Here it is SCO's brief [PDF] in opposition to Novell's petition for a writ of certiorari filed with the US Supreme Court. They did file. Old-timers here will notice that it looks a lot like SCO's opposition brief to Novell's petition [PDF] to the Tenth Circuit Court of Appeals last year, when Novell asked for a rehearing by the Tenth Circuit of its decision on SCO's first appeal. That decision is the same one Novell now is asking the Supreme Court to review. Compare the table of contents on each SCO filing, and you'll see that SCO is recycling. In fact, I was able to just copy and paste their Table of Authorities from the earlier filing, and the only change I needed to make was to the page numbers by one digit.
Don't take this case, SCO says to the Supreme Court. It's moot, because we lost in the trial the appeals court ordered and so Novell owns the UNIX and UnixWare copyrights at issue. We are appealing, but if we win, Novell can petition you then. And it doesn't involve a question of importance anyhow, SCO argues. Besides, the court of appeals was right, SCO goes on. The APA, once amended by Amendment 2, is a copyright transfer writing, because it showed an intent to transfer some copyrights.
This is exactly what the jury just decided was *not* the case.
But SCO is right that this is what the Tenth Circuit said. It thought the Amendment 2 language meant that at least some copyrights were meant to be transferred under the APA, but if you followed the trial, as the jury did, you found out that this was absolutely not Novell's intent and that's not at all what Amendment 2 meant. So the Tenth Circuit's assumption otherwise is exactly what Novell would like the Supreme Court to take a look at. And SCO will argue that the jury got it wrong. SCO reveals in this document what its appeal to the Tenth Circuit will be about this second time, and it will not surprise you to learn that this X marks the very spot: SCO's appeal will concern whether the jury instructions accurately reflected the Tenth Circuit's rulings, including on the issue of writings in satisfaction of Section 204 of the Copyright Act. I gather SCO thinks the jury instructions should have said that some copyrights were intended to be transferred, and their only job was to decide which ones. But was the APA plus Amendment 2 saying that or did the appeals court get it wrong? Or is SCO stretching what the appeals court wrote? The question Novell would like the Supreme Court to answer is: what is required to satisfy Section 204 of the Copyright Act? The Tenth Circuit held that if there is a writing that shows that some copyrights were intended to transfer, you could leave it up to a jury to decide which ones. Novell argues that to be sufficient, a writing should at least explicitly say *which* copyrights are intended to be transferred, so that juries don't have to try to figure it out in some cases decades later, when disputes arise. Considering how long copyrights last, if you leave it up to juries, the parties to the agreement could all be long dead by the time the question comes up, and even if still alive, as the appeals court stated, the disputes might arise from "the self-serving
testimony offered by partisan witnesses whose recollection is hazy
from passage of time and colored by their conflicting interests." Land titles are not left to chance like that. You can't sign over some land at a closing, and then two years later say where the boundaries are, or worse, leave it up to a jury to figure that out. You might have built a house by then in the wrong spot. Now you have to move it. And neither, Novell argues, should copyright ownership be left up to such vagaries and require burdensome litigation to decipher meanings when it's certainly possible to be explicit, because businesses need to know where they stand in advance of investing in a business proposition, not years later, after they are found liable for copyright infringement, for example, over copyrights they believed they owned.
If you would like to review the jury instructions, they're here. SCO hasn't filed that second appeal brief with the Tenth Circuit yet, but we'll share it with you when they do. SCO says the question presented is: Whether a writing evincing the intent to transfer ownership of certain copyrights satisfies the requirements of Section 204(a) of the Copyright Act. But Novell wrote in its petition that the question presented was:Section 204(a) of Title 17 of the United States Code provides: "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." The question presented is:
Whether Section 204(a) requires a writing that specifies which copyrights were conveyed, or whether, as the court of appeals held, requires only that the written instrument could be construed to convey some copyrights, leaving the factfinder to determine which, if any, copyrights were conveyed.
Not exactly the same question, is it? And SCO writes like the jury didn't already decide its question. It claimed for years it wanted a jury trial, but when it got it, what it wants is a jury that can't rule on the evidence, because it has to slavishly follow a mistaken appeals court that didn't have the advantage of considering the evidence presented to the jury. Should a jury have to follow wrong decisions, decisions that fly in the face of the actual evidence? SCO also presents the appeals decision by the Tenth Circuit as upholding SCO's position, but what it actually wrote was this: But so long as sufficient evidence could lead a rational trier of fact to resolve the dispute in favor of either party, granting either party's dueling motions for summary judgment would be inappropriate. That's why they said a trial was necessary. They thought that an intent to transfer some copyrights was what the APA plus Amendment 2 meant:But when it is clear that the parties contemplated that copyrights transfer, we do not think that a linguistic ambiguity concerning which particular copyrights transferred creates an insuperable barrier invalidating the transaction. Thus, the majority of cases that Novell draws our attention to, in which alleged copyright transfers are found not to satisfy Section 204, involve transactions where it is not clear whether the parties intended that copyrights would transfer at all--not disputes over which specific copyrights were within the scope of an intended transfer. That's where the appeals court ran off the rails. As the jury just found, there was no intent to transfer *any* copyrights, just as Novell has been saying for years. So it wasn't a question of which ones. It wasn't a question of all. It was none. None at all. That was the decision. So whatever the appeals court thought was conceivable or whatever conclusions it reached, the decision was reached by the jury that there was no such intent.
