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Novell Files Motion to Set Aside Judgment Re SCOsource Monies
Wednesday, December 23 2009 @ 01:27 AM EST

Novell is asking the Utah District Court to set aside the earlier judgment by the Hon. Dale Kimball that Novell is not entitled to any of the SCOsource money from Microsoft or from Linux end users like EV1. That decision was based on his earlier ruling in August of 2007 on summary judgment that Novell owned the copyrights, not SCO, and that since SCO couldn't offer a release of copyright infringement claims, since it didn't own the copyrights, the licenses must not be SVRX licenses. I never could see the logic in that, but that is what happened. But since the Tenth Circuit set that summary judgment aside on copyright ownership, the judgment that Novell has no claim on the money must also be set aside, Novell argues.

In effect, if SCO were to be declared the owner of the copyrights, then Novell would like its 95 percent of any royalties. Of course, SCO is broke, so why is Novell asking for money, when it's so unlikely it will ever get any? I can only guess, but I believe they see that SCO is thinking of gearing up the SCOsource business if it can win the copyrights at trial, and Novell is moving to block. If the licenses are determined to be about SVRX, then SCO would be obligated not only to pay almost everything to Novell, but to ask Novell for permission to sue. Think somewhere between slim to none, the odds of Novell granting SCO permission to sue Linux end users.

Here is the motion, the memorandum in support, and a declaration by one of the attorneys:

12/22/2009 - 608 - MOTION to Set Aside Judgment filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 12/22/2009)

12/22/2009 - 609 - MEMORANDUM in Support re 608 MOTION to Set Aside Judgment filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 12/22/2009)

12/22/2009 - 610 - DECLARATION of Grant L. Kim re 608 MOTION to Set Aside Judgment filed by Novell, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4)(Sneddon, Heather) (Entered: 12/22/2009)

If you review Novell's arguments in this Motion for Partial Summary Judgment on the SCOsource issues, you'll see why I think that is what this is about. Of course, Novell would like its money too, but it also is stalwartly standing up to the bully trying to kick sand in Linux users' faces. And it viewed and views those SCOsource licenses as SVRX licenses, and while Judge Kimball ruled against them on that point, I think erroneously, they'd like another chance to present its case, now that the basis for Kimball's ruling has been reversed on appeal. Here's a bit of Novell's argument back then:
1. The Asset Purchase Agreement prohibits SCO from modifying existing SVRX Licenses and from entering into new SVRX Licenses. (Declaration of David E. Melaugh in Support of Novell's Motion for Summary Judgment on its Fourth Claim for Relief, filed herewith ("Melaugh Decl."), Ex. 9 (APA) at 4.16; Order at 92.)

2. SCO can amend existing SVRX Licenses only "as may be incidentally involved through its rights to sell and license [UnixWare software]" or "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." (Id.; see also Melaugh Decl., Ex. 10 (Amendment No. 1) 10 (amending APA 4.16).)

3. SCO can enter into new SVRX Licenses only "as may be incidentally involved through its rights to sell and license [UnixWare software]." (Id.)

4. In addition, before entering into "any potential transaction with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations," SCO must obtain Novell's consent. (Melaugh Decl., Ex. 12 (Amendment No. 2) at B.) This prohibition is subject to no exceptions.

So if, in some crazed alternate universe, SCO were declared the owner of the copyrights and ramped up SCOsource, it would be Novell's position that SCO had no authority to enter into such deals without Novell's permission, and should it get it, unlikely at best, then Novell would take almost all the money anyway, a distinct disincentive.

If this doesn't make sense to you, don't apply to law school. This is exactly how lawyers think. They set a goal, and they then look for a way to reach it.

Here's the rule that Novell is using as the foundation of its motion, FRCP Rule 60(b)(5):

(b) Grounds for Relief from a Final Judgment, Order, or Proceeding.

On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:... (5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable;


  


Novell Files Motion to Set Aside Judgment Re SCOsource Monies | 162 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Correction here
Authored by: Steven W on Wednesday, December 23 2009 @ 01:42 AM EST
.

