of the matter, Novell argues, their testimony violates the parol evidence rule, because the agreement's language about the copyrights is clear and obvious: copyrights were excluded.
If, however, Novell continues, the court were to allow testimonial evidence, then the picture gets bleaker still for SCO, they say, because the conduct of its employees shows that they knew from the signing of the APA onwards that they didn't get the copyrights, and in fact they repeatedly over the years tried to get them.
Novell points out that while its position has remained constant, SCO's keeps changing. First it contended that the APA transferred the copyrights; then it was Amendment 2; and now it's an amalgamated approach, relying on a bill of sale, and claiming that the obvious language in the APA clause that excluded all copyrights doesn't "exist for purposes of construing the APA" because it was modified 13 months later by Amendment 2. But SCO also says the Bill of Sale did the trick. And also the APA really did too, or it meant to. However, Novell points out, the APA Excluded Assets clause is relevant and it has to be, because SCO's Bill of Sale was based on the APA, not Amendment 2. Anyway, Novell doesn't care which is the story of the day, it says, because no matter how much SCO flies through the air, time traveling back and forth, the bottom line is the same: In any event, it does not matter which
position SCO takes because neither the APA nor Amendment No. 2
transferred copyright ownership from Novell to Santa Cruz. The APA, signed by Novell and Santa Cruz on September 19, 1995,
explicitly excluded "all copyrights" from the assets that Novell
transferred to Santa Cruz. SCO submits extrinsic evidence that
purportedly demonstrates that "all copyrights" did not mean "all
copyrights" but only "some copyrights." That evidence is
inadmissible under the parol evidence rule, as it seeks not to
explain the meaning of the term "all copyrights" but rather to
demonstrate a contradiction between the plain language of the agreement and its supposed
intent. SCO's evidence should be ignored and this Court should
find, as a matter of law, that the APA did not transfer
copyrights.... Novell has
submitted documents and testimony from the specific individuals
that drafted the "all copyrights" exclusion, who have all attested
that the exclusion was deliberately inserted to protect Novell's
ongoing interests in the UNIX business. SCO, in contrast, has
submitted no admissible evidence from a single person involved in
drafting the "all copyrights" exclusion, relying instead on
testimony from persons who were not involved in drafting that
exclusion and who did not participate in negotiations concerning
the transfer of copyrights. There is no written instrument of copyright conveyance, as the law requires, Novell states, and no list of copyrights to transfer, so as a matter of law, the court doesn't need to even consider what anyone intended.
There is no evidence of any business need for ownership either, since Santa Cruz had a license under the APA to use the copyrighted works. Furthermore, Santa Cruz put Novell's copyrights on their software years after the APA and Amendment 2 were executed, showing that it knew of Novell's continued ownership of the code.
Interestingly, as Novell points out in footnote 1, SCO has *not* asked for summary judgment on its specific performance claim. Here's what specific performance means: the right of a party to a contract to demand that the defendant (the party who it is claimed breached the contract) be ordered in the judgment to perform the contract. Specific performance may be ordered instead of (or in addition to) a judgment for money if the contract can still be performed and money cannot sufficiently reward the plaintiff. Example: when a defendant was to deliver some unique item such as an art- work and did not, a judge may order the defendant to actually deliver the artwork. So, if SCO really needs the copyrights to run its business, you'd think it would ask the court to make Novell hand them over. Of course, then it would need to admit it doesn't have them already. What to do? Probably save it for later, if it loses the argument about already having the copyrights. Not only that, Novell says, in 2001, in another agreement, "Santa Cruz expressly acknowledged a problem with the 'chain of
title from Novell' and discussed obtaining a 'global IP assignment'
from Novell", which you can read, along with SCO's witness Troy Keller's explanation here.
He testified that the clause was about where the copyright certificates were kept and whether or not Santa Cruz had registered its copyrights with the Copyright Office. However, you don't need a global IP assignment to fix either problem. So, obviously, that document wouldn't have happened if they thought they owned the copyrights already, now would it? You don't prove copyright ownership based on where the paper registration certificates are kept, anyway. Here's how the 2001 assignment agreement from Santa Cruz to Caldera, now SCO Group, read, as a review: Assignor has no knowledge of any fact that would
prevent Assignee's registration of any Rights related or
appurtenant to the Inventions and Works or recording the transfer
or Rights hereunder (except that Assignor may not be able to establish a
chain of title from Novell Inc. but shall diligently endeavor
to do so as soon as possible). Does that sound like a building is being discussed? I'll bet when the Novell lawyers found that clause in that contract, the first thing they did is dance around the office high fiving each other. It's huge, despite SCO's weak "explanation". It's like an ad in Times Square, with scrolling lights reading, "SCO doesn't own the copyrights and not only that, it always knew it." Worse for SCO, Novell again traces the drafting of the document, and it was Caldera that first did the draft of the agreement, and its draft just said that SCO, the Assignor, had no knowledge of any fact that would prevent Caldera from "registration of any Rights related or appurtenant to the Inventions and Works." That's pretty standard language. And it reflects that at that point, Caldera knew of no impediments. Santa Cruz's lawyers sent it back redlined to include the exception language about a problem with the chain of title and emailed later that they would do their best to get Novell to sign a global IP assignment. They kept working on the draft language, and eventually settled on what you see. You don't need to do things like that if you already own the copyrights, folks. You just go down to the Copyright Office and register your ownership. Or pop the form in the mail. And if you can't find the paperwork, you don't need an IP assignment. You just contact the Copyright Office and work through the problem, whatever it is. The paper certificates aren't the proof of ownership, as Novell explains: SCO makes much of the fact that Santa Cruz apparently had physical possession of the UNIX copyright registrations.... The physical possession of copyright papers is legally irrelevant. "[T]he possessor of a copyright certificate is not ipso facto the copyright owner. The valuable federal right is not transferred by mere physical delivery, or other acquisition, of the certificate. The owner may, of course, assign the copyright. But this is to be done 'by an instrument in writing signed by the proprietor of the copyright.'" Kingsrow Enterprises, Inc. v. Metromedia, Inc., 397 F. Supp. 879, 881 (S.D.N.Y. 1975) (possession of the actual papers is "immaterial" to the question of copyright ownership); see also La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1202-1203 & n.7 (10th Cir. 2005) (holding that physical possession of a "registration is separate from the issuance of a registration" and that a rule placing emphasis on physical possession of registration papers is "hard to imagine considering the fact that a certificate could easily be lost").
SCO suggests that Santa Cruz's possession of the registrations is relevant here to show Novell's supposed intent to transfer the copyrights. But the undisputed evidence is that Novell took no such affirmative action. The UNIX registrations simply stayed in the same office in New Jersey through the ownership changes from AT&T to USL to Novell to Santa Cruz. (Novell's Opposition Facts, ¶ 19.)
This document is a first in the Novell litigation in that it brings Ralph Yarro, Chairman of the Board of SCO and formerly chairman, president and CEO of Canopy Group, meaningfully into the narrative. As I was reading this filing, I began to wonder if the wording might be an indication that Novell may be thinking of trying to pierce the corporate veil to try to go after Yarro's personal assets. Why might Novell be thinking about trying to pierce the veil to go after Yarro, if they are? Remember I'm just guessing here, as I have no knowledge if they are or are not. I just know if I were Novell, I would be. And if I were Yarro, I'd put the house in my wife's name. Kidding. It's too late now. One reason, the principal reason, is that SCO doesn't appear to have enough money to pay Novell what Novell says it is due, let alone any damages that might be awarded. If Novell prevails in the litigation, it certainly wants to be paid, and courts will consider piercing the veil in circumstances like that, particularly in tort or contract cases, if the principals have enough to make up the difference and if certain other elements are met. You can read about piercing the corporate veil in an earlier article I wrote very early in Groklaw's life, by scrolling down to the header on that page.
If you are a corporate entity, the law expects you to have enough to cover likely liabilities, including litigation you know about. If Novell wins, it would be a partially hollow victory, if SCO can't pay what it owes. Courts don't favor such outcomes. I don't know if SCO has insurance that would cover a judgment in Novell's favor or not, but if not, I would expect Novell to argue that it wants its money from somebody. That doesn't mean the court will agree to pierce the veil, but by
bringing Yarro into the story and quoting him in the way Novell does ("Yarro told Stone that he 'would like for Novell to make changes to the agreement to give them [i.e., SCO] the copyrights'"), it brings the Chairman of the Board into the picture in a way he has not been before, apparently with his SCO hat on, linked directly with SCO and representing SCO in the negotiations. But
Yarro is also a shareholder.
He was the principal shareholder of SCO, becoming even more so later when in 2005 he was fired by Canopy, previously the parent company of SCO where he was President and chairman, exiting with all of Canopy's SCO stock, some cash and with all Yarro and SCO ties to Canopy severed. But back in May of 2003, at the meeting with Stone, whose interests was he representing? Were they all perfectly aligned? Who is gaining benefit from this lawsuit? Shareholders? SCO as a company? Canopy? Who? Courts can take notice of questions like that when deciding whether or not to pierce the corporate veil.
The only other times Yarro's name has come up in the Novell case that I can recall was once when SCO failed to turn over some depositions, including Yarro's, taken in the IBM case until Novell forced the issue. And the other time was of course in connection with what I call "Yarro's Law," the unfair competition law in Utah that Yarro took credit for and which seemed absolutely perfect for SCO's use against IBM, except the legislators failed to make it retroactive. This is the first time Yarro has played a starring role, you might say, in a filing. I'm only guessing that perhaps Novell is foreshadowing that it may try to pierce the corporate veil, so that Yarro's assets become reachable by Novell. It's also possible that it's just what it seems, that Novell is bringing him into the narrative because it's one more example of SCO trying to wrestle the copyrights away from Novell after the APA was long signed and amended. People set up as corporations because, for one thing, it provides limited liability in litigation. Normally, you can only sue for corporate assets, not the executives' houses and other personal assets. And that's usually a good thing, because otherwise, who'd go into business? LLC's also provide limited liability. And here's a reference to piercing the veil of an LLC, which is what Canopy is.
When I say that incorporation provides limited liability, it means just that. It's limited, not total. The Asset Protection Law Center explains piercing the corporate veil like this: The lawsuit protection features of the corporation will be available only if the integrity of the corporation as a separate and distinct entity, apart from the individual, is respected by a court and by the Internal Revenue Service. In matters involving a lawsuit by an injured party, especially if a corporation has no significant assets, the plaintiff will attempt to convince the court that the corporate entity should not be respected and that the principals of the company should be personally liable. In these cases, the plaintiff is attempting to pierce the corporate veil in order to obtain a judgment against the principals, who may have personal assets sufficient to satisfy a judgment.
On the one side, it's not fair to let a party be deprived of what is due, just because of a corporate setup. However, on the other side, courts don't do it lightly, because then the corporate limited liability, which has a good public purpose, becomes meaningless. So courts look for certain elements before they will consider it. One reason many people choose to set up as an LLC instead of a straight
corporation is because it reduces the factors that can bite you in a pierce the veil discussion. There are not the same bookkeeping requirements for an LLC as there are for corporations. Canopy would therefore have less worries than SCO in any case, even if Yarro were still there. When corporations get sued, judges sometimes will tell you to bring your corporate books in within the half hour, or whatever is a reasonable time frame for you to go pick them up and get right back without being able to change the paperwork. That is because with a corporation, if you failed to hold certain annual meetings and memorialize it just so in your corporate kit, it works against you being a corporate entity in a veil-piercing discussion. LLCs don't have as such strict requirements. But LLCs can be pierced too. Factors court consider include:
Inadequate capitalization: one of the most important factor that may ultimately determine a court’s decision to pierce the LLC’s veil. All business entities, including LLCs, should have sufficient capital to run the entity’s business properly. Veil piercing will most likely occur in instances where the owners siphoned out the assets of the LLC, leaving too little in the corporation to satisfy creditors. However, grossly undercapitalized LLCs may also have their veils pierced where additional factors, such as disregard of formalities or intermingling of funds, are present.
No one factor is dispositive but if the court gets the idea that a business is being used and manipulated to benefit individuals, the business can lose its limited liability umbrella. Here's a paper [PDF] explaining how veil piercing works with LLCs, from 2004. Of course, case law doesn't stand still, but it will give you an overview.
Remember I wrote about the deposition of Kim Madsen and pointed out the significance of her testimony that she recalled no conversations about copyright at all and that everyone just assumed they transferred? Well, here it is, paragraph 66.
Before I had read this document, I still wondered if either side could prevail on summary judgment. But now, I believe SCO has to be at least worrying that, based on this material, it could actually be the ball game.
******************************
MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Kenneth W. Brakebill (pro hac vice)
Grant L. Kim (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 and Counterclaim-Plaintiff Novell, Inc.
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
THE SCO GROUP, INC., a Delaware
corporation,
Plaintiff and Counterclaim-Defendant,
vs.