And while SCO now makes it sound like the APA plus Amendment 2 is a vision of clarity, the appeals court characterized SCO's argument to them like this: SCO argues that the district court erred by interpreting the APA and Amendment No. 2 as separate and independent. It further contends that the text of the APA and Amendment No. 2 is at least ambiguous concerning whether the parties intended to transfer ownership of the copyrights, making it appropriate to consider extrinsic evidence. So, when SCO wanted a jury trial, it said it was ambiguous. Now that it doesn't want the Supreme Court to take this case, it says it's clearly expressing the intent to transfer. But the Tenth Circuit wrote that under California law, you can only present extrinsic evidence in certain circumstances, namely to show a latent ambiguity that allows for an alternative meaning: California law "generally prohibits the introduction of any extrinsic evidence to vary or contradict the terms of an integrated written instrument." Gerdlund v. Elec. Dispensers Int'l, 190 Cal. App. 3d 263, 270 (Cal. Ct. App. 1987). California's parol evidence rule provides that "[t]erms set forth in a writing intended by the parties as a final expression of their agreement . . . may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement." Cal. Code Civ. Proc. § 1856(a). Such a writing "may not be contradicted by even the most persuasive evidence of collateral agreements. Such evidence is legally irrelevant." EPA Real Estate P'ship v. Kang, 12 Cal. App. 4th 171, 175 (Cal. Ct. App. 1992); see also Gerdlund, 190 Cal. App. 3d at 270 (Cal. Ct. App. 1987) (although all parties testified that they shared same intent as to employment agreement, evidence was not admissible to prove meaning of contract where plain language of contract could not support that interpretation). The rule "is based upon the premise that the written instrument is the agreement
of the parties." Id. (citing Tahoe Nat'l Bank v. Phillips, 480 P.2d 320, 4 Cal.3d 11, 2223 (Cal. 1971)).
On the other hand, "[e]ven if a contract appears unambiguous on its face, California law permits the use of extrinsic evidence to expose "a latent ambiguity . . . which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible." Dore v. Arnold Worldwide, Inc., 139 P.3d 56, 60 (Cal. 2006) (emphasis added). "The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible." Id. (quoting Pacific Gas & E. Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d 641, 644 (Cal. 1968)). Thus, California law does not permit the use of extrinsic evidence to establish an ambiguity in the parties' intent independent from the terms of the contract; instead, it can only be used to expose or resolve a latent ambiguity in the language of the agreement itself. SCO's witnesses, however, at trial didn't present an alternative meaning for the words. Instead, they all said that the words were wrong, because the words contradicted their thoughts, dreams, and alleged intent.
Novell discusses this in its petition:The court held that there was an issue of fact as to whether the
amendment to the Asset Purchase Agreement transferred ownership of
the UNIX copyrights at issue in this case. App., infra, 28a.
The court explained that it was enough to satisfy the Copyright
Act's written-transfer requirement if there was any writing that a
jury could read as having transferred some copyrights.
The court of appeals recognized that "predictability and
certainty of ownership" was a "paramount goal" of the Copyright Act
revisions, but nevertheless concluded that Section 204(a) does not
require any particularity as to which copyrights a written document
purports to transfer. In reaching this conclusion, the court
acknowledged that it was parting ways with "some courts" which have
held that "a writing is insufficient to transfer copyrights unless
(1) it reasonably identifies the subject matter of the agreement,
(2) is sufficient to indicate that the parties have come to an
agreement, and (3) states with reasonable certainty the essential
terms of the agreement." App., infra, 21a. By contrast, the
court of appeals held that "Section 204's writing requirement is
best understood as a means of ensuring that parties intend to
transfer copyrights themselves, as opposed to other categories of
rights." App., infra, 22a. Any "linguistic ambiguity
concerning which particular copyrights" were involved, the court
noted, can be
determined with the use of extrinsic evidence. App.,
infra, 23a.
Under this standard, the court of appeals did not hold that any
copyrights actually transferred from petitioner to SCO. App.,
infra, 29a-37a. Rather, the court below explained that
whether any copyrights at issue in this case had transferred was
disputed, because a rational trier of fact "could" conclude, based
upon extrinsic evidence, that "at least some copyrights transferred
to SCO." App., infra, 31a-32a (emphasis added). Based on
this possibility that a transfer had occurred, the court of appeals
held that the issue of copyright ownership could not be resolved on
summary judgment. Significantly, the court of appeals recognized
that there "may be reasons to discount the credibility, relevance,
or persuasiveness of the extrinsic evidence that SCO presents."
