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10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Tuesday, August 30 2011 @ 05:04 PM EDT

Finally, the 10th Circuit Court of Appeals has ruled [PDF] on SCO's appeal of its loss to Novell in the second jury/bench trial. The appeals court affirms in all respects.

So, SCO loses again, and likely this is as far as it will go. Technically, SCO can ask the US Supreme Court to hear a further appeal, but that is very unlikely to happen and even less likely to be granted were it to happen.

SCO has fallen downstairs, hitting its head on every step, to the very bottom, just like I told you in May of 2003, in the first article I ever wrote about SCO.

And Groklaw is still standing. Thank you to everyone who worked so hard for so many years and are still here to see this day.

For those wishing to review, here are all the decisions SCO has now lost, except for partially winning on the first appeal:

You can find Groklaw's reports about the oral argument in this second appeal here, and a transcript and audio of the hearing here. Remember one of our Groklaw reporters, charlie_Turner, wrote that day, "My overall impression was that these judges do not suffer baloney salesmen, not even for one slice." He had that right, I'd say, now that I read today's ruling. It was worth waiting for.

Not even Boies Schiller could save SCO. In fact, Judge Terence O'Brien, who wrote today's decision for the panel, seems to me to have given SCO's lawyers a bit of a spanking.

Yes. It's that time. I wrote years ago I'd go to SCO's funeral in a red dress, and here we are.

: )

[ Update: Tom Harvey at the Salt Lake Tribune got responses from Novell and from Michael A. Jacobs of Morrison and Foerster, who successfully represented Novell in the appeal:

Novell said in a statement only that it "is pleased that the jury verdict and Court ruling have been upheld."

Michael Jacobs, an attorney with the San Francisco law firm that represented Novell, said the ruling most likely means the end of the case. "Both sides have had their day in court," he said. "We hope this brings finality to the matter."

SCO's Chapter 11 trustee Edward Cahn, who decided to pursue this appeal, reportedly did not return Mr. Harvey's request for comment.

Some comments from the group point out that SCO could ask for an en banc reconsideration, but that seems pointless to me. Not that SCO ever listened to me. Imagine if they had. I would have saved the company millions. - End Update.]

[ Update 2: Bloomberg's notes the event as well as the Houston Chronicle. And for old time's sake, here's Maureen O'Gara at her most terse, except in describing herself as "the most read technology reporter in the last 20 years". I doubt that, and I hope not, in that she writes, "SCO's original case against IBM for poaching Unix to improve Linux, which is still pending, is therefore presumably quashed." Not so.

It's stayed by the bankruptcy, but IBM still has counterclaims that are still valid. It's up to IBM if it wishes to go forward. SCO would have to defend, but without any claims to use against IBM based on copyright ownership. I'm sure they'd think of something, though, if IBM chooses to go forward.

I believe that is part of why SCO sold off all its assets, as O'Gara puts it "for a song", so as to disincentivize IBM from resuming the litigation. Litigation is usually only about money. But sometimes it's about honor, and that is what IBM will have to decide -- is it worth it to make a final record of SCO's and its lawyers' conduct and of IBM's innocence? They may decide that it is. SCO falsely accused them and Linux of many things, after all, and a company like IBM cares about its good reputation. And it's their call.

Of course, it's possible O'Gara doesn't know what the word quashed means legally. And I see she doesn't write about her role in the SCO saga, but Groklaw has the full chronicle of Maureen "I need you to send a jab pj's way" O'Gara's participation. Here's her testimony by deposition at the Novell trial, for those who missed it, not that it helped SCO one bit. I wonder if SCO ever paid her the money it owed her, listed as a debt in the bankruptcy? Her company, G2, was listed on SCO's Creditors List. When SCO sold off the assets, I believe that left her, along with all the other creditors, holding the bag. Funny about life, how things end up sometimes. - End Update 2.]

Here it is as text:


United States Court of Appeals
Tenth Circuit

August 30, 2011

Elisabeth A. Shumaker
Clerk of Court



THE SCO GROUP, INC., a Delaware

Plaintiff/Counterclaim Defendant-

v. NOVELL, INC., a Delaware corporation,

Defendant/Counterclaim Plaintiff- Appellee.


No. 10-4122
(D.C. No. 2:04-CV-00139-TS)
(D. Utah)




Before O'BRIEN, SEYMOUR, and HOLMES, Circuit Judges.


This contract interpretation case is the second appeal arising out of a dispute between SCO Group, Inc. and Novell, Inc. over copyright ownership of early versions of the UNIX operating system and the scope of Novell's rights in licenses issued to its former customers prior to its partial sale of UNIX to SCO. In the first appeal, we

reversed a summary judgment in favor of Novell because questions of material fact remained on these issues. See SCO Group v. Novell, 578 F.3d 1201 (10th Cir. 2009) (Novell I), cert. dismissed, 131 S. Ct. 51 (2010). On remand, after a two-week trial, a jury determined Novell owned the copyrights. Separately, the district judge concluded Novell retained rights in the licenses which included the right to prevent SCO from terminating a UNIX license issued before the transfer. SCO challenges both determinations and claims evidentiary errors also require reversal. We affirm.