NOVELL, INC., a Delaware corporation,
Defendant and Counterclaim-Plaintiff. |
MEMORANDUM IN SUPPORT OF
NOVELL'S OPPOSITION TO SCO'S
MOTION FOR PARTIAL SUMMARY
JUDGMENT ON SCO'S FIRST,
SECOND, AND FIFTH CAUSES OF
ACTION AND FOR SUMMARY
JUDGMENT ON NOVELL'S FIRST
COUNTERCLAIM (COPYRIGHT
OWNERSHIP)
[REDACTED pursuant to the August 2,
2006 Stipulated Protective Order]
Case No. 2:04CV00139
Judge Dale A. Kimball |
(1)
TABLE OF CONTENTS
TABLE OF AUTHORITIES |
v |
I. |
STATEMENT OF ISSUES |
1 |
II. |
INTRODUCTION |
2 |
III. |
STATEMENT OF FACTS |
5 |
|
A. |
Santa Cruz's Conduct Following the Execution of the
APA and Amendment No. 2 Demonstrates Its Understanding that No
Copyrights Were Transferred. |
6 |
|
|
1. |
In 2001, Santa Cruz and SCO Acknowledged a Problem with the
"Chain of Title from Novell.". |
6 |
|
|
2. |
In Early 2003, SCO Repeatedly Requested that Novell Transfer
the UNIX Copyrights to SCO. |
9 |
|
|
3. |
After the Execution of the APA, Santa Cruz and SCO Distributed
Copies of UNIX Code Bearing Joint SCO-Novell Copyright
Notices. |
11 |
|
B. |
Novell's Conduct After Signing the APA Is
Consistent with Its Understanding that the APA Did Not Transfer the
UNIX Copyrights. |
12 |
|
|
1. |
Novell Took No Action to Send Santa Cruz the Physical Copyright
Registrations. |
12 |
|
|
2. |
Novell Had No Knowledge that SCO Licenses Contained Any
Incorrect Representations and Warranties that SCO Owned UNIX
Copyrights. |
13 |
|
|
3. |
The Technology License Agreement Is Consistent With the Fact
that the APA Did Not Transfer the Copyrights. |
14 |
|
C. |
SCO's "Testimonial Evidence" Does Not Demonstrate
an Intent to Transfer Copyrights. |
16 |
|
|
1. |
None of SCO's Witnesses Was Involved in the Negotiation or
Drafting the Intellectual Property Provisions of the APA. |
16 |
ii (2)
|
|
2. |
Those Directly Involved in the Drafting of the APA's
Intellectual Property Provisions Confirm that Novell Deliberately
Excluded Copyrights From the Transfer of Assets. |
25 |
|
D. |
Amendment No. 2 Did Not Transfer the Copyrights
Either. |
27 |
|
|
1. |
Amendment No. 2 Was Not Intended to Transfer All Copyrights
Pertaining to UNIX to Santa Cruz. |
27 |
|
|
2. |
SCO's Only Evidence Concerning the Intent of Amendment No. 2
Comes From Witnesses Who Had No Involvement in or Memory of
Drafting or Negotiating that Amendment. |
29 |
|
|
3. |
SCO Has Presented No Evidence that Any Copyrights Were
"Required for" the Operation of the UNIX-Related Business
Contemplated by the APA. |
30 |
|
|
4. |
Novell's Statements Concerning Amendment No. 2 Are Entirely
Consistent With Its Understanding that the Amendment Did Not
Transfer Copyrights. |
33 |
IV. |
ARGUMENT |
34 |
|
A. |
The Plain Language of the APA Excluded Copyrights
from the Assets to Be Transferred by Novell to Santa Cruz. |
34 |
|
|
1. |
Schedule 1.1(b) Expressly Excluded "All Copyrights" From the
Transfer of Assets. |
34 |
|
|
2. |
SCO Cannot Use Extrinsic Evidence About the Supposed Intent of
the Parties to Rewrite the Plain Language of the APA. |
36 |
|
B. |
In Any Event, Extrinsic Evidence Would Simply
Reinforce the Conclusion that the APA Intentionally Excluded
Copyrights. |
38 |
|
|
1. |
The Drafters of the APA's Intellectual Property Provisions
Agree that the Exclusion of Copyrights Was Deliberate. |
38 |
|
|
2. |
SCO Presents No Evidence to the Contrary from Anyone Involved
in the Negotiation of the Intellectual Property Provisions of the
APA. |
40 |
|
C. |
Amendment No. 2 Did Not Transfer the UNIX and
UnixWare Copyrights to Santa Cruz. |
42 |
iii (3)
|
|
1. |
Amendment No. 2 Is Not a Signed Instrument of Conveyance, and
Hence Cannot Transfer Copyright Ownership Under the Copyright
Act. |
43 |
|
|
2. |
In Any Event, Amendment No. 2 Was Never Intended to Transfer
All Copyrights Pertaining to UNIX and UnixWare. |
44 |
|
|
3. |
No Copyrights Are "Required" for Santa Cruz to Run the
UNIX-Related Business Contemplated by the APA. |
46 |
|
D. |
Subsequent Conduct by the Parties Confirms that All
Parties Understood Neither the APA Nor Amendment No. 2 Transferred
the Copyrights. |
48 |
|
|
1. |
Santa Cruz's and SCO's Actions Indicate a Recognition that No
Transfer of Copyrights Occurred. |
48 |
|
|
2. |
Novell's Conduct Was Consistent with Its Understanding that It
Still Owned the Copyrights. |
52 |
V. |
CONCLUSION |
56 |
iv (4)
TABLE OF AUTHORITIES
Cases
Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435 (9th Cir.
1994)........................................46
Bank of the West v. Resolution Trust Corp., No. C 95-4708 FMS,
1997 U.S. Dist. LEXIS 1581 (N.D. Cal. Feb. 13, 1997)....................36
EPA Real Estate P'ship v. Kang, 12 Cal. App. 4th 171
(1992)..................................38
Gerdlund v. Electronic Dispensers Int'l, 190 Cal. App. 3d 263
(1987)............................................37, 38
GM Corp. v. Superior Court, 12 Cal. App. 4th 435 (1993)...............45
Kingsrow Enterprises, Inc. v. Metromedia, Inc., 397 F. Supp.
879 (S.D.N.Y. 1975).......................................53
Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355 (9th Cir.
1994)..................................43
La Resolana Architects, PA v. Clay Realtors Angel Fire, 416
F.3d 1195 (10th Cir. 2005)...................................53
Lyrick Studios, Inc. v. Big Idea Prods., Inc., 420 F.3d 388
(5th Cir. 2005).......................................44
Pamiloff v. Giant Records, Inc., 794 F. Supp. 933 (N.D. Cal.
1992)........................................44
Relational Design & Tech., Inc. v. Brock, No. 91-2452-EEO,
1993 WL 191323, at *6 (D. Kan. May 25, 1993)........................35
S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir.
1989)..........................................35
Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410
(7th Cir. 1992)........................................35
Shugrue v. Continental Airlines, 977 F. Supp. 280 (S.D.N.Y.
1997)...........................................35
Statutes
17 U.S.C. § 204(a).................................3, 43
17 U.S.C. § 401(b)(3)...............................52
17 U.S.C. § 406(a).....................................52
v (5)
Other Authorities
Berne Convention for the Protection of Literary and Artistic
Works, Article 15, § 1..................................52
Treatises
2-7 Nimmer on Copyright § 7.12[C][1]
..............................................52
vi (6)
I. STATEMENT OF ISSUES
SCO has moved for complete summary judgment on Novell's First
Counterclaim for slander of title on the basis that SCO purportedly
owns the copyrights at issue. In addition, SCO has moved for
partial summary judgment on its slander of title
(Claim I), breach of contract (Claim II), and unfair competition
(Claim V) claims on the issue of whether SCO owns the copyrights at
issue.1
SCO's motion mirrors Novell's motion for summary judgment on
SCO's slander of title (Claim I) and specific performance (Claim
III) claims. Novell has moved for summary judgment on those claims
on the ground that the plain language of the relevant contracts
demonstrates that Novell, not SCO, owns the copyrights at issue.
(Memorandum in Support of Novell's Motion for Summary Judgment on
SCO's First Claim for Slander of Title and Third Claim for Specific
Performance, filed April 20, 2007, PACER No. 286 ("Novell's
Ownership MSJ No. 1").)2
SCO's motion presents two principal issues:
1. Is SCO entitled to summary judgment that the 1995 Asset
Purchase Agreement between Novell and Santa Cruz ("APA")
transferred the UNIX and UnixWare copyrights to Santa Cruz despite
the APA's express exclusion of "all copyrights" from the assets to
be transferred?
1 (7)
2. Is SCO entitled to summary judgment that Amendment No. 2 to
the APA effectuated a transfer of the UNIX and UnixWare copyrights
to Santa Cruz?
Novell submits that both questions should be answered in the
negative, for the reasons stated in Novell's Ownership MSJ No. 1
and for the additional reasons stated in this memorandum. Novell
agrees that the question of copyright ownership is appropriate for
summary judgment, but such judgment should be entered in
Novell's favor, not SCO's.
II. INTRODUCTION
The APA expressly excludes "all copyrights" from the transfer of
assets. Throughout this litigation, SCO has vacillated between
arguing that the transfer of copyrights was effectuated by the APA
and contending that such transfer was effectuated instead by
Amendment No. 2. In this most recent motion, SCO appears to adopt
an amalgamated approach, suggesting that the "all copyrights"
exclusion "does not exist for purposes of construing the APA,"
because the APA was modified thirteen months later by Amendment No.
2. (SCO's Ownership MSJ 4/9/2007, PACER No. 259, at 2.) Yet the
original APA is indisputably relevant because the "Bill of Sale" on
which SCO relies as evidence of the alleged transfer was based on
the APA, and not on Amendment No. 2 (which was not even executed
until ten months later). In any event, it does not matter which
position SCO takes because neither the APA nor Amendment No. 2
transferred copyright ownership from Novell to Santa Cruz.
The APA, signed by Novell and Santa Cruz on September 19, 1995,
explicitly excluded "all copyrights" from the assets that Novell
transferred to Santa Cruz. SCO submits extrinsic evidence that
purportedly demonstrates that "all copyrights" did not mean "all
copyrights" but only "some copyrights." That evidence is
inadmissible under the parol evidence rule, as it seeks not to
explain the meaning of the term "all copyrights" but rather to
demonstrate a contradiction
2 (8)
between the plain language of the agreement and its supposed
intent. SCO's evidence should be ignored and this Court should
find, as a matter of law, that the APA did not transfer
copyrights.
Because the plain language of the APA is clear, consideration of
SCO's extrinsic evidence is both unnecessary and improper. However,
even if this evidence were considered, it would not change the
conclusion that the copyrights were not transferred. Novell has
submitted documents and testimony from the specific individuals
that drafted the "all copyrights" exclusion, who have all attested
that the exclusion was deliberately inserted to protect Novell's
ongoing interests in the UNIX business. SCO, in contrast, has
submitted no admissible evidence from a single person involved in
drafting the "all copyrights" exclusion, relying instead on
testimony from persons who were not involved in drafting that
exclusion and who did not participate in negotiations concerning
the transfer of copyrights. These individuals have no personal
knowledge of the intent of the "all copyrights" exclusion.
Amendment No. 2 did not transfer copyright ownership either. To
transfer copyright ownership, the Copyright Act requires a signed
"written instrument of conveyance" that makes evident precisely
what rights are being transferred. 17 U.S.C. § 204(a).
Amendment No. 2 does not meet that standard. It did not purport to
"transfer" any copyrights. Nor did it identify with any specificity
the copyrights, if any, to be transferred. Accordingly, the Court
need not consider extrinsic evidence concerning the intent of
Amendment No. 2, because Amendment No. 2 did not transfer the
copyrights as a matter of law, regardless of what may or may not
have been intended.
Even if this court were to consider extrinsic evidence of
intent, the undisputed evidence establishes that Amendment No. 2
was not intended to transfer the copyrights. Novell expressly
rejected Santa Cruz's proposed version of Amendment No. 2 that
would have transferred all
3 (9)
copyrights pertaining to UNIX and UnixWare to Santa Cruz.
Instead, Novell stated that it would agree only to a more limited
amendment that exempted from the "all copyrights" exclusion those
copyrights "required for" Santa Cruz to run the UNIX-related
business contemplated by the APA. Novell understood that amendment
as affirming Santa Cruz's license under the APA to use the UNIX and
UnixWare copyrighted works. SCO has submitted no admissible
evidence to the contrary. SCO relies on various witnesses who opine
on the supposed meaning of Amendment No. 2, but none of
those witnesses was involved in negotiating or drafting that
amendment. Moreover, SCO has not submitted any evidence that
outright ownership of any copyrights was "required" for Santa Cruz
to run the UNIX-related business contemplated by the APA, when
Santa Cruz already had a license under the APA to use the
copyrighted works as needed to run that business.
SCO has asserted that the parties' conduct after the APA was
signed shows that the copyrights were transferred to Santa Cruz.
Once again, this extrinsic evidence is inadmissible. But if the
Court were to examine additional evidence, it would simply confirm
that Santa Cruz and SCO understood that no transfer of copyrights
occurred. In distributing software in the late 1990s, Santa Cruz
repeatedly used copyright notices indicating Novell's continued
ownership of UNIX and UnixWare code. Moreover, in 2001, in an
agreement assigning various UNIX intellectual property rights to
SCO, Santa Cruz expressly acknowledged a problem with the "chain of
title from Novell" and discussed obtaining a "global IP assignment"
from Novell. Obviously, no such assignment would be necessary if
the APA and Amendment No. 2 had transferred the copyrights to Santa
Cruz. Then, in late 2002 and early 2003, SCO repeatedly contacted
Novell to request to amend the APA to transfer SCO the copyrights,
recognizing that
4 (10)
no such transfer had occurred under the APA and Amendment No. 2.
SCO's actions speak louder than its words: SCO was well aware that
no transfer of copyrights had occurred.
Because neither the APA nor Amendment No. 2 transferred the
copyrights to Santa Cruz, Novell, not SCO, owns the copyrights at
issue. Accordingly, summary judgment should enter in favor of
Novell. Moreover, SCO's motion should be denied, as Novell (at the
very least) has shown a disputed issue of material fact as to SCO's
purported ownership of the copyrights.
III. STATEMENT OF FACTS
Novell incorporates by reference its statement of undisputed
facts in support of its motion for summary judgment ("Novell's
Ownership MSJ No. 1 Facts"), as well as the evidence submitted in
support of that motion.3 Key points established in Novell's
statement of undisputed facts include:
-
The APA expressly excluded "all copyrights" from the assets to
be transferred (Novell's Ownership MSJ No. 1 Facts, ¶¶ 1-4);
-
The Bill of Sale conveyed the assets described in the APA, as
amended by Amendment No. 1 (Id., ¶¶ 25-27); and
-
Amendment No. 2 did not "transfer" any assets on its own and did
not retroactively amend the Bill of Sale to convey assets described
in Amendment No. 2 (Id., ¶¶ 28-30).
5 (11)
In response to the arguments and evidence in SCO's motion,
Novell also notes the following additional facts.4 Because the plain language
of the APA and Amendment No. 2 did not effectuate a transfer of
copyrights, the Court need not consider the evidence related to
these additional facts to decide SCO's motion for summary judgment
or Novell's related motion. However, even if this evidence were
considered, it simply reinforces the conclusion that that no
transfer of copyrights occurred.
A. Santa Cruz's Conduct Following the Execution of the APA and
Amendment No. 2 Demonstrates Its Understanding that No Copyrights
Were Transferred.
1. In 2001, Santa Cruz and SCO Acknowledged a Problem with the
"Chain of Title from Novell."
1. In an agreement dated May 7, 2001 ("Assignment Agreement"),
Santa Cruz assigned various items of intellectual property to SCO,
which was then named Caldera. (Supplemental Declaration of Ken
Brakebill in Opposition to SCO's Motion for Summary Judgment, filed
herewith ("Supp. Brakebill Decl."), Ex. 1.) That Assignment
Agreement purported to transfer various UNIX and UnixWare
copyrights. (Supp. Brakebill Decl., Ex. 1, at Schedule C, WSGR
4450.)
2. In the Assignment Agreement, Santa Cruz made various
representations and warranties concerning the intellectual property
rights being purportedly being transferred, but inserted a notable
caveat regarding its "chain of title" from Novell:
Assignor has no knowledge of any fact that would
prevent Assignee's registration of any Rights related or
appurtenant to the Inventions and Works or recording the transfer
or Rights hereunder
6 (12)
(except that Assignor may not be able to establish a
chain of title from Novell Inc. but shall diligently endeavor
to do so as soon as possible).
(Id. at ¶ 8(v), WSGR 4431 (emphasis added).)
3. Santa Cruz deliberately inserted the "chain of title" caveat
as a result of its negotiations with Caldera. In the Assignment
Agreement, Caldera was represented by Brobeck Phleger &
Harrison, and Santa Cruz was represented by Wilson Sonsini Goodrich
& Rosati. (Supp. Brakebill Decl., Ex. 2, Danaher Dep.
13:16-14:3; Supp. Brakebill Decl., Ex. 3.)5 On April 26, 2001, Caldera's
attorneys e-mailed a draft of the Assignment Agreement to Santa
Cruz's attorneys. That initial draft provided an unlimited
representation and warranty from Santa Cruz: "Assignor has no
knowledge of any fact that would prevent Assignee's registration of
any Rights related or appurtenant to the Inventions and Works."
(Supp. Brakebill Decl., Ex. 5, at ¶ 8(v).) In the cover e-mail
transmitting the draft, Caldera's attorney proposed that Santa
Cruz's assignment of intellectual property obtained from Novell
would require the inclusion in the Assignment Agreement of "a
single exhibit taken from the Novell/SCO Asset Purchase Agreement."
(Id. at 1.)
4. Four days later, on April 30, 2001, an in-house attorney at
Santa Cruz responded with a redlined draft of the Assignment
Agreement incorporating revisions and comments from Santa Cruz and
its outside counsel, Wilson Sonsini. Among other things, the
redlined draft
7 (13)
added an exception to Santa Cruz's representation and warranty,
inserting the underlined text into Paragraph 8(v): "Except for
the inability to obtain third party acknowledgements to establish a
chain of title, Assignor has no knowledge of any fact that
would prevent Assignee's registration of any Rights related or
appurtenant to the Inventions and Works." (Supp. Brakebill Decl.,
Ex. 6, at ¶ 8(v).)
5. On May 3, 2001, four days before the execution of the
Assignment Agreement, Caldera's outside counsel at Brobeck
circulated a "final" draft of the agreement, stating in her cover
e-mail:
SCO will sign the approximately 55 individual trademark
assignments for recordation purposes next week, along with
trying to get Novell to sign a global IP assignment, for chain
of title purposes. I understand that time is very short now,
but this must happen as soon as possible after closing so we do not
lose track of this.
(Supp. Brakebill Decl., Ex. 7, at 1 (emphasis added).)
6. In the redlined draft attached to the May 3, 2001 e-mail,
Caldera's attorneys deleted Santa Cruz's insertion of the
qualifying phrase "[e]xcept for the inability to obtain third party
acknowledgements to establish a chain of title." Instead, the draft
inserted a new qualifying phrase at the end of Paragraph 8(v) to
limit chain of title questions to those involving Novell. The
redlined version thus read:
Except for the potential inability to obtain
third party acknowledgements to establish a chain of
title, Assignor has no knowledge of any fact that would
prevent Assignee's registration of any Rights related or
appurtenant to the Inventions and Works or recording the transfer
or Rights hereunder, (except that Assignor may not be able to
establish a chain of title from Novell Inc. but shall diligently
endeavor to do so as soon as possible).
(Id. at ¶ 8(v) (emphasis added).) That became the final
language in the executed Assignment Agreement. (Supp. Brakebill
Decl., Ex. 1, at ¶ 8(v), WSGR 4431.)
8 (14)
2. In Early 2003, SCO Repeatedly Requested that Novell Transfer
the UNIX Copyrights to SCO.
7. Beginning in late 2002, Darl McBride, SCO's CEO, contacted
Novell repeatedly to seek copies of records concerning SCO's
intellectual property rights to UNIX. McBride stated that he wanted
this information to support possible efforts by SCO to assert
claims against end users of Linux. (Declaration of Greg Jones,
Supp. Brakebill Decl., Ex. 8, at ¶ 13; Supp. Brakebill Decl.,
Ex. 9, at 1; Supp. Brakebill Decl., Ex. 10.)
8. On January 4, 2003, McBride received an e-mail from Michael
Anderer, a consultant for SCO retained to examine its intellectual
property. Anderer stated that * * REDACTED * *
Anderer noted that * * REDACTED * * Anderer
* * REDACTED * * (Supp. Brakebill Decl., Ex.
11, Anderer Dep. 9:2-17, 88:17-90:24; Supp. Brakebill Decl., Ex. 12
at SCO 1272179.)
9. On February 25, 2003, McBride called a Novell employee in
business development, David Wright, and said, "SCO needs the
copyrights." Wright passed McBride's request to Novell's in-house
legal department. McBride's request was memorialized in an e-mail
written that day by a Novell in-house attorney, Greg Jones. (Supp.
Brakebill Decl., Ex. 13, at 1.) McBride does not dispute that he
made that statement in his phone call to Wright. (Supp. Brakebill
Decl., Ex. 14, McBride Dep. 99:10-100:1.)
10. In early 2003, McBride and Chris Sontag of SCO contacted
Greg Jones at Novell several times to request transfer of the UNIX
copyrights. (Supp. Brakebill Decl., Ex. 8, at ¶ 13; Supp.
Brakebill Decl., Ex. 15, Jones Dep. 181:2-182:22.) McBride stated
that "the asset purchase agreement excluded copyrights from being
transferred" and that this was a "clerical
9 (15)
error." (Id. at 181:2-182:22.) Sontag then requested that Jones
sign a letter purportedly attempting to "clarify" that the APA did
not transfer copyrights. (Supp. Brakebill Decl., Ex. 16 at Ex.
2.)
11. On February 4, 2003, McBride contacted Christopher Stone,
vice chairman of Novell, and stated that he wanted Novell to
"amend" the APA to give SCO "the copyrights to UNIX." (Supp.
Brakebill Decl., Ex. 17 at NOV 39458; Supp. Brakebill Decl., Ex.
18, Stone Dep. 108:22-109:10.).
12. Again, in March 2003, McBride called Stone to ask him if
Novell would "amend" or "change" the APA so SCO "could have the
copyrights." (Supp. Brakebill Decl., Ex. 18, Stone Dep.
248:10-249:16.)
13. Ralph Yarro, chairman of SCO, requested an in-person meeting
with Stone. In that meeting, on May 14, 2003, Yarro told Stone that
he "would like for Novell to make changes to the agreement to give
them [i.e., SCO] the copyrights." Stone refused. (Id. at
135:23-136:5, 137:20-24, 140:3-19.) In June 2003, Stone made notes
memorializing that conversation. (Id. at 174:5-9; Supp. Brakebill
Decl., Ex. 17 at NOV 39460-61.)
14. On May 19, 2003, McBride called Stone and Joe LaSala,
Novell's general counsel, and again requested that Novell convey
the copyrights to SCO. Specifically, McBride said, "We only need
you to amend the contract so that we can have the copyrights."
(Supp. Brakebill Decl., Ex. 19, LaSala Dep. 172:14-173:4,
176:12-177:12, 227:6-14; Supp. Brakebill Decl., Ex. 18, Stone Dep.
249:17-250:12.) Stone made notes in June 2003 memorializing that
conversation. (Id. at 174:5-9; Supp. Brakebill Decl., Ex. 17, at
NOV 39460.)
10 (16)
3. After the Execution of the APA, Santa Cruz and SCO
Distributed Copies of UNIX Code Bearing Joint SCO-Novell Copyright
Notices.
15. SCO contends that Novell failed to object to Santa Cruz's
distribution of UnixWare software containing copyright notices in
Santa Cruz's name. In fact, the copyright notices distributed by
Santa Cruz indicated Novell's continued ownership of the original
UNIX and UnixWare code and SCO's ownership only of modifications to
that code. SCO submitted in support of its summary judgment motion
copies of the labels on two UnixWare CDs released by Santa Cruz.
(Declaration of Edward Normand, filed 4/9/07, PACER No. 260
("Normand Decl."), Exs. 27-28.)6
16. The CDs were labeled "SCO UnixWare Release 2.1," "SCO
UnixWare Release 2.1.3 Installation CD," and "SCO UnixWare Release
2.1.3 Supplemental CD." (Declaration of James McKenna in Support of
Novell's Opposition, filed herewith ("McKenna Decl.") ¶ 4.) On
the CDs labeled "SCO UnixWare Release 2.1" and "SCO UnixWare
Release 2.1.3 Installation CD," the main installation directories
contained, with slight variations, the following copyright
notices:
(c) Copyright 1996 The Santa Cruz Operation, Inc. All
rights reserved.
Copyright 1984-1995 Novell, Inc. All Rights Reserved.
(McKenna Decl., ¶ 5.)
17. On the CDs labeled "SCO UnixWare Release 2.1" and "SCO
UnixWare Release 2.1.3 Installation CD," the documentation
directories contained the following copyright notices:
11 (17)
Copyright (c) 1994-1995 Novell, Inc. All rights
reserved.
(c) Copyright 1996 The Santa Cruz Operation, Inc. All rights
reserved.
(McKenna Decl., ¶ 6.)
18. On the CD labeled "SCO UnixWare Release 2.1.3 Supplemental
CD," the following text appeared:
COPYRIGHT=Copyright 1996-1998 The Santa Cruz Operation,
Inc. All Rights Reserved.
COPYRIGHT=Copyright 1984-1995 Novell, Inc. All Rights
Reserved.
(McKenna Decl., ¶ 8.)
B. Novell's Conduct After Signing the APA Is Consistent with Its
Understanding that the APA Did Not Transfer the UNIX
Copyrights.
1. Novell Took No Action to Send Santa Cruz the Physical
Copyright Registrations.
19. In SCO's Statement of Facts, SCO states that Santa Cruz
"obtained physical possession of the UNIX copyright registrations
from Novell," implying that Novell affirmatively took action to
send the registrations to SCO. (SCO Statement of Facts, ¶ 22.)
In fact, Novell did no such thing. Burt Levine was an in-house
attorney who worked in the UNIX unit in New Jersey. Levine stayed
in that unit in New Jersey as the business was sold from AT&T
to UNIX System Laboratories to Novell to Santa Cruz. (Normand
Decl., Ex. 33, ¶¶ 2-6.) Levine testified that the UNIX
unit and its business files, including the copyright registrations,
remained in New Jersey throughout the changes in ownership of the
business. (Supp. Brakebill Decl., Ex. 22, Levine Dep. 19:10-20:23.)
As a result of the APA, the UNIX facility in New Jersey became part
of Santa Cruz. The UNIX business files in New Jersey, including
copyright registrations, continued to be kept in the same place.
Accordingly, Santa Cruz obtained physical possession of
12 (18)
those registrations. (Id. 24:16-25:8.) Chris Sontag, testifying
as SCO's representative under Fed. R. Civ. P. 30(b)(6), confirmed
Levine's account. (Supp. Brakebill Decl., Ex. 23, Sontag 30(b)(6)
Dep. 5:10-13, 137:13-139:14.) Greg Jones, a Novell 30(b)(6)
deponent questioned by SCO on the issue, also confirmed that Novell
had no record of ever having moved the UNIX copyright registrations
out of New Jersey or having taken action to send them to Santa Cruz
after the execution of the APA. (Supp. Brakebill Decl., Ex. 24,
Jones 30(b)(6) Dep. 177:13-179:5.)
2. Novell Had No Knowledge that SCO Licenses Contained Any
Incorrect Representations and Warranties that SCO Owned UNIX
Copyrights.
20. SCO's Statement of Facts refers to three licenses executed
after the APA between SCO and third-party vendors. SCO contends
that those licenses represent and warrant that SCO owns the UNIX
copyrights and that Novell failed to object to SCO's entering into
such licenses. (SCO Statement of Facts, ¶ 24.)
21. SCO has presented no evidence that Novell knew of those
supposed agreements and thus had an opportunity to object. SCO's
Director of Software Licensing, Bill Broderick, has attested that
"[t]he terms and conditions of each UNIX licensee's use of the
licensed UNIX software product were confidential." (Normand Decl.,
Ex. 33, at ¶ 23.)
22. SCO has submitted no evidence that any of the three license
agreements were shown to Novell for approval, as required by the
APA for certain UNIX and UnixWare licenses. The first license
agreement, with Integration Design, does not appear to involve UNIX
or UnixWare, so it would not need to be submitted to Novell for
approval. (Normand Decl., Ex. 30, at SCO 1041490). SCO has itself
asserted that the remaining two licenses, with Lucent Technologies
and Samsung Electronics, did not need to be shown to Novell for
approval. (Supp.
13 (19)
Brakebill Decl., Ex. 25, SCO's Responses and Objections to
Novell's Second and Third Sets of Interrogatories, Response No. 7
and Ex. A, pages 3-4.)7
23. In any event, none of the three licenses contains any
representation or warranty of SCO's copyright ownership. The first
license concerns products having nothing to do with UNIX or
UnixWare, such as Netscape Navigator. (Normand Decl., Ex. 30 at SCO
1041490). The second license states only that "[a]s between SCO and
LICENSEE," ownership of the licensed product "shall remain" with
SCO. (Normand Decl., Ex. 31 § 2.4.) The third license states
only that SCO is not aware of any copyrights that are infringed
through the use or copying of the licensed product and that SCO
indemnifies the licensee against copyright infringement claims.
(Normand Decl., Ex. 32 § 7.02.)
3. The Technology License Agreement Is Consistent With the Fact
that the APA Did Not Transfer the Copyrights.
24. SCO's Statement of Facts notes that, upon closing of the
deal, Santa Cruz and Novell entered into a Technology License
Agreement ("TLA") whereunder Novell retained a license to any UNIX
and UnixWare technology transferred under the APA. (SCO's Statement
of Facts ¶ 6.) SCO argues that Novell would not have needed
such a license if Novell did not transfer copyrights to Santa Cruz
under the APA.
14 (20)
25. In fact, Novell requested that license because, although
Novell would retain its copyright in the original UNIX and UnixWare
code, Novell would not have a right to use other intellectual
property (such as any software know how) transferred in the APA and
would not have a copyright to future enhancements that it
anticipated Santa Cruz would be making to the SVRX and UnixWare
code. (Declaration of Tor Braham in Support of Novell's Ownership
MSJ No. 1, PACER No. 281 ("Braham Decl.") ¶¶ 21-23, Ex.
11 at NOV 39972-39973.)
26. The TLA provided that Novell "retains" a license to the
"Licensed Technology," which was defined in the APA as:
(i) all of the technology included in the Assets and
(ii) all derivatives of such technology included in the Assets,
including the "Eiger" product release . . . .
(Normand Decl., Ex. 1, Section II.A.)
27. The "Licensed Technology" in the TLA was intended to cover
Santa Cruz improvements to the code, i.e., the derivative works
that Santa Cruz was to develop. (Braham Decl., ¶ 23.)
28. The "Licensed Technology" in the TLA was also intended to
cover other technical information and intellectual property in UNIX
and UnixWare, including any protectible trade secrets, software
know-how, methods, and concepts and documentation. Unlike
copyrights, those items were not excluded from the assets
transferred to Santa Cruz, so Novell needed a license to use them.
(Braham Decl., ¶ 23.)
29. Duff Thompson, who was a Novell executive at the time and is
now chair of SCO's litigation committee, confirmed that the
"technology" licensed in TLA is "a broader category than
copyrights" and "could include everything from patents, processes,
customer lists that are proprietary." (Supp. Brakebill Decl., Ex.
27, Thompson Dep. 147:9-148:25.)
15 (21)
C. SCO's "Testimonial Evidence" Does Not Demonstrate an Intent
to Transfer Copyrights.
1. None of SCO's Witnesses Was Involved in the Negotiation or
Drafting the Intellectual Property Provisions of the APA.
30. The general thrust of the Novell-Santa Cruz transaction
changed radically over the course of negotiations. At the outset,
Novell had hoped for an all cash deal to sell the UNIX assets
outright. (Declaration of David Bradford in Support of Novell's
Ownership MSJ No. 1, PACER No. 279 ("Bradford Decl.") ¶ 7.) As
explained in more detail in Novell's Ownership MSJ No. 1, the
transaction became significantly more complex when it became
evident that Santa Cruz lacked the resources for such a purchase.
(See Novell's Ownership MSJ No. 1 Facts ¶¶ 5-10.) In the
end, Novell negotiated for specific contractual provisions to allow
it to retain various rights and interests in UNIX. (Bradford Decl.,
¶ 7; Braham Decl., ¶¶ 7-11.)
31. The contractual terms of the APA were negotiated over a
period of approximately two weeks in September 1995. That
negotiation was "almost exclusively" between the parties' lawyers,
including both in-house and outside counsel. (Supp. Brakebill
Decl., Ex. 28, Alter Dep. 8:14-22; Braham Decl., ¶ 24.)
¶
32. SCO's motion does not rely on any testimony from any
individuals involved in drafting the intellectual property
provisions of the APA. For Novell, those individuals were Tor
Braham, Aaron Alter, and Shannon Whisenant of Wilson Sonsini
Goodrich & Rosati. (Braham Decl., ¶ 5; Supp. Brakebill
Decl., Ex. 28, Alter Dep. 8:2-9:15) For Santa Cruz, Jeff Higgins of
Brobeck Phleger & Harrison was the recipient of drafts of
Schedules 1.1(a) and 1.1(b), listing intellectual property to be
included and excluded from the transfer of assets, which were sent
to Santa Cruz by Novell. (Supp. Brakebill Decl., Exs. 29.) Braham,
Alter, Whisenant, and Higgins were all on the "Project Sleigh Ride
Working Party List," which listed persons to whom drafts of
16 (22)
the APA were circulated. (Supp. Brakebill Decl., Ex. 30; Supp.
Brakebill Decl., Ex. 31, Chatlos Dep. 101:10-12.)
a. Robert Frankenberg
33. SCO relies on the testimony of Robert Frankenberg, Novell's
former CEO. In fact, Frankenberg testified that he did not draft
provisions of the APA, but instead entrusted others with drafting a
document that protected Novell's ongoing interest in UNIX:
Q. And as a result, you tasked your negotiating
team with making sure that the detailed draft of the Asset
Purchase Agreement winded its way between the goal of selling the
UNIX business to SCO but retaining the rights necessary for
Novell to protect its interest in the ongoing UNIX revenue
stream and the capitalization of that revenue stream?
A. Yes.
(Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 64:14-21 (emphasis
added).)
34. Frankenberg testified that he "directed the negotiating team
to make sure that [Novell's] rights to enter into buyouts after the
acquisition closed were preserved." (Id. at 63:119.) Frankenberg
recalled "discussing" with the negotiation team the fact that
"retaining the UNIX copyrights would facilitate Novell's exercise
of rights with respect to capitalizing the SVRX revenue stream."
(Id. at 65:21-66:7.)
35. Frankenberg signed the APA "on basis of the recommendation
of his team" and "did not review every item." (Id. at
68:12-17.)
36. Tor Braham, the principal person responsible for drafting
the APA and negotiating its contractual language on behalf of
Novell, confirms that Frankenberg "was not involved in the
negotiation or drafting of the contract language of the APA."
(Braham Decl., ¶ 24(f).)
17 (23)
b. Ty Mattingly
37. SCO relies on the testimony of Ty Mattingly, Novell's former
Vice President for Strategic Relations. In fact, Mattingly
testified that his role "related only to the high level business
strategy" and that he was "not involved in the details of the legal
document." (Supp. Brakebill Decl., Ex. 33, Mattingly Dep.
66:11-19.)
38. Mattingly was involved only "very superficially" in the
"last two or three weeks before the contract was executed," which
was "when the back and forth concerning the legal provisions was
taking place." (Id. at 68:22-69:22.) He was "not involved in
crafting or wordsmithing the contractual provisions." (Id.
86:3-6.)
39. Tor Braham, the principal person responsible for drafting
the APA and negotiating its contractual language on behalf of
Novell, confirms that Mattingly "was not involved in negotiating or
drafting the APA contract language." (Braham Decl., ¶
24(b).)
c. Duff Thompson
40. SCO relies on the testimony of Duff Thompson, a former
Novell executive who now chairs SCO's litigation committee. In
fact, Thompson was not involved in the drafting of the relevant APA
provisions either.
Q. By the time of the asset purchase agreement you are
no longer in a legal function?
A. No. That's correct.
Q. And so this -- and so in the -- when you were involved in the
asset purchase agreement negotiations, who were you relying on for
the detailed drafting of the agreement?
A. Our counsel, Wilson Sonsini.
Q. Tor Braham in particular?
18 (24)
A. Tor and his team . . . . [H]e had people within his
firm who were specialists in these items that were probably doing
the bulk of the actual drafting.
(Supp. Brakebill Decl., Ex. 27, Thompson Dep. 30:22-31:12)
41. Tor Braham confirms that Thompson "was not involved in
negotiating or drafting the APA contract language." (Braham Decl.,
¶ 24(a).)
42. Thompson did not recall "any specific discussions around
copyrights" or any "discussion with SCO about the excluded asset
schedule" during negotiation of the deal. (Supp. Brakebill Decl.,
Ex. 27, Thompson Dep. 86:1-20.)
43. Ty Mattingly testified that Thompson was "not really
involved in the details of the Novell, Santa Cruz transaction."
(Supp. Brakebill Decl., Ex. 33, Mattingly Dep. 70:17-71:1.)
Thompson was "checked out" during the drafting of the agreement and
was "not in the office that often." (Id. 71:2-72:19.)
d. Ed Chatlos
44. SCO relies on the testimony of Ed Chatlos, a former Novell
employee. But Chatlos did not draft the intellectual property
provisions at issue. Chatlos admitted that
* * REDACTED * *
(Supp. Brakebill Decl., Ex. 34, Chatlos IBM Dep. 82:11-83:5.)
45. Chatlos testified that he was not involved in any
negotiations concerning either including or excluding copyrights
from the transaction. (Supp. Brakebill Decl., Ex. 31, Chatlos Dep.
124:5-14.)
46. Tor Braham confirms that Chatlos "did not draft the APA" and
that Chatlos was not "the Novell business person directing the
drafting of the contract." Braham "reported to and
19 (25)
received instructions from David Bradford [Novell's general
counsel], not from Mr. Chatlos." (Braham Decl., ¶ 24(c).)
e. Burt Levine
47. SCO relies on the testimony of Burt Levine, a former Novell
in-house attorney. Levine testified that he "may have" worked on
some "early drafts" the APA but does not remember which specific
provisions, if any. (Supp. Brakebill Decl., Ex. 35, Levine IBM Dep.
179:3-8, 180:2-12.) He testified that he has no "understanding as
to specifically what intellectual property, if any, was or wasn't
transferred" under the APA. (Id. 180:21-181:13.)
48. Levine testified that during APA negotiations, he had
reviewed and marked up drafts of Schedules 1.1(a) and (b) of the
APA, which listed Included and Excluded Assets. He revised the list
of included assets, but did not add copyrights. He left the
exclusion of "all copyrights" intact while making other revisions
to intellectual property provision of the Excluded Assets schedule.
He then faxed his markup to Wilson Sonsini. (Supp. Brakebill Decl.,
Ex. 22, Levine Dep. 71:19-77:18; Supp. Brakebill Decl., Ex.
36.)
49. Wilson Sonsini then passed on Levine's comments to Santa
Cruz's outside counsel, Brobeck. (Supp. Brakebill Decl., Ex. 29;
Supp. Brakebill Decl., Ex. 22, Levine Dep. 80:19-81:12.)
50. However, Levine recalled nothing further about his review
and markup of Schedules 1.1(a) and (b). (Id. at 71:13-18;
72:14-18.)
51. Tor Braham received Levine's comments on Schedules 1.1(a)
and (b), but does not recall Levine ever participating in APA
negotiations with Santa Cruz. (Braham Decl., ¶ 24(g).).
20 (26)
f. Bill Broderick
52. SCO relies on the testimony of Bill Broderick, SCO's
Director of Software Licensing. (Normand Decl., Ex. 15 ¶ 2.)
Broderick "did not" have "any involvement at all in negotiating the
APA." (Supp. Brakebill Decl., Ex. 37, Broderick Dep. 158:5-7.)
53. Broderick, who participated in the APA transition team,
testified that he did not recall any specific discussion about the
transfer of copyrights during APA transition meetings. (Id.
49:15-51:16.)
54. Tor Braham has never heard of Broderick and confirms that
Broderick "was not involved in the APA negotiations or drafting."
(Braham Decl., ¶ 24(d).).
g. Alok Mohan
55. SCO relies on the testimony of Alok Mohan, Santa Cruz's
former CEO. Mohan testified that he was involved in the
negotiations "only at a high level." (Supp. Brakebill Decl., Ex.
38, Mohan Dep. 10:17-20.) Mohan "was not involved" in "specific
drafting of the documents." (Id. 16:9-17:6)
56. Mohan testified that "the issue of copyrights in or out was
not discussed with me." He testified, "[Novell] did not tell me
that they'd kept it. They did not tell me they'd given it to us."
(Id. 261:7-262:2.)
57. Tor Braham, the principal person responsible for drafting
the APA and negotiating its contractual language on behalf of
Novell, has never met Alok Mohan. (Braham Decl., ¶
24(e).).
21 (26)
h. Doug Michels
58. SCO relies on the testimony of Doug Michels, Santa Cruz's
founder. Michels was involved in only two or three meetings with
Novell after the initial discussion about the deal. (Supp.
Brakebill Decl., Ex. 39, Michels Dep. 11:18-12:1.) Michels did not
"draft any language of the Asset Purchase Agreement" or "review
drafts" of it and does not recall "even vaguely" any debates in
which he participated regarding the drafting of the APA. (Id. at
12:14-13:7.)
59. Michels testified that he did not recall any discussion by
anyone at either Novell or SCO regarding whether UNIX copyrights
were being transferred as part of the APA. (Id. 50:20-52:5.)
60.
Tor Braham, the principal person responsible for drafting the APA
and negotiating its contractual language on behalf of Novell, was
not aware of "any involvement" by Michels in the negotiation and
drafting of APA contract language. (Braham Decl., ¶
24(h).).
i. Jim Wilt
61. SCO relies on the testimony of Jim Wilt, a business
development executive at Santa Cruz during the negotiation of the
APA. (Supp. Brakebill Decl., Ex. 40, Wilt Dep. 10:1711: 2.) Wilt
does not recall drafting "any of the language of the Asset Purchase
Agreement" and believes that "the lawyers" did the drafting. (Id.
20:19-21:7.)
62. Ed Chatlos, on whose testimony SCO relies, testified that
* * REDACTED * * (Supp. Brakebill Decl., Ex.
34, Chatlos IBM Dep. 184:12-185:7.) Wilt concurs that he was "less
active at the end of the negotiations," when the APA was being
drafted. (Supp. Brakebill Decl., Ex. 40, Wilt Dep. 20:12-15.)
22 (28)
63. Wilt testified that he did not recall anyone from Novell
stating that copyrights were being transferred. (Id.
57:10-59:17.)
64. Tor Braham, the principal person responsible for drafting
the APA and negotiating its contractual language on behalf of
Novell, was not aware of "any involvement" by Wilt in the
negotiation and drafting of APA contract language. (Braham Decl.,
¶ 24(i).).
j. Kim Madsen
65. SCO relies on the testimony of Kim Madsen, a Santa Cruz
paralegal. (Supp. Brakebill Decl., Ex. 41, Madsen Dep. 6:24-7:2.)
Madsen had no recollection of negotiating the relevant intellectual
property provisions of the APA, though:
Q. Was it your testimony earlier that you did not
recall being involved in negotiating any specific provisions of the
asset purchase agreement?
A. I don't recall negotiating specific provisions.
Q. As you sit here today do you recall negotiating any provisions
relating to the UNIX copyrights in the asset purchase
agreement.
A. No.
(Id. 58:7-15.) She did not recall providing feedback on "specific
provisions" either. (Id. 39:1642: 19.)
66. Madsen testified, "I don't recall any conversations with
Novell pertaining to copyrights." (Id. 79:16-22.) She does not
recall Santa Cruz ever asking for the copyrights. (Id. 79:24-80:5.)
Rather, she testified that she and the Santa Cruz team were simply
"assuming" the copyrights were transferring. (Id. 81:10-15.)
23 (29)
67. Tor Braham, the principal person responsible for drafting
the APA and negotiating its contractual language on behalf of
Novell, does not recall any specific interactions with Madsen
regarding the APA contractual provisions at issue. (Braham Decl.,
¶ 24(j).).
k. "Joint" press release
68. SCO also relies on a supposedly "joint" press release
stating that under the APA, "SCO will acquire Novell's UnixWare
business and UNIX intellectual property." (SCO's Statement of Facts
¶ 9.) Novell's joint press releases with other companies
typically contain both companies' logos and information. (Supp.
Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 20:24-21:10.) The
press release on which SCO relies does not contain Novell's logo,
contact information, or company description, but contains
information only for SCO. (Tolonen Decl., Ex. 8.) Greg Jones, a
Novell 30(b)(6) deponent questioned by SCO about the press release,
stated that he had no knowledge that such press release was ever
approved by Novell. (Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6)
Dep. 18:21-20:16.)
69. SCO has no evidence that this press release was in fact
"joint." SCO relies on testimony from Alok Mohan, Santa Cruz's
then-CEO, to argue that the press release upon which SCO relies was
"joint." But Mohan testified that he had no knowledge of whether
the press release was sent to Novell for approval. (Supp. Brakebill
Decl., Ex. 39, Mohan Dep. 249:3251: 11.) SCO also relies on Robert
Frankenberg, Novell's then-CEO, who accepted SCO's counsel's
description at deposition of the press release as "jointly
approved." But Frankenberg never testified to any personal
knowledge of the press release being approved by Novell. (Supp.
Brakebill Decl., Ex. 32, Frankenberg Dep. 22:20-23:5.)
70. In fact, Novell did issue press releases about the APA.
(Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 22:10-12.) Both
press releases, which were issued in September
24 (30)
1995 and December 1995, are publicly available on Novell's
website and have been produced to SCO in this litigation. Neither
makes any mention of any transfer of copyrights or other
intellectual property. (Supp. Brakebill Decl., ¶¶ 46-47
and Exs. 43, 44.)
71. In any event, the press release relied upon by SCO provides
little information in its reference to unspecified "intellectual
property." The APA undisputedly did not transfer patents to Santa
Cruz. Duff Thompson, a current member of SCO's Board and head of
its litigation committee, admitted in the declaration submitted by
SCO that patents were expressly excluded from the assets
transferred to Santa Cruz. (Normand Decl., Ex. 10 ¶ 9).
Similarly, Burt Levine, a former paid SCO litigation consultant who
was represented by SCO's counsel at his deposition, testified that
Novell's UNIX patents were not transferred to Santa Cruz.
(Declaration of Ken Brakebill in Support of Novell's Ownership MSJ
No. 1, PACER No. 284 ("Brakebill Decl."), Ex. 25, Levine Dep. at
146:22 to 149:9, 185:9-23.)
72. Moreover, non-attorney employees at Novell in 1995
frequently referred to "intellectual property" in loose terms.
* * REDACTED * *
(Supp. Brakebill Decl., Ex. 45, Bouffard Dep. 11:612: 22,
39:12-40:18, 125:18-127:6, 169:1-14.)
2. Those Directly Involved in the Drafting of the APA's
Intellectual Property Provisions Confirm that Novell Deliberately
Excluded Copyrights From the Transfer of Assets.
73. Tor Braham was the principal drafter of the APA. (Braham
Decl., ¶ 5.) Braham and others on Novell's legal team have
explained that Novell deliberately excluded copyrights from the
transfer of assets to protect Novell's ongoing interests in the
UNIX business. Among other things, Novell excluded copyrights from
the transfer to protect its ability to "buy out"
25 (31)
SVRX licenses. Such "buyouts" occur when the licensee makes a
substantial payment to obtain a "paid up" license on which no
future royalty payments are due. (Novell's Ownership MSJ No. 1
Facts ¶¶ 5-14.)
74. Robert Frankenberg, Novell's then-CEO, testified that he
"directed the negotiating team to make sure that [Novell's] rights
to enter into buyouts after the acquisition closed were preserved."
(Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 63:1-19.)
Frankenberg recalled "discussing" with the negotiation team the
fact that "retaining the UNIX copyrights would facilitate Novell's
exercise of rights with respect to capitalizing the SVRX revenue
stream." (Id. at 65:21-66:7.) Frankenberg testified that it was
"possible" that the negotiation team excluded copyrights from the
transfer of assets to "effectuate" his "direction to try to make
sure that [Novell] could protect [its] right to do buyouts." (Id.
at 85:8-15.)
75. That is precisely what happened, according to Novell's
then-general counsel David Bradford. Bradford instructed Tor Braham
to retain Novell's intellectual property in UNIX and UnixWare to
protect Novell's SVRX revenue stream. (Bradford Decl., ¶¶
6-9; Braham Decl., ¶ 14.) Among other things, Schedule 1.1(b)
was revised to exclude "all copyrights" from the transfer of
assets. (Braham Decl., ¶ 15.) That exclusion was reviewed and
left intact by Novell representatives, including Tor Braham, David
Bradford, Aaron Alter, and Burt Levine. (Id. ¶ 16; Supp.
Brakebill Decl., Ex. 28, Alter Dep. 138:16-140:17.); Supp.
Brakebill Decl., Ex. 29.). At least one draft of that exclusion was
sent to Santa Cruz representatives before the execution of the APA.
(Braham Decl. at ¶ 17; Supp. Brakebill Decl., Ex. 28, Alter
Dep. 141:20-142:14; Supp. Brakebill Decl., Ex. 29.)
26 (32)
76. The day before the APA was signed, it was presented to
Novell's Board of Directors for approval. Bradford reviewed the
terms of the APA with the Board. The minutes from that board
meeting state:
RESOLVED:
...
Pursuant to the Asset Purchase Agreement, . . . Novell will retain
all of its patents, copyrights and trademarks (except for the
trademarks UNIX and UnixWare) . . . .
(Bradford Decl., ¶ 13, Ex. 1 at 2.)
D. Amendment No. 2 Did Not Transfer the Copyrights Either.
1. Amendment No. 2 Was Not Intended to Transfer All Copyrights
Pertaining to UNIX to Santa Cruz.
77. As explained in greater detail in Novell's Ownership MSJ No.
1, Novell and Santa Cruz executed Amendment No. 2 to the APA on
October 16, 1996. (See Brakebill Decl., Ex. 28; Novell's Ownership
MSJ No. 1 Facts ¶¶ 31-36.) Amendment No. 2 revised the
definition of "Excluded Assets" in Section V.A of Schedule 1.1(b)
to read as follows:
All copyrights and trademarks, except for the
copyrights and trademarks owned by Novell as of the date of the
Agreement required for SCO to exercise its rights with respect to
the acquisition of the UNIX and UnixWare technologies.
(Id., Paragraph A.)
78. Amendment No. 2 was negotiated primarily through
communications between two in-house lawyers, Allison Amadia of
Novell and Steve Sabbath of Santa Cruz. (Novell's Ownership MSJ No.
1 Facts, ¶¶ 31-36; Declaration of Allison Amadia in
Support of Novell's Ownership MSJ No. 1, PACER No. 278 ("Amadia
Decl."), ¶¶ 4-6.) During the summer of 1996, Sabbath
telephoned Amadia and stated that the original APA explicitly
excluded copyrights to
27 (33)
UNIX and UnixWare and that he wanted to amend the original APA
to give Santa Cruz those copyrights. (Id.)
79. Sabbath proposed to revise Section V of Schedule 1.1(b) to
read as follows:
All copyrights and trademarks, except for the
copyrights and trademarks owned by Novell as of the date of this
Amendment No. 2, which pertain to the UNIX and UnixWare
technologies and which SCO has acquired hereunder. . .
(Amadia Decl., Ex. 1, Paragraph A.) Amadia rejected that draft,
stating that Novell would not transfer ownership of any copyrights.
(Id., ¶ 10.)
80. Ultimately the parties agreed on much narrower language that
became Amendment No. 2. Amadia understood that the final version of
Amendment No. 2 did not transfer ownership of any UNIX or UnixWare
copyrights but instead merely affirmed Santa Cruz's license to use
Novell's UNIX and UnixWare copyrighted works. (Id. at ¶
14.)
81. Jim Tolonen, the Novell executive who signed Amendment No.
2, confirms that it was never Novell's intent to transfer
copyrights by way of Amendment No. 2 (or the APA), and that he
would not have signed Amendment No. 2 had he believed it would do
so. (Declaration of James R. Tolonen in Support of Novell's
Ownership MSJ No. 1, PACER No. 280 ("Tolonen Decl.") ¶
13-16.)
82. SCO has not submitted any evidence from Sabbath concerning
his negotiation or signing of Amendment No. 2 on Santa Cruz's
behalf. At his recent deposition in this case, Sabbath testified
that he did not recall "negotiating to any extent" "Paragraph A of
Amendment No. 2," the portion that refers to copyrights. He did not
recall "focusing on paragraph A to any extent." (Supp. Brakebill
Decl., Ex. 46, Sabbath Dep. 33:11-20.)
28 (34)
2. SCO's Only Evidence Concerning the Intent of Amendment No. 2
Comes From Witnesses Who Had No Involvement in or Memory of
Drafting or Negotiating that Amendment.
83. SCO relies on the testimony of Robert Frankenberg and Ed
Chatlos regarding Amendment No. 2. However, both left Novell before
Amendment No. 2 was negotiated, so they had no involvement with the
amendment. (Supp. Brakebill Decl., Ex. 32, Frankenberg Dep.
86:12-16; Supp. Brakebill Decl., Ex. 31, Chatlos Dep.
41:13-19.)
84. SCO relies on the testimony of Ty Mattingly, Burt Levine,
Bill Broderick, Alok Mohan, Doug Michels, and Jim Wilt. However,
all testified that they had no involvement with Amendment No. 2.
(Supp. Brakebill Decl., Ex. 33, Mattingly Dep. 85:1-10; Supp.
Brakebill Decl., Ex. 22, Levine Dep. 190:11-22; Supp. Brakebill
Decl., Ex. 37, Broderick Dep. 144:12-16; Supp. Brakebill Decl., Ex.
38, Mohan Dep. 200:6-15; Supp. Brakebill Decl., Ex. 39, Michels
Dep. 19:25-20:4.)
85. SCO relies on the testimony of Jim Wilt. But Wilt was not
involved in drafting or negotiating Amendment No. 2. (Supp.
Brakebill Decl., Ex. 40, Wilt Dep. 40:10-17.) Wilt did participate
in some internal SCO discussions relating to Amendment No. 2 but
had no memory of what was said. (Id. 41:14-25.)
86. SCO relies on the testimony of Duff Thompson. At the time
Amendment No. 2 was being negotiated, Duff Thompson had left Novell
and was serving as Novell's appointee to the Santa Cruz board.
(Supp. Brakebill Decl., Ex. 27, Thompson Dep. 19:22-20:7.) Thompson
"recused" himself from any discussion about Amendment No. 2 and
"was not given any information by either party, by either side as
to how it was being negotiated." (Id. 21:8-23:6.)
87. Kim Madsen has submitted a declaration on what she believes
to be the intended meaning of Amendment No. 2. That declaration
incorporates by reference an earlier declaration
29 (35)
by Madsen in the SCO v. IBM case, in which she claims that her
understanding of Amendment No. 2 is based on "negotiations and
discussions leading up to the Amendment." (Supp. Brakebill Decl.,
Ex. 41, ¶ 16.) However, in her recent deposition, Madsen
conceded, "I cannot recall any specific conversations regarding
amendment 2." (Supp. Brakebill Decl., Ex. 42, Madsen Dep.
202:15-19.)
3. SCO Has Presented No Evidence that Any Copyrights Were
"Required for" the Operation of the UNIX-Related Business
Contemplated by the APA.
88. Although the APA did not expressly use the word "license,"
the APA had the legal effect of granting SCO a license to the
copyrights insofar as necessary to exercise its rights under the
APA. (Braham Decl., ¶ 20; see also Novell's Ownership MSJ No.
1 at 26-29.) Burt Levine testified that the APA "convey[ed] enough
of a patent license under Novell's patents that would be necessary
for SCO to conduct its business." (Brakebill Decl., Ex. 25, Levine
Dep. at 185:17-23; see id. at 7-24, 148-49.) Similarly, Levine
testified that if copyrights were not transferred, the APA also
conveyed a copyright license:
Q. Assuming that the copyrights had been retained by
Novell in the transaction, SCO would have had a license to use
those copyrights in the business, correct?
A. Correct.
(Id. at 89:7-11; see id. at 88:5-89:2 (Santa Cruz "absolutely,
absolutely" would have had a license to use copyrights in its
business; there would be an "inherent" license to do "anything
necessary to practice the copyright in the transferred asset").)
Levine testified further: "My understanding is similarly to my
stand on copyrights that the grant of the whole business carries
with it at least licenses under the patents needed to carry on the
business to the extent that Novell had them." (Id. at 87:2-6; see
also id. at 185:9-23.)
30 (36)
89. SCO had been operating the UNIX and UnixWare business for
thirteen months prior to the execution of Amendment No. 2 on
October 16, 1996, based on that license and without ownership of
any of the copyrights. (Tolonen Decl., ¶ 16; Brakebill Decl.,
Ex. 28.)
90. SCO designated Chris Sontag as its Rule 30(b)(6) deponent on
what "copyright SCO alleges that Novell transferred to SCO." (Supp.
Brakebill Decl., Ex. 23, Sontag 30(b)(6) Dep. 121:10-122:2.) Sontag
could identify no facts demonstrating that any of the copyrights at
issue are "required for" SCO's operation of the UNIX-related
business contemplated by the APA:
Q. And how do you know -- what is SCO's view on how one
knows whether a copyright was required for, say, the UNIX
business?
A. I believe that's laid out in our filings and our pleadings.
...
Q. Is the answer to the question, "Where can I find out all of
SCO's views on the question of 'required for,'" is the answer to
that question, "Look at what we filed in litigation"?
A. Yes.
(Id., at 121:3-18.) Sontag testified that he had "no testimony over
and above that." (Id.) SCO's filings contain only allegations
concerning which copyrights are required, not any deposition
testimony or declarations on that issue. (See SCO's Ownership MSJ
at 24-25.) When directly confronted about whether a license, rather
than outright ownership of the copyrights, would be sufficient for
SCO to operate the UNIX and UnixWare business, Sontag again
provided no facts supporting SCO's position. (Id., Sontag 30(b)(6)
Dep. 130:1-131:9.)
91. Christopher Stone, who was vice chairman of Novell and has
been for the last two years CEO of a software company in Boston,
testified that no copyrights were required for SCO
31 (37)
to operate the UNIX-related business contemplated by the APA.
(Supp. Brakebill Decl., Ex. 18, Stone Dep. 72:18-73:6,
217:15-218:9.) Stone testified that "You don't need the copyrights
to be transferred" to sell UNIX. (Id.) He noted, "There are many
examples where that has taken place in the industry. I gave you an
example earlier of my current business where I have licensed source
code from IBM for printer technologies, and I don't own the
copyrights." (Id. at 218:1015.) He testified:
Q. I mean if Santa Cruz were licensing source code to a
third party --
A. You don't need the copyrights.
Q. Why is that?
A. You don't need them. That third party doesn't necessarily need
them either. You're just licensing a right to use the software.
That's all it is. That's how the software business works. We're
letting you use it for a period of time. You're not -- it's not like
buying a piece of hardware. You're licensed a right to use it.
Q. If in that example Santa Cruz were to make a copy of the source
code and put it on a disk and send it to the third party, where
would Santa Cruz's right to copy that source code and put it on the
disk come from?
A. The license.
(Id. at 218:16-219:9.)
92. Other companies have bought parts of Novell's software
business without obtaining ownership of the copyrights for the
underlying software. (Bradford Decl., ¶ 18.) On January 24,
1996, Novell entered into an agreement with BEA Systems, Inc., in
which Novell transferred certain assets relating to its TUXEDO
software business, but specifically retained the copyrights in the
TUXEDO software. (Id.)
32 (38)
4. Novell's Statements Concerning Amendment No. 2 Are Entirely
Consistent With Its Understanding that the Amendment Did Not
Transfer Copyrights.
93. Novell issued a press release on May 28, 2003 announcing
that it, not SCO, owned the UNIX copyrights.8
94. SCO makes much of a June 6, 2003 press release from Novell.
That press release stated simply that Amendment No. 2 "appears to
support" SCO's claim of copyright ownership. (SCO Statement of
Facts ¶ 30.) Novell did not elaborate any further on the
subject in that press release. Novell' statement was based solely
on its review the night before. On the evening of June 5, 2003, SCO
had surprised Novell with an executed copy of Amendment No. 2,
which Novell had not realized existed and had found in its files
only in an unsigned version. Novell felt compelled to respond
immediately, as it began to receive calls from the press and SCO
announced the next morning that it would be holding a press call at
11:00 a.m. (Supp. Brakebill Decl., Ex. 47, Messman IBM Dep.
212:22-214:20; Supp. Brakebill Decl., Ex. 48, Messman Dep.
60:16-63:5; Supp. Brakebill Decl., Ex. 49, LaSala Dep.
113:8-118:10, 124:3-125:18.)
95. Novell explained its position further in a letter to SCO,
dated June 26, 2003:
Upon closer scrutiny, ... Amendment No. 2 raises as
many questions about copyright transfers 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).
33 (39)
(Supp. Brakebill Decl., Ex. 50.) Novell later published that
June 26, 2003 letter on its website. (Supp. Brakebill Decl., Ex.
51, ¶ 6.)
96. Novell addressed its position in a subsequent letter, dated
August 4, 2003, that "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 . . . ." (Supp. Brakebill Decl., Ex. 52 (emphasis
added).) Novell later published that August 4, 2003 letter on its
website. (Supp. Brakebill Decl., Ex. 51, ¶ 7.)
IV. ARGUMENT
A. The Plain Language of the APA Excluded Copyrights from the
Assets to Be Transferred by Novell to Santa Cruz.
1. Schedule 1.1(b) Expressly Excluded "All Copyrights" From the
Transfer of Assets.
As this Court noted in its June 9, 2004 Order, "the APA
specifically excluded all copyrights from the assets transferred
from Novell to SCO's predecessor." (Order Denying Motion to
Dismiss, June 9, 2004, PACER No. 29.) The APA defined the assets to
be transferred by Novell to Santa Cruz by reference to lists of
included and excluded assets. (Novell's Ownership MSJ No. 1 Facts,
¶ 2.)9
The only "Intellectual Property" identified in the Schedule 1.1(a)
list of Included Assets were UNIX and UnixWare trademarks.
(Novell's Ownership MSJ No. 1 Facts, ¶ 3.) The UNIX and
UnixWare copyrights were not listed as Included Assets. (Id.)
Conversely, the Schedule 1.1(b) list of "Excluded Assets" expressly
excluded from the
34 (40)
transferred assets "[a]ll copyrights and trademarks,
except for the trademarks UNIX and UnixWare." (Novell's Ownership
MSJ No. 1 Facts, ¶ 4 (emphasis added).)
SCO contends that this exclusion should be ignored because the
APA transferred the "right, title, and interest" in UNIX and
UnixWare. (SCO's Ownership MSJ at 20-21.) SCO cites a series of
cases purportedly holding that those magic words automatically
transfer all copyrights. In fact, those cases support Novell's
position, not SCO's, because those cases specifically distinguish
the situation where the agreement expressly excludes copyrights.
SCO principally relies on Shugrue v. Continental Airlines, 977 F.
Supp. 280 (S.D.N.Y. 1997). There, the court found that the sale of
"all right, title, and interest" in all of the seller's computer
software transferred the copyrights in that software because
"[n]o exception was carved out for copyrights" and "no
rights, titles, or interests were retained." Id. at 285. Similarly,
both of the other cases on which SCO relies specifically note the
lack of any specific provisions excluding or discussing copyrights.
Relational Design & Tech., Inc. v. Brock, No. 91-2452-EEO, 1993
WL 191323, at *6 (D. Kan. May 25, 1993)10 ("The original contract is
devoid of any language excluding copyright law"); Schiller &
Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir. 1992)
(noting that "the agreement does not mention the word
'copyright'").11 SCO cannot escape the plain language of
the APA, which excludes "all copyrights."
35 (41)
2. SCO Cannot Use Extrinsic Evidence About the Supposed Intent
of the Parties to Rewrite the Plain Language of the APA.
SCO asserts that even though the APA excluded "all copyrights"
from the assets to be transferred, the APA intended to instead to
include all copyrights pertaining to UNIX and UnixWare. That
attempt to rewrite the APA should be rejected because it is
contrary to the APA's plain language.
As explained in Novell's Ownership MSJ No. 1,12 black-letter California
law holds that extrinsic evidence is not admissible to vary or
contradict the terms of an integrated agreement. (Novell's
Ownership MSJ No. 1 at 19-23.) Such evidence is admissible only if
relevant to prove a meaning to which the terms are reasonably
susceptible. The same rule applies to evidence of parties' conduct
after signing the contract. See Bank of the West v. Resolution
Trust Corp., No. C 95-4708 FMS, 1997 U.S. Dist. LEXIS 1581 (N.D.
Cal. Feb. 13, 1997)13 (excluding evidence of the parties'
subsequent conduct under California law).
The extrinsic evidence offered by SCO does not advance an
interpretation of "all copyrights" of which the phrase is
reasonably susceptible. Instead, SCO seeks to demonstrate a
contradiction between the supposed intent of the parties and
the language of the contract. Indeed, the witnesses upon whom SCO
relies admit that Schedule 1.1(b)'s explicit exclusion of "all
copyrights" is wholly incompatible with any intent to transfer
copyrights.
36 (42)
Doug Michels, Santa Cruz's founder, could not square the
exclusion with an intent to transfer the copyrights:
Q. Did you have any opinion on the meaning of the
exclusion here --this is V(A) again, "All copyrights" --
A. I mean, it clearly makes no sense in the context of the
agreement. I assume it was an error.
(Supp. Brakebill Decl., Ex. 39, Michels Dep. 76:25-77:3.)
Steve Sabbath, Santa Cruz's lead in-house counsel on the deal,
concurred that "Roman Numeral V(a)" of Schedule 1.1(b), which
contained the copyright exclusion, was "just screwed up." (Supp.
Brakebill Decl., Ex. 45, Sabbath Dep. 131:16-132:1.) Sabbath
testified:
Q. And that's the truth, isn't it? As you sit here
today, you don't know why Section [V](a) is the way it is,
do you?
MR. NORMAND: Objection to form.
THE WITNESS: Yes, because all the sudden here pops up UNIX and
UnixWare. It's a little bit nonsensical.
(Id. 132:2-8 (emphasis added).) Allison Amadia, then Novell's
in-house counsel, confirms that Sabbath told her in the summer of
1996, approximately nine months after the execution of the APA,
that he believed "the Original APA explicitly excluded copyrights
to UNIX and UnixWare as assets being sold by Novell to Santa Cruz
and that it shouldn't have." (Amadia Decl., ¶ 6.)
California courts have specifically held that extrinsic evidence
may not be used for this purpose: i.e., to show that the parties
intended a result contrary to the express terms of the contract. In
Gerdlund v. Electronic Dispensers Int'l, 190 Cal. App. 3d 263
(1987), all parties testified that they intended a contract
allowing termination "for any reason" to mean "for any
good reason." Id. at 273 (emphasis added). The California
Court of Appeal held that such evidence should have been excluded:
"Testimony of intention which is contrary to a contract's
37 (43)
express terms . . . does not give meaning to the contract:
rather it seeks to substitute a different meaning." Id.
B. In Any Event, Extrinsic Evidence Would Simply Reinforce the
Conclusion that the APA Intentionally Excluded Copyrights.
The APA did not transfer the copyrights, as a matter of law,
because of its plain language excluding "all copyrights."
Accordingly, the Court need not and should not consider SCO's
extrinsic evidence regarding the intent of the APA. If this Court
were to examine that evidence, though, the evidence is that the APA
deliberately retained the copyrights for Novell.
1. The Drafters of the APA's Intellectual Property Provisions
Agree that the Exclusion of Copyrights Was Deliberate.
Following preliminary business negotiations, the contractual
terms of the APA were drafted and negotiated by both sides' lawyers
over a short two-week period. (Novell's Opposition Facts, ¶
31.) The key players in that intensive drafting process have
confirmed that the exclusion of copyrights was deliberate. Prior
drafts of the APA also confirm this point.14
Tor Braham, outside counsel for Novell at Wilson Sonsini, was
the principal drafter of the APA. (Novell's Opposition Facts,
¶ 73.) Braham has submitted a declaration explaining in detail
why he and his legal team deliberately excluded copyrights from the
transfer of assets to protect Novell's ongoing interests in the
UNIX business. (Novell's Ownership MSJ No. 1 Facts,
38 (44)
¶¶ 5-14.) As explained in Novell's Ownership MSJ No.
1, the exclusion of copyrights allowed Novell, among other things,
to protect its SVRX revenue stream if Santa Cruz were to go
bankrupt and to preserve Novell's ability to buy out SVRX licenses.
(Id.)
The paper trail confirms Braham's account. Novell, through
Wilson Sonsini, sent Santa Cruz an earlier draft of the APA that
listed as Included Assets under Schedule 1.1(a) "all patents,
patent applications, copyrights . . . and all other intellectual
property . . . that pertain to Unix or UnixWare" on September 8,
1995. (Id. ¶ 16.) Wilson Sonsini deleted that language
from the Included Assets, so that the UNIX and UnixWare trademarks
were the only intellectual property assets mentioned. Wilson
Sonsini then added an exclusion of "all copyrights" to the Excluded
Assets in Schedule 1.1(b). (Id. ¶ 17.) Drafts of the new
schedules were transmitted to Santa Cruz before the APA was
executed. (Id. ¶ 18.) Aaron Alter, a member of Braham's Wilson
Sonsini team, confirmed that he reviewed the exclusion of "all
copyrights," left it intact, and sent it to Santa Cruz. (Novell's
Opposition Facts, ¶ 75.) Alter's notes also provide
contemporaneous corroborating evidence that the exclusion of
copyrights was no accident. Alter marked up a term sheet with the
handwritten notation "already excluded" next to a Section including
"Intellectual Property . . . Copyrights, trademarks . . . ."
(Novell's Ownership MSJ No. 1 Facts, ¶ 21.)
In excluding all copyrights from the transfer, Braham and his
team acted with the direct authorization of Novell. David Bradford,
Novell's Senior Vice President, General Counsel, and Corporate
Secretary, instructed the Novell legal team to retain Novell's
intellectual property in UNIX and UnixWare to protect Novell's
ongoing interest in SVRX revenues. (Novell's Opposition Facts,
¶ 75.) Robert Frankenberg, the CEO of Novell at the time,
testified that he "directed the negotiating team to make sure that
[Novell's] rights to enter into buyouts after the acquisition
closed were preserved." (Id. ¶ 74.) Frankenberg recalled
"discussing" with the
39 (45)
Novell team the fact that "retaining the UNIX copyrights would
facilitate Novell's exercise of rights with respect to capitalizing
the SVRX revenue stream." (Id.)
Moreover, Novell's Board of Directors specifically ratified the
exclusion of copyrights. The day before the execution of the APA,
Bradford explained the terms of the APA to the Board and the Board
approved the transaction. (Novell's Opposition Facts, ¶ 76.)
The Board minutes specifically note the exclusion of copyrights,
stating: "RESOLVED: Pursuant to the Asset Purchase
Agreement, . . . Novell will retain all of its patents, copyrights
and trademarks (except for the trademarks UNIX and UnixWare) . . .
." (Id.)
2. SCO Presents No Evidence to the Contrary from Anyone Involved
in the Negotiation of the Intellectual Property Provisions of the
APA.
SCO does not provide contrary testimony from a single witness
involved in drafting or negotiating the intellectual property
provisions of the APA. The persons involved in drafting and
negotiating those provisions for Novell were Tor Braham, Aaron
Alter, and Shannon Whisenant. (Novell's Opposition Facts, ¶
32.) Jeff Higgins, of Brobeck Phleger & Harrison, represented
Santa Cruz in APA contract negotiations and received at least one
draft of the Included and Excluded Assets schedules, in which
copyrights were omitted from the Included Assets and expressly
listed as Excluded Assets. (Id.)
Instead, SCO relies on testimony of those who had no involvement
in the negotiation or drafting of the contractual language at
issue:
-
Robert Frankenberg, Novell's former CEO, testified that he
delegated the drafting of the APA to the negotiation team and
relied on their recommendation in signing it. (Novell's Opposition
Facts, ¶¶ 33-36.)
-
Ty Mattingly, Novell's former Vice President for Strategic
Relations, testified his role was limited to "high level
business
40 (46)
strategy" and had no involvement in the wording of the APA. (Id.
¶¶ 37-39.)
-
Duff Thompson, who worked at Novell and is now chair of SCO's
litigation committee, admitted the he relied on Tor Braham and the
Wilson Sonsini team to draft the APA. (Id. ¶¶ 40-43.)
-
Ed Chatlos, a former Novell employee, admitted that
* * REDACTED * * (Id. ¶¶ 44-46.)
-
Burt Levine, a former Novell in-house attorney, has no
"understanding as to specifically what intellectual property, if
any, was or wasn't transferred." He reviewed the Included and
Excluded Assets schedules for Novell during APA negotiations, and
left the copyright exclusion intact. But he has no memory of what
he was thinking during that review. (Id. ¶¶ 47-51.)
-
Bill Broderick, SCO's Director of Software Licensing, admitted
that he had no involvement at all in negotiating or drafting the
APA. (Id. ¶¶ 52-54.)
-
Alok Mohan, Santa Cruz's former CEO, said he was involved in
negotiations "only at a high level" and was not involved in
"specific drafting of documents." (Id.¶¶ 55-57.)
-
Doug Michels, Santa Cruz's founder, did not draft any portions
of the APA and did not review any drafts of the APA.
(Id.¶¶ 58-60.)
-
Jim Wilt, a Santa Cruz business development executive, testified
that he did not draft any of the APA but left that to "the
lawyers." He was "less active" in the latter part of the
negotiations, when the APA provisions were being negotiated. (Id.
¶¶ 61-64.)
-
Kim Madsen, a Santa Cruz paralegal, did not recall "negotiating
any provisions relating to the UNIX copyrights in the asset
purchase agreement." (Id. ¶¶ 65-67.)
None of those persons has personal knowledge of the drafting and
negotiation of the Included and Excluded Assets schedules.
Accordingly, none of those witnesses has the necessary
41 (47)
foundation to testify as to the key issue: that is, what was
meant by the listing of "all copyrights" on the Excluded Assets
schedule and what was meant by the omission of copyrights from the
"Intellectual Property" in the Included Assets schedule.
Moreover, SCO's evidence indicates that the lawyers who drafted
the APA and negotiated its terms are the only ones who had
any substantive exchange about copyrights during the negotiations.
SCO submits no evidence that any of the witnesses upon which it
relies participated in any discussion of copyrights. Indeed, most
of the witnesses upon whom SCO relies, including Duff Thompson, Ed
Chatlos, Alok Mohan, Doug Michels, Jim Wilt, and Kim Madsen,
affirmatively stated that they could remember no discussions on the
subject of copyrights being included or excluded during the
negotiations in which they participated. (Novell's Opposition
Facts, ¶¶ 42, 45, 56, 59, 63, 66.) By contrast, the
lawyers who drafted the APA actually exchanged drafts specifically
addressing copyrights. Their testimony that the exclusion of
copyrights was deliberate is controlling.
C. Amendment No. 2 Did Not Transfer the UNIX and UnixWare
Copyrights to Santa Cruz.
Unable to show that the APA transfers copyrights, SCO falls back
on arguing that the Amendment No. 2 intended to effectuate such a
transfer. That amendment revised the definition of "Excluded
Assets" in Schedule 1.1(b) to exclude "[a]ll copyrights and
trademarks, except for copyrights and trademarks . . . required for
SCO to exercise its rights with respect to the acquisition of the
UNIX and UnixWare technologies." (Novell's Opposition Facts, ¶
77.) SCO's evidence about the intent of Amendment No. 2 is
incompetent and irrelevant. Even if Amendment No. 2 intended to
transfer the copyrights, it failed to do so because the Copyright
Act requires the execution of written instrument of conveyance to
transfer copyrights and no
42 (48)
such instrument was ever signed by the parties. And, in any
event, the undisputed evidence is that Amendment No. 2 was never
intended to transfer copyrights, and that no copyrights were
"required for" SCO to run the UNIX-related business contemplated by
the APA.
1. Amendment No. 2 Is Not a Signed Instrument of Conveyance, and
Hence Cannot Transfer Copyright Ownership Under the Copyright
Act.
As explained in greater detail in Novell's Ownership MSJ No. 1,
the Copyright Act requires a signed "written instrument of
conveyance" to transfer ownership of copyrights. 17 U.S.C. § 204(a).
(See Novell's Ownership MSJ No. 1, at 34-37.) Although SCO
correctly notes that no "magic words" are required for this
transfer (SCO's Ownership MSJ, at 25-26), the law requires that a
written conveyance be sufficiently specific in order to "force[] a
party who wants to use the copyrighted work to negotiate with the
creator to determine precisely what rights are being
transferred." Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355, 357 (9th
Cir. 1994) (emphasis added). Amendment No. 2 fails those
requirements.
Amendment No. 2 contains no language "transferring" or
"assigning" the copyrights because Novell rejected such language.
(Novell's Ownership MSJ No. 1 Facts, ¶ 31-36.) Moreover,
Amendment No. 2 nowhere identifies the specific copyrights, if any,
to be transferred. Which copyrights in the many releases of UNIX
are "required for" the UNIX business contemplated by the APA? And
for which of those copyrights is outright ownership, rather than a
license or partial right under copyright, necessary? Amendment No.
2 provides no answers.
Because Amendment No. 2 lacks sufficient specificity to transfer
any copyrights, such a transfer could occur only if the parties
executed a further document listing the specific copyrights to be
transferred pursuant to the amendment. In the case of the original
APA, the parties did execute a "Bill of Sale" that explicitly
transferred "the Assets," as defined in the APA and
43 (49)
Amendment No. 1. (Novell's Ownership MSJ No. 1 at 33-34;
Novell's Ownership MSJ No. 1 Facts, ¶¶ 25-27.) However,
the parties did not execute a Bill of Sale or other written
instrument of transfer in connection with Amendment No. 2.
(Novell's Ownership MSJ No. 1 at 36; Novell's Ownership MSJ No. 1
Facts, ¶ 30.) Moreover, Amendment No. 2 did not purport to
retroactively amend the Bill of Sale to transfer additional assets;
on the contrary, it explicitly became effective as of the date of
its execution, which was ten months after the Bill of Sale.
(Id.)
Because Amendment No. 2 did not constitute a written conveyance
sufficient to effectuate a transfer of copyrights, SCO's extrinsic
evidence concerning the "intent" of Amendment No. 2 is legally
irrelevant. Evidence of intention, whether through testimonial
evidence or subsequent course of conduct, does not allow a party to
bypass the Copyright Act's requirement of a written conveyance. See
Pamiloff v. Giant Records, Inc., 794 F. Supp. 933, 935, 937 (N.D.
Cal. 1992) (granting summary judgment for failure to satisfy the
written conveyance requirement despite plaintiffs' argument that
the parties "intended" to transfer copyright ownership and treated
the copyrights as having transferred); see also Lyrick Studios,
Inc. v. Big Idea Prods., Inc., 420 F.3d 388, 396 (5th Cir. 2005)
(irrelevant that "parties acted as if they had a deal for several
years" because "Section 204(a) requires a writing" and there was no
satisfactory writing).
2. In Any Event, Amendment No. 2 Was Never Intended to Transfer
All Copyrights Pertaining to UNIX and UnixWare.
Even if this Court were to examine the intent behind Amendment
No. 2, the undisputed evidence is that there was no intention to
transfer all copyrights pertaining to UNIX or UnixWare.
44 (50)
As explained in Novell's Ownership MSJ No. 1, both Allison
Amadia, who negotiated Amendment No. 2, and Jim Tolonen, who signed
the amendment on behalf of Novell, understood the amendment would
not transfer ownership of any copyrights. (Novell's Ownership MSJ
No. 1, Facts ¶ 36.) Indeed, Novell expressly rejected a draft
amendment that would accomplish precisely what SCO now seeks: the
removal of any exclusion of "copyrights . . . which pertain to the
UNIX and UnixWare technologies" and the declaration that "SCO has
acquired hereunder" those copyrights. (Id. ¶¶ 31-35.)
Instead, Novell negotiated for language that did not mention any
"acquisition" or "transfer" of copyright ownership, but instead
merely affirmed Santa Cruz's license to use Novell's UNIX and
UnixWare copyrighted works as "required for" the business. (Id.
¶ 36.)
SCO does not submit any admissible evidence to the contrary.
With the exception of Kim Madsen, all of the witnesses upon
whom SCO relies admit that they had no involvement whatsoever in
the drafting or negotiation of Amendment No. 2. (Novell's
Opposition Facts, ¶¶ 83-86.) As such, their testimony is
without foundation, as they have no personal knowledge of the
intent of the parties at the time the amendment was executed. See
GM Corp. v. Superior Court, 12 Cal. App. 4th 435, 442 (1993)
(testimony of witness "was not competent evidence to raise a
triable issue of fact regarding the interpretation of the release
agreement" because the witness "was not involved in the
negotiations which resulted in the execution of the release so that
he had no personal knowledge regarding the intent of the parties at
the time the release was executed").
Madsen's testimony is not admissible either. Madsen submitted a
declaration opining on the meaning of Amendment No. 2, purportedly
based on her participation in "negotiations and discussions leading
up to the Amendment." (Novell's Opposition Facts, ¶ 87.)
However, in her
45 (51)
deposition, Madsen conceded that she had no recollection of any
conversations regarding Amendment No. 2. (Id.)
Moreover, even if the testimony upon which SCO relies were
admissible, the undisputed negotiation history of Amendment No. 2
renders such testimony irrelevant. Novell expressly rejected a
proposed draft of Amendment No. 2 that transferred all copyrights
pertaining to UNIX and UnixWare from Novell to Santa Cruz. That
alone is sufficient to establish that Amendment No. 2 could not
have been intended to effectuate such a transfer. See Apple
Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1440-41 (9th Cir.
1994) (where "Apple tried to limit Microsoft's license to Windows
1.0" by proposing a draft agreement to that effect, and "Microsoft
. . . rejected this limitation," there could be "no basis for
construing the Agreement to grant the narrow license that Apple
bargained for but gave up") (applying California law).
3. No Copyrights Are "Required" for Santa Cruz to Run the
UNIX-Related Business Contemplated by the APA.
Even assuming that the written conveyance requirement under the
Copyright Act is satisfied, and even assuming the parties intended
to transfer such copyrights despite all evidence to the contrary,
SCO still cannot show that it owns the copyrights. Amendment No. 2
states that copyrights "required for SCO to exercise its
rights with respect to the acquisition of the UNIX and UnixWare
technologies" are no longer excluded from the transfer of assets.
(Novell's Opposition Facts, ¶ 77 (emphasis added).) It is
SCO's burden, as the plaintiff, to present evidence of what
copyrights, if any, were "required for" Santa Cruz to exercise its
rights. It is not enough for SCO to show that some copyrights
"relate to" or "pertain to" UNIX and UnixWare. SCO must demonstrate
that outright ownership of the copyrights it claims was
"required for" Santa Cruz to run the UNIX-related business
contemplated by the APA.
46 (52)
SCO has not presented any evidence to meet its burden. SCO
simply asserts in its motion that it needed complete ownership of
the copyrights to operate the business, without citing any
deposition testimony or declaration from anyone involved in the
UNIX or UnixWare business. In fact, the undisputed evidence is that
SCO did not need ownership of any copyrights to operate that
business.
The APA already granted SCO a license to use the UNIX and
UnixWare copyrights as necessary to exercise its rights under the
APA. (Novell's Opposition Facts, ¶ 88.) As noted by Jim
Tolonen, who signed Amendment No. 2 for Novell, SCO had already
been operating the UNIX-related business contemplated by the APA
for thirteen months before the execution of Amendment No. 2,
pursuant to that license. (Id. ¶ 89.) SCO has no explanation
as to why copyright ownership was unnecessary in those thirteen
months, but is now suddenly "required for" the operation of the
business.
SCO's designated 30(b)(6) witness on copyright ownership could
not name a single fact that supports SCO's position that a license
is insufficient. (Id. ¶ 90.) Chris Stone, a former Novell
employee who now runs his own software business in Boston testified
that no ownership of copyrights was required to operate the UNIX or
UnixWare business. (Id. ¶ 91.)
Indeed, it is common in the software industry to operate a
business based on a copyright license, rather than outright
ownership of the copyrights. Stone noted that his new company in
Boston had done that. (Id.) And other corporations have bought
parts of Novell's software business without obtaining ownership of
the copyrights for the underlying software. On January 24, 1996,
Novell sold BEA Systems part of its TUXEDO software business, but
specifically retained the copyrights in the TUXEDO software. (Id.
¶ 92.)
47 (53)
SCO has not shown that any copyrights are "required for" its
operation of the UNIX and UnixWare business. Accordingly, its
argument that Amendment No. 2 effectuated a transfer of all
copyrights pertaining to UNIX and UnixWare must fail.
D. Subsequent Conduct by the Parties Confirms that All Parties
Understood Neither the APA Nor Amendment No. 2 Transferred the
Copyrights.
SCO has argued that this Court should look to evidence of
subsequent conduct to determine the meaning of the APA and
Amendment No. 2. Again, the Court need not and should not consider
evidence of subsequent conduct because the APA's plain language
excluded "all copyrights" from the transfer of assets and SCO has
not shown that Amendment No. 2 transferred those copyrights.
However, even if this Court were to examine such evidence, the
conduct of the parties following the execution of the APA and
Amendment No. 2 simply confirms their understanding that no
copyrights were transferred.
1. Santa Cruz's and SCO's Actions Indicate a Recognition that No
Transfer of Copyrights Occurred.
Santa Cruz and SCO repeatedly acknowledged Novell's ownership of
the copyrights by (1) expressly noting a problem with the "chain of
title from Novell" in the representations and warranties in Santa
Cruz's assignment of its intellectual property in UNIX to SCO,
which was at that time named Caldera, in 2001; (2) asking Novell on
numerous occasions in late 2002 and early 2003 to transfer Novell's
copyrights in UNIX to SCO; and (3) distributing software with
copyright notices indicating Novell's continued copyright in the
original UNIX works and Santa Cruz's copyright in modifications
that it made to those works.
48 (54)
a. In 2001, SCO and Santa Cruz Acknowledged that Santa Cruz "May
Not Be Able to Establish Chain of Title from Novell" as to UNIX
Intellectual Property.
In May 2001, Santa Cruz purported to assign its intellectual
property in UNIX to SCO, which at that time was named Caldera.
(Novell's Opposition Facts, ¶ 1.) During the negotiations
regarding that assignment, Caldera sought a representation and
warranty that Santa Cruz had "no knowledge of any fact that would
prevent [Caldera's] registration of any Rights" being transferred.
(Id. ¶ 3.) Santa Cruz refused. Instead, Santa Cruz proposed a
more limited provision stating that Santa Cruz had "no knowledge"
of such facts, "[e]xcept for the inability to obtain third party
acknowledgments to establish a chain of title." (Id. ¶
4.)
Both Caldera and Santa Cruz understood the chief problem to be
establishing Novell's transfer of intellectual property to Santa
Cruz. In an e-mail responding to Santa Cruz's proposed limitation,
Caldera's counsel noted that Santa Cruz was "trying to get
Novell to sign a global IP assignment, for chain of title
purposes." (Id. ¶ 5.) Obviously, if the APA and Amendment
No. 2 in fact transferred all copyrights pertaining to UNIX and
UnixWare, as SCO now claims, no such global IP assignment would be
necessary. Indeed, at least as to copyrights, such an assignment
would be impossible if the copyrights had been transferred to Santa
Cruz six years earlier, since Novell would not longer own them and
thus be unable to assign them.
Both Caldera and Santa Cruz concluded that Santa Cruz would not
be able to establish a chain of title from Novell quickly enough
for the Caldera-Santa Cruz deal to close as planned. (Id. ¶
6.) Establishing a chain of title would require a further agreement
from Novell transferring rights that had been excluded from
transfer under the APA. Caldera and Santa Cruz eventually agreed
that Santa Cruz would represent and warrant only that it had "no
knowledge" of anything preventing registration of the copyrights
"except that [Santa Cruz] may not be able to establish a
49 (55)
chain of title from Novell, but shall diligently endeavor to
do so as soon as possible." (Id. ¶¶ 2, 7.) That
agreement makes clear that Santa Cruz understood it could not show
it had obtained a transfer of copyrights from Novell and that SCO
was aware of that problem.
b. In Early 2003, SCO Repeatedly Requested that Novell Transfer
the UNIX Copyrights to SCO.
SCO's repeated requests for the transfer of the UNIX copyrights
demonstrate that it understood Novell still owned those copyrights
after the execution of the APA and Amendment No. 2. In late 2002,
SCO began a series of repeated calls to Novell regarding the
copyrights. (Novell's Opposition Facts, ¶ 7.) At around the
same time, SCO hired a consultant to examine its intellectual
property in UNIX. That consultant's findings were memorialized in a
January 4, 2003 e-mail to SCO's CEO, Darl McBride, concluding that
* REDACTED * * The consultant * * REDACTED * *
(Id. ¶ 8.)
After receiving that e-mail, McBride called at least three
different individuals at Novell in early 2003 to ask for the
copyrights. SCO sent a letter to Novell purporting to seek only to
"clarify" the APA. (Id. ¶ 10.) McBride's conversations,
however, tell a different story. In those conversations, McBride
stated that "the asset purchase agreement excluded copyrights from
being transferred" and that this was a "clerical error." He
requested that Novell "amend" or "change" the APA so SCO "could
have the copyrights." In a conversation memorialized in a
contemporaneous e-mail, McBride said, "SCO needs the copyrights."
(Id. ¶¶ 9-12.) All of those statements are inconsistent
with any belief that the APA had already transferred the copyrights
eight years earlier.
50 (56)
SCO redoubled its efforts to obtain a transfer of copyrights
from Novell in May 2003. SCO's chairman, Ralph Yarro, requested an
in-person meeting with Christopher Stone, Novell's vice chairman,
and told Stone that he "would like for Novell to make changes to
the agreement to give them [i.e., SCO] the copyrights." (Id. ¶
13.) A few days later, McBride called Stone and Joe LaSala,
Novell's general counsel, to reiterate SCO's request that Novell
"amend the contract so that we can have the copyrights." (Id.
¶ 14.) Both Yarro's meeting with Stone and McBride's call were
memorialized in notes made by Stone in June 2003. (Id. ¶¶
13-14.) Again, those conversations reflected SCO's understanding
that it could not document a transfer of copyright ownership from
Novell to Santa Cruz.
c. Santa Cruz Distributed New Releases of UnixWare Software with
Copyright Notices that Acknowledged Novell's Continued
Ownership.
In inserting the "all copyrights" exclusion, Novell had
contemplated that it would retain the copyright in the original
UnixWare code sold to Santa Cruz in the APA, and that Santa Cruz
would own the copyright in the derivative work created by
improvements that Santa Cruz would add to the original code.
(Braham Decl., ¶¶ 20-21.) After the execution of the APA
and Amendment No. 2, Santa Cruz began to distribute new releases of
the UnixWare software, which contained the UnixWare code bought
from Novell along with improvements made by Santa Cruz. The
copyright notices used by Santa Cruz on its new releases indicate
that Santa Cruz understood that Novell continued to own the
copyright to the original code.
The copyright notices on the main installation directories for
Santa Cruz's new release CDs for UnixWare Version 2.1 and 2.1.3
state, with minor variations:
(c) Copyright 1996 The Santa Cruz Operation, Inc. All
rights reserved.
Copyright 1984-1995 Novell, Inc. All Rights Reserved.
51 (57)
(Novell's Opposition Facts, ¶¶ 15-16, 18.) Similar
notices were affixed to the documentation directories for those
releases of UnixWare. (Id. ¶ 17.)
If Santa Cruz believed that it owned the copyright to both the
original code and the derivative work, the copyright notice should
not have mentioned Novell at all. 17 U.S.C. § 401(b)(3)
(copyright notice "shall" list "the name of the owner of
copyright"). The notice should have been in Santa Cruz's name
alone. Instead, Santa Cruz used the format commonly employed where
the publisher owns the derivative work, but not the copyright to
the original work. In that situation, it is "the existing practice
of many publishers to include earlier copyright notices as well as
a notice for the newly published derivative or collective work."
2-7 Nimmer on Copyright § 7.12[C][1].15
2. Novell's Conduct Was Consistent with Its Understanding that
It Still Owned the Copyrights.
a. Novell Did Not Take Any Action to Physically Send Santa Cruz
the Copyright Registrations in Its Files.
SCO makes much of the fact that Santa Cruz apparently had
physical possession of the UNIX copyright registrations. (SCO's
Ownership MSJ at 29.) The physical possession of
52 (58)
copyright papers is legally irrelevant. "[T]he possessor of a
copyright certificate is not ipso facto the copyright owner. The
valuable federal right is not transferred by mere physical
delivery, or other acquisition, of the certificate. The owner may,
of course, assign the copyright. But this is to be done 'by an
instrument in writing signed by the proprietor of the copyright.'"
Kingsrow Enterprises, Inc. v. Metromedia, Inc., 397 F. Supp. 879,
881 (S.D.N.Y. 1975) (possession of the actual papers is
"immaterial" to the question of copyright ownership); see also La
Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195,
1202-1203 & n.7 (10th Cir. 2005) (holding that physical
possession of a "registration is separate from the issuance of a
registration" and that a rule placing emphasis on physical
possession of registration papers is "hard to imagine considering
the fact that a certificate could easily be lost").
SCO suggests that Santa Cruz's possession of the registrations
is relevant here to show Novell's supposed intent to transfer the
copyrights. But the undisputed evidence is that Novell took no such
affirmative action. The UNIX registrations simply stayed in the
same office in New Jersey through the ownership changes from
AT&T to USL to Novell to Santa Cruz. (Novell's Opposition
Facts, ¶ 19.)
b. Novell Did Not Object to SCO's Licenses Because Those
Licenses Carefully Avoided Representing that SCO Owned the
Copyrights and, in Any Event, Novell Was Not Aware of Those
Licenses.
SCO also makes much of Novell's failure to object to licenses
between SCO and third parties that purportedly "contain express
representations and warranties of SCO's rights and ownership in the
intellectual property." (SCO's Ownership MSJ at 29.) In fact,
Novell had no reason to object to those licenses because those
licenses were never shown to Novell and, in any event, do not
contain any such representations or warranties.
53 (59)
SCO has no evidence that Novell had any knowledge of the terms
of SCO's licenses with third parties. SCO's Director of Software
Licensing, Bill Broderick, has attested that the terms of the
licenses are "confidential." (Novell's Opposition Facts, ¶
21.) SCO cites no evidence that it showed Novell any of the
licenses. The first license did not involve UNIX or UnixWare, so it
would not need to be approved by Novell under the APA. SCO has
elsewhere asserted that the second and third licenses did not need
to be shown to Novell for approval. (Id. at ¶ 22.) Novell
cannot be expected to object to the terms of licenses if it had no
knowledge of them.
Moreover, SCO's licenses appear carefully worded to avoid
any representation or warranty that SCO owns the UNIX or UnixWare
copyrights. None of the three licenses submitted by SCO even comes
close to making a representation and warranty of outright copyright
ownership. The first license does not even involve UNIX or
UnixWare, so any representations therein are irrelevant. (Id.
¶ 23.) The second license stated only that "[a]s between
SCO and the licensee" the ownership of the licensed product
"shall remain" with SCO. (Id.) The third license states only that
SCO is not aware of any copyrights infringed by the product and
that the licensee is indemnified against copyright infringement
claims. (Id.) Novell had no reason to object to any of those
provisions.
c. Section 1.6 and the Technology License Agreement do not
demonstrate that "all copyrights" means "NetWare copyrights
only."
Finally, SCO contends that the "license back" contemplated by
Section 1.6 of the APA and implemented by the Technology License
Agreement implies that Novell transferred the UNIX and UnixWare
copyrights to Santa Cruz, because this license would have been
unnecessary if Novell retained ownership of the UNIX and UnixWare
copyrights. (SCO's Ownership MSJ at 22.)
54 (60)
In fact, as noted in Novell's Ownership MSJ No. 1, Novell sought
the license to fill two important holes in its rights to UNIX,
despite its ownership of the copyrights. (Novell's Ownership MSJ
No. 1 at 31-32.) First, although Novell still owned the copyrights
to the original UNIX and UnixWare code, Novell did not have any
rights in future enhancements that the parties anticipated Santa
Cruz would be developing, so Novell needed the license to use that
code. (Novell's Opposition Facts, ¶¶ 25, 27.) Second,
although copyrights were excluded from the transfer of assets from
Novell to Santa Cruz, some intellectual property and technical
information concerning UNIX and UnixWare was not excluded,
including trade secrets, software know-how, methods, and concepts
and documentation. Novell needed a license to use those. (Id.
¶¶ 25, 28.) Tor Braham, Novell's outside counsel, thus
requested the Technology License Agreement to address those
concerns. (Id.)
d. SCO's reliance on a purported "joint" press release referring
to "UNIX intellectual property" is misplaced.
SCO asserts that an intention to transfer copyrights can be
gleaned from a purportedly "joint" press release announcing that
"SCO will acquire Novell's UnixWare business and UNIX intellectual
property." (SCO's Statement of Facts, ¶ 9.)
SCO, however, has presented no evidence that this press release
was in fact "joint." Typically, Novell's joint press release
include the logo, contact information, and company description for
both companies. The press release on which SCO relies, however,
contains information only for SCO, not for Novell. (Novell's
Opposition Facts, ¶ 68.) Alok Mohan, upon whom SCO relies,
testified that he does not know if Novell ever approved the press
release. (Id. at ¶ 69.) Robert Frankenberg accepted at
deposition SCO's counsel's use of the term "jointly approved press
release," but never testified to any personal knowledge that Novell
approved the
55 (61)
press release. (Id.) In fact, Novell published its own separate
press releases concerning the APA in September 1995 and December
1995, both of which were produced to SCO and are publicly available
on Novell's website. Neither of those press releases mentions any
transfer of intellectual property or copyrights. (Id. at ¶
70.)
To the extent that the press release's reference to unspecified
"intellectual property" is interpreted to mean that the APA
transferred all forms of intellectual property relating to
UNIX or UnixWare (including trademarks, patents, and copyrights),
that statement is indisputably incorrect. The APA did transfer UNIX
and UnixWare trademarks to Santa Cruz (to the extent owned by
Novell), but explicitly excluded "all patents" and "all
copyrights." The witnesses on which SCO relies have admitted that
the APA did not transfer UNIX and UnixWare patents to Santa Cruz.
(Id. ¶ 71.) Moreover, Novell employees at the time used the
term "intellectual property" to refer to
* * REDACTED * * (Id. ¶ 72.) To the extent
that the press release is interpreted to include all copyrights and
patents, the press release is simply incorrect and does not change
the fact that copyrights and patents were excluded from the
transfer.
V. CONCLUSION
The APA explicitly excluded "all copyrights" from the assets to
be transferred by Novell to Santa Cruz. SCO's attempt to rewrite
"all copyrights" as "some copyrights" fails because it is contrary
to the plain language and to the parol evidence rule. It is also
contrary to the intent of the parties, as described by those
actually involved in the drafting and negotiation of the "all
copyrights" language. SCO's reliance on Amendment No. 2 is also
misplaced, because outright copyright ownership is not "required
for" SCO to operate the UNIX and UnixWare business.
56 (62)
Moreover, Amendment No. 2 did not transfer ownership of any
copyrights and was never intended to do so.
For all of these reasons, Novell requests that the Court deny
SCO's motion for partial summary judgment on its First, Second, and
Fifth Causes of Action and its motion for summary judgment on
Novell's First Counterclaim.
DATED: May 14, 2007
ANDERSON & KARRENBERG
By: /s/ Heather M. Sneddon
Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon
-and-
MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Kenneth W. Brakebill (pro hac vice)
Grant L. Kim (pro hac vice)
Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.
57 (63)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of May, 2007, I caused a
true and correct copy of the foregoing MEMORANDUM IN SUPPORT OF
NOVELL'S OPPOSITION TO SCO'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON
SCO'S FIRST, SECOND, AND FIFTH CAUSES OF ACTION AND FOR SUMMARY
JUDGMENT ON NOVELL'S FIRST COUNTERCLAIM (COPYRIGHT OWNERSHIP)
[REDACTED pursuant to the August 2, 2006 Stipulated Protective
Order]to be served to the following:
Via CM/ECF:
Brent O. Hatch
Mark F. James
HATCH JAMES & DODGE, P.C.
[address]
Stuart H. Singer
William T. Dzurilla
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
[address]
David Boies
Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]
Devan V. Padmanabhan
John J. Brogan
DORSEY & WHITNEY, LLP
[address]
58 (64)
Via U.S. Mail, postage prepaid:
Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]
/s/ Heather M. Sneddon
59 (65)
|
SCO's motion is a limited one. SCO has moved for partial
summary judgment on Claims I, II, and V on the issue of copyright
ownership only, and has not presented any argument or
evidence concerning other elements of those claims. In addition,
SCO has not moved for summary judgment on its claim for specific
performance (Claim III). |
|
Novell has filed a separate motion for summary judgment on the
copyright ownership portions of SCO's claims for breach of contract
(Claim II) and unfair competition (Claim V) on the grounds that (1)
SCO's allegations do not state a valid claim, even if assumed to be
true; and (2) SCO cannot establish that Novell's assertion that SCO
does not own the copyrights is false, which is a required element
of SCO's claims. (See Memorandum in Support of Novell's Motion for
Summary Judgment on the Copyright Ownership Portions of SCO's
Second Claim for Breach of Contract and Fifth Claim for Unfair
Competition, filed April 20, 2007, PACER No. 272 ("Novell's
Ownership MSJ No. 2").) |
|
Novell's statement of facts in support of its summary judgment
motion can be found at pages 3-16 of the Memorandum in Support of
Novell's Motion for Summary Judgment on SCO's First Claim for
Slander of Title and Third Claim for Specific Performance, filed on
April 20, 2007, PACER No. 286. In support of that motion, Novell
relied upon the Declarations of Allison Amadia (PACER No. 278),
David Bradford (PACER No. 279), James R. Tolonen (PACER No. 280),
Tor Braham (PACER No. 281), and Ken Brakebill (PACER No. 284), all
filed on April 20, 2007, and the exhibits attached to those
declarations. |
|
Novell also responds to each of SCO's numbered "Statement of
Facts" in its Response to SCO's Statement of Facts, attached as
Exhibit A to this memorandum. In addition, Novell will separately
file Evidentiary Objections to SCO's Summary Judgment
Exhibits. |
|
Different lawyers from Wilson Sonsini had previously
represented Novell in its 1995 deal with Santa Cruz. To avoid any
conflict of interest, an ethical wall was erected that prevented
the Wilson Sonsini lawyers on the Santa Cruz-Caldera deal from
consulting the Wilson Sonsini lawyers who had worked on the 1995
Novell-Santa Cruz deal. (Supp. Brakebill Decl. Ex. 4; Supp.
Brakebill Decl. Ex. 2, Danaher Dep. 29:13-30:3.) In its opinion
letter for the Santa Cruz-Caldera deal, Wilson Sonsini made clear
that its work was based entirely on Santa Cruz's representations,
not on any pre-existing knowledge from the Novell-Santa Cruz deal.
(Supp. Brakebill Decl. Ex. 3.) |
|
At Novell's repeated requests following SCO's April 9, 2003
summary judgment motion, SCO provided Novell with copies of the
underlying CDs; only the labels of those CDs were referenced and
submitted in SCO's motion. (Supp. Brakebill Decl., Exs. 20 and
21.) |
|
During discovery in this litigation, Novell asked SCO to
"identify" all "royalties" from "licensees of UNIX and/or UnixWare,
for which SCO contends that it is entitled to retain 100% [of the
income on the license] and is not required to pass through to
Novell" for approval. (Supp. Brakebill Decl., Ex. 26, Novell's
Second Set of Interrogatories, Interrogatory No. 7.) In response,
SCO asserted that it had the right to retain 100% of royalties on
the Lucent and Samsung licenses and was not required to show those
licenses to Novell for approval. (Supp. Brakebill Decl., Ex. 25,
SCO's Responses and Objections to Novell's Second and Third Sets of
Interrogatories, Response No. 7 and Ex. A, pages 3-4.) |
|
SCO claims in its introduction (but not its Statement of Facts)
that Novell's Vice Chairman Chris Stone told a journalist named
Maureen O'Gara that Novell timed that press release to coincide
with SCO's earnings report. Stone testified, however, that O'Gara
asked him if Novell's press release was related to SCO's earnings
announcement and that he replied that he "didn't even know SCO was
having an earnings announcement." (Supp. Brakebill Decl., Ex. 18,
Stone Dep. 140:20-143:6.) |
|
The Statement of Facts in this brief will be cited as "Novell
Opposition Facts." The Statement of Undisputed Facts from Novell's
Ownership MSJ No. 1 will continue to be cited as "Novell's
Ownership MSJ No. 1 Facts." |
|
Pursuant to DUCivR 7-2, a copy of Relational Design &
Tech., Inc. v. Brock, No. 912452- EEO, 1993 WL 191323, at *6 (D.
Kan. May 25, 1993) is attached hereto as Exhibit B. |
|
SCO also cites S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th
Cir. 1989). That case holds that a copyright owner should not be
presumed to have transferred outright ownership of the copyrights
when it grants a license. Id. at 1088. That supports Novell's
position, not SCO's. Novell retained "all copyrights," while
granting a license to copy, use, and otherwise carry out the UNIX
business to Santa Cruz. |
|
Novell hereby incorporates by reference all of the arguments
made in its Memorandum in Support of its Motion for Summary
Judgment on SCO's First Claim for Slander of Title and Third Claim
for Specific Performance, filed June 20, 2007, PACER No. 276. |
|
Pursuant to DUCivR 7-2, a copy of Bank of the West v.
Resolution Trust Corp., No. C 95-4708 FMS, 1997 U.S. Dist. LEXIS
1581 (N.D. Cal. Feb. 13, 1997) is attached hereto as Exhibit
C. |
|
Extrinsic evidence is inadmissible to contradict the plain
language of an integrated contract, but is admissible where
consistent with the terms. EPA Real Estate P'ship v. Kang,
12 Cal. App. 4th 171, 176-77 (1992). Because the APA explicitly
excludes "all copyrights," the Court need not consider extrinsic
evidence to decide the parties' summary judgment motion. However,
the extrinsic evidence presented by Novell is consistent with the
APA and hence may properly be considered by the Court. By contrast,
SCO's extrinsic evidence improperly seeks to contradict the plain
language of the APA and is therefore inadmissible as a matter of
law. |
|
Proper copyright notice is an important issue. Where "the
person named in a copyright . . . is not the owner of the copyright
, . . . any person who innocently begins an undertaking that
infringes the copyright has a complete defense to any action for
such infringement if such person proves that he or she was
misled by the notice and began the undertaking in good faith under
a purported transfer or license." 17 U.S.C. § 406(a) (emphasis
added); see also Berne Convention for the Protection of Literary
and Artistic Works, Article 15, § 1 ("In order that the author
of a literary or artistic work protected by this Convention shall,
in the absence of proof to the contrary, be regarded as such, and
consequently be entitled to institute infringement
proceedings in the countries of the Union, it shall be
sufficient for his name to appear on the work in the usual
manner.") (emphasis added). |
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