App., infra, 28a. Nevertheless, the court held that cases
involving "complicated, multi-million dollar business
transaction[s] involving ambiguous language" could be resolved at
trial, even though it might mean resorting to "the self-serving
testimony offered by partisan witnesses whose recollection is hazy
from passage of time and colored by their conflicting interests."
And that's the very issue Novell is asking the Supreme Court to decide, was the appeals court right to say that the APA with Amendment 2 was a sufficient copyright transfer writing:
Under the court of appeals' decision, a
writing is sufficient under 17 U.S.C. § 204(a) to transfer
copyright ownership so long as that writing evinces that a transfer
of some copyrights might have been intended, even if the identity
of those copyrights is not clear. If allowed to stand, this
decision will leave to juries the question of what rights, if any,
have been transferred by an ambiguous writing. This decision
deepens a preexisting conflict among the courts of appeals. Five
courts of appeals now have adopted divergent standards for
determining whether Section 204(a)'s written-transfer requirement
has been met, and most require more specificity than that tolerated
by the decision below. Because this case presents an ideal vehicle
to address an important and recurring problem, the petition should
be granted. Did you notice the part where the Tenth Circuit noted that it was parting ways with some other courts? Note what SCO nevertheless dares to say to the Supreme Court:On Novell's motion for rehearing and rehearing en banc, SCO demonstrated to the Tenth Circuit Panel that its decision does not create any conflict of law within that Circuit or with any other Circuit Courts. The Panel agreed, unanimously declining to grant rehearing by the full Circuit. They didn't write anything about that, though, just that it was denying Novell's petition, so SCO is divining their thoughts on that specific point, I think. The last thing the Tenth Circuit *wrote* was that it was parting ways with some other courts. Update: Groklaw member Kilz notes in a comment another smooth move by SCO that I missed. SCO describes Amendment 2 like this: While the original APA excluded "all copyrights" from transfer, Amendment No. 2 expressly clarified the parties' intent by narrowing the exclusion only to those copyrights not required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. Amendment 2 actually reads like this:With respect to Schedule 1.1(b) of the Agreement, titled "Excluded Assets", Section V, Subsection A shall be revised to read:
All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks. So, by altering the language with the "not", SCO seems to imply that unless you can prove the copyright is not needed, all transfer. That wasn't at all what came out at trial. And it's not even what the words plainly say, which is that all are excluded still, except for any that *are* required "to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies", which as Novell proved at trial was the software business, not SCOsource, which was not contemplated by the parties to the APA. Darl McBride stated in a SEC filing that the company doesn't need copyrights for that business. So, to date, none have been demonstrated to be required. Man, oh man, you have to watch those Boies Boyz like a hawk. Good thing we have so many eyeballs.
Update 2: I thought you would enjoy seeing the opening paragraphs from Lamlaw's take on this filing. He's more plain spoken than I am:
An issue is hardly moot when SCO continues to appeal the relevant issues. But, then SCO has to somehow get the US Supreme Court to stay away from their nuisance law suits. SCO lawyers know for certain that if the US Supreme Court decides that a writing means that the specific copyrights subject to a transfer actually have to be identified in the writing itself, they are out of luck.
And that is precisely what the US Supreme Court decision should clarify. Certainly that was the intent of congress when they passed the copyright laws. It does no good at all to require a transfer be in writing if the substance of the agreement is omitted. And it was omitted in the APA in this case. No copyrights were ever listed anywhere for the purpose of transferring them. Period. And that is what has permitted SCO to bring its nuisance law suits and cost everyone a whole lot of money.
I can not say that the US Supreme Court will hear this case. But, I can say that all industries that rely upon copyrights will benefit if the court can make it clear that a writing means that the detailed copyrights themselves must be identified or it is not a transfer. Certainly this is no greater burden upon anyone at all. Normally they are clearly identified. Regardless of how many of them may be involved. That is normal practice. That's logic, eh? Why require a writing at all, if the heart of the deal isn't required to be in there? Why *not* just a handshake? After all, the hand shakers could always come to court and testify as to what they thought, or meant, or intended.
******************************
No. 09-1061
_________________________________________
In The
Supreme Court of the United
States
_____♦______
NOVELL, INC.,
Petitioner,
v.
THE SCO GROUP, INC.,
______♦_____
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
________♦________
RESPONDENT'S BRIEF IN OPPOSITION
______♦_________
DAVID BOIES
ROBERT SILVER
EDWARD NORMAND
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax] |
STUART SINGER
Counsel of Record
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[email] |
BRENT HATCH
MARK F. JAMES
HATCH, JAMES & DODGE, PC
[address, phone, fax] |
DEVAN V. PADMANABHAN
DORSEY & WHITNEY LLP
[address, phone, fax] |
Attorneys for Respondent, The SCO Group, Inc.,
by and through Edward N. Cahn as Chapter 11 Trustee
QUESTION PRESENTED
Whether a writing evincing the intent to transfer ownership of certain copyrights satisfies the requirements of Section 204(a) of the Copyright Act.
i
RULE 29.6 CORPORATE
DISCLOSURE STATEMENT
Respondent The SCO Group, Inc. ("SCO"), is not owned by a parent corporation. No publicly held
corporation owns 10% or more of SCO's stock.
ii
TABLE OF CONTENTS
Page
QUESTION PRESENTED ............................
i
RULE 29.6 CORPORATE DISCLOSURE STATEMENT..................ii
TABLE OF AUTHORITIES..............................v
PRELIMINARY STATEMENT...........................1
ARGUMENT...............................3
I. THE PETITION IS MOOT........................3
II. THE COURT OF APPEALS' DECISION
DOES NOT INVOLVE A QUESTION OF
EXCEPTIONAL IMPORTANCE, WHERE
IT DOES NOT CHANGE EXISTING
COPYRIGHT LAW AND IS NOT IN
CONFLICT WITH ANY DECISION OF
ANY COURT OF APPEALS
............................................4
A. The Court of Appeals' Decision
Applies Existing Copyright Law to
the Unique Structure of the Amended
APA.........................................4
B. The Court of Appeals' Decision Is
Consistent with Precedent...........................7
C. The Court of Appeals' Decision Is Not
in Conflict with Any Decision of Any
Court of Appeals.........................8
III. THE COURT OF APPEALS' DECISION
DOES NOT UNDERMINE THE POLICY
OF THE COPYRIGHT ACT.........................12
iii
TABLE OF CONTENTS — Continued
IV. THE COURTS OF APPEALS' DECISION
PROPERLY REJECTS NOVELL'S RELI-
ANCE ON THE BILL OF SALE............................14
CONCLUSION ......................................15
iv
TABLE OF AUTHORITIES
CASES
Page
Am. Plastic Equip., Inc. v. Toytrackerz, LLC,
Civil Action No. 07-2253-DJW, 2009 U.S. Dist. LEXIS 27787
(D. Kan. Mar. 31, 2009) ………………………………………………………………11
Chugrue v. Cont'l Airlines, Inc.,
977 F. Supp. 280 (S.D.N.Y. 1997) …………………………………………………………5
Dick Corp. v. SNC-Lavalin Constructors, Inc.,
No. 04 C 1043, 2004 WL 2967556 (N.D. Ill. Nov. 24, 2004) ……………………8
Foraste v. Brown Univ.,
290 F. Supp. 2d 234 (D.R.I. 2003) ……………………………………………………….11
ITOFCA, Inc. v. MegaTrans Logistics, Inc.,
322 F.3d 928 (7th Cir. 2003) …………………………………………………………………5
Konigsberg Int'l, Inc. v. Rice,
16 F.3d 355 (9th Cir. 1994) …………………………………………………………………10
La Resolana Architects, PA v. Clay Realtors Angel Fire,
416 F.3d 1195 (10th Cir. 2005) ……………………………………………………………..7
Liu v. Price Waterhouse,
302 F.3d 749 (7th Cir. 2002) …………………………………………………………………8
Lyrick Studios, Inc. v. Big Ideas Prods., Inc.,
420 F.3d 388 (5th Cir. 2005) ……………………………………………………………….10
Morgan v. Hawthorne Homes, Inc.,
2009 U.S. Dist. LEXIS 31456 (W.D. Pa. Apr. 14, 2009) ………………………..10
Pamfiloff v. Giant Records, Inc.,
794 F. Supp. 933 (N.D. Cal. 1992)......................................................... 11, 12
v
TABLE OF AUTHORITIES -- Continued
Page
Radio Television Espanola S.A. v. New World Entm't, Ltd.,
183 F.3d 922 (9th Cir. 1999) ……………………………………………………………….10
Relational Design & Tech., Inc. v. Brock,
No. 91-2452-EEO, 1993 WL 191323 (D. Kan. May 25, 1993)………………….5
Rico Records Distribs., Inc. v. Ithier,
No. 04 Civ. 9782 (JSR), 2006 WL 846488 (S.D.N.Y. Mar. 30, 2006)………..8
Schiller v. Schmidt, Inc.,
969 F.2d 410 (7th Cir. 1992) …………………………………………………………………8
SCO Group, Inc. v. Novell, Inc.,
No. 08-4217, 2009 WL 2581735 (10th Cir. Aug. 24, 2009)……………. passim
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)………8
vi
Respondent, The SCO Group, Inc. ("SCO"), respectfully submits this memorandum in opposition to Novell's petition for writ of certiorari.
________♦__________
PRELIMINARY STATEMENT
As an initial matter, Novell's petition is moot. As events stand, following the trial that followed the Tenth Circuit's decision, Novell owns the UNIX and UnixWare copyrights at issue, and the question of the accuracy of the Tenth Circuit's decision is academic. SCO is appealing the jury verdict and post-trial rulings to the Tenth Circuit, but if that court were to find in SCO's favor, Novell is free to renew its petition, and this Court would be better positioned to consider such a petition at that time.
Novell also fails to raise proper grounds for this Court to grant a writ of certiorari. On Novell's motion for rehearing and rehearing en banc, SCO demonstrated to the Tenth Circuit Panel that its decision does not create any conflict of law within that Circuit or with any other Circuit Courts. The Panel agreed, unanimously declining to grant rehearing by the full Circuit. The Court of Appeals' decision is consistent with the prior precedent addressing Section 204 of the Copyright Act and does not set forth any grounds for granting a writ of certiorari.
What the Court of Appeals' decision does is modest: it holds that in the sale of the UNIX business from Novell to SCO's predecessor-in-interest, the
1
amended Asset Purchase Agreement ("APA") did not as a matter of law exclude the transfer of UNIX copyrights; a trial was required on those issues; and the entry of summary judgment was improper. In the course of that decision, the Court of Appeals correctly held that the amended APA satisfied the requirements of Section 204(a) of the Copyright Act because the amended APA is a written instrument transferring copyrights.
The amended APA identified the assets sold as "all rights and ownership of UNIX, UnixWare and
Auxiliary Products," including but not limited to software programs listed in detail in Schedule 1.1(a) of the Agreement. While the original APA excluded "all copyrights and trademarks" from the sale, Amendment No. 2 removed that exclusion so that the copyrights required for SCO "to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies" were not excluded. This Amendment thus brought the APA into conformity with the intent of the parties. The Court of Appeals' decision that a new Bill of Sale was not required to accompany this Amendment so as to comply with Section 204(a) is perfectly sensible and does not conflict with any authority.
The courts applying Section 204(a) have repeatedly considered extrinsic evidence to determine the parties' intent -- which the leading authorities on copyright law agree is the paramount goal in interpreting the transfer document. No case holds either that a court should disregard extrinsic evidence of the parties' intent in
determining whether a writing
2
satisfies Section 204(a) or that an agreement identifying copyrights (like the amended APA) cannot satisfy Section 204(a). Instead, Novell proposes a standard under which a reasonable dispute between parties regarding their intent to transfer particular copyrights could not be resolved like any other
contract dispute. As the Court of Appeals concluded, neither the language nor the legislative history of Section 204(a) supports "such an onerous restraint on the alienability of copyrights."
__________♦_____________
ARGUMENT
I. THE PETITION IS MOOT.
By stipulation of the parties the Court has delayed its resolution of the trial that followed the remand upon the Tenth circuit decision that Novell asks this court to review. The trial concerned whether the amended APA at issue in Novell's petition transferred the UNIX and UnixWare copyrights from Novell to SCO's predecessor-in-interest. The jury found in Novell's favor. In addition, in separate post-trial findings of fact and conclusions of law, the trial court declined to require Novell to transfer the copyrights to SCO at that time.
Accordingly, as events stand, in light of the verdict below, Novell owns the copyrights to pre-APA UNIX and UnixWare technologies, and the question of the accuracy of the Tenth Circuit's decision is
3
academic. To be sure, SCO is appealing the jury verdict and post-trial rulings to the Tenth Circuit. If the Tenth Circuit were to find in SCO's favor, however, Novell is free to renew its petition and this Court would be better positioned to consider such a petition at that time.
In addition to the foregoing practicalities, the Tenth Circuit's resolution of SCO's appeal may further bear on the legal issues that Novell's petition raises. SCO's appeal will concern whether the jury instructions accurately reflected the Tenth Circuit's rulings, including on the issue of writings in satisfaction of Section 204 of the Copyright Act. The Tenth Circuit therefore may further expand or elaborate upon its earlier ruling in addressing SCO's arguments. This Court should have such elaboration before it in considering the propriety of reviewing any
decision by the Tenth Circuit.
II. THE COURT OF APPEALS' DOES NOT INVOLVE A QUESTION OF EXCEPTIONAL IMPORTANCE, WHERE IT DOES NOT CHANGE EXISTING COPYRIGHT LAW AND IS NOT IN CONFLICT WITH ANY DECISION OF ANY COURT OF APPEALS.
A. The Court of Appeals' Decision Applies Existing Copyright Law to the Unique Structure of the Amended APA.
Section 204(a) of the Copyright Act requires that a "transfer of copyright ownership" include "an instrument of conveyance, or a note or memorandum
4
of the transfer". Considering that language, as the Court of Appeals observed, the cases applying Section 204(a) ask whether the writing at issue evinces the parties' intent to engage in a transfer of "copyright ownership" as opposed to other categories of ownership rights. SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1212-13 (10th Cir. 2009).
The amended APA, as the Court of Appeals explained in detail, id. at 1211-14, meets the foregoing standard. Without revisiting the full breadth of the Court of Appeals' reasoning, the Court of Appeals' decision makes the following critical points: - The APA conveys "all rights and ownership" in the list of UNIX software programs identified on the attached Schedule 1.1(a). When a party acquires "all rights and ownership" in a set of works, courts have repeatedly found such language to satisfy Section 204(a), particularly where the asset is computer software.1
-
While the original APA excluded "all copyrights" from transfer, Amendment No. 2
5
expressly clarified the parties' intent by narrowing the exclusion only to those copyrights not required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies.-
Because the amended APA excised the "all copyrights" language from the Excluded Assets in Schedule 1.1(b), the amended APA is an instrument of the conveyance of copyrights identified among the Assets in Schedule 1.1(a) and not excluded by Schedule 1.1(b). As the Court of Appeals explained, to hold otherwise would mean that the amendment was a nullity. SCO, 578 F.3d at 1217-18.
-
Novell's argument that a second bill of sale must accompany Amendment No. 2 is misplaced for two independent reasons: (1) it is not necessary for the Bill of Sale to have been executed at the same time as Amendment No. 2, and (2) Section 204(a) requires only a "note or memorandum of transfer," and thus Amendment No. 2 (and the
amended APA) satisfies that requirement by "evincing a clear intent to revise or clarify the formal schedule of copyrights transferred by Novell to Santa Cruz."
The Court of Appeals' decision and reasoning thus break no new ground in the interpretation and application of Section 204(a), but rather turn on the Panel's detailed assessment of the particular provisions of the APA and Amendment No. 2 consistent with the statute and relevant precedent.
6
B. The Court of Appeals' Decision Is Consistent with Precedent.
The decision and reasoning below are consistent with the rules of statutory interpretation that the courts have established and follow. Under these rules, the analysis of Section 204(a) must "start with the language of the statute." La Resolarua Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1200 (10th Cir. 2005). Section 204(a) does not impose any heightened burden of clarity or particularity. SCO, 578 F.3d at 1212-13.
No case has interpreted Section 204(a) to mean that the scope of assets properly transferred under a sufficient writing cannot be determined by recourse to extrinsic evidence -- that an entire category of otherwise admissible evidence of the parties' intent should be deemed irrelevant and excluded if the writing contains an ambiguity on the scope of copyrights transferred. Nothing in the language of Section 204(a) or even its legislative history suggests that Congress intended to revise the rules of contract interpretation in such blunderbuss fashion. Novell thus proposes a new rule that no court has previously followed, that would conflict with the
well-established precedent interpreting Section 204(a), and that would
subvert longstanding rules of statutory interpretation.
7
C. The Court of Appeals'Decision Is Not in
Conflict with Any Decision of Any Court
of Appeals.
Novell acknowledges that courts that have specifically addressed the
issue -- in contrast to the cases Novell cites -- have
considered extrinsic evidence of the parties' intent in applying
Section 204(a).2 These cases
have not found such consideration to undermine the purposes of the Copyright Act.
Novell fails to cite (and SCO has not found) any decision from any other federal court in conflict with the Tenth Circuit's decision in this case: -
No decision holds that a writing that references copyrights,
much less a writing that identifies them, cannot satisfy Section 204(a).
-
No decision holds that a court cannot consider extrinsic evidence
of the parties' intent in determining whether the writing at issue
satisfies Section 204(a).
-
No decision holds that extrinsic evidence is admissible to determine
only whether a
8
party has transferred all its copyrights, but is not admissible
to determine whether the parties intended to transfer only a subset
of such copyrights.
As the Court of Appeals here decided: "Where ambiguity persists
in the language of a parties' shared agreement concerning a copyright
transfer, the transfer is not invalidated; instead, we look to
parol evidence to construe the terms of the agreement."
SCO, 578 F.3d at 1212.
Instead, the cases Novell has cited address particular circumstances
involving a combination of elements not at issue here namely, scenarios
in which there is no signed writing at all, or in which the writing
at issue says nothing about copyrights and the parties do not attempt
to cite any extrinsic evidence of the parties' intent outside of the
writing or writings at issue. As the Court of Appeals observed:
the majority of cases that Novell draws our
attention to, in which alleged copyright transfers are found not
to satisfy Section 204, involve transactions where it is not clear
whether the parties intended that copyrights would transfer at
all -- not disputes over which specific copyrights were within the
scope of an intended transfer.
Id. at 1213. In fact, several of the cases Novell has cited
set forth standards that directly support
9
the Court of Appeals' decision.3 Even the principal cases on which Novell has relied do not, on close inspection, support
Novell's position.4
10
None of Novell's cases addresses a detailed written agreement that
transfers all ownership rights; identifies the copyrights at issue
in the written document itself; contains numerous material terms
setting forth the types of rights that copyrights comprise; and therefore reflects, on its face, the parties' negotiation and bargaining over
the subject of copyrights. Just as importantly, none of the decisions
holds that a court cannot consider extrinsic evidence in assessing
whether the writing at issue satisfies section 204(a), and several
of those decisions in fact do consider whether such evidence exists.
The precedent is not at all inconsistent with the Court of Appeals'
core reasoning that, where a detailed contract clearly contemplates
the transfer of a discrete set of copyrights, a jury is entitled to
consider the extrinsic evidence of the parties' intent to transfer
some or all of those copyrights.
III. THE COURT OF APPEALS' DECISION
DOES NOT UNDERMINE THE POLICY OF
THE COPYRIGHT ACT.
Novell argues that the decision conflicts with the policy of section 204(a). Novell's argument fails for several reasons.
First, the plain language and legislative history of Section 204(a)
no more require that the instrument
11
meet some heightened standard of specificity in referring to "copyrights"
than they require that the parties use the word "copyrights" in the
first place -- that is, there is no such requirement at all.
Second, as the Court of Appeals' decision points out, ambiguities
in instruments of transfer are common: Written memorializations of
copyright ownership, like written memorializations of all manner of
private agreements, inevitably are subject to more than one
interpretation. SCO, 578 F.3d at 1212-13. Yet Novell proposes
a standard under which a reasonable dispute between parties regarding
their intent to transfer particular copyrights -- or even, as the Court
of Appeals points out, a dispute that one party in effect manufactures
by pointing out any ambiguity in the writing at issue -- could not be
resolved like any other contract dispute, but instead would result in invalidating the transfer altogether. Id. at 1212. Neither the
language nor the legislative history of Section 204(a), as the Court
of Appeals correctly reasoned, supports "such an onerous restraint on
the alienability of copyrights." Id.
Third, it is Novell's position that would undermine the
purposes of the Copyright Act. If a detailed Asset Purchase Agreement memorializing the sale of a software business is not a sufficient
writing to convey copyrights, there would be greater uncertainty as to how far parties must go to comply with Section 204(a). Where the parties to an agreement indisputably intended to transfer copyrights as part of numerous other ownership rights, and where all of the copyrights at issue are
identified in the agreement, the
13
policy and goals of Section 204(a) are satisfied. Ordering a trial on
these issues of intent hardly creates an issue of "exceptional
importance."
IV. THE COURT OF APPEALS' DECISION
PROPERLY REJECTS NOVELL'S RELI-
ANCE ON THE BILL OF SALE.
As the Court of Appeals determined, Novell's argument that the parties
needed to execute a second bill of sale in connection with Amendment
No. 2 misapprehends both the facts of the transaction and the requirements of Section 204(a) for two reasons. First, by its own terms, Amendment
No. 2 amends the schedules of assets being transferred to Santa Cruz,
and there is no requirement that another bill of sale needed to have
been executed at the same time as the amendment.
Second, the Court of Appeals correctly found that even if there
had been no bill of sale, Section 204(a) requires only a "note or
memorandum of transfer" -- a standard that Amendment No. 2 itself
(and also the amended APA) easily satisfies by "evincing a clear
intent to revise or clarify the formal schedule of copyrights
transferred by Novell to Santa Cruz."5 Id.
14
at 1214. This unremarkable holding does not approach the standards for granting Novell's petition.
____________♦____________
CONCLUSION
SCO respectfully submits, for the foregoing reasons, that the Court
should deny Novell's petition for writ of certiorari.
Respectfully submitted on this 5th day of August, 2010.
DAVID BOIES
ROBERT SILVER
EDWARD NORMAND
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax]
STUART SINGER
Counsel of Record
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax, email]
BRENT HATCH
MARK F. JAMES
HATCH, JAMES & DODGE, PC
[address, phone, fax]
DEVAN V. PADMANABHAN
DORSEY & WHITNEY LLP
[address, phone, fax]
Attorneys for Respondent, The SCO Group, Inc.,
by and through Edward N. Cahn as Chapter 11 Trustee
_______________
1 See ITOFCA Inc. v. MegaTrans Logistics, Inc., 322 F.3d, 928, 931 (7th Cir. 2003) (written intent to transfer "all assets" can indicate intent to transfer copyrights); Chugrue v. Cont'l Airlines, Inc., 977 F. Supp. 280, 284-85 (S.D.N.Y. 1997) (written agreement to transfer "all right, title and interest" in software indicated intent to transfer copyrights); Relational Design & Tech., Inc. v. Brock, No. 91-2452-EEO, 1993 WL 191323, at *6 (D. Kan. May 25, 1993) (transfer of "all rights" in software program included copyright).
2 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 Distribs., 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).
3 In Radio Television Espanola S.A. v. New World Entm't, Ltd., 183 F.3d 922 (9th Cir. 1999), for example, the court expressly contemplates that where the "facts" surrounding the negotiation of the document at issue are "compelling," the writing at issue need not be clear on its face. Id. at 928. Similarly, Novell previously relied on Morgan v. Hawthorne Homes, Inc., Civll Action No. 04-1809, 2009 U.S. Dist. LEXIS 31456 (W.D. Pa. Apr. 14, 2009), in which the court acknowledged with approval: "When interpreting facially ambiguous documents, some courts have looked to the surrounding circumstances to clarify the intent of the parties." Id. at *47-48.
4 In Lyrick Studios, Inc. v. Big Ideas Prods., Inc., 420 F.3d 388 (5th Cir. 2005), the court did not even consider whether there was sufficient reference to "copyrights" in the writings at issue to satisfy Section 204(a), because the plaintiff in that case contended that it had received copyright ownership only through the grant of an exclusive license. Id. at 391. The court thus did not determine whether a signed agreement transferring assets referred to copyrights with "reasonable certainty," but rather concluded only that the parties had never entered into an
exclusive license, where they had never entered into any contract in the first place. Id. at 393-96.
Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355 (9th Cir. 1994), is
also easily distinguished. There, the court addressed whether a letter
sent over three years after the parties entered into an oral agreement satisfied section 204(a). The court held that it did not suffice because
(a) "it was not substantially contemporaneous
with the oral agreement"; (b) it was not "a product of the parties' negotiations"; (c) it was written "a year and a half after the alleged
term [of the agreement] would have expired"; and (d) it was written
"6 months into a contentious lawsuit." Id. at 357. In short, the
letter "came far too late to provide any reference point for the parties' license disputes."
Foraste v. Brown Univ., 290 F. Supp.2d 234 (D.R.I. 2003), concerned
whether certain Brown University's "Policies and Procedures Relating to Copyright" satisfied Section 204(a) with respect to certain photographs
that plaintiff took while employed by Brown. The court said no, reasoning
that the policies and procedures contained "no material terms specific
to the contested photographs," and emphasized that the plaintiff
"himself acknowledges that he did not even contemplate ownership of
the photographs" until well after Brown adopted the policies and
procedures, that "there is no evidence of a negotiation or 'meeting of
the minds'" between the parties "regarding the contested photographs,"
and that there "is no indication" that the plaintiff "ever bargained for the copyrights he now seeks." Id. at 239-40. In addition,
the court in Foraste specifically considered whether
there was extrinsic evidence of the adoption of the policies and
procedures, the parties' interpretation of them, and the parties'
performance thereunder.
In Am. Plastic Equip., Inc. v. Toytrackerz, LLC, Civil Action
No. 07-2253-DJW, 2009 U.S. Dist. LEXIS 27787 (D. Kan. Mar. 31, 2009),
the court held that plaintiff failed to demonstrate chain of title
between itself and Marx Toys, Inc., where there was "no written document memorializing that assignment in the record," but rather only a
declaration from an officer of Marx Toys that he had assigned copyrights
to plaintiffs in his official capacity. Id. at *18. In short,
there was no written agreement before the court at all; it decided only
that a unilateral declaration of the officer of a company cannot itself
satisfy Section 204(a).
Novell also previously relied on Pamfiloff v. Giant Records, Inc.,
794 F. Supp. 933 (N.D. Cal. 1992), where, as in Konigsberg, the
court addressed whether certain documents created after the parties
entered into the alleged oral agreement satisfied Section 204(a),
with respect to certain publishing rights claimed by the plaintiff.
The first document at issue was a recording agreement that "makes
no mention of any transfer of ownership rights," or
even publishing rights; the second document "was never signed by any
party and contains no date," and also made no reference to publishing
rights. Id. at 935-36. Neither document made any reference to the "rights to reproduce, perform, distribute, market, promote, or otherwise exploit the compositions" that publishing rights comprise. Id.
at 936.
5 The Court of Appeals
correctly rejected Novell's and the District Court's position that the reference in Amendment No. 2 to having been executed as of a given date
meant that the amendment did not have retroactive effect. SCO,
578 F.3d at 1214. Clearly, an amendment to the schedules of assets
being sold is intended to relate to the transfer of those assets at
the closing and under the Bill of Sale. The reference in Amendment
No. 2 to transfer of copyrights owned by Novell "as of the date of
the [APA]" confirms this interpretation.
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