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Novell's Trial Brief for Utah
Thursday, November 29 2007 @ 10:32 AM EST

Groklaw member LEXLAW suggested that now would be a good time to take a second look at Novell's Trial Brief [PDF]. It was filed in Utah back in the middle of September, on the same day that SCO filed for bankruptcy in Delaware, and so we never did a text version or paid much attention. But now that we are Utah bound, here it is, the text version, the work of the entire Groklaw Group. You know, like the SCO Group and the 363 Group? Except there are more of us than there are of them, now that I think of it. So I guess we could have a subsidiary called Oceans Toyou (oceans of researchers, that is).

As I explained back in September, a trial brief is where a party tells the court what claims it will be present at trial so as to give the judge an overview. SCO filed one too, but under seal [PJ:I went to find the reference to it, but I was wrong. SCO has not yet filed a trial brief, sealed or otherwise, so that's something we have to look forward to.] The most significant piece, to me, is the part about the constructive trust at the end. Novell says that it would only be after the trial is done, and depending on the outcome, meaning when they win, that it would then ask for such a trust:

Based on that recovery, Novell anticipates seeking additional relief in its post-trial briefing, such as a constructive trust. Consideration of such relief is not necessary at trial, which per the Court's direction will focus on the proper apportionment of the SCOsource revenue and on Novell's entitlement to declaratory relief.

So, ironically enough, despite all of SCO's dancing and prancing in Delaware, the Utah trial is actually going to be just as it would have been originally. Leaving out the emotions, that is, and SCO's altered status. But the issues at trial will be what they always were going to be.

Novell is asking for the following relief:

  • Apportionment of the SCOsource revenue in an amount to be determined by the Court, without any 5% administrative fee deduction;

  • Prejudgment interest at 7%; and

  • A declaration that SCO exceeded its authority in entering into the SCOsource licenses.

If you look at Judge Kevin Gross's order lifing the stay, that's what he told Novell it can litigate. He doesn't mention interest, but that's part of asking for your money in any court. The only difference is that if a trust is deemed worth asking for after the trial, Novell will ask Delaware, not Utah.

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

MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice
[address]
[phone]
[fax]

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

Attorneys for Defendant 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,

v.

NOVELL, INC., a Delaware corporation,

Defendant and Counterclaim-
Plaintiff.
NOVELL'S TRIAL BRIEF

(REDACTED pursuant to the August 2,
2006 Stipulated Protective Order)

Case No. 2:04CV00139

Judge Dale A. Kimball

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES....................................................................................................ii

INTRODUCTION...................................................................................................................1

CLAIMS AT ISSUE................................................................................................................2

A. Fourth Claim: Declaratory Relief.............................................................................2

B. Sixth, Seventh, and Eighth Claims: Unjust Enrichment,
Breach of Fiduciary Duty, Conversion.....................................................................3

C. Claims Not Set for Trial.............................................................................................3

ARGUMENT............................................................................................................................3

I. SCOSOURCE WAS A CAMPAIGN TO LICENSE SVRX. .................................................3

II. NOVELL IS ENTITLED TO THE SCOSOURCE LICENSING
REVENUE. ..................................................................................................................5

A. Any Doubt or Ambiguity as to Entitlement to SCOsource
Revenue Must Be Resolved in Novell's Favor. .......................................................5

B. Novell Is Entitled to the Microsoft SCOsource Revenue. ......................................8

C. Novell Is Entitled to the Sun SCOsource Revenue......................................................10

D. Novell Is Entitled to the Other SCOsource Revenue.................................................12

E. SCO Is Not Entitled to Keep 5% of the SVRX License
Revenue............................................................................................................13

F. Novell Is Entitled to Prejudgment Interest at 7%. ....................................................13

III. SCO WAS WITHOUT AUTHORITY TO ENTER INTO THE
SCOSOURCE LICENSES. .............................................................................................14

IV. SCO'S AFFIRMATIVE DEFENSES HAVE NO MERIT. ...................................................16

A. Novell Is Not Estopped from Pursuing Its Fiduciary Duty
Claims Against SCO. ................................................................................................16

B. Novell Has Acted with "Clean Hands." ..................................................................18

CONCLUSION...................................................................................................................19

i


TABLE OF AUTHORITIES

CASES

Belling v. Croter,
57 Cal. App. 2d 296 (1943)

19

Bullis v. Security Pac. Nat'l Bank,
21 Cal. 3d 801 (1978)

13-14

Cassinos v. Union Oil Co. of Cal.,
14 Cal. App. 4th 1770 (1993)

14

Evolution, Inc. v. Prime Rate Premium Fin. Corp.,
No. 03-2315-KHV, 2004 U.S. Dist. LEXIS 25017 (D. Kan. Aug. 13, 2004)

9

Feduniak v. California Coastal Comm'n,
148 Cal. App. 4th 1346 (2007)

17

Hobbs v. Bateman Eichler, Hill Richards, Inc.,
164 Cal. App. 3d 174 (1985)

17-18

Irwin v. Mascott,
112 F. Supp. 2d 937 (N.D. Cal. 2000)

14

Kennard v. Glick,
183 Cal. App. 2d 246 (1960)

7

Kim v. Fujikawa,
871 F.2d 1427 (9th Cir. 1989)

7

Leigh v. Engle,
727 F.2d 113 (7th Cir. 1984)

7

Lentz v. McMahon,
49 Cal. 3d 393 (1989)

17

Nordahl v. Dep't of Real Estate,
48 Cal. App. 3d 657 (1975)

14

Reynolds v. Roll,
122 Cal. App. 2d 826 (1954)

19

Rosenfeld, Meyer & Susman v. Cohen,
191 Cal. App. 3d 1035 (1987)

6-7

Rosenfeld v. Zimmer,
116 Cal. App. 2d 719 (1953)

19

ii


Sheldon v. Metro-Goldwyn Pictures, Corp.,
106 F.2d 45 (2d Cir. 1939)

6

Stan Lee Trading, Inc. v. Holtz,
649 F. Supp. 577 (C.D. Cal. 1986)

14

Unisys Corp. Retiree Med. Benefits Litig.,
MDL NO. 969,2000 U.S. Dist. LEXIS 22347 (E.D. Pa. Apr. 25, 2000)

7

Watson v. Poore,
18 Cal. 2d 302 (1941)

19

STATUTES

Cal. Civ. Code

§3287

13

§3288

13

§3336

14

§3517

18

Cal. Evid. Code

§623

16

iii

INTRODUCTION

This Court has held that any contract "relating to" the SVRX releases listed in the APA is an SVRX License, that the Sun and Microsoft SCOsource licenses are SVRX Licenses, and that SCO breached its fiduciary duties by failing to disclose those licenses and by failing to remit appropriate revenue from those licenses. The principal questions that remain for trial are:

  • What portion of the revenue from the Sun and Microsoft SCOsource licenses has SCO wrongly retained?

  • Are SCO's other SCOsource licenses SVRX Licenses and, if so, what portion of the revenue from those SCOsource licenses has SCO wrongly retained?

  • Did SCO have the authority to enter into the SCOsource licenses, including those with Sun and Microsoft?
As the Court may have surmised from the motion in limine briefing, neither Novell nor SCO intends to come into court and argue, e.g., "The evidence definitively establishes Novell is entitled to precisely 98% of this license's revenue, 88% from this license, etc." Instead, SCO intends to argue that it is entitled to most, if not all, of the SCOsource licensing revenue, and Novell intends to argue the opposite. Novell believes the evidence presented at trial will paint Novell's position as considerably more credible.

At trial, the evidence will show that:

  • SCO approached Novell before beginning the SCOsource licensing campaign and asked Novell to join in that effort;

  • Novell refused to join the SCOsource campaign but SCO went ahead anyway;

  • The SCOsource campaign was based entirely on claims that Linux infringed SVRX copyrights;

  • SCO has never claimed that any party infringed SCO's UnixWare rights;

1

  • The focus of the specific SCOsource licenses SCO executed is SVRX rights, not UnixWare rights; and

  • SCO never remitted to Novell any portion of the SCOsource revenue - to the contrary, in violation of its fiduciary duties, SCO consistently refused to disclose the SCOsource contracts.

Novell acknowledges there is ambiguity in this picture. The law is clear, however, that as Novell's fiduciary and as the party at fault for introducing any apportionment ambiguity into the SCOsource licenses, SCO must bear the burden of apportionment and any doubts as to entitlement to particular licensing revenue must be decided against SCO.

In the face of such evidence, SCO persists in arguing that SVRX played only an incidental role in SCOsource and that it was therefore authorized to enter into the SCOsource licenses, notwithstanding the APA's general prohibition against SCO entering into new SVRX Licenses. Because the evidence will demonstrate that SVRX was at the heart of SCOsource, it cannot be that SVRX played only an "incidental" role in SCOsource licenses. Novell is therefore entitled to a declaration that SCO was without authority to enter into the SCOsource licenses.

CLAIMS AT ISSUE

A. Fourth Claim: Declaratory Relief

At trial, Novell will seek a declaration that SCO had no authority to enter into the Sun, Microsoft, and other SCOsource licenses. The Court has already held that the Sun and Microsoft SCOsource licenses are SVRX Licenses. At trial, Novell will prove that the other SCOsource licenses are also SVRX Licenses. Novell will then prove that none of the exceptions to the APA's prohibition against SCO entering into or modifying SVRX Licenses apply -- i.e., that Novell did not consent, that these licenses were not merely "incidental" to SCO's right to enter into UnixWare licenses, and that the licenses are not "additional CPU" licenses.

2

In addition, Novell will demonstrate it is entitled to a declaration that SCO had no authority to enter into the Sun SCOsource license because that agreement "concerned" a buy-out and SCO did not seek Novell's approval before entering into the Sun SCOsource license.

B. Sixth, Seventh, and Eighth Claims: Unjust Enrichment, Breach of Fiduciary Duty, Conversion

The Court has resolved any question as to SCO's liability for unjust enrichment, breach of fiduciary duty, and conversion as to the Sun and Microsoft SCOsource licenses. (Memorandum Decision and Order, Docket No. 377 ("Order"), at 97 ("SCO's conduct also amounts to a breach of fiduciary duty, conversion, unjust enrichment, and breach of express contract").) As to the Sixth, Seventh, and Eighth Claims, the only issue left for trial on the Sun and Microsoft SCOsource licenses is therefore the proper apportionment of the license revenue. The trial will also address whether SCO's remaining SCOsource agreements licensed SVRX and, if so, the amount of revenue that should be apportioned to Novell from those agreements. As discussed below, Novell need only prove up the total amount of revenue SCO received from the SCOsource licenses, and the burden then shifts to SCO to prove what amount is not Novell's. The evidence will show that the majority of the SCOsource revenue is in fact SVRX Royalties.

C. Claims Not Set for Trial

Pursuant to agreement or Court order, Novell's First, Second, Third, Fifth, and Ninth Claims are not set for trial. Novell will also not seek punitive damages.

ARGUMENT

I. SCOSOURCE WAS A CAMPAIGN TO LICENSE SVRX.

SCOsource was, fundamentally, a campaign to extract licensing revenue based on SCO's now-rejected claim to own the SVRX copyrights. (Order at 29 ("SCOsource ... was an effort to obtain license fees from Linux users based on claims to Unix System V intellectual property.").) From start to finish, SCO never claimed SCOsource had anything to do with SCO's UnixWare derivative rights, and any attempt by SCO to recast SCOsource at trial should fail.

3

In late 2002, SCO approached Novell and asked Novell to be part of a campaign to extract licenses from the Linux community based on supposed infringement of the SVRX copyrights. Novell refused to cooperate in the scheme. In early 2003, just before SCOsource was formally launched, SCO's intellectual property consultant Michael Anderer reviewed the APA and warned Darl McBride, "We really need to be clear on what we can license. It may be a lot less than we think." (Order at 28, citing NOV-EX-166.) As a consequence, Mr. Anderer counseled further negotiations with Novell, in the hopes that SCO could convince Novell that revenue sharing from SCOsource would be a "win-win" proposition with "upside" for Novell. (NOV-EX-167.)

In January 2003, SCO nevertheless launched SCOsource without Novell's consent. From the start, it was clear that SCOsource was an SVRX licensing campaign. Indeed, the name for the first iteration of the SCOsource program was "SCO System V for Linux." (NOV-EX-162, -163, -183.) One of the first major acts SCO undertook as part of SCOsource was to send a letter to every Fortune 1000 company. (NOV-EX-192, -193, -194, -195.) In that letter, SCO asserted:

We have evidence that portions of UNIX System V software code have been copied into Linux and that additional other portions of UNIX System V software code have been modified and copied into Linux, seemingly for the purposes of obfuscating their original source.

(NOV-EX-194.) SCO later followed up on that correspondence with another, more specific letter identifying particular SVRX files, claiming:

[A]ny distribution of Linux by a software vendor or a redistribution of Linux by an end user that contains any of the identified System V code violates SCO's rights under the DMCA, insofar as the distributor knows of these violations.

(NOV-EX-346.)

4

SCO rarely, if ever, used the phrase "UnixWare" when describing the intellectual property involved in the SCOsource campaign, and never used that phrase when describing Linux's supposed infringement of the UNIX copyrights.1

II. NOVELL IS ENTITLED TO THE SCOSOURCE LICENSING REVENUE.

The evidence presented at trial will show that the bulk of the money SCO collected in its SCOsource campaign was in fact SVRX Royalties and that Novell is entitled to restitution of tbis money.

A. Any Doubt or Ambiguity as to Entitlement to SCOsource Revenue Must Be Resolved in Novell's Favor.

As the plaintiff, Novell bears the burden to make out its prima facie case -- to show that SCO entered into SVRX Licenses, that SCO received SVRX Royalties, and that SCO did not remit those SVRX Royalties. The evidence presented at trial will establish such a case. The law is clear, however, that where a fiduciary commingles its own funds with those of its agent, it is the fiduciary's obligation to untangle the funds. Novell need only prove up the total amount of revenue SCO received, and the burden then shifts to SCO to show what amount is not Novell's.

Any other result would be manifestly unfair. Novell is not the author of the SCOsource licenses -- instead, SCO did its best to keep the terms of those licenses secret from Novell. If it is difficult to separate out what is SCO's from what is Novell's in those licenses, that is SCO's fault alone. To place the burden of doubts on Novell would reward SCO for its breach of

5

fiduciary duty and encourage fiduciaries to convert agents' funds in ways that make apportionment difficult. Indeed, this is one of the primary benefits of the APA's requirement for Novell's prior approval of SVRX Licenses -- it allows the parties to work out a fair apportionment of licensing revenue ahead of time and structure licenses to make clear each party's rights.

Faced with similar questions in the context of a copyright infringement accounting, Judge Learned Hand held:

[T]he defendants must be content to accept much of the embarrassment resulting from mingling the plaintiff's property with their own. We will not accept the expert's testimony at its face value; we must make an award which by no possibility shall be too small. It is not our best guess that must prevail, but a figure which will favor the plaintiffs in every reasonable chance of error.
Sheldon v. Metro-Goldwyn Pictures, Corp., 106 F.2d45, 51 (2d Cir. 1939). Similarly, Rosenfeld, Meyer & Susman v. Cohen, 191 Cal. App. 3d 1035 (1987), involved the dissolution of a law firm. The court held that, in breach of their fiduciary duties, one set of partners (the "RMS" partners) withheld partnership revenue from a second set (the "C&R" partners). Separation of the monies involved was complicated by the fact that some revenue stemmed from post-dissolution work (to which, like SCO, only the RMS partners were entitled) and predissolution work (to which, like Novell, the C&R partners were entitled). Given the fiduciary relationships involved, the trial court placed the burden of apportionment on the RMS partners, with doubts decided against them. The appellate court affirmed:
The position of RMS was not unlike that of other trustees who fail to keep proper records of the dates and amounts of receipts and expenses; such fiduciaries have the burden of establishing that data and, upon their failure to do so, a computation may be made on the basis of gross receipts, even though that approach is unfavorable to them.

. . .

Surely, where a fiduciary has a legal duty to allocate receipts between those in which its beneficiary has some interest and those

6

in which the beneficiary has none, and is fully and singularly capable of making that allocation but fails to do so, a court is justified in calling upon the fiduciary to bear the burden of differentiation at trial ....

Except for a few accounts, for which RMS did prove that percentage fee receipts were the product of post dissolution work, RMS failed to bear its burden at trial. As a result, the trial court correctly used the balance of the percentage fee income as the base for allocating the partners' shares.

Id. at 1051-52; see also Kim v. Fujikawa, 871 F.2d 1427, 1430-31 (9th Cir. 1989) ("In determining the amount that a breaching fiduciary must restore to the Funds as a result of a prohibited transaction, the court should resolve doubts in favor of the plaintiffs." (internal quotation and citation omitted)); Leigh v. Engle, 727 F.2d 113, 138-39 (7th Cir. 1984) ("the burden is on the defendants who are found to have breached their fiduciary duties to show which profits are attributable to their own investments apart from their control of the Reliable Trust assets .... [W]hile the district court may be able to make only a rough approximation, it should resolve doubts in favor of the plaintiffs"); In re Unisys Corp. Retiree Med. Benefits Litig., MDL NO. 969,2000 D.S. Dist. LEXIS 22347, at * 15 (E.D. Pa. Apr. 25, 2000) ("[O]nce a plaintiff has established breach and resulting harm, the breaching fiduciary has the burden of resolving any uncertainty pertaining to the extent of that harm.") (attached hereto as Ex. 1); Kennard v. Glick, 183 Cal. App. 2d 246,250-51 (1960) ("An agent who fails to keep an account raises thereby a suspicion of infidelity or neglect, creates a presumption against himself, and brings upon himself the burden of accounting to the utmost for all that has come into his hands; and in such case every doubt will be resolved against the agent, and in favor of the principal .... ").

SCO has attempted to distinguish these cases by inventing a distinction between uncertainty caused by the mingling of revenue from multiple sources (e.g., the new and old business in RMS) and uncertainty caused by the mingling of revenue within one source (e.g., the Microsoft SCOsource license). (SCO's Reply Memo. in Further Support of SCO's Motion In Limine Regarding Apportionment of 2003 Microsoft and Sun Agreements, Docket No. 449, at

7

3.) Nothing in these cases supports such a distinction, however, and SCO cited no cases of its own in support. It would be surprising if a fiduciary could force its principal to pay the price for the uncertainty caused by its own wrongdoing by simply commingling multiple revenue streams in one agreement.

B. Novell Is Entitled to the Microsoft SCOsource Revenue.

SCO has consistently described the license with Microsoft as part of its SCOsource campaign, and has never classified any portion of the revenue it collected from Microsoft as "UnixWare revenue" in its SEC filings. (NOV-EX-304.) Microsoft paid SCO [REDACTED ] for its SCOsource license, as follows:

REDACTED

8

REDACTED

9

REDACTED

C. Novell Is Entitled to the Sun SCOsource Revenue.

REDACTED

10

REDACTED

(NOV-EX-327.) Darl McBride, SCO's CEO, was asked about this aspect of Sun's SCOsource license, and confirmed that SCO believes the license conveyed the right to Sun to open source Solaris. (NOV-EX-327, -341.) Sun's CEO, Scott McNealy, describes the license in the same way:

There were hundreds of encumbrances to open sourcing Solaris. Some of them we had to buy out, others we had to eliminate. We had to pay SCO more money so we could open the code -- I couldn't say anything about that at the time, but now I can tell you that we paid them that license fee to expand our rights to the code," McNealy said, referring to the February 2003 expanded Unix SVR4 license rights purchase from the SCO Group.

(NOV-EX-341.)

REDACTED

11

D. Novell Is Entitled to the Other SCOsource Revenue.

As noted above, SCO sent letters to thousands of Linux users threatening suit over the SVRX code supposedly in Linux [REDACTED] such users took a SCOsource license, each under similar terms. These licenses grant, with certain limitations, the "right and license to use ... SCO IP." (NOV-EX-346.) The definition of "SCO IP" makes clear that these licenses convey SVRX rights:

"SCO IP" means the SCO UNIX®-based Code alleged by SCO to be included, embodied, or otherwise utilized in the Operating System.

. . .

"UNIX-based Code" means any Code or Method that: (i) in its literal or non-literal expression, structure, format, use, functionality or adaptation (ii) is based on, developed in, derived from or is similar to (iii) any Code contained in or Method devised or developed in (iv) UNIX System V or UnixWare®, or (v) any modification or derivative work based on or licensed under UNIX System V or UnixWare.

(NOV-EX-346 (emphasis added).)

In total, SCO entered into the following additional SCOsource licenses:

REDACTED

12

REDACTED

(NOV-EX-365, -391, -411.)

As SCO itself admits "[t]he central feature of the other SCOsource agreements is the covenant not to sue and the waiver of claims by SCO for the companies' internal Linux usage." (SCO's Memo. in Opp. to Novell's Motion In Limine to Preclude SCO from Contesting Licenses Conveying SVRX Rights Are "SVRX Licenses," Docket No. 421, at 3.) Because SCO has never contended UnixWare is in Linux, that "covenant not to sue" and "waiver of claims" must concern only SVRX. Novell is therefore entitled to the entirety of this SCOsource revenue.

E. SCO Is Not Entitled to Keep 5% of the SVRX License Revenue.

As the Court is aware, under the APA, SCO undertook a fiduciary duty to collect and remit 100% of the SVRX Royalties. "In consideration of SCO's exercise of its fiduciary duties, SCO is ordinarily entitled to "an administrative fee equal to 5% of such SVRX Royalties." (NOV-EX-l (APA) at §4.16(a).) Here, the Court has found that, as a matter of law, SCO breached its fiduciary duties and converted revenue meant for Novell. (Order at 97.) Given that breach, SCO is not entitled to any percentage of the SVRX Royalties and the Court should therefore make no 5% deduction from any restitution granted Novell.

F. Novell Is Entitled to Prejudgment Interest at 7%.

California law permits the award of 7% prejudgment interest at the discretion of the Court. Cal. Civ. Code §§3287, 3288; Bullis v. Security Pac. Nat'l Bank, 21 Cal. 3d 801, 814

13

n.l6 (1978) ("While section 3288 only grants such authority to the 'jury,' the trial court, when acting as the trier of fact, may award prejudgment interest under this section."). California law mandates prejudgment interest where the defendant is found to have converted funds. Cal. Civ. Code §3336; Stan Lee Trading, Inc. v. Holtz, 649 F. Supp. 577, 582-83 (C.D. Cal. 1986). Whether pursuant to Section 3336's mandate or pursuant to the Court's discretion, an award of prejudgment interest is appropriate here to ensure that SCO does not reap the benefit of the time value of the SVRX Royalties that it wrongfully withheld from Novell. See, e.g., Cassinos v. Union Oil Co. of Cal., 14 Cal. App. 4th 1770, 1788-90 (1993) (awarding interest pursuant to Civ. Code § 3288 on claim seeking disgorgement of defendant's unjust enrichment); Irwin v. Mascott, 112 F. Supp. 2d 937,955-56 (N.D. Cal. 2000) ("prejudgment interest is also due on money paid as restitution" under Civ. Code § 3287(a)); Nordahl v. Dep't of Real Estate, 48 Cal. App. 3d 657, 665 (1975).

Novell provided SCO with calculations of prejudgment interest as part of Mr. Terry Musika's expert report. Novell will provide the Court with a calculation of the appropriate prejudgment interest with its proposed final verdict once it is known what recovery the Court finds appropriate following trial.

III. SCO WAS WITHOUT AUTHORITY TO ENTER INTO THE SCOSOURCE
LICENSES.

In addition to the return of SCOsource revenue wrongfully withheld, Novell seeks a declaration that SCO was without authority to enter into the SCOsource licenses. Novell's entitlement to such a remedy is straightforward. This Court has already held that the Microsoft and Sun SCOsource licenses are SVRX Licenses, and has barred SCO from contesting that ruling at trial. (Order at 95; September 9, 2007 Order ("MIL Order"), Docket No. 453, at 16-17.) The evidence will show that SCO's other SCOsource licenses also conveyed SVRX rights and that they are therefore SVRX Licenses.

14

SCO is generally barred from modifying existing SVRX Licenses and from entering into new SVRX Licenses. (Order at 92.) As amended, the APA permits only three exceptions:

SCO may enter into SVRX Licenses with Novell's written permission. Novell never consented to the SCOsource licenses, and SCO has not suggested otherwise. (Order at 41.)

SCO may enter into SVRX Licenses "incidentally involved through [SCO's] rights to sell and license" UnixWare. The evidence cited and discussed above amply demonstrates that SVRX played more than an "incidental" role in the SCOsource licenses -- it was the very heart of SCOsource.

And SCO may enter into SVRX Licenses "to allow a licensee under a particular SVRX License to use the source code of the relevant SVRX product(s) on additional CPU's or to receive an additional distribution, from [SCO], of such source code." The SCOsource licenses are not such "additional CPU" licenses. In the case of Sun and Microsoft, the SCOsource licenses convey broad rights to use, distribute, sublicense, etc. SVRX in both binary and source form, and contain no mention of CPU limitations. The other SCOsource licenses permit the licensee to use SVRX in Linux and, again, contain no CPU limitations. With no applicable exception, the APA's general bar applies and SCO was therefore without authority to enter into the SCOsource licenses.

SCO was without authority to enter into the Sun SCOsource license for an additional, independent reason. Before entering into "any potential transaction with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations," SCO must notify Novell in writing and obtain Novell's consent. (NOV-EX-40 (Am. 2) at § B.) There is no dispute that Sun's 1994 agreement with Novell was a "buy-out," as that term is used in Amendment No. 2. Sun's 2003 SCOsource license explicitly acknowledges that it is intended to "amend and restate" the 1994 buy-out agreement. (Order at 94.) By definition, Sun's SCOsource license therefore "concerns" a buy-out, and SCO was required to follow the additional restrictions imposed by

15

Amendment No. 2 on transactions that concern buy-outs. The evidence will establish that SCO did not inform Novell in writing of its intention to enter into the Sun SCOsource agreement and did not obtain Novell's consent to that agreement. For this additional reason, SCO was without authority to enter into the Sun SCOsource agreement.

IV. SCO'S AFFIRMATIVE DEFENSES HAVE NO MERIT.

During meet and confer on the pretrial order, SCO articulated two affirmative defenses it intends to raise at trial: estoppel and unclean hands. Neither has any application here.

As a preliminary matter, both defenses would appear to concern Novell's entitlement to equitable relief, not the precise amount of that relief. As that entitlement has already been determined as a matter of law, it is unclear what application these defenses could have now. Put otherwise, if SCO wanted to raise these defenses, it should have done so in the motion for summary judgment briefing.

A. Novell Is Not Estopped from Pursuing Its Fiduciary Duty Claims Against SCO.

SCO's draft pretrial order suggested that SCO will assert that Novell is estopped from seeking the SVRX Royalties withheld by SCO. SCO has, in the past, asserted that Novell's purported failure to ask for SVRX Royalties from licenses that also license UnixWare is evidence that Novell is not entitled to such revenue. SCO made that argument in an effort to graft "existing at the time of the APA" into the definition of "SVRX License," which the Court rejected as a matter of law. (Order at 90-93.) SCO bears an even greater burden to show that the same supposed facts make out a case for estoppel -- a burden that SCO cannot hope to carry.

Estoppel arises out of the rule that "[w]henever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it." Cal. Evid. Code § 623. To make out estoppel, "four elements must be present ... (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct

16

shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." Lentz v. McMahon, 49 Cal. 3d 393,399 (1989). SCO would therefore have to show that Novell knew whether and to what extent SCO collected but did not remit SVRX Royalties, that Novell failed to seek such Royalties and intended for that failure to be taken by SCO as indication it could keep the money, and that SCO relied on Novell to its injury.

It is obviously impossible for SCO to make out those elements as to the SCOsource revenue -- as soon as Novell found out about that, it sent repeated letters to SCO demanding Novell's proper share. (NOV-EX-220, -267, -280, -293, -297, -303, -317.) What SCO must intend to argue, instead, is that Novell's purported conduct concerning earlier licenses, not at issue in this trial, waived Novell's right to insist on apportionment of the SCOsource revenue. If that is not the very argument this Court has already rejected as a matter of law, it certainly bears a striking resemblance.

Assuming the law of the case does not bar estoppel here, though, SCO still cannot succeed. It cannot point to any affirmative conduct by Novell waiving its right to SVRX Royalties. SCO is therefore confined to arguing that Novell's silence when supposedly presented with evidence that SCO withheld SVRX Royalties estops Novell now. "Estoppel by silence" is especially difficult to show. Courts typically require a duty to speak before imparting preclusive effect to silence. See, e.g., Feduniak v. California Coastal Comm'n, 148 Cal. App. 4th 1346, 1362 (2007) ("It is settled that when the party to be estopped does not say or do anything, its silence and inaction may support estoppel only if it had a duty to speak or act under the particular circumstances."). That is especially true in fiduciary relationships, where the presumption is that the principal need not investigate the activities of its agent and can instead rely on the agent to fulfill its duties faithfully. Hobbs v. Bateman Eichler, Hill Richards, Inc.,

17

164 Cal. App. 3d 174, 201-202 (1985) ("Where there is a fiduciary relationship, the usual duty of diligence to discover facts does not exist."). As Novell has no "duty to speak" here, it cannot be estopped by its supposed silence. Even if SCO surmounted all these obstacles, the facts simply do not show Novell silence in the face of knowledge that SCO retained SVRX Royalties from mixed licenses. SCO has presented no evidence that Novell was aware of even one such circumstance. The record instead shows that Novell's auditors reviewed royalty reports prepared by SCO, royalty reports from third-party licensees, and other payment and financial records, and not the terms of the actual SCO UnixWare licenses. (NOV-EX-84 (Mar. 2, 1999 Audit Report) ("[t]he audit included a review of royalty reports, third party royalty reports, summary reports, Novell cash deposit reports, cash reconciliations, accounts receivable reports, customer lists, other financial records and SCO's customer audits").) Novell is not aware of any evidence that Novell saw any of SCO's UnixWare licenses that conveyed SVRX rights. SCO's briefing is to the same effect. 2

B. Novell Has Acted with "Clean Hands."

SCO's draft pretrial order also suggested that SCO intends to assert that the equitable remedies Novell seeks are barred under the doctrine of unclean hands. As partially codified in California Civil Code section 3517, this doctrine provides that "[n]o one can take advantage of his own wrong." Aside from listing "unclean hands" in its Answer, SCO has never mentioned this defense and has therefore never articulated what conduct by Novell SCO claims bars the recovery of equitable remedies. If SCO had a meritorious unclean hands defense, it is surprising that SCO did not raise it in the motion for summary judgment briefing.

18

In any event, Novell has always acted with good faith toward SCO (see, e.g., Order at 65), and the cases actually granting such a defense make clear that no conduct by Novell rises to the level of unclean hands. See, e.g., Rosenfeld v. Zimmer, 116 Cal, App. 2d 719, 722 (1953) ("A court of equity will not assist a party to a fraudulent scheme to secure the objective of such plan."); Reynolds v. Roll, 122 Cal. App. 2d 826,836 (1954) ("courts will not lend assistance to persons whose claim for relief rests on an illegal transaction" (internal quotation marks and citation omitted)). Even where such conduct is shown, it must be part of the same transaction at issue, and the nature of the plaintiff's conduct must be worse than that of the defendant. See, e.g., Watson v. Poore, 18 Cal. 2d 302, 313 (1941) ("[I]mproper conduct not necessarily connected with the transaction particularly involved ... is not a reason for denying equitable relief on the ground of unclean hands."); Belling v. Croter, 57 Cal, App. 2d 296, 304 (1943) (Unclean hands does not apply "if it be shown that [the plaintiff] is the one 'least at fault,' and that the party against whom relief is sought was guilty of wrongdoing in respect to the same matters and is 'most in fault. '”).

It is therefore clear that no affirmative defenses protect SCO's conduct here.

CONCLUSION

For the reasons stated above, Novell is entitled to:

  • Apportionment of the SCOsource revenue in an amount to be determined by the Court, without any 5% administrative fee deduction;

  • Prejudgment interest at 7%; and

  • A declaration that SCO exceeded its authority in entering into the SCOsource licenses.

Based on that recovery, Novell anticipates seeking additional relief in its post-trial briefing, such as a constructive trust. Consideration of such relief is not necessary at trial, which

19

per the Court's direction will focus on the proper apportionment of the SCOsource revenue and on Novell's entitlement to declaratory relief.

DATED: September 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
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice

Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.


1 REDACTED.

2 SCO's Memorandum in Opposition to Novell's Motion for Partial Summary Judgment or Preliminary Injunction and in Support of SCO's Cross Motion for Summary Judgment or Partial Summary Judgment, Docket No. 183, at ¶ 60 (noting that Novell representatives received only reports of binary royalties from SVRX licenses).

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 14th day of September, 2007, I caused a true and correct copy of NOVELL'S TRIAL BRIEF [ 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]

Via U.S. Mail, postage prepaid:

Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Heather M. Sneddon

21


  


Novell's Trial Brief for Utah | 379 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here
Authored by: FrankH on Thursday, November 29 2007 @ 10:36 AM EST
Let's have 'em.
Make your title relevant

---
All right now, baby it's all right now.

[ Reply to This | # ]

Off Topic
Authored by: FrankH on Thursday, November 29 2007 @ 10:38 AM EST
With lickable clinks (see the example in red)

---
All right now, baby it's all right now.

[ Reply to This | # ]

News Picks Comments Here
Authored by: red floyd on Thursday, November 29 2007 @ 11:11 AM EST
Please put the newspick in the title.

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 11:24 AM EST
Adam Sandler or maybe Will Farrel

[ Reply to This | # ]

Cool Names for Judges.
Authored by: Anonymous on Thursday, November 29 2007 @ 11:24 AM EST
Can anyone suggest anything better than the ultra-cool name of "Judge
Learned Hand" referenced above?

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Question on limit of scope.
Authored by: MrCharon on Thursday, November 29 2007 @ 11:54 AM EST
After reading Judge Gross’s order and the trial brief I’m left wondering. Will
Novell be allowed to go after the other SCOSource contracts outside of Microsoft
and SUN? Gross’s order seems to be limiting the scope.

---
MrCharon
~~~~

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A Game of Consequences?
Authored by: elderlycynic on Thursday, November 29 2007 @ 12:18 PM EST
Just to check my understanding of the law - if Novell wins, and
SCO was ruled to be acting without authority in granting those
licences, they they become invalid, don't they?

If that is so, what happens then, I wonder? Such a decision is
clearly political to a degree - so much so that I can't even
guess what Novell would do with it.

[ Reply to This | # ]

Rumor - Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 12:20 PM EST
I heard a rumor, that because of the corporate structure of SCO, it is possible
that the executive officers of the corporation may be at financial risk if SCO
does not have sufficient funds to satisfy a decision against SCO in Novell's
favor, and that the CEO Darl McBride was particularly at risk because of the
percentage of the stock he owned.

Is there any truth to this?

[ Reply to This | # ]

Time For A "Mind Map" Of All Players
Authored by: Anonymous on Thursday, November 29 2007 @ 12:33 PM EST
Is it time for "us" to do some research and piece together a
"Mind Map" of all the players (individuals) involved in this entire
"Game"? It night reveal one or more "interesting"
connections! Lots of software for doing the above. One FOSS is Freemind. Be good
to have one that can be used collaboratively over the web.

I can't remember the names of folks in Norway who put together a rather complex
"mind mapping" system that could be accessed by a browser. It could
massaged the data/info in a variety of ways in order to look at the data from
different perspectives in a very graphical way - and produce unusual
relationships which sort of jump out at you.

We are very very visual - that is, our brains are very very visual and respond
better to colored images rather than, text in lines.

Of course mind maps could be also used to lay out all of the claims and counter
claims made by all the Players in this game.

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Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 12:34 PM EST
I think you'll all agree that this presents a very bleak picture for SCO at
trial -- and I think receiving this brief made an immediate decision to declare
bankruptcy look pretty good, as long as it put off this day in court.

But it couldn't put it off forever, and now we're back.

What's most devastating isn't even what's written - it's what is IMPLIED.

What's implied is that (a) Novell will put on it's case in chief, as it has
already laid out here. Novell will establish the prima facia claim, and that
will be sufficient (because SCO breached a fiduciary duty) to win -- UNLESS --
SCO can rebut it, with their own evidence.

As the brief states (from the great Learned Hand himself):

"As the plaintiff, Novell bears the burden to make out its prima facie case
-- to show that SCO entered into SVRX Licenses, that SCO received SVRX
Royalties, and that SCO did not remit those SVRX Royalties. The evidence
presented at trial will establish such a case. The law is clear, however, that
where a fiduciary commingles its own funds with those of its agent, it is the
fiduciary's obligation to untangle the funds. Novell need only prove up the
total amount of revenue SCO received, and the burden then shifts to SCO to show
what amount is not Novell's.
Any other result would be manifestly unfair. Novell is not the author of the
SCOsource licenses -- instead, SCO did its best to keep the terms of those
licenses secret from Novell. If it is difficult to separate out what is SCO's
from what is Novell's in those licenses, that is SCO's fault alone. To place the
burden of doubts on Novell would reward SCO for its breach of fiduciary duty and
encourage fiduciaries to convert agents' funds in ways that make apportionment
difficult. Indeed, this is one of the primary benefits of the APA's requirement
for Novell's prior approval of SVRX Licenses -- it allows the parties to work
out a fair apportionment of licensing revenue ahead of time and structure
licenses to make clear each party's rights."


That means SCO has to put on a case, or else lose it all. That means SCO has to
put up witnesses. And THAT means that Novell gets to cross-examine them. And
they will be "under oath".

And how will SCO attempt to prove that Microsoft WASN'T paying for SVRX
licenses? It can't be by hearsay -- so won't they have to call someone who can
speak for Microsoft?

Hmmmm. That will be delicious to watch. And that's why SCO was trying, IMHO, to
sell itself away in BK court. SCO was trying to draw Novell into an auction,
using York as the stalking horse, and then extract a settlement from Novell to
make this day in court go away. It didn't work.

LEXLAW

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Novell's Trial Brief for Utah
Authored by: Yossarian on Thursday, November 29 2007 @ 01:11 PM EST
>So, ironically enough, despite all of SCO's dancing and
>prancing in Delaware, the Utah trial is actually going to
>be just as it would have been originally.

Not exactly.
SCO got a three months delay.

You may say that three months is not a lot, but I say that
you can hide most of your assets in three months.

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: Bill The Cat on Thursday, November 29 2007 @ 01:12 PM EST
Can Novell and/or the court "undo" the Sun and Microsoft license deals
if it is ruled that SCO did NOT have the authority to enter into these
arrangements?

The reason for asking is that if nothing can be done about it now (water under
the bridge, so to speak) then why waste any time on it? I could understand not
allowing any future (if SCO even has a future) such arrangements but just making
a determination that these were unauthorized sales but nothing can be done about
it doesn't seem to justify spending any time on them. Can somebody help me out
here?

The only thing that I can come up with for the court making such a ruling would
be to then "undo" the sale. Of course, that would also mean returning
any moneys received. That burden would fall on SCO however, not Novell since
Novell never received the revenue in the first place.

So, the court could rule the sales were not authorized by the APA.
The court then could rule that the sales be reversed
Sun and Microsoft go after the insolvent SCO for their loss
Novell finally wins something of value in this fiaSCO.

I realize this would probably never happen but the question is "Could
It?"


---
Bill The Cat

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 01:20 PM EST
Would it not be a hoot IF SCOg outed the PIPE in order to take the heat off?
Really at this point, they have nothing to fear but possible Prison/Fines, and
in the end may make sense to them to point the finger and say "They put us
up to this".....

Not like it will happen, but a man can have his dreams, can't he?

[ Reply to This | # ]

Novell's Trial Brief for Utah - missing reference
Authored by: Anonymous on Thursday, November 29 2007 @ 01:29 PM EST
I believe Novell should also reference California Constitution Article 15 Section 1 The rate of interest upon the loan or forbearance of any money, goods, or things in action, or on accounts after demand, shall be 7 percent per annum but it shall be competent for the parties to any loan or forbearance of any money, goods or things in action to contract in writing... Usury

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: tknarr on Thursday, November 29 2007 @ 01:40 PM EST

My guess at Judge Kimball's rulings:

  • SCO had at least apparent authority to enter into the licenses, so Microsoft's and Sun's licenses remain valid. If SCO failed to get approval as required by the APA, Sun and MS wouldn't have been in a position to know that and it's a matter to be settled between Novell and their agent. Novell's audit requests will probably be judged an attempt to settle the matter, and SCO's resistance to them will count against it.
  • Prejudgement interest granted but possibly at a lower rate than the 7% Novell requested.
  • At least 50% of the license revenue deemed to be Novell's, possibly 100% if SCO can't elaborate on the exact allocation and justify portions as not related to SysV. Due to the first finding and SCO's documented resistance to audits, Novell's likely to get the 5% administrative-fee portion as well as the 95% the APA grants them.

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Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 03:15 PM EST
Firstly, politicians never read bills. They spread fear and imaginary outrage
over imaginary rules being broken by imaginary enemies.

Secondly, this is the "off-topic" portion of the comments, so it is
technically not invalid. You may not like it, but people do see a lot of
politics in IT issues, and they are not mutually exclusive as you seem to be
implying.

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: GLJason on Thursday, November 29 2007 @ 04:03 PM EST
I thought Novell and IBM had a deal where they could share discovery information
and documents...

[ Reply to This | # ]

did Judge Kimall ever rule on Novell's motion limiting SCOG"s apportionment theories?
Authored by: Anonymous on Thursday, November 29 2007 @ 04:13 PM EST
Novell had a motion asking the judge that if SCOG had not presented an
apportionment in discovery, SCOG could not present it at trial.

Anyone know what happened to that?

Or was that the matter on which Kimball ruled

"I assume SCOG turned this accounting data over ..."

And SCOG had not done so?

[ Reply to This | # ]

Interest in the trust?
Authored by: Filias Cupio on Thursday, November 29 2007 @ 04:58 PM EST
Assuming Novell prevails, and Kimball agrees to the prejudgement interest: does
the interest become part of the trust, or is it just another unsecured debt?

[ Reply to This | # ]

disgorgement :) yeah! (nt)
Authored by: SilverWave on Thursday, November 29 2007 @ 05:03 PM EST
.

---
Software Patents give Hardware Patents a bad name.

If the Pharmaceutical industry does not want to be included in the backlash...
arrange for a separation.

[ Reply to This | # ]

Microsoft paid SCO [REDACTED ] for its SCOsource license
Authored by: Anonymous on Thursday, November 29 2007 @ 05:17 PM EST
What is the likelihood of any of these [REDACTED] pieces
of the puzzle being repeated in open court?
To satisfy the requirement of justice being seen to be done,
oh, and the prurient...

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 05:26 PM EST
I would not worry about the trustee "selling" access to IBM or Novell.
As creditors they will be able to walk right through the books. Bankruptcy makes
this possible.

I would be worried about the bankruptcy court looking back over the transactions
with other tentacles of Canopy.

[ Reply to This | # ]

The SCO Dilemma, Mk II
Authored by: sproggit on Thursday, November 29 2007 @ 06:07 PM EST
Gotta hand it to the Novell Legal Team.

Do you remember the way that Cravath et al (in the IBM case) carefully answered
SCO's claim that the GPL was illegal and invalid?

"Either the GPL is a valid and legal license, or your act of distributing
IBM copyright code that was released under the GPL and *no other* license is
completely illegal. We're both covered by it, or neither of us are covered by
it. Which way do you want it?"

IBM even went to the trouble of pulling out specific programs and lines of codes
and listing it in their motion, thus demonstrating to Judge Kimball just how
easy it was to identify lines of offending code with specificity.

Kinda like the legal equivalent of giving SCO a slap with a wet kipper - and it
was a joy to behold.


I think it's pretty obvious that the Legal Beagles over at MoFo saw this and
decided they liked it.

Now we have a second and equally delicious dilemma for Darl and SCO to wriggle
against:

If the SCOsource license covers primarily use of Unix SVRX code, then revenue
generated belongs primarily to Novell, SCO are guilty of conversion and in a
heap of trouble. (aka Chapter 7 bankrupt and toast).

or...

If the SCOsource license covers primarily use of Unixware code (which the
letters to Fortune companies expressly did *not* claim), then how, pray tell,
could IBM possibly have contributed *this* to Linux when they would never have
seen it??? Perhaps more significantly, in this case, then those letters to the
Fortune companies that were posted in the US Mail could potentially become
"Mail Fraud" and yet another series of jagged rocks appears before the
Good Ship SCO.

It's rather sweet, don't you think?


As observers, we get only a vague notion of the personalities of the parties
involved. Thinking about Judge Kimball, I get the impression that he's as sharp
as a tack and has a dry sense of humor.

That tells me that he will have read this brief, grokked *exactly* where Novell
were going with this, understood precisely what SCOs reaction would likely be,
then sat there chortling to himself. Not because he favours one side over the
other, but because he's demonstrated an appreciation for "fine
lawyering" as PJ so eloquently puts it, and this particular lawyering is
exceedingly fine...


Also, as an observer, I like to think that the legal strategists at both IBM and
Novell have been figuring all this out for months, a bit like a complex game of
chess. They waited, quietly and patiently, as SCO performed action after action
which IBM/Novell knew could later be used to seal SCO's own fate.

Just as the most effective of martial arts use the energy of an aggressor
against them, so IBM and Novell are now using the actions of a legal aggressor,
SCO, in the same way.

Let this be a lesson to any company who would seek to attack the FOSS community.








[ Reply to This | # ]

Strange ...
Authored by: Anonymous on Thursday, November 29 2007 @ 06:48 PM EST
Now a week has passed with no filings from SCOG - have the SCOundrels fled?

[ Reply to This | # ]

Novell's Trial Brief for Utah
Authored by: Anonymous on Thursday, November 29 2007 @ 07:21 PM EST
There's been quite a bit of chatter about ...

* Did SCO have the authority to enter into the SCOsource licenses, including
those with Sun and Microsoft?

... so well let's sees how the players stand one way or the other on this point
...

SCOG: Lost each way; neutral
Novell: Not in it for the money; neutral
Microsoft: LOL
Sun: Oooooooh!

Proud to be Anonymous Coward ;)



[ Reply to This | # ]

Michael Anderer
Authored by: Brian S. on Thursday, November 29 2007 @ 07:42 PM EST

In early 2003, just before SCOsource was formally launched, SCO's intellectual property consultant Michael Anderer reviewed the APA and warned Darl McBride, "We really need to be clear on what we can license. It may be a lot less than we think." (Order at 28, citing NOV-EX-166.) As a consequence, Mr. Anderer counseled further negotiations with Novell, in the hopes that SCO could convince Novell that revenue sharing from SCOsource would be a "win-win" proposition with "upside" for Novell. (NOV-EX-167.)
Although Mike Anderer is famous on Groklaw and elsewhere, I don't remember his name being in the courts before.

Since, whatever it was that was arranged between M$ and Ralph Yarro around Christmas 1999 in a hotel room in Seattle, HE has been the M$ connection.

I'd love to think that he could be called to give evidence.

Brian S.

[ Reply to This | # ]

Will David Boies FINALLY make his appearance?
Authored by: Anonymous on Thursday, November 29 2007 @ 08:11 PM EST
If SCO cannot pull a rabbit out of the hat, and has to appear at trial before
Judge Kimball, I'm wondering if we will FINALLY get to see David Boies'
appearance in this case.

After all, SCO paid a lot of money to get HIS name and reputation, and his
second-string is just not going to cut it.

But Boies must be feeling quite differently about it...

[ Reply to This | # ]

Novell have "nothing to lose".
Authored by: Brian S. on Thursday, November 29 2007 @ 09:10 PM EST
Their name is MUD in the OSS world.

All their Linux efforts are based in Europe.

They have the cross licensing deal with M$.

Their major play is with governments and their historic Novell networks (they're huge and everywhere).

EU governments don't like M$ for many reasons, not least their bills.

Will Novell take advantage of this?

Brian S.

[ Reply to This | # ]

SCO's "already spent it" defense
Authored by: Khym Chanur on Thursday, November 29 2007 @ 10:55 PM EST

Two questions about SCO's defense of "we already spent the money that belongs to Novell, so the money we have left is 100% ours":

  1. Can SCO bring up that defense in the Utah apportionment trial, or is that something that they can only bring up in the bankruptcy court? (I'm not asking if such a defense would any chance of working, just if it's germane to the issue of apportionment)
  2. If SCO can bring it up in the Utah trial, and they put it in their trial brief, can Novell file an updated version of their trial brief with arguments against SCO's "already spent it" defense?

---
Give a man a match, and he'll be warm for a minute, but set him on fire, and he'll be warm for the rest of his life. (Paraphrased from Terry Pratchett)

[ Reply to This | # ]

How can Novell be entitled to revenue from Linux?
Authored by: devil's advocate on Friday, November 30 2007 @ 12:22 AM EST
"NOVELL IS ENTITLED TO THE SCOSOURCE LICENSING REVENUE" - but that was
for licensing of SVRX code in Linux (there was none) so how can Novell claim the
revenue? It's tainted money. The only safe thing is to give it back to the
people they collected it from.

[ Reply to This | # ]

SCO's Prejudicial Trial Brief
Authored by: DaveJakeman on Monday, December 03 2007 @ 05:57 AM EST
Having OCR'd , HTML'd and proofed Novell's Trial Brief back in September (not
used here -- I was on holiday the last few days), I've been painfully aware SCO
omitted to submit theirs on that fateful day, 14th September.

By the time this gets to trial, SCO will have had three months or more to
consider Novell's trial brief and what they might put in theirs. Is this not
highly prejudicial? How could the Utah court address this now, so as to ensure
a fair trial? Now the stay is lifted, SCO's filing goes further overdue with
every passing moment. The more overdue their filing, the more obvious it is SCO
had no intention of going to trial in the first place. We now know SCO were
scurrying fast *before* the 14th, desperately trying to avoid the trial, but
where is their trial brief? Hmm? Shouldn't they already have it prepared?
Shouldn't it just be a matter of printing it off and wandering down to the
courthouse? Or use that handy electronic filing system?

I half expect to see something filed by Novell at least pointing this out and
requesting relief, although I've no idea what relief could be granted to remove
such prejudice. (Well, actually I have some ideas, but they're all rather
silly.)

---
Monopolistic Ignominious Corporation Requiring Office $tandard Only For
Themselves

[ Reply to This | # ]

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