[ Reply to This | # ]

Newspicks discussion here
Authored by: Steven W on Wednesday, December 23 2009 @ 01:43 AM EST
.

[ Reply to This | # ]

Off-topic here
Authored by: Steven W on Wednesday, December 23 2009 @ 01:44 AM EST
.

[ Reply to This | # ]

Novell Files Motion to Set Aside Judgment Re SCOsource Monies
Authored by: Steven W on Wednesday, December 23 2009 @ 01:51 AM EST
So if, in some crazed alternate universe, SCO were declared the owner of the copyrights and ramped up SCOsource, it would be Novell's position that SCO had no authority to enter into such deals without Novell's permission, and should it get it, unlikely at best, then Novell would take almost all the money anyway, a distinct disincentive.

I remember how hard I laughed at SCO's contract with EV1. I'm laughing doubly hard now. This is good one.

[ Reply to This | # ]

Copyrights on the trunk or the branches?
Authored by: Totosplatz on Wednesday, December 23 2009 @ 02:05 AM EST
Hmmmmmmmm... Is that piece of code in the trunk or on the branches? Well it just
depends: When it's Novell chasing after us it must be all out on those branches,
but it we are chasing after IBM it must be all in that trunk!

Yes indeed! Whatever works today, never mind yesterday or tomorrow!

.

---
Greetings from Zhuhai, Guangdong, China; or Portland, Oregon, USA (location
varies).

All the best to one and all.

[ Reply to This | # ]

Well I, for one, won't be applying to law school.
Authored by: DaveJakeman on Wednesday, December 23 2009 @ 03:08 AM EST
Trying to annul a nonsensical ruling, vacated by an outrageously biased maljudgement, such that an illegitimate former transaction might be countermanded and its ill-gotten gains conveyed to the rightful misowner -- and the cat put back in the bag.

Let me guess: Cahn will oppose this motion because poor little SCO is running out of money and can't afford to pay nasty Novell their big bucks. And anyway, it would hamper continuation of the SCurrilous extortion racket, which is SCO's only hope for riches survival.

[ Reply to This | # ]

Novell Flips a Dime for SCO
Authored by: DaveJakeman on Wednesday, December 23 2009 @ 03:27 AM EST
The obverse reads: "SCO lose"; the reverse reads: "SCO
lose".

After all the selfsame dimes PJ flipped for SCO.

Not to mention IBM.

My 10 cents.

[ Reply to This | # ]

It makes perfect sense, PJ
Authored by: Anonymous on Wednesday, December 23 2009 @ 03:47 AM EST

Novell is asking the Utah District Court to set aside the earlier judgment ... That decision was based on his earlier ruling in August of 2007 on summary judgment that Novell owned the copyrights, [so] the licenses must not be SVRX licenses .... But since the Tenth Circuit set that summary judgment aside on copyright ownership, the judgment that Novell has no claim on the money must also be set aside.

But that is perfectly logical. The two judgements are linked, with one depending on the other. So if one is set aside, the one that Kimball said followed from it must also be set aside. Why would anyone with a brain find that strange?

Now, Kimball's detailed reasoning is another matter. But the logic, that if a judgement is set aside then all judgements which depend on it must be set aside, is simple, clear, and indeed obvious to any non-lawyer.

[ Reply to This | # ]

he. Something PJ said struck a chord...
Authored by: jesse on Wednesday, December 23 2009 @ 07:02 AM EST
If this doesn't make sense to you, don't apply to law school. This is exactly how lawyers think. They set a goal, and they then look for a way to reach it.

The third sentence made me realize this is the same thing mathematicians do when proving theorems.

[ Reply to This | # ]

Novell Files Motion to Set Aside Judgment Re SCOsource Monies
Authored by: ThrPilgrim on Wednesday, December 23 2009 @ 08:13 AM EST
It would appear that SCO having provided a rock, Novell has just supplied a hard
place for SCO to stand between.

---
Beware of him who would deny you access to information for in his heart he
considers himself your master.

[ Reply to This | # ]

Novell Files Motion to Set Aside Judgment Re SCOsource Monies
Authored by: Anonymous on Wednesday, December 23 2009 @ 08:16 AM EST
Novell is asking the Utah District Court to set aside the earlier judgment by the Hon. Dale Kimball that Novell is not entitled to any of the SCOsource money from Microsoft or from Linux end users like EV1. That decision was based on his earlier ruling in August of 2007 on summary judgment that Novell owned the copyrights, not SCO, and that since SCO couldn't offer a release of copyright infringement claims, since it didn't own the copyrights, the licenses must not be SVRX licenses. I never could see the logic in that, but that is what happened.
Judge Kimball said that the way the SCOsource licenses were worded were that they were for "Any SCO owned IP in Linux" without specifying exactly what that IP might actually be. Therefore, if SCO didn't own the SVRx copyrights, then the licenses couldn't be for SVRx code that might be in Linux, only for any code that SCO owned that might be in Linux. Whether that was a small bit of SCO owned IP, or a large bit, or none at all, he couldn't say since it wasn't specified, but it certainly could not be for anything that SCO did not own.

[ Reply to This | # ]

Novell Cites a Case
Authored by: DaveJakeman on Wednesday, December 23 2009 @ 08:31 AM EST
Werner, 731 F.2d at 208-209. Werner involved a negligence claim against Dr.Carbo, Dr. Carbo's professional corporation, and Upjohn Company (the drug manufacturer), for failing to provide adequate warnings in connection with a certain prescribed drug. Id. at 206. After the jury found both Dr. Carbo and Upjohn negligent, the court entered judgment against all three defendants, finding that the professional corporation's liability was coextensive with that of Dr. Carbo. Id. Dr. Carbo and Upjohn filed appeals and the Fourth Circuit vacated the judgments against them. Id. The professional corporation then filed a motion under Rule 60(b) to set aside the judgment against it, which the district court denied. Id. The Fourth Circuit held that the district court abused its discretion by failing to set aside the judgment under Rule 60(b)(5). Id. at 209. The Fourth Circuit explained that "when one judgment rests upon a contemporaneous judgment which has been reversed or otherwise vacated," Rule 60(b)(5) should be applied to set aside the judgment. Id. at 208.
Interesting choice of citation: set-aside denied, but reversed on appeal. Looks like Novell have Ted's number.

[ Reply to This | # ]

Tough choice for Mr. Cahn
Authored by: Anonymous on Wednesday, December 23 2009 @ 10:14 AM EST

Does he:

    Agree with Novell and ask the judgement to be set aside on the chance that SCOG will have to pay Novell less than already owed?
or
    Dispute Novell in the possible chance of avoiding an even bigger ruling in Novell's favor
Sure would be interesting to be a fly on that wall when this is under discussion and the reasons to agree/dispute are placed on the table.

RAS

[ Reply to This | # ]

Anti-litigation Lottery Motion
Authored by: Eeyore on Wednesday, December 23 2009 @ 11:03 AM EST
I think this should have been titled the "Anti-litigation Lottery
Motion" because it pretty much shoots the whole "we will get BILLIONS
in the end" sales pitch in the head. If this works, SCO will (probably) end
up with no litigation options left. Which, I bet Cahn isn't happy about - there
goes the "whole value" of this company.

What self respecting investor would consider dropping money on a company that is
dependent on litigation if the litigation isn't going to be allowed? Oh wait,
what was I thinking when I said "self respecting"... This is the
SCOundrel universe we are discussing after all.

[ Reply to This | # ]

Lesson of the Day
Authored by: Anonymous on Wednesday, December 23 2009 @ 11:16 AM EST
SCO,

Beware of what you wish for (appeal!),


You just might get it (And it may not be what you thought it was!)

Love

Novell

[ Reply to This | # ]

Only procedural action reversed?
Authored by: Anonymous on Wednesday, December 23 2009 @ 12:05 PM EST
Isn't it just a procedural action that has been reversed?

That you cannot do a summary ruling on the matter?

It might be crystal clear that Novell has the copyrights but SCO has the right
to a trial.

Or am I off again?

[ Reply to This | # ]

No, Kimball was right
Authored by: Anonymous on Wednesday, December 23 2009 @ 12:31 PM EST
Let's cut through all the fine-sounding verbage, and say the truth for once:
The "SCO source license" was an extortion racket, pure and simple. It
was never a "license" to anything.

Now: How much of an extortion racket is Novell contractually entitled to
receive? None.

If I understand Kimball's position correctly, that's exactly what he said - that
SCO source wasn't a SVRX license, because SCO couldn't license that. Kimball
didn't say that it was fraud or extortion. But he ruled that SCO wasn't -
couldn't be - selling what they said they were selling. It seems to me that the
fraud/extortion conclusion follows inevitably from this, though, even though
Kimball didn't take that step.

MSS2

[ Reply to This | # ]

Why did the egg cross the road?
Authored by: webster on Wednesday, December 23 2009 @ 01:09 PM EST

...to get away from litigation. This is marvelously complex and unexpected. As has been noted here over the years, litigation is like riding a snake. There are so many interests pulling at the reins that the direction is unpredictable. There is nothing like the unique perspective of a party, a judge, or a jury. Novell says to SCO, "You can't win for winning!" SCO's victory in the non-jury trial so far as the Monopoly and other SCOSource licences combined with their victory on Appeal of the Summary Judgments means that the former victory is invalid. Judge Stewart has a lot to do or ignore before he can ramrod a jury trial in March. He is going to have to figure out what that jury trial is about first.

  1. There is a stunningly delicious irony in this Motion. It was the prospect of this trial that inspired SCO to dodge into bankruptcy. When the Bankruptcy Court lifted the stay, the non-jury trial worked out by Novell and Kimball took place. SCO didn't lose very badly at all. If they knew they would lose only 2 or 3 million, they wouldn't have risked loss of control in bankruptcy. SCO won their appeal but that now undermines their SCOSource victory against Novell. They are up against a 30 million claim again with a jury trial crying for specificity. This 95% issue also undermines all their other claims to gain.
  2. SCO's response to this will be that it is untimely, prejudicial, and waived. Novell did not appeal this issue. This is a back door way of appealing it now. Novell waived by not appealing this aspect of the trial. This is why lawyers address every issue and try not to waive anything. One never knows what the future holds. But who knew that the Court of Appeals would rule that unspecified copyrights might have transferred.
  3. Isn't it amazing that the system expects a jury to sort this all out when even judges can disagree.
  4. Let's hope Cahn can handle the Holidays better.

Season's Greetings. Mardi Gras is coming.


---------webster

Tyrants live their delusions. Beware. Deal with the PIPE Fairy and you will sell your soul.



[ Reply to This | # ]

Fiduciary duty?
Authored by: eschasi on Wednesday, December 23 2009 @ 02:22 PM EST
Are these monies part of the stuff covered by the fiduciary actions Novell
claimed were done on its behalf? I vaguely recall a statement here on Groklaw
that fiduciary stuff is handled differently from 'ordinary' creditor stuff
because the money is not considered to be the property of the collector and
hence wouldn't be available to the creditors. Unfortunately I can't find the
article involved, assuming I'm even remembering correctly.

[ Reply to This | # ]

Novell is sending another message to Cahn
Authored by: jbb on Wednesday, December 23 2009 @ 02:30 PM EST
PJ pondered:
... why is Novell asking for money, when it's so unlikely it will ever get any?
I think this is another message from Novell to Cahn. Since he seemed to ignore the previous messages, this one is much less polite. Let's hope this intervention works and Cahn can ween himself off of the heady intoxication of Darl's [pinkie to cheek] PIPE dreams before it's too late. But I fear the addiction has already taken hold and the more Cahn is confronted with stark reality, the more he will burrow deeper and deeper into the comfort of drug dreams. If the message behind Novell's action is rude, it is much less rude than the awakening Cahn will get if he continues to ignore any reality outside of SCO and BS&F.

My message to Cahn would be to remind him of the words of Judge Gross when he appointed a chapter 11 trustee:

The Court's "two cents," however, is to suggest that the OUST consider appointing a retired judge or litigator since the analysis of the Litigation will serve as the trustee's principal responsibility. ...
Don't lose sight of that *principal* responsibility. Don't assume. And never get involved in a land war in Asia.


---
You just can't win with DRM.

[ Reply to This | # ]

What Will Novell's Motion Accomplish?
Authored by: sk43 on Wednesday, December 23 2009 @ 07:43 PM EST
Novell quotes the key paragraph from Kimball's ruling in which he determined that Novell is not owed money: [Novell-542]:
Because the SCOsource licenses cannot be construed to include a release of SVRX copyright infringement, the court does not find the licenses to be SVRX Licenses that generated SVRX Royalties to Novell under the APA. SCO could not release Novell's rights to claims based on its ownership of the SVRX copyrights. Even if the releases contained in the SCOsource Agreements were considered SVRX Licenses, there is no value in the agreements with respect to Novell's SVRX interests. As such, Novell has no entitlement to monies SCO received with respect to a release of only SCO's rights. The value of those SCOsource releases is a matter between SCO and the parties who entered into such releases. In addition, because the court concludes that the releases in the SCOsource Licenses were not SVRX Licenses, SCO had authority to execute the agreements.

This paragraph has six sentences. Numbers one, two, and six cover consequences based on Novell, not SCO owning the copyrights (and in particular, that SCOsource licenses are not SVRX licenses as contemplated in the APA). However, numbers two, three, and four cover conseqeuences as to what happens if they WERE SVRX licenses (independent of who owns the copyrights), and here Kimball asserts that Novell is still not entitled to any money.

It would be seem to be inappropriate for Novell to ask Stewart to redecide an issues already decided by Kimball that has not yet been before the Appeals Court. Rather, all that Novell would have done is to preserve the right to appeal sentences 3-5 of Kimball's original decision.

Anyway, that is my reading of the relevant filings. IANAL. YMMV.

[ Reply to This | # ]

Novell Files Motion to Set Aside Judgment Re SCOsource Monies
Authored by: mupi on Thursday, December 24 2009 @ 01:46 AM EST
I distinctly remember commenting, I think there was a whole thread about it, at
the time of Kimball's original ruling.

This is exactly why some of us thought that SCO might not appeal: because even
"winning" in the appeal would open a can of worms that they might not
want to reopen.

SCO might attempt to claim that Novell waived a large portion of this, but in
fact, Novell's waiver was contingent on issues already decided remaining
decided. Since those issues did NOT remain decided, but got sent back, Novell
is fully within their rights to pursue this.

I think long ago this became, for both IBM and Novell, more a question of
principle than any monetary gain they may get. If Novell wins this, then even
the small amount of cash that SCO has to pursue their litigation goes away.
Without money, no company can function.

The real shame in this is that if Novell wins, IBM may never get their day in
court to say "we never infringed in the first place"

The advantage to this is that if Novell wins, they can probably force a chapter
7 conversion, and at that point, there might well be records that suddenly get
made public, regarding potentially piercing the corporate veil and/or criminal
cases. Although many such records probably no longer exist, any of the major
players probably have copies of such documents, retained as insurance against
being set up as the Fall Guy.

I think Kimball was very smart and deliberate in what he did. He set it up so
SCO had a very strong disincentive to appeal; by being foolhardy enough to
pursue the appeal anyway, SCO opened itself to a much larger amount again.

Another aspect might be that Novell is growing weary of SCO trumpeting their
"victory", and how the actual amount owed Novell was such a minor
amount, and etc.

[ Reply to This | # ]

Novell Files Motion - Clever move as usual from these guys.
Authored by: SilverWave on Thursday, December 24 2009 @ 09:04 AM EST
OK so Kimball is out..

..so everything is back in play again :)

Nice.

We saw that he was subject to incredible pressure at the time and how OTT some
of the players in Utah take things.

I do think it affected some of his decisions, even if it resulted in him being
too careful and giving SCO too much latitude.

One thing to remember is how much of SCO's case by ambush is now known.



---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

[ Reply to This | # ]

How does this affect BSF?
Authored by: Anonymous on Thursday, December 24 2009 @ 10:42 AM EST
If this places a lot of burden on BSF it might be the quickest way to get Cahn
to reconsider his negotiating position.

[ Reply to This | # ]

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