A. Novell's Purchase of UNIX from AT&T

In the late 1960's, AT&T developed UNIX, a computer operating system, and began licensing UNIX source code to its customers. These customers, in turn, would modify the source code to create customized platforms for internal use as well as for sale to end users. In 1993, Novell purchased the UNIX program development and licensing business from AT&T for over $300 million. It continued to license older versions of UNIX source code (referred to as SVRX, with X being the number of the licensed release) and developed its own customized UNIX platform, UnixWare. Two years later, Novell decided to sell the business.1

B. Novell's Sale to SCO

Originally, Novell envisioned selling the entire UNIX business to a company that would develop a version of UNIX integrated with Novell's network software capable of


competing with operating systems like Microsoft's NT. SCO was a good candidate because, although smaller than some of the other potential buyers, it did not have its own hardware business and would be more likely to agree to develop a broadly functional version of UNIX for use on all types of hardware.2 Because it was a small company, however, SCO was unable to finance the purchase of the entire business. Novell altered its original vision and structured a deal SCO could afford by means of an Asset Purchase Agreement (APA).3

The parties signed the APA in September 1995 but the transaction did not close4 until December of that year. The original version of the APA did not include copyrights in the list of transferred assets. In fact, it specifically excluded "[a]ll copyrights and trademarks, except for the trademarks UNIX and UnixWare" from the sale. (R. Vol. IX at 3166). Before closing, the parties signed Amendment No. 1 to the APA. Amendment No. 1 made numerous changes to the original document but did not alter the language excluding copyrights from the sale.5 The parties amended the APA again in October


1996, nearly a year after the close of the transaction. Relevant here, Amendment No. 2 modified the language regarding assets to exclude, "[a]ll 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." (Id. at 3219) (emphasis added).

Under the original APA, Novell retained the right to the royalties collected by SCO on SVRX licenses with a 5% administrative fee to be paid to SCO after collection. The APA restricted SCO's rights with respect to the licenses as follows:

[SCO] shall not, and shall not have the authority to, amend, modify or waive any right under or assign any SVRX License without the prior written consent of [Novell]. In addition, at [Novell]'s sole discretion and direction, [SCO] shall amend, supplement, modify or waive any rights under, or shall assign any rights to, any SVRX License to the extent so directed in any manner or respect by [Novell]. In the event that [SCO] shall fail to take any such action concerning the SVRX Licenses as required herein, [Novell] shall be authorized, and hereby is granted, the rights to take any action on [SCO]'s own behalf. [SCO] shall not, and shall have no right to, enter into future licenses or amendments of the SVRX Licenses, except as may be incidentally involved through its rights to sell and license the Assets or the Merged Product . . . or future versions of the Merged Product.
(Id. at 3134) This language was not altered by the amendments.

1. SCO's Attempts to Assert Ownership Rights in UNIX

By 2002, the UNIX business was not as profitable as SCO had hoped. To raise revenues, SCO sought to aggressively "market" UNIX licenses to users of Linux, a competing platform, on the theory that Linux incorporated portions of the UNIX code.6


SCO asked Novell to clarify the two companies' respective interests in the UNIX copyrights and invited Novell to participate in the aggressive pursuit of Linux users under SCO's newly formed SCO Source licensing division. Novell declined the offer.7 Subsequently, SCO sent warning letters to Linux users (including Novell) asserting rights to part of the Linux code. The letters informed Linux users SCO had sued IBM8 for violating its UNIX license by contributing proprietary code to Linux and it was "prepared to take all actions necessary to stop the ongoing violation of [its] intellectual property or other rights." (R. Vol. XI at 4213.) SCO also attempted to terminate IBM's UNIX license. Novell reacted by publicly asserting ownership of the UNIX copyrights and, pursuant to the waiver provision of the APA, directed SCO to waive its right to terminate IBM's UNIX license. When SCO did not comply, Novell executed documents waiving whatever rights SCO had under the IBM licensing agreements.


Claiming it owned the copyrights to UNIX and Novell had no right under the APA to waive its claims against IBM, SCO sued Novell for slander of title and sought to compel Novell to transfer ownership of the copyrights to it. Novell counterclaimed alleging slander of title, breach of contract, and unjust enrichment. (R. Vol. I at 96)


Both parties amended their pleadings to add claims and then filed cross motions for summary judgment. The district court entered a summary judgment in favor of Novell. We reversed and remanded for trial on: (1) the ownership of the UNIX and UnixWare copyrights; (2) SCO's specific performance claim; (3) the scope of Novell's rights under the APA to direct SCO to waive its claims against IBM for alleged breach of its UNIX license; and (4) the application of the covenant of good faith and fair dealing as it related to Novell's claimed rights to waiver under the APA. Novell I, 578 F.3d at 1227.

The parties stipulated to trying SCO's slander of title claim to a jury but left to the judge the resolution of SCO's request for specific performance, the scope of Novell's waiver rights under the APA, and whether, under the circumstances, Novell had breached the covenant of good faith and fair dealing by exercising its waiver rights.

At the close of the evidence, the judge denied both parties' motions for judgment as a matter of law.9 The jury found Novell had not transferred the copyrights to SCO, which resolved SCO's slander of title claim in Novell's favor.

SCO renewed its request for judgment as a matter of law and moved for a new trial. The judge denied both motions and also 1) denied SCO's request for specific performance, 2) decided the parties' contract gave Novell the right to direct SCO to waive its licensing claims against IBM, and 3) concluded Novell had not breached the implied covenant of good faith and fair dealing.



SCO argues the district court erred in denying its Rule 50 motion and motion for new trial on its slander of title claim. It challenges the court's findings of fact and conclusions of law on its specific performance and breach of the covenant of good faith and fair dealing claims. It also argues erroneous evidentiary rulings prejudiced its case.

A. Evidentiary Issues

SCO challenges several of the district court's evidentiary rulings. Our review is for abuse of discretion. Bryant v. Farmers Ins. Exch., 432 F.3d 1114, 1122 (10th Cir. 2005).

1. Admission of Summary Judgment Rulings

In a motion in limine, SCO sought to exclude Novell from introducing into evidence the summary judgment rulings we reversed in Novell I. The judge granted the motion before trial. But, at trial, SCO argued the period of Novell's purported slander extended to the present day. It did so despite admonishment from the court that such arguments were "unwise and inappropriate" and warning that if SCO continued its inquiry the court may "revisit" its ruling. (R. Vol. VII at 2363.) Even so, SCO's counsel elicited testimony from its damages expert based on calculated damages including those SCO allegedly incurred after the district court had issued its summary judgment rulings in Novell's favor and prior to this Court's reversal. Novell sought permission to cross-examine the expert with quotes from the district court's June 4, 2004 and June 9, 2004 summary judgment rulings to show the jury the expert's calculations failed to take into account the effect of the rulings on SCO's slander claim and purported damages. The


court granted Novell's request but issued a limiting instruction contemporaneous with the discussion of the June 4th ruling, stating:
Now, ladies and gentlemen, I want to give you an instruction right now . . . . I want you to listen to this very carefully.

In light of the testimony that is being elicited on prior court decisions in this matter, I want you to listen to this. You will hear evidence about prior court rulings in this case. And it may lead you to wonder why are we being asked to serve as jurors at this point in time in light of those prior decisions. You have to be aware that SCO appealed the ruling by the District Court, this decision and perhaps another decision that you may yet have reference to, to the Tenth Circuit Court of Appeals. The Tenth Circuit Court of Appeals in a unanimous decision reversed the District Court as to the issues before you in this case and concluded that those issues were to be decided by a jury.

And so it is important for you to understand that reference to these prior decisions does not in any way affect the decisions that you will be making in this case because they were reversed and found to have been in error in a unanimous decision. Thank you.

(Id. at 2549). After Novell's counsel referenced the summary judgment ruling, the court again instructed the jury "to the extent that language . . . pertains to the issues in this case, you are to disregard it." (Id. at 2550). SCO argues the court abused its discretion in admitting the rulings as they were irrelevant and "highly prejudicial."10(Appellant Br. at p. 56). We see no abuse of discretion.

We accord "deference to a district court's familiarity with the details of the case


and its greater experience in evidentiary matters. This is particularly true with respect to Rule 403 since it requires an on-the-spot balancing of probative value and prejudice, potentially to exclude as unduly prejudicial some evidence that already has been found to be factually relevant." Frederick v. Swift Transp. Co., 616 F.3d 1074, 1083 (10th Cir. 2010) (citation and quotation omitted).

The prior court rulings were relevant because the jury was instructed to consider slanderous only those statements uttered with constitutional malice, i.e., with "(1) knowledge that it was false; or (2) reckless disregard of whether it was true or false." (R. Vol. VI at 1952). SCO's expert's damages calculation included damages for slander continuing even after summary judgment was entered against it (concluding Novell owned the copyrights). Therefore, Novell's subsequent claims to ownership from the date the summary judgment was entered in its favor until the summary judgment was reversed could not, as a matter of law, have been slanderous, i.e., made with knowledge of or with reckless disregard of their falsity, Novell had a court ruling in its favor on the issue. The rulings were relevant to limit the period of the claimed slander as well as to refute SCO's claim that its damages were caused by Novell, as opposed to other events, during that period.

The evidentiary ruling most probably was prejudicial to SCO, as it claims. However, it was probably just as prejudicial to Novell. Its claim to own the copyrights and have the right to waive SCO's claims against IBM -- the very matters at issue -- had been resolved in its favor but the decision was later "found to have been in error." (R. Vol. VII at 2549). Moreover, the risk of prejudice was significantly reduced by the


court's ardent limiting instruction informing the jury the rulings should have no effect on its decision and that the rulings had been found to be erroneous. See United States v. Jones, 530 F.3d 1292, 1299 (10th Cir. 2008) ("We presume that juries follow limiting instructions.") Given the extreme care taken by the district court to avoid presentation of this evidence to the jury, the opportunities for SCO to assist the court in avoiding such necessity, and the careful instruction of the jury following its admission, there was no abuse of discretion in permitting this limited use of the earlier rulings.

2. Reference to Original Agreement without Reference to Amendment 2

SCO contends the district court abused its discretion when it permitted certain witnesses to testify about the original APA language without allowing SCO to cross-examine those witnesses regarding the changes implemented by Amendment 2. 11 We reject its argument.

In Novell I we decided the contract documents must be construed together and extrinsic evidence regarding the parties’ intent over the entire course of the transaction, including the drafting and negotiation of the original language, was admissible as relevant to the interpretation of the combined instrument. 578 F.3d at 1211. But the specific fact witnesses of whom SCO complains had no firsthand knowledge of Amendment 2. For example, one witness referenced by SCO in its argument is Robert Frankenberg, chief executive officer and later chairman of the board at Novell. Frankenberg testified regarding his involvement in the APA and the closing documents,

- 10 -

but was no longer with Novell when the second amendment to the APA was negotiated. It would have been inappropriate to question fact witnesses lacking personal knowledge about the meaning or even the existence of the amendment. See Zokari v. Gates, 561 F.3d 1076, 1089 (10th Cir. 2009) ("A witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.") (quoting Fed. R. Evid. 602). If SCO felt Novell was de-emphasizing the controlling nature of Amendment 2, self-help was a sufficient remedy. SCO was free to (and did throughout the trial) emphasize to the jury that Amendment 2 contained the operative language. There was no abuse of discretion.

Over SCO's objection, the district court allowed Novell to show the jury a slide containing a quote from a BusinessWeek article referring to SCO as "The Most Hated Company in Tech." (R. Vol. VIII at 2815; R. Vol. XIV at 5091). The slide was part of the examination of Novell's damages expert who criticized the failure of SCO's damages expert to consider the toll SCO's own actions had taken on its potential market. In particular, SCO's expert did not account for the effect of SCO's "business plan . . . founded on litigation . . . ." (R. Vol. VIII at 2815.) The article was used to highlight SCO's tactic of demanding from Linux users a form of royalty payment under threats of infringement suits and demonstrate how the tactic incurred alienation of SCO in the "open source" market and was a possible cause of the damage to SCO during the period it alleged to have been slandered.

- 11 -

SCO argues the slide was impermissible hearsay. We need not dwell on its technical hearsay arguments because any possible error was harmless.

Because hearsay determinations are particularly fact and case specific, our review of those decisions is especially deferential. Further, this court applies a harmless error standard when reviewing trial courts' rulings on hearsay objections resting solely on the Federal Rules of Evidence. A harmless error is one that does not have a substantial influence on the outcome of the trial; nor does it leave one in grave doubt as to whether it had such effect.
United States v. Collins, 575 F.3d 1069, 1073 (10th Cir. 2009) (quotation and citation omitted).

The language of which SCO complains is one line of text briefly before the jury during a three-week trial. In addition, there was repeated testimony and argument over the course of the trial pointing out the unpopularity of the SCO Source program. The admission of this single piece of evidence did not undermine the jury's decision.

B. Judgment as a Matter of Law (Rule 50)

SCO argues the court erred in denying its Rule 50 motion because the evidence showed ownership of the copyrights was "required for SCO to exercise its rights with respect to the acquisition of UNIX . . . technologies" and the copyrights were therefore transferred under the language of Amendment 2 to the contract.12 The question of whether the copyrights were required for SCO to exercise its rights depends entirely upon what portion of the UNIX business the APA transferred. SCO contended at trial, and

- 12 -

continues to argue, it had to have the copyrights to protect the UNIX technologies. Novell argued, and continues to argue, the copyrights were not transferred to SCO in the APA and they were not necessary for SCO to exercise its rights in the business because the "business" SCO purchased was limited to: (1) the right to create its own product based on UNIX (which it was then free to copyright and protect) and (2) the power to act as Novell's agent in licensing and marketing (with certain restrictions) established UNIX technologies.

We review de novo the district court's ruling on a Rule 50 motion for judgment as a matter of law, drawing all reasonable inferences in favor of the nonmoving party. We reverse the denial of such a motion only if we conclude "the evidence points but one way and is susceptible to no reasonable inferences supporting the party opposing the motion." Wagner v. Live Nation Motor Sports, Inc., 586 F.3d 1237, 1243-44 (10th Cir. 2009), cert. denied, 130 S. Ct. 2405 (2010). We do not "weigh evidence, judge witness credibility, or challenge the factual conclusions of the jury."13 Id. at 1244.

In support of its arguments, SCO points to extensive evidence supporting its interpretation of the APA. However, the question for purposes of the Rule 50 analysis is not whether SCO presented compelling evidence but whether the "evidence points but

- 13 -

one way." It does not. The copyrights do not appear on the detailed list of assets to be transferred in the APA and, indeed, the original language in the APA specifically excluded all copyrights from the assets being transferred.14 Moreover, Novell's Board of Directors adopted a resolution approving the sale, which specifically mentioned the copyrights were to be retained by Novell. According to SCO's witnesses the "all copyrights" language ran contrary to SCO's intent. But such intent is not demonstrated by the plain language of the APA before it was amended. Moreover, the unexpressed intent of one contracting party is irrelevant. Mutual intent governs.

As to Amendment 2, both parties presented evidence about its intent and meaning. SCO's witnesses testified the amendment was to remedy the error resulting in Novell retaining the copyrights in the original transaction. Novell's witnesses testified Amendment 2 was to allay SCO's fears about violating Novell's intellectual property rights in the everyday operation of the transferred portion of the business but was never intended to transfer the copyrights to older versions of UNIX. In fact, the Novell witnesses involved in the negotiation of Amendment 2 testified that SCO's first draft of the Amendment included language explicitly transferring the copyrights, which Novell's negotiators removed15 because the copyrights had been excluded from the transfer in

- 14 -

order to protect Novell's royalty streams in the existing UNIX licenses.

SCO contends uncontroverted evidence shows the UNIX copyrights were "required" for SCO to run the business. This argument assumes the entire business was transferred. Novell presented sufficient evidence at trial showing only two things were sold in the transaction--(1) the UNIX licensing business, which SCO would continue on behalf of Novell in exchange for 5% of total royalties while Novell retained the copyrights and 95% of the royalty stream and (2) UnixWare and the license to use the underlying UNIX source code. Novell admits copyright ownership would be required to protect existing UNIX licenses. However, it presented testimony and documentary evidence showing SCO was merely to act as Novell's agent in managing the existing licenses and collecting royalties while Novell retained ownership and ultimate control of that aspect of the UNIX business. The APA itself expressly gives Novell the right to direct SCO's behavior regarding such licenses. SCO also argues the copyrights were required to protect the UNIX source code. However, as Novell showed at trial, SCO was able to protect the products it developed by copyrighting additions to the existing code and the copyrights to earlier versions were not required for SCO to carry out its responsibilities under the APA as Novell's licensing agent.

There was ample evidence to support Novell's contention that the copyrights were not transferred in the sale and not necessary to the operation of the business transferred. The district court properly denied SCO's motion for judgment as a matter of law under

- 15 -

Fed. R. Civ. P. 50(b).


We review the district court's denial of the motion for a new trial for an abuse of discretion. Henning v. Union Pac. R.R. Co., 530 F.3d 1206, 1216 (10th Cir. 2008). "The inquiry focuses on whether the verdict is clearly, decidedly or overwhelmingly against the weight of the evidence." Black v. Hieb's Enter., Inc., 805 F.2d 360, 363 (10th Cir. 1986). SCO devotes one paragraph of its brief to this issue. For previously discussed reasons, the denial of SCO's request for a new trial was not an abuse of discretion. Ample evidence in the record supported the jury's verdict and Novell's position.


SCO sought to compel Novell to transfer ownership of the copyrights to it. Specific performance is an exercise of the equitable discretion of the district court and we review the court's decision for an abuse of discretion. Koch v. Koch, 903 F.2d 1333, 1335-36 (10th Cir. 1990).

The jury rejected SCO's argument that Amendment 2 transferred the Unix and UnixWare copyrights because they were required for SCO to exercise its rights in the newly acquired technologies. Because the jury determined SCO had no claim to the copyrights, the court did not abuse its discretion in denying SCO's request for specific performance.


We determined the APA was ambiguous regarding the scope of Novell's waiver

- 16 -

rights and remanded to the district court for trial on the issue. Novell I, 578 F.3d at 1224. "Once a provision is found to be ambiguous, the resolution of its proper meaning is a question of fact, subject to review on a clearly erroneous standard." Nunn v. Chem. Waste Mgmt., Inc., 856 F.2d 1464, 1467 (10th Cir. 1988) (citations and quotations omitted). At the start of the trial the parties agreed to submit the issue for decision by the judge rather than the jury.

The APA gives Novell the ability to waive any claim of right SCO might make with regard to "SVRX Licenses."16 (R. Vol. IX at 3134.) The dispute was centered on the particular agreements to be included in that term. As testimony showed at trial, there are three parts to the UNIX licensing scheme. UNIX customers must sign a software licensing agreement setting forth the terms on which they are permitted to use and/or modify licensed products. This umbrella agreement contains general terms governing the use of licensed intellectual property but does not specify what products are being licensed. Customers developing software for resale using UNIX source code must also sign a software sublicensing agreement, which governs such use. Finally, all customers must enter into a product supplement, which lists each licensed product and specific information (including royalties due) related to each.

SCO argues the APA waiver language does not allow Novell to interfere with its ability to terminate IBM's software licensing agreement because the waiver language was only intended to apply to the product supplement; the other agreements are not "SVRX

- 17 -

licenses" under the APA. SCO points out that the language dictating Novell's SVRX royalties is contained only in the product supplement. The software licensing and sublicensing agreements do not explicitly refer to the licensed SVRX version. SCO contends Novell exceeded the scope of its rights under the APA by directing SCO to waive (and later by waiving) its rights under IBM's general software licensing agreements.

However, the APA's language is not so restrictive. As the district court noted, the contract language does not distinguish between the three types of agreements. The district court reasoned:

Novell retained a significant financial interest . . . [which] Section 4.16 of the APA was designed to protect . . . . The somewhat hierarchical structure of the three types of agreements leads to the conclusion that Novell must retain rights over the software and sublicensing agreements as well . . . . If Novell did not have the authority over the software agreements, SCO could easily cancel that agreement, necessarily cancelling both the sublicensing and product supplement agreements, and thereby deprive Novell of all revenue.
(Id.)17 It was not clear error for the district court to determine "SVRX licenses" referred to all of the integrated licensing agreements.18

- 18 -


SCO argues the district court erred in entering judgment in Novell's favor on its good faith and fair dealing claim (Novell breached the implied covenant by waiving SCO's rights under the licensing agreements). Interpretation of a contract, including the implied covenant of good faith and fair dealing, is a question of law, which we review de novo. See Flood v. Clearone Commc'n, Inc., 618 F.3d 1110, 1117-18 (10th Cir. 2010); Del Taco, Inc. v. Univ. Real Estate P'ship V, 3 Cal. Rptr. 3d 311, 315 (Cal. Ct. App. 2003). As noted in our previous opinion, under California law, the covenant of good faith and fair dealing does not apply to an express grant of authority like the one at issue here unless: 1) the covenant would aid in the interpretation of a contradictory and ambiguous contract, or 2) the granted authority would render an agreement unenforceable and illusory. Novell I, 578 F.3d at 1227.

SCO argues the contract is either contradictory or illusory without the good faith restriction because giving Novell unconstrained rights to control the licenses would leave SCO helpless to protect the underlying source code. However, the jury found SCO did not own the copyrights to the earlier versions of the UNIX code. The district court found the parties intended for SCO to serve as Novell's agent with respect to the old SVRX licenses and the only portion of the UNIX business transferred outright under the APA was the ability to exploit and further develop the newer UnixWare system. SCO was able to protect that business because it was able to copyright its own improvements to the system. The only reason to protect the earlier UNIX code would be to protect the existing SVRX licenses, and the court concluded Novell retained ultimate control over

- 19 -

that portion of the business under the APA. The district court's conclusion on this point is consistent with the jury verdict on copyright ownership and is supported by evidence in the record.


Entered by the Court:

Terrence L. O'Brien
United States Circuit Judge


* This order and judgment is an unpublished decision, not binding precedent. 10th Cir. R. 32.1(A). Citation to unpublished decisions is not prohibited. Fed. R. App. 32.1. It is appropriate as it relates to law of the case, issue preclusion and claim preclusion. Unpublished decisions may also be cited for their persuasive value. 10th Cir. R. 32.1(A). Citation to an order and judgment must be accompanied by an appropriate parenthetical notation B (unpublished). Id.

1 For convenience we refer to the buyer as SCO; in fact, the actual purchaser was Santa Cruz, a predecessor company to SCO.

2 Many of the companies developing UNIX-based systems tailor the software to be most efficient on their own hardware systems. Novell did not want to sell to a company likely to promote its own hardware at the expense of UNIX's market reach.

3 SCO contends the changes to the transfer were mere financing accommodations while Novell argues the deal was completely restructured and valuable assets, including the copyrights, were held back because of SCO's inability to pay cash for the full business.

4 The APA did not transfer the assets and the parties continued to work on the deal until they signed closing documents in December. (See Appellant's Br. at 5.)

5 The document signed at closing was not a new agreement but merely executed the transaction laid out in the APA with the incorporation of later changes. See Novell I, 578 F.3d at 1211.

6 Linux is an open-source platform in which the underlying source code is free and available for anyone to develop. The SCO Source division was formed on the theory current versions of Linux illegally incorporate portions of the UNIX code and Linux users therefore need UNIX licenses in order to use the Linux operating system without infringing on UNIX copyrights.

7 Shortly after the dispute began, Novell announced plans to acquire SUSE, a Linux platform, anticipating that the market was turning toward the open source software. Novell was planning the acquisition at the time SCO contacted it to request help with SCO's inventive licensing theory.

8 IBM had a longstanding UNIX license it purchased originally from AT&T.

9 The court eventually granted SCO's motion for judgment on Novell's slander of title counterclaim but that decision is not at issue in this appeal.

10 Although neither party cited to the rule in its brief, SCO objected at trial under Rule 403 of the Federal Rule of Evidence:

Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

11 Once again, SCO cites no law in support of its argument but appears to be claiming the evidence was improper under Fed. R. Evid. 403 as misleading to the jury.

12 SCO argues at length that the language of Amendment 2 is controlling. It appears SCO maintains the district court and jury ignored the words "required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies" in reaching their results. (Appellant Br. at 26.) However, as we explain below, it is clear the district court and jury interpreted the language of the APA as amended.

13 In reviewing the district court's grant of summary judgment, we were required to "view the evidence and draw reasonable inferences therefrom in the light most favorable to [SCO]." Novell I, 578 F.3d at 1208. Here, we are required to do just the opposite and view all evidence and draw all inferences in the light most favorable to Novell. Insofar as SCO is arguing the APA may only be interpreted one way as a matter of law, we rejected that argument when we reversed summary judgment because there were triable issues of fact and competing conclusions to be drawn from the evidence. Id. at 1217. We will not revisit it here.

14 No document explicitly transfers the UNIX copyrights. The final sale was executed pursuant to the terms of the APA, which contains only the ambiguous language at issue here.

15 The proposed language, which Novell rejected, excluded from transfer "[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of this Amendment No. 2, which pertain to the UNIX and UnixWare technologies and which SCO has acquired hereunder." (R. Vol. XIII at 4753)(emphasis added).

16 As stated above, SVRX refers to the versions of Unix transferred from AT&T to Novell prior to the development of UnixWare.

17 SCO argues the district court's reasoning is impermissible under language in Novell I. Our opinion there focused on problems with Novell's interpretation of the waiver provision in the context of summary judgment because we disagreed with the district court's conclusion no rational trier of fact could accept SCO's interpretation. However, we ultimately concluded only that "the [waiver] language . . . [was not] so clear as to preclude SCO's interpretation of the scope of Novell's waiver rights." Novell I, 578 F.3d at 1224. Novell I did not bar the district court from accepting Novell's interpretation as correct after weighing all the evidence.

18 A witness who specialized in dealing with the contracts testified they were integrated agreements that worked together. The district court specifically noted that testimony.



10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj | 259 comments | Create New Account
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10th Circuit Affirms - Novell Owns the Copyrights, etc., by pj
Authored by: qwertybdj on Tuesday, August 30 2011 @ 05:20 PM EDT
Get that red dress out!

[ Reply to This | # ]

Congratulations, to you too!
Authored by: IMANAL_TOO on Tuesday, August 30 2011 @ 05:34 PM EDT
"SCO has fallen downstairs, hitting its head on every step, to the very
bottom, just like I told you in May of 2003, in the first article I ever wrote
about SCO."

You were head on from the beginning, so to speak.

Congratulations, to you too!




[ Reply to This | # ]

10th Circuit Affirms - Novell Owns the Copyrights, etc., by pj
Authored by: om1er on Tuesday, August 30 2011 @ 05:39 PM EDT
The 10th Circuit's ruling is a nice conclusion to this long ordeal.

The justices came very close to calling the scam a scam, but used politically
correct language instead.

I got the impression that the justices fully understood what TSCOG had been up
to, and were in no humor to change the well-deserved destiny (at the bottom of
the stairs).

March 23, 2010 - Judgement day.

[ Reply to This | # ]

10th Circuit Affirms - Novell Owns the Copyrights, etc., by pj
Authored by: turbopro on Tuesday, August 30 2011 @ 05:39 PM EDT
you're welcome. and i intend to hang around here for as long as Groklaw is.

been my homepage since ever.

thanks PJ et al.

"Speak your mind; don't back down!"

[ Reply to This | # ]

10th Circuit Affirms - Novell Owns the Copyrights, etc., by pj
Authored by: Steve Martin on Tuesday, August 30 2011 @ 05:41 PM EDT
What are the chances of an en banc hearing?

"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

10th Circuit Affirms - What's Next?
Authored by: rsteinmetz70112 on Tuesday, August 30 2011 @ 05:41 PM EDT
SCO basically has two appeals left, Appeal for an En Banc re-hearing by the Full
10th Circuit and Appeal to SCOTUS.

Neither will likely take much work, unless granted, neither is likely to be

I expect to see both appeals filed and denied.

Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

10th Circuit Affirms - Novell Owns the Copyrights, etc., by pj
Authored by: Tkilgore on Tuesday, August 30 2011 @ 05:46 PM EDT
We have all been waiting and hoping for this. Congratulations for calling it
right in the first place, PJ, and thank you for sticking it out.

This is something long overdue, but it seems it finally happened.

I read the decision. To my non-lawyer eyes, it seems to be well reasoned,
appears to give a good recital of the relevant facts and legal precedents, gives
a description of the history of the case which shows attention to detail, and
presents the appearance of being very difficult indeed to overturn. I find it
difficult to imagine that the case could even have a possibility of going on
from here, and I suspect that even BSF would agree with that, even if they think
that they are obliged to try anyway.

[ Reply to This | # ]

En Banc appeal?
Authored by: Anonymous on Tuesday, August 30 2011 @ 05:51 PM EDT
Can't they ask to have it heard en banc?

[ Reply to This | # ]

  • Sure.... - Authored by: Anonymous on Tuesday, August 30 2011 @ 06:28 PM EDT
No need for corrections, just a sincere thank you PJ for holding out.
Authored by: entre on Tuesday, August 30 2011 @ 05:56 PM EDT
To you,

Thank you!

[ Reply to This | # ]

Where we are (per Gandhi)
Authored by: Anonymous on Tuesday, August 30 2011 @ 06:08 PM EDT
"First they ignore you. Then they laugh at you. Then they fight you.
Then you win." - Gandhi

We're deep in "then they fight you". But what fights are left?
There's the fight on PR. Microsoft's "Get the Facts [sic]" didn't set
the world on fire. There's the fight on technical quality and functionality.
Microsoft does produce some products with impressive functionality, but they
often do so at the expense of technical quality. Let's say that that is not an
arena where Microsoft can hope for a decisive win (due to open source's ability
to re-implement anything it finds worthwhile).

That pretty much leaves the IP battleground. Well, "IP" is
trademarks, trade secrets, copyrights, and patents. Trademarks aren't going to
do anything useful. Trade secrets (at least for Linux) have been dead since the
Lion book. Even SCO dropped that argument. Copyrights are dead as far as Linux
goes, but they have one more go in Oracle's "copyright of the API argument
in the Google Android suit. (Again, a very similar argument didn't fly in the
SCO case.)

That leaves patents. Patents are the last battle that open source software has
to win before they win the war.


[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: piskozub on Tuesday, August 30 2011 @ 06:10 PM EDT
You really deserve your Red Dress, PJ.

Thanks for the 8 years. You were right from the beginning when you gave us hope
Linux is not lost.

Thanks again!!!

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: charlie Turner on Tuesday, August 30 2011 @ 06:20 PM EDT
Based on what I heard and saw that day in Denver, this is what I expected. That
the opinion was written by Justice O'Brien, after his "Blowing smoke"
comment in another case, causes me to grin. They saw through the smoke. :)!

[ Reply to This | # ]

Corrections here please
Authored by: IANALitj on Tuesday, August 30 2011 @ 06:21 PM EDT
Please place correction in title, if possible.

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: egan on Tuesday, August 30 2011 @ 06:30 PM EDT
Congratulations, PJ and Groklaw.

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: nobody on Tuesday, August 30 2011 @ 06:32 PM EDT
How many stakes are we going to have to drive into this bloodsucker before it
actually dies?

Right now it's roughly the density of a tightly strapped bundle of boards.

[ Reply to This | # ]

Bidding farewell to SCO in style
Authored by: clemenstimpler on Tuesday, August 30 2011 @ 06:49 PM EDT
I admire what you have achieved. I am proud of what this community has done. And
I am very glad that this final chapter is written in a sober manner befitting
the occasion.


[ Reply to This | # ]

[After 8 yrs and mounds of lawyers the] 10th Circuit Affirms ....
Authored by: zdvflyer on Tuesday, August 30 2011 @ 07:03 PM EDT
Sadly I have come to feel the legal system is broken. As a taxpayer, funding
the courts, I am disappointed that it took this long to conclude. And I can't
begin to contemplate my disappointment with the BK court in DE.

I learned a lot reading the posts and following the progress. Thanks to so many
Groklaw regulars that provided technical, legal expertise and attended court
sessions. Special thanks to PJ for diligence and patience.

[ Reply to This | