SCO has filed its reply to Novell's brief: 04/23/2009 Open Document [ 9654117]
Appellant's reply brief filed by SCO Group. Original and 7 copies.
Served on 04/23/2009. Manner of Service: email.
I haven't read it yet myself, so we will do so together. Here's Groklaw's timeline page for the appeal, and you can find the documents there. Thank you, Erwan! I've added that timeline to the menu. Here's SCO's appeal brief and this is Novell's brief that this one is replying to. While I will read it carefully now, the opening six pages, to my quick reading, reflect SCO's usual casual nod in the direction of accuracy. For example, how do you like this sentence:
This is the rare case where the principals on both sides of the contract agree on the parties' intent. I think not, m'lord. That's why you are in appeals court.
Here it is as text:
**********************
No. 08-4217
IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
THE SCO GROUP, INC.,
Plaintiff-Appellant,
v.
NOVELL, INC.,
Defendant-Appellee.
____________________________________________________
On Appeal from the United States District Court for the District of Utah
Hon. Dale A. Kimball, Presiding
No. 2:04-CV-00139-DAK
_______________________________________________________
REPLY BRIEF FOR APPELLANT, THE SCO GROUP, INC.
ORAL ARGUMENT REQUESTED
David Boies
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[Address, phone, fax]
Stuart Singer
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax]
Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
Devan V. Padmanabhan
DORSEY & WHITNEY LLP
TABLE OF CONTENTS
TABLE OF AUTHORITIES ................................................................................... iii
LEGAL STANDARDS .............................................................................................1
NOVELL'S "STATEMENT OF FACTS" ................................................................2
SUMMARY OF ARGUMENT .................................................................................4
ARGUMENT .............................................................................................................5
I. THE DISTRICT COURT ERRED IN CONCLUDING,
AS A MATTER OF LAW, THAT THE APA AS AMENDED
DID NOT TRANSFER THE EXISTING UNIX AND
UNIXWARE COPYRIGHTS TO SANTA CRUZ.........................................5
A. The District Court Erred in Interpreting the APA and
Amendment No. 2 As Separate and Independent. ................................5
B. The District Court Erred in Finding an "Implied License"
From the Text of the APA and Amendment No. 2. ..............................7
C. The District Court Erred in Its Limited Consideration of the
Extrinsic Evidence of the Parties' Intent to Sell the UNIX
Copyrights to Santa Cruz Under the Amended APA......................... 10
D. The Amended APA and Bill of Sale Exceed
The Requirements of the Copyright Act. ........................................... 16
II. THE DISTRICT COURT ERRED IN CONCLUDING, AS A
MATTER OF LAW, THAT IF THE APA DID NOT TRANSFER
THE EXISTING UNIX AND UNIXWARE COPYRIGHTS, THEN
SCO IS NOT ENTITLED TO SPECIFIC PERFORMANCE
REQUIRING THE TRANSFER OF THOSE COPYRIGHTS NOW. ........ 19
III. THE DISTRICT COURT ERRED IN CONCLUDING, AS A
MATTER OF LAW, THAT NOVELL HAS THE RIGHT TO
i
"WAIVE" SCO'S RIGHTS UNDER ALL CONTRACTS
RELATING TO SVRX INCLUDING THE SOFTWARE AND
SUBLICENSING AGREEMENTS. ............................................................ 20
A. The Term "SVRX Licenses" Is Ambiguous. ..................................... 20
B. The APA Separately Transfers the Software and
Sublicensing Agreements to Santa Cruz Without
Any Reservation of Rights for Novell. .............................................. 23
C. The District Court's Interpretation of Article 4.16(b) Destroys
The Value of the Assets Santa Cruz Purchased. ................................ 24
D. Overwhelming Extrinsic Evidence Confirms that Novell
Did Not Retain Any Rights Over Software and
Sublicensing Agreements................................................................... 25
IV. THE DISTRICT COURT ERRED IN CONCLUDING THAT
NOVELL DID NOT HAVE TO COMPLY WITH THE IMPLIED
COVENANT OF GOOD FAITH AND FAIR DEALING IN
EXERCISING ITS ARTICLE 4.16(b) RIGHTS. ........................................ 28
V. THE DISTRICT COURT ERRED IN CONCLUDING,
AS A MATTER OF LAW, THAT NOVELL IS ENTITLED TO
ROYALTIES FROM POST-APA CONTRACTS RELATED TO
SVRX, INCLUDING THE 2003 SUN AGREEMENT............................... 29
CONCLUSION....................................................................................................... 32
ii
TABLE OF AUTHORITIES
Cases
Ameripride Servs. v. Valley Indus. Serv.,
No. CIV. S-00-113 LKK/JFM, 2007 WL 656850 (E.D. Cal. Feb. 28, 2007) .... 24
April Enterprises, Inc. v. KTTV,
147 Cal. App. 3d 805 (1983)............................................................................... 28
Bay Cities Paving & Grading v. Lawyers' Mutual Insurance Co.,
5 Cal. 4th 854 (1993)........................................................................................... 21
Big Creek Lumber Co. v. County of Santa Cruz,
38 Cal. 4th 1139 (2006)....................................................................................... 23
Blumenfeld v. R.H. Macy & Co.,
92 Cal. App. 3d 38 (1979) ................................................................................... 11
Crow Irvine #2 v. Winthrop California Investors Ltd. Partnership,
104 Cal. App. 4th 996 (2002).............................................................................. 23
Dick Corp. v. SNC-Lavalin Constructors, Inc.,
No. 04 C 1043, 2004 WL 2967556 (N.D. Ill. Nov. 24, 2004) ............................ 17
Effects Assocs., Inc. v. Cohen,
908 F.2d 555 (9th Cir. 1990)..................................................................8
EPA Real Estate Partnership v. Kang,
12 Cal. App. 4th 171 (1992)................................................................................ 10
Foad Consulting Group v. Musil Govan Azzalino,
270 F.3d 821 (9th Cir. 2001)..................................................................................8
Gerdlund v. Electrical Dispensers International,
190 Cal. App. 3d 263 (1987)............................................................................... 10
iii
I.A.E., Inc. v. Shaver,
74 F3d 768 (7th Cir. 1996) .....................................................................................6
Imperial Residential Design, Inc. v. Palms Dev. Group, Inc.,
70 F.3d 96 (11th Cir. 1995) ................................................................................. 19
In re B.J.B.,
185 Cal. App. 3d 1201 (1986)............................................................................. 23
In re Napster,
191 F. Supp. 2d 1087 (N.D. Cal. 2002) .............................................................. 19
John G. Danielson, Inc. v. Winchester-Conant Props., Inc.,
322 F.3d 26 (1st Cir. 2003) ....................................................................................8
Keane Dealer Servs. v. Harts,
968 F. Supp. 944 (S.D.N.Y. 1997) .........................................................................8
Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc.,
690 F. Supp. 298 (S.D.N.Y. 1988) ...................................................................... 17
Kingsrow Enters. v. Metromedia,
397 F. Supp. 879 (S.D.N.Y. 1975) ...................................................................... 11
Liu v. Price Waterhouse,
302 F.3d 749 (7th Cir. 2002)............................................................................... 17
Lyrick Studios v. Big Idea Products,
420 F.3d 388 (5th Cir. 2005) ............................................................................... 19
Motorola, Inc. v. Pick,
No. CV 04-2655 ABC (SHx), 2005 WL 5918849 (C.D. Cal. May 26, 2005) ... 11
Nelson-Salabes, Inc. v. Morningside Dev., LLC,
284 F.3d 505 (4th Cir. 2002)..................................................................................8
Novell, Inc. v. Network Trade Ctr., Inc.,
25 F. Supp. 2d 1218 (D. Utah 1997) ................................................................... 11
iv
Pamfiloff v. Giant Records, Inc.,
794 F. Supp. 933 (N.D. Cal. 1992).................................................................. 8, 16
Playboy Enterprises v. Dumas,
53 F.3d 549 (2d Cir. 1995) .................................................................................. 16
Radio Television Espanola S.A. v. New World Entm't Ltd.,
183 F.3d 922 (9th Cir. 1999)............................................................................... 17
Rico Records Distributors, Inc. v. Ithier,
No. 04 Civ. 9782 (JSR), 2006 WL 846488 (S.D.N.Y. Mar. 30, 2006) .............. 17
Scanlon v. Kessler,
11 F. Supp. 2d 444 (S.D.N.Y. 1998) ................................................................... 11
Schiller v. Schmidt, Inc.,
969 F.2d 410 (7th Cir. 1992)............................................................................... 17
SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms, Inc.,
211 F.3d 21 (2d Cir. 2000) .....................................................................................8
Spectrum Creations, L.P. v. Carolyn Kinder Int'l, LLC,
No. SA-05-CV-750-XR, 2008 WL 416264 (W.D. Tex. Feb. 13, 2008) ............ 17
Other Authorities
Nimmer on Copyrights § 10.03[2] (2006) .............................................................. 16
v
LEGAL STANDARDS
Novell does not dispute the legal standards governing review of the district
court's summary judgment decisions.
NOVELL'S "STATEMENT OF FACTS"
Novell treats the record as if it had prevailed on a trial and were asking this
Court to construe the evidence in the light most favorable to the verdict. The
opposite standard controls on summary judgment. This appeal almost exclusively
addresses the district court's summary judgment determinations.1 By discussing
the facts based only on evidence it has submitted, Novell constructs for this Court
an essentially irrelevant factual record.
Novell repeatedly contends, for example, that it retained ownership of "all
copyrights." The record shows that the APA was amended and expressly replaced
the language concerning the retention of "all copyrights," and that Novell's most
senior executives, including its CEO and chief negotiator, intended that the UNIX
and UnixWare copyrights be transferred to Santa Cruz. (08563;08661-63¶¶9-
11;08674-75;05646;05663-65;05631-32;05616;05715; 05712;08914-
15;10719;10764-65;07827-28¶¶9-11;05727-29;10721;03938¶¶9-16.)
The factual record contains testimony from numerous material witnesses,
drawn from both sides of the transaction, who agree that (1) the parties intended to
transfer the copyrights,2 (2) Novell retained an interest only in the royalty stream
2
from existing licenses to SVRX products,3 and (3) Novell's "waiver rights" were
limited to protecting that royalty interest and did not give Novell the right to
countermand virtually any business decision that SCO might make.4 These
witnesses are not "unfamiliar" with the APA. They include Novell's own CEO,
who authorized and approved the deal, its lead negotiator, and other parties directly
involved in the deal. (08531-32;08659-60;08620;08610-11;08736;08744;08747;
08771;08582;08584-85;08461;08494;08921-22¶7;08882; 08952;08956;10717-
19;10738.)
3
SUMMARY OF ARGUMENT
This is the rare case where the principals on both sides of the contract agree
on the parties' intent. There is such agreement on each of the three main issues
before the Court. The language of the amended APA is reasonably susceptible to
that consensus interpretation, and the extrinsic evidence of that intent is
overwhelming in SCO's favor. The district court erred by failing to acknowledge
numerous material issues of disputed fact and by deciding against SCO as a matter
of law on each of those issues.
4
ARGUMENT
I. THE DISTRICT COURT ERRED IN CONCLUDING,
AS A MATTER OF LAW, THAT THE APA AS AMENDED
DID NOT TRANSFER THE EXISTING UNIX AND
UNIXWARE COPYRIGHTS TO SANTA CRUZ.
A. The District Court Erred in Interpreting the APA and
Amendment No. 2 As Separate and Independent.
Novell stresses (at 24) that Amendment No. 2 was executed "as of the 16th
day of October 1996" as if the Amendment somehow could have been executed
on no particular date at all. The date of execution does not change the fact that on
its face the Amendment referred back to and expressly amended the APA by
changing the schedule of assets excluded from the sale or that the Bill of Sale
thereafter pertains to that amended contract.
The APA unambiguously transfers "All rights and ownership" of UNIX and
UnixWare, including the copyrights "required for SCO to exercise its rights with
respect to the acquisition of UNIX and UnixWare technologies." (00313;00374.)
If these provisions are to have any meaning, they must mean that copyrights were
transferred under the APA. The parties clarified the transfer by eliminating the
language excluding all copyrights from the sale and thus resolved the ambiguity
between the "All rights and ownership" language in the Asset Schedule and the
former exclusion of copyrights.
5
The TLA provides a license back to Novell of the Licensed Technology,
which includes the core asset of the business the UNIX and UnixWare source
code and products. (00268;03690;00313;00361.) Had the parties intended for
Novell to retain the copyrights, Novell would not have needed any license back to
those assets, much less the restricted license that the TLA provides. Novell says
(at 30) that the TLA must have licensed back to Novell "other aspects of the
technology sold to Santa Cruz." Novell's interpretation is no more reasonable than
SCO's, and Novell's own Board resolution approving the APA states that Novell
was transferring "its UNIX and UnixWare technology assets" (05192), which even
under Novell's definition of "technology" would include copyrights.
In addition, Santa Cruz indisputably acquired all claims "relating to any
right, property or asset" in the UNIX business, including the UNIX and UnixWare
source code. (00313-14.) Under any reasonable interpretation of the provision, the
transferred claims included copyright infringement claims for unauthorized use of
the source code. But if Santa Cruz had received only an "implied license," Santa
Cruz could not bring any such claims. I.A.E., Inc. v. Shaver, 74 F3d 768, 775 (7th
Cir. 1996). In this plain sense the copyrights were "required."
Former Santa Cruz General Counsel Steve Sabbath testified, for example,
that "if you didn't own the copyrights, how could you even go after somebody
that's pirating your software?" (10722.) "We didn't want somebody to be able to
6
go off and pirate it, for example, so we needed the copyrights in order to defend
the property." (10762.) Santa Cruz senior executive Doug Michels explained that
software products "are governed by copyrights. That's what -- that's what you
own. That's the intellectual property of a source code product. It would be
meaningless to own it if you didn't own the copyrights." (08906-07.) It is
incongruous for Novell to argue (as at 45) that courts should consider evidence of
how other companies supposedly operate without owning the underlying rights, but
that courts cannot consider how the very businesses at issue operated.5
As for the period prior to Amendment No. 2, no one has suggested that
Santa Cruz was physically unable to make copies of the UNIX and UnixWare
source code. That hardly means that SCO did not need or obtain the copyrights to
run the UNIX licensing business.
B. The District Court Erred in Finding an "Implied License"
From the Text of the APA and Amendment No. 2.
The district court's reconciliation of the APA depends on Santa Cruz having
received an "implied license" to the UNIX copyrights. "Courts have found implied
licenses only in narrow circumstances where one party created a work at the
other's request and handed it over, intending that the other copy and distribute it."
7
SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms, Inc., 211 F.3d
21, 25 (2d Cir. 2000) (brackets and quotations omitted) (quoting Effects Assocs.,
Inc. v. Cohen, 908 F.2d 555, 558 (9th Cir. 1990)). Other Circuits agree that the
doctrine applies only in such "narrow circumstances."6 The APA does not involve
those circumstances, and Novell does not suggest otherwise.
Novell also does not dispute that the finding of an implied license presents a
classic question of fact. In Novell's own cases, the courts equate the standards for
finding an implied license with the standards for interpreting a contract using
extrinsic evidence of the parties' conduct to resolve ambiguities.7
Novell's "implied license" argument also runs up against the scope of the
claims Santa Cruz had acquired. The assets Santa Cruz indisputably acquired
under the APA, as shown above, included all claims relating to the source code.
(00313-14.) If SCO had received only an "implied license" under the APA, it
would not be permitted to bring such claims.
8
When Novell acknowledges (at 44) that a "central purpose" of the APA was
to enable Santa Cruz "to modify and distribute the copyrighted code in Novell's
UnixWare," it should follow that this "central purpose" was not implicitly
recognized through an implied "license" in an "asset purchase agreement."8
Novell also cannot square the concept of an implied license with the parties'
subsequent amendment of the schedules of assets sold to remove the exclusion of
all copyrights.
The parties knew how to refer to and provide for a "license" for technology.
Schedule 1.1(b) identifies "Licensed technology" being "licensed" to Santa Cruz
the list does not include the UNIX technology. (00317.) The APA also provides
that "Seller and Buyer shall enter into a license agreement with respect to the
NetWare Portion." (00288.)9
Novell also misses the point in suggesting (at 46) that SCO must believe,
absent an implied license, that its predecessor was "acting illegally" during the
time between the Bill of Sale and Amendment No. 2, because Santa Cruz
9
"indisputably did not own the copyrights" during that time. Amendment No. 2
clarified the APA to confirm that the copyrights had been transferred thereunder.
(08563;08661-63¶¶9-11;08674-75;05646;05663-65;05631-32;05616;05715;
05712;08914-15;10719;10764-65;07827-28¶¶9-11;05727-29;10721;03938¶¶9-16.)
C. The District Court Erred in Its Limited Consideration of the
Extrinsic Evidence of the Parties' Intent to Sell the UNIX
Copyrights to Santa Cruz Under the Amended APA.
Novell argues (at 26-28) that all extrinsic evidence must be rejected because
it allegedly contradicts the language of the APA. But the language that SCO's
evidence allegedly contradicts was excised by Amendment No. 2 and replaced
with operative language consistent with that evidence. (00374.) Extrinsic
evidence of the operative APA goes to the meaning and intent of the language.10
Unlike EPA Real Estate Partnership v. Kang, 12 Cal. App. 4th 171, 175
(1992), the evidence the district court rejected does not concern any "collateral
agreement," let alone one that "contradicted" the amended APA. In each of
Gerdlund v. Electrical Dispensers International, 190 Cal. App. 3d 263, 270 (1987),
10
and Blumenfeld v. R.H. Macy & Co., 92 Cal. App. 3d 38, 45 (1979), the court
declined to admit extrinsic evidence because it supported an interpretation limiting
"all inclusive" language in the contract. There is no "all inclusive" language in the
amended APA.
Novell tries to explain away (at 32 n.6) its transfer of UNIX copyright
registrations to Santa Cruz, but no copyright owner would transfer registrations to
a party from whom it was supposedly withholding copyrights. In the lone case
Novell cites, the court did not even consider whether possession of copyright
registrations could evidence a separate copyright transfer accomplished by
contract. Kingsrow Enters. v. Metromedia, 397 F. Supp. 879, 881 (S.D.N.Y.
1975). That issue is not subject to dispute, as overwhelming precedent including
Kingsrow makes clear that copyright registrations constitute prima facie
evidence of ownership of valid copyrights.11
Contrary to Novell's allegations, Santa Cruz "did not add any Novell
copyright notices to," or "remove any copyright notices" from, the source code it
acquired from Novell. (10666¶¶6-7.) In fact, it was Novell that changed the
notices to add the Santa Cruz notice. (Id.) In addition, the date range of the Novell
11
notices from 1984-95 could not pertain to UnixWare source code, because Novell
did not acquire the UNIX and UnixWare source code from AT&T until 1993.
(10666¶8.) Instead, since Netware code was "contained in UnixWare," the notices
pertained to Netware, which Novell had owned since "the mid-1980s."
(00317;10666¶8.)
In November 1995, Novell engineers "changed" the copyright notices on the
"pre-existing UNIX and UnixWare source code" that "was transferred to The Santa
Cruz Operation by Novell in 1995." (10303-04¶¶3-9.) Novell requested its
engineers to make that change "to reflect the change in ownership of the copyrights
from Novell to SCO." (10303¶6.) In December 1995, Novell admitted that "the
following changes have been made at the request of SCO: SCO copyright notices
added to documentation and software." (10320.) In addition, Novell admitted in
October 1995 that "SCO will replace Novell as the Copyright owner" on existing
UnixWare online books by changing "the notice that appears when each book is
opened." (11176.) SCO also submitted photographs of the Santa Cruz copyright
notices on the compact discs of distributed versions of the code acquired from
Novell, reflecting Santa Cruz's ownership of the copyrights for the products as a
whole. (05749;05751;05747¶3.) Novell addresses none of this evidence.
The testimony of the ten witnesses who confirmed the transfer of the
copyrights under the APA is plainly relevant to the issue of the parties' intent, and
12
SCO has shown that neither of the two main witnesses on whom Novell relies in
opposition (Messrs. Bradford and Braham) had anything to do with Amendment
No. 2. In addition, SCO cited a litany of other highly probative evidence,
including the parties' course of performance and Novell's admissions
contemporaneous with the transaction.12 Novell does not even address most of this
evidence, and thus admits that all the evidence that it seeks to exclude and that the
district court discounted or ignored supports SCO's interpretation.
Novell's conspicuous failure to confront its own conduct following the
discovery of Amendment No. 2 is telling. On June 6, 2003, after SCO had sent
Novell a copy of the Amendment, Novell issued an immediate press release
13
admitting that Amendment No. 2 "appears to support SCO's claims that ownership
of certain copyrights for UNIX did transfer to SCO in 1996." (04395.) On June
26, 2003, Novell tried to un-ring the bell. "We acknowledge," explained Novell
General Counsel Joseph LaSala, "as noted in our June 6 public statement, that
Amendment No. 2 to the Asset Purchase Agreement appears to support a claim
that Santa Cruz Operation had the right to acquire some copyrights from Novell."
(07895.) But that is not what Novell said in its "June 6 public statement," in which
Novell candidly admitted that copyrights "did transfer to SCO" not that
Amendment No. 2 merely set up a prospective process for a potential transfer.
Novell cites part of a sentence from a Novell Board resolution approving the
APA, which states in full: "Novell will retain all of its patents, copyrights and
trademarks (except for the trademarks UNIX and UnixWare), a royalty-free,
perpetual, worldwide license back to UNIX and UnixWare for internal use and
resale in bundled products, Tuxedo and other miscellaneous, unrelated
technology." (05192.) Mr. Frankenberg, who "chaired the meeting" (05191),
testified that he understood the reference to "its copyrights" to mean Novell's
copyrights to Netware, the network technology Novell had long pioneered before
its two-year stint as owner of the UNIX business and on which it was now
refocusing. (08542-43;08548;08550;08572.)
14
Novell stresses (at 13) that the Santa Cruz-SCO assignment stated in a
parenthetical that Santa Cruz "may not be able to establish a chain of title from
Novell." (07424§8(v).) But Santa Cruz transferred to SCO "all copyrights" to
UNIX and UnixWare (07422-23;07443), and Novell never controverts the
evidence that counsel for Santa Cruz and SCO concluded that the APA had
transferred those copyrights and that the parenthetical referred only to "a question
about the location and transfer of copyright registrations." (10553-54.)
Novell cites (at 14) an email from SCO consultant Michael Anderer
regarding his views on January 4, 2003 before SCO even discovered Amendment
No. 2 on the copyrights issue. The evidence showed that Mr. Anderer "never
saw" and "didn't know of" Amendment No. 2, and further showed that his
testimony was legally irrelevant. (07537-38.)
Novell also claims (at 14) that SCO contacted Novell in 2002 "seeking a
transfer of copyrights." But Novell's own in-house counsel admitted that SCO
never sought such a transfer, and the testimony of three SCO witnesses showed
that SCO witnesses did not ever make such request.13 (11488;11434¶¶2-4;04698-
04700¶¶7-14;07562-64¶¶3-12.)
15
D. The Amended APA and Bill of Sale Exceed
The Requirements of the Copyright Act.
Novell does not dispute that the fundamental purpose of the Copyright Act is
to "effectuate the intent of the parties." Nimmer on Copyrights § 10.03[2] (2006)
(collecting cases). The cases (including those that Novell cites) consistently liken
the Copyright Act to a classic statute of frauds, which requires only that parties
reduce their agreement to writing and not rely on oral understandings. See
Pamfiloff v. Giant Records, Inc., 794 F. Supp. 933, 936 (N.D. Cal. 1992). Novell
and Santa Cruz indisputably reduced their agreements to writing. And the district
court below did precisely what the court in Playboy Enterprises v. Dumas, 53 F.3d
549 (2d Cir. 1995), was unwilling to do reject the transfer agreement as a matter
of law without allowing a factfinder to make factual determinations after trial. The
writing at issue in that case did not even mention "copyrights." Id. at 564.
Contrary to Novell's suggestion, moreover, the requirements of Section 204
are not divorced from the general standards for determining the intent of the parties
16
under any contract. The federal courts agree that, applying Section 204, a court is
to consider extrinsic evidence to resolve ambiguities.14
The parties agreed to identify the transferred copyrights as "All rights and
ownership" of UNIX and UnixWare specifically including "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 UNIX and UnixWare
technologies." (00313;00374.) Novell does not and cannot cite a single case that
invalidates a written agreement merely because the parties chose to refer to a group
of copyrights instead of listing by name each copyright being transferred. The law
clearly rejects any such magic formula, Radio Television Espanola S.A. v. New
World Entm't Ltd., 183 F.3d 922, 927 (9th Cir. 1999), and even approves
instruments of conveyance, notes, or memoranda that do not mention the term
"copyright," Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc., 690 F. Supp. 298, 301
(S.D.N.Y. 1988).15
17
The amended APA and Bill of Sale exceed the only specific standards that
Novell cites (at 34). The Bill of Sale more than reasonably identifies "all of the
Assets" on the operative asset schedules as the subject matter of the agreement,
and states with certainty that Novell agreed to "transfer, convey, sell, assign, and
deliver to Buyer . . . all of the Assets." (05602.) As reflected in Attachment A
hereto, there is a specific four-page schedule of the products that comprised the
UNIX and UnixWare software being transferred (00313-16), and the copyrights to
those products were transferred as part of the all "right, title and interest" and "All
rights and ownership" in each product. (00264;00313.) Amendment No. 2 states
with reasonable certainty that the defined term "Assets" includes all of the UNIX
and UnixWare copyrights Santa Cruz needed to operate the UNIX business.
Amendment No. 2 also satisfies the Copyright Act as a memorandum
ratifying the agreement between the principals who negotiated the transaction to
transfer "All rights and ownership" of UNIX and UnixWare, including copyrights,
as of the Closing Date. Copyrights can be transferred not only by "an instrument
of conveyance" but also by "a note or memorandum of the transfer," and "the
chief purpose of Section 204(a)" is "to resolve disputes between copyright owners
and transferees." Imperial Residential Design, Inc. v. Palms Dev. Group, Inc., 70
18
F.3d 96, 99 (11th Cir. 1995). Novell does not even address, let alone contest,
SCO's claim that Amendment No. 2 satisfies the statute.16
II. THE DISTRICT COURT ERRED IN CONCLUDING, AS A
MATTER OF LAW, THAT IF THE APA DID NOT TRANSFER
THE EXISTING UNIX AND UNIXWARE COPYRIGHTS, THEN
SCO IS NOT ENTITLED TO SPECIFIC PERFORMANCE
REQUIRING THE TRANSFER OF THOSE COPYRIGHTS NOW.
The specific performance count was an alternative count, relevant only if the
copyrights had not already transferred. It is not based on "circular" reasoning, any
more than any suit for specific performance of an agreement. SCO requires
ownership of the copyrights because otherwise it would not have the right to
pursue the claims indisputably assigned to it under the APA. (Part I.A, above.)
Amendment No. 2 does not compel SCO to show that it was unable to operate its
business without suing IBM in particular, but even if it did, SCO easily meets the
standard. If SCO were unable to pursue or recover on those claims against IBM,
SCO would be unable to exercise the rights in the entire UNIX business, which
includes the right to pursue claims to protect misuse of the UNIX and UnixWare
source code.
19
Novell goes on to suggest (at 50) that it would receive 95% of any revenues
arising from the claims SCO has asserted against IBM. That is baseless. (02433-
35;08538;08563-64;08669;08626-27;08611-12.) There is no language in the APA
even suggesting that SCO had to pay Novell any money SCO might receive for
pursuing and prevailing on the claims it was authorized to bring.
III. THE DISTRICT COURT ERRED IN CONCLUDING, AS A
MATTER OF LAW, THAT NOVELL HAS THE RIGHT TO
"WAIVE" SCO'S RIGHTS UNDER ALL CONTRACTS
RELATING TO SVRX INCLUDING THE SOFTWARE AND
SUBLICENSING AGREEMENTS.
A. The Term "SVRX Licenses" Is Ambiguous.
The issue is whether Software and Sublicensing Agreements with IBM so
clearly fall within the meaning of "SVRX Licenses" that the courts may ignore the
express intent of Novell's and Santa Cruz's executives and negotiators. The
parties agree that no language in the APA expressly says that the IBM Software
and Sublicensing Agreements, or any such Agreements, are subject to Novell's
retained waiver rights. That alone should mean that the parol evidence is
admissible to clarify what the parties intended.
Novell argues (at 51) that the "ordinary meaning of 'any SVRX License' is
any agreement that licenses SVRX," but cannot help but acknowledge (at 16) that
the APA "defined 'SVRX Licenses' by referring to Item VI of Schedule 1.1(a)."
20
As the APA's efforts to define the term "SVRX Licenses" demonstrate, that term
has no generally understood meaning.
The gap in the APA is the absence of the "SVRX Licenses" that are
supposed to be "listed in detail" under Item VI as part of the circular definition of
the term. (00287;00315;00363.) The court in Bay Cities Paving & Grading v.
Lawyers' Mutual Insurance Co., 5 Cal. 4th 854 (1993), did not "reject" the view
that the absence of a definition can support the finding of an ambiguity. The court
in fact observed that "in an appropriate case, the absence of a policy definition,
though perhaps not dispositive, might weigh, even strongly, in favor of finding an
ambiguity, for example, when the term in question has no generally accepted
meaning outside the context of the policy itself." Id. at 867 (emphasis added).
Moreover, SVRX Licenses are not defined as "all contracts" relating to the
products listed in Item VI of the Schedule. The "all contracts" is what was
transferred to Santa Cruz by Item VI; the SVRX Licenses are supposed to be listed
within that item. The district court confused the introductory sentence of Item VI,
which identifies assets being transferred to Santa Cruz, with the list under the
sentence, which purports to identify the SVRX Licenses over which Novell has
waiver rights.
Novell argues (at 51) that the Product Schedule Licenses "did not grant any
right to use SVRX" without being "combined" with the Software and Sublicensing
21
Agreements. But each licensee executed only a single umbrella Software
Agreement and Sublicensing Agreement, with a separate Product Schedule to
license each individual product over time. (04610¶¶14-15;04625¶¶11-
12;01471§4;01492§4 .) If the SVRX Licenses included a licensee's umbrella
agreement, then Novell's waiver rights would extend to all products a licensee
licensed, including UnixWare and other non-SVRX products.
In addition, the Product Schedule Licenses did grant rights access to and
delivery of the product source code.17 (08849-50;04610¶¶15-16;04625¶¶12-13.)
According to Novell's interpretation, once a licensee executed an SVRX Product
Schedule License, the licensee's Software and Sublicensing Agreements were then
somehow converted into "SVRX Licenses." Yet it is at least equally arguable that
the Product Schedule Licenses were the licenses intended to be covered by the
waiver rights, because those rights were designed to protect Novell's royalties, not
to give Novell an unchecked veto over a business it had sold. Only the Product
Schedule Licenses listed those royalties. (04610¶16; 06425¶13.) This is precisely
the type of situation where relevant extrinsic evidence must be considered.
22
B. The APA Separately Transfers the Software and
Sublicensing Agreements to Santa Cruz Without
Any Reservation of Rights for Novell.
A reading of the term "SVRX Licenses" that redundantly or in Novell's
language, as a "superfluity" includes Software and Sublicensing Agreements
violates basic rules of construction. Yet Novell (at 53-54) defends the redundancy.
The cases Novell cites are inapposite,18 and Novell's argument amounts to another
red herring. While Item VI is ambiguous, Item III clearly transfers "all of Seller's
rights" under the "Software and Sublicensing Agreements." (00314-15.) A
reading of the Assets Schedule that avoids the redundant transfer of the Software
and Sublicensing Agreements in Item VI thus does not contradict "what the
contract clearly does" or "vitiate" any part of the Schedule.
In contrast, the contradiction that the district court's interpretation creates is
glaring and runs afoul of the authority SCO cited. On the one hand, Item III
provides for the unqualified transfer of "all of Seller's rights" under the Software
and Sublicensing Agreements. (00314-15.) On the other hand, Item VI serves as a
23
cross-reference to the Article 4.16(b) rights at issue, which the district court ruled
give Novell unfettered control over the "SVRX Licenses" purportedly listed under
Item VI. A reading of the term "SVRX Licenses" that includes the Software and
Sublicensing Agreements therefore brings the Agreements under Novell's
unfettered control, and thus "vitiates" the rights indisputably transferred to Santa
Cruz under Item III.
C. The District Court's Interpretation of Article 4.16(b) Destroys
The Value of the Assets Santa Cruz Purchased.
Novell primarily argues (at 54-55) that because it had the "sole discretion"
to exercise authority under Article 4.16(b), SCO should not be heard to dispute the
scope of the Article. This is a non sequitur. SCO principally argues that
interpreting "SVRX Licenses" to be as broad as Novell contends would render the
rights afforded under Article 4.16(b) unduly broad. (See Part IV, below.)
The Court need not conclude that the entire APA is "unconscionable" to
agree with SCO. A court may not interpret one provision to render another
provision "meaningless." Ameripride Servs. v. Valley Indus. Serv., No. CIV. S-
00-113 LKK/JFM, 2007 WL 656850, at *11 (E.D. Cal. Feb. 28, 2007). A
provision giving Novell the unilateral right to waive all of SCO's rights under the
agreements it had just acquired would render meaningless the provision
transferring those agreements. (00314-15.) In addition, if Novell had the right to
make public all of the SVRX source code protected under the Software and
24
Sublicensing Agreements, Novell's conduct would extinguish the confidentiality of
the base source code for UnixWare as well, and thereby destroy the economic
value of that product.
Novell (at 56-57) makes the half-hearted contention that it has "never
argued" that the TLA is an SVRX License, but that is irrelevant; the unavoidable
result of its argument about the scope of the term is that Novell supposedly has the
right to waive all of SCO's rights under the very agreement through which it
sought to acquire protections from Novell. With respect to Santa Cruz's
preexisting license, Novell tries to draw a distinction between Santa Cruz's rights
as a "licensor" versus its rights in the "administration" of SVRX Licenses, but the
text of the APA makes no such distinction, and it is the text of the APA on which
Novell otherwise seeks to hang its hat.
D. Overwhelming Extrinsic Evidence Confirms that Novell
Did Not Retain Any Rights Over Software and
Sublicensing Agreements.
Novell barely addresses the overwhelming extrinsic evidence confirming
that the parties did not intend for Novell to have rights over the Software and
Sublicensing Agreements, or over subsequent claims based on those Agreements.
In 2000, for example, Novell and The Hewlett Packard Company ("HP")
executed an "Addendum to HP's UNIX System Agreement," which Agreement is
defined to include HP's Software and Sublicensing Agreements. (02384.) In the
25
Addendum, Novell warranted that, through the APA, it "retained or has acquired
all rights to outstanding and future HP binary code royalty and license fee
payments, but not source code royalties." (Id. (emphasis added).) Novell also
warranted that it "has full right and authority to modify the terms and conditions of
the Agreement with respect to" those binary royalties. (Id.) Novell did not
warrant that it had any other right to modify the Agreement. Other examples:
- Novell states (at 58-59) that Messrs. Maciaszek and Broderick, who
worked for Novell at the time of the APA and had been in the UNIX
licensing department for decades, did not testify that the term SVRX
License refers exclusively to Product Schedule Licenses, but both
witnesses unequivocally testified to the contrary: "We understood an
SVRX license to be an SVRX product supplement."
(04625¶12;04610¶15.)
- Novell downplays the language in the Operating Agreement, claiming (at
61 n.13) that the Agreement "merely states that Novell should transfer
contracts to Santa Cruz" but that is not a fair account of the all-
inclusive, unqualified language in the Agreement: "It is the intent of the
Parties to transfer the agreements and associated rights and obligations
which relate to Novell's UNIX System business to SCO." (01432§7
(emphasis added).)
26
- Novell claims that numerous letters it sent to customers disclaiming
rights in UNIX agreements were intended only to inform them that they
should send royalty payments to SCO. But that is not what the letters
say: "Novell transferred to The Santa Cruz Operation, Inc. ('SCO') its
existing ownership interest in UNIX System-based offerings and related
products." (10645 (emphasis added); see also 10652;10657;10710;
03838;13843;139845;1028486;02790;02972;02974.)
Novell simply cannot square its long, undisputed course of performance with its
after-the-fact legal arguments.
As to the IBM Buyout, Novell and Santa Cruz had already resolved the
dispute over whether Novell's Article 4.16(b) rights extended to IBM's Software
and Sublicensing Agreements just months after the APA closed, after Santa Cruz
warned that it had acquired "ownership and exclusive rights to license the UNIX
source code." (03890.) Less than one year after the APA had closed, IBM paid
$10.125 million for UNIX rights. (04380;04384;03915.) By Novell's lights, it
was entitled to 95% of the entire amount, and Santa Cruz should have received
only 5%, or a little more than $500,000. But Santa Cruz received $2 million
nearly four times that amount. (04380;04384;03915.) As the witnesses involved
in that event testified, that evidence confirms that Santa Cruz -- and not Novell --
had exclusive rights over the Software and Sublicensing Agreements and
27
associated source code rights and therefore received all of the money paid by IBM
for source code rights. (03915;10724-25;09008-09;08516;02454-55.)
IV. THE DISTRICT COURT ERRED IN CONCLUDING THAT
NOVELL DID NOT HAVE TO COMPLY WITH THE IMPLIED
COVENANT OF GOOD FAITH AND FAIR DEALING IN
EXERCISING ITS ARTICLE 4.16(b) RIGHTS.
The facts of this case are directly analogous to April Enterprises, Inc. v.
KTTV, 147 Cal. App. 3d 805, 816-817 (1983), which Novell declines even to
address. Under one provision of the APA, SCO acquired and owns the UNIX and
UnixWare businesses; under another provision of the Agreement, Novell has the
supposed right to waive all of the rights underlying all of the agreements
constituting those businesses. If the term "SVRX License" is to have the
extremely broad scope Novell attributes to it in the face of all the evidence to the
contrary, the application of the implied covenant is the way to reconcile the
conflicting provisions.
Under even a generous reading to Novell, given Novell's arguments and the
district court's interpretation of the overwhelming rights and core assets Novell
supposedly retained, Santa Cruz and SCO paid more than $250 million
(06101;04637) for some unenumerated and redundant "ownership rights"
concerning post-1995 technology, and for the office furniture of the Novell
28
employees switching over to Santa Cruz.19 Under California law, the foregoing
construction of the APA requires the application of the implied covenant of good
faith and fair dealing.
V. THE DISTRICT COURT ERRED IN CONCLUDING,
AS A MATTER OF LAW, THAT NOVELL IS ENTITLED TO
ROYALTIES FROM POST-APA CONTRACTS RELATED TO
SVRX, INCLUDING THE 2003 SUN AGREEMENT.
The APA itself defines "SVRX Licenses" to refer only to licenses existing at
the time (00264;00313), and certain language in Amendment No. 1 referring to
"new SVRX licenses" (00357) thus creates ambiguity. Neither provision overrides
the other, and the extrinsic evidence SCO presented wholly supports SCO's
interpretation. The witnesses on both sides of the transaction, including Messrs.
Frankenberg and Chatlos, agree that Novell retained royalties only from licenses
existing at the time of the APA. (08537-38;08518; 02472¶7;08760;08588;
02431¶4;02438¶4;08888-89;10729;02483¶12; see also 02488.)
The provision referring to "new SVRX licenses" provides, moreover, that
SCO retains the source code right-to-use fees thereunder. (00357.) That provision
is thus consistent with SCO's reading of the primary references to "SVRX
29
Licenses" -- namely, that the phrase refers to the then-existing SVRX Product
Schedule Licenses under which source code right-to-use fees are not paid at all,
and under which Novell would receive 95% of the royalties. (04612-13¶23;04627-
28¶20.) Novell's own publicly filed statements support the view that it retained
only these existing royalty rights. (02182;02232;02302;02320;02341.)
Novell's alternative argument that it is entitled to collect the $2,547,817
award as a form of "unjust enrichment" is flawed because the Sun Agreement did
not "concern" the 1994 buyout within the meaning of Amendment No. 2.
Paragraph B.4, for example, states that "Prior to either parties' unilateral
determination as to the suitability of any potential buyout transaction, the parties
will meet face to face and analyze the potential merits and disadvantages of the
transaction." (00374 (emphasis added); see also Paragraph B.6.) Paragraph C
provides as follows:
Novell may execute a buy-out with a licensee without
any approval or involvement of SCO, and will no longer
be bound by any of the requirements stated in Section B.
above, if: (I) SCO ceases to actively and aggressively
market SCO's UNIX platforms; or (II) upon a change of
control of SCO as stated in schedule 6.3(g) of the
Agreement.
(Id.) All of the foregoing language shows that Section B does not apply when a
licensee already has a buyout and now enters into a subsequent agreement that
merely relates to the prior buyout agreement. Indeed, in its Order dated August 10,
30
2007, the district court had concluded (at 85) that "all of the subparagraphs of
paragraph B are limited to buy-out transactions."
Paragraph B.5 of Amendment No. 2 supports the foregoing interpretation of
the scope of the rest of Paragraph B, providing in relevant part that "Novell may
not prevent SCO from exercising its rights with respect to SVRX source code in
accordance with the Agreement." (00374.) The terms SCO negotiated with Sun in
the 2003 Agreement were an exercise of SCO's right to license source code and to
determine the scope of the restrictions on the use of such code.
The extrinsic evidence also supports SCO's interpretation. In the summer of
1996, Santa Cruz repeatedly addressed with Novell "this issue of future buyout
transactions." Santa Cruz explained that its position "pertains to any future buyout
concerning binaries." (13543 (emphasis added).) Santa Cruz and Novell entered
into an Agreement dated May 20, 1996, stating: "Novell agrees that it will not
enter into any royalty buy-out agreement involving UNIX System V until such
time as the parties have resolved this dispute or this Agreement is otherwise
terminated as provided herein." (13503 (emphasis added).)
Novell's main response has been to say that it would not make sense for
SCO or Novell to be able unilaterally to renegotiate the terms of an existing
buyout. As SCO asserted in its opening brief, however, the 1994 buyout was not
modified in any way. It was left untouched. The 2003 Agreement did not require
31
Novell to relinquish any of the $84 million it had received from Sun for the buy-out.
CONCLUSION
SCO respectfully submits, for the foregoing reasons, that the Court reverse
the district court in each of the respects and on the grounds set forth in SCO's
opening brief and herein.
Respectfully submitted on this 23rd day of April, 2009.
/s/ Edward Normand
David Boies
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax, emails]
Stuart Singer
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax, email]
Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
[address, phone, fax, emails]
Devan V. Padmanabhan
DORSEY & WHITNEY LLP
[address, phone, fax, email]
Attorneys for Plaintiff-Appellant, The SCO Group, Inc.
32
CERTIFICATE OF COMPLIANCE WITH
FEDERAL RULE OF APPELLATE PROCEDURE 32(a)
Certificate of Compliance with Type-Volume Limitation, Typeface Requirements
and Type Style Requirements
1. This brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(B) because this brief contains 6,989 words, excluding the parts of the
brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).
2. This brief complies with the typeface requirement of Fed. R. App. P.
32(a)(5), and the type style requirements of Fed. R. App. P. 32(a)(6) because this
brief has been prepared in a proportionally spaced typeface using Microsoft Word
2002 in 14-point Times New Roman font.
Dated: April 23, 2009
/s/ Edward Normand
Edward Normand
Boies, Schiller & Flexner LLP
[address, phone, fax, email]
33
CERTIFICATE OF SERVICE
I, Edward Normand, hereby certify that on this 23rd day of April, 2009, a
true and correct copy of the foregoing REPLY BRIEF OF APPELLANT, THE
SCO GROUP, INC. was filed with the court and served via electronic mail to the
following recipients:
Thomas R. Karrenberg
Heather M. Sneddon
ANDERSON & KARRENBERG
[address]
Michael A. Jacobs
George C. Harris
David E. Melaugh
MORRISON & FOERSTER
[address]
Counsel for Defendant-Appellee Novell, Inc.
/s/ Edward Normand
Edward Normand
Boies, Schiller & Flexner LLP
[address, phone, fax, email]
34
CERTIFICATE OF DIGITAL SUBMISSION
The undersigned certifies with respect to this filing that no privacy
redactions were necessary. This REPLY BRIEF FOR APPELLANT, THE
SCO GROUP, INC. submitted in digital form is an exact copy of the written
document filed with the Clerk. The digital submission has been scanned for
viruses with the most recent version of a commercial virus scanning program
(using Symantec Antivirus which is updated weekly) and, according to the
program, is free of viruses.
Dated: April 23, 2009
/s/ Edward Normand
Edward Normand
Boies, Schiller & Flexner LLP
[address, phone, fax, email]
35
1
The only material issue decided at trial was the amount of revenues from the
Sun Agreement that Novell was to be awarded based on the district court's
summary judgment decision regarding the scope of "SVRX Licenses."
2
(08563;08661-63¶¶9-11;08674-75;05646;05663-65;05631-32;05616;05715;
05712;08914-15;10719;10764-65;07827-28¶¶9-11;05727-29;10721;03938¶¶9-16.)
3
(08537-38;08518;02472¶7;08760;08588;02431¶4;02438¶4;08888-
89;10729;02483¶12; see also 02488.)
4
(08540-41;05653¶13;03553-54¶7;08592;03929-30¶4;03677-
78¶10;03561¶9;03858-59¶¶4-5;03937¶13.)
5
Novell cites only the off-hand testimony of Chris Stone, a Novell executive
who was not with Santa Cruz or Novell at the time of the APA and who was not
offered as an expert on industry practice.
6
John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d 26, 40-
41 (1st Cir. 2003); Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505,
514-15 (4th Cir. 2002). This Court does not appear to have addressed the issue.
7
See Foad Consulting Group v. Musil Govan Azzalino, 270 F.3d 821, 827-31
(9th Cir. 2001); Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 559 (9th Cir. 1990);
Keane Dealer Servs. v. Harts, 968 F. Supp. 944, 946-47 (S.D.N.Y. 1997); see also
Pamfiloff v. Giant Records, Inc., 794 F. Supp. 933, 938-39 (N.D. Cal. 1992).
8
Former Novell and Santa Cruz in-house attorney Burt Levine testified that it
was neither his recollection nor his "understanding" that during the drafting
process Novell had undertaken to retain the copyrights. (5663-65.) Mr. Levine's
legal opinion in response to hypothetical questions is irrelevant.
9
In the January 1996 "Tuxedo" transaction with BEA Systems, Inc. that
Novell cites (at 6 n.2), the agreement was titled "TUXEDO License and
Distribution Agreement," and Novell admits that the deal with Tuxedo was
"described as a license" in the transaction documents. (11455.)
10
Novell has cited a 9/15/95 draft of the APA which eliminated Section I from
the "Assets" identified in the 9/8/95 draft, left the paragraph identifying Santa
Cruz's acquisition of "All rights and ownership of Unix and UnixWare," and
added to the end of that paragraph the language "such assets to include without
limitation the following." (06383.) The "without limitation" phrase was taken
from the first paragraph of the 9/8/95 Assets Schedule, which paragraph addressed
"intellectual property." The confirmation that Santa Cruz was receiving "All rights
and ownership of Unix and UnixWare . . . without limitation" thus clearly meant
the inclusion of the copyrights.
11
See, e.g., Novell, Inc. v. Network Trade Ctr., Inc., 25 F. Supp. 2d 1218,
1229 (D. Utah 1997); Motorola, Inc. v. Pick, No. CV 04-2655 ABC (SHx), 2005
WL 5918849, at *3 (C.D. Cal. May 26, 2005); Scanlon v. Kessler, 11 F. Supp. 2d
444, 447 (S.D.N.Y. 1998); Metromedia, 397 F. Supp. at 881.
12
Steve Sabbath never understood Amendment No. 2 to retain copyrights for
Novell. IBM counsel had pressured him to sign his prior declaration just "a few
days before the Christmas holidays, within a few weeks of [his] retiring"; IBM
counsel drafted that declaration with language that "could be read in at least a
couple of different ways" and he "did not understand the implications of every
word" when the declaration was put in front of him; IBM "was twisting" the words
and "reading more" into the declaration than he intended; and, as a result, he would
"never sign another declaration" for IBM again. (04738-39;04748-
49;04775;10719;10721;10764-65;04774-75.)
Novell cites two cases (at 42) to support its argument that a "conclusory
affidavit that contradicts prior testimony does not defeat summary judgment," but
SCO properly relies on Mr. Sabbath's deposition testimony not an affidavit
which does defeat summary judgment.
Mr. Sabbath's deposition testimony is corroborated by the deposition
testimony of Kim Madsen, who participated in the negotiations of both the APA
and Amendment No. 2. (03935-38¶¶6-16.) Novell does not even address her
testimony.
13
Novell claims SCO has a litigation-oriented business model, but since SCO
first asserted its contract and intellectual property rights, it has released several
major upgrades to its two UNIX product lines, UnixWare and OpenServer. SCO
also has formed a business partnership with The Franklin Covey Company to develop and launch a new line of systems and applications for smart handheld
devices such as Blackberries and iPhones.
By way of comparison, at last count, at least five times Novell has asserted
or promoted claims against Microsoft Corporation, both directly and indirectly,
here and abroad, in federal courts and before regulatory agencies, on the grounds
that Microsoft's actions have destroyed all of Novell's major business lines going
back nearly two decades. (See e.g., http://www.novell.com/news/press/
archive/2004/11/pr04076.html.)
14
See, e.g., Liu v. Price Waterhouse, 302 F.3d 749, 755 (7th Cir. 2002);
Schiller v. Schmidt, Inc., 969 F.2d 410, 413 (7th Cir. 1992); Spectrum Creations,
L.P. v. Carolyn Kinder Int'l, LLC, No. SA-05-CV-750-XR, 2008 WL 416264, at
*85 (W.D. Tex. Feb. 13, 2008); Rico Records Distributors, Inc. v. Ithier, No. 04
Civ. 9782 (JSR), 2006 WL 846488, at *1 (S.D.N.Y. Mar. 30, 2006); Dick Corp. v.
SNC-Lavalin Constructors, Inc., No. 04 C 1043, 2004 WL 2967556, at *5 n.5
(N.D. Ill. Nov. 24, 2004).
15
Novell (at 37-38) fails to distinguish Kenbrooke in any meaningful way.
16
Novell also cites In re Napster, 191 F. Supp. 2d 1087, 1099 (N.D. Cal.
2002), but that case is inapposite, as there the alleged copyright owners claimed
they had obtained the copyrights "as authors, not owners by assignment." Id. In
Lyrick Studios v. Big Idea Products, 420 F.3d 388, 393-94 (5th Cir. 2005), the
court acknowledged that a note or memorandum can ratify a transfer even where
the transferor challenges the ratifying document. Here, the ratifying memorandum
is an amendment negotiated and signed by both parties precisely to confirm the
agreement to transfer all UNIX and UnixWare copyrights to Santa Cruz.
17
Novell omits (at 51) this key fact, which SCO set forth below: "Without
executing the Supplement for the product it desired, a licensee did not obtain
delivery of, let alone a license to, the product." (03494.)
18
Novell quotes Crow Irvine #2 v. Winthrop California Investors Ltd.
Partnership, 104 Cal. App. 4th 996 (2002), an opinion that has been "Deleted at the
direction of Supreme Court by order dated April 23, 2006," id., and therefore may
not be cited, Cal. Rules of Court 8.1115. In contrast to the facts of that case,
Novell is the proponent of the superfluity at issue, and the superfluous meaning it
proposes for Item VI runs counter to what the contract clearly does transfer all
rights in the Software and Sublicensing Agreements to Santa Cruz. Big Creek
Lumber Co. v. County of Santa Cruz, 38 Cal. 4th 1139 (2006), and In re B.J.B.,
185 Cal. App. 3d 1201 (1986), involve the interpretation of a statute, not a
contract.
19
In addition to what would have to be extremely expensive office furniture,
the rights "related to" UnixWare were worthless where Novell retained the
unfettered right to waive all of Santa Cruz's rights in the core technology
underlying UnixWare (that is, SVRX), and any customer lists and transferring of
customers was similarly worthless where Novell retained the unfettered right to
decimate the businesses for which there were customers in the first place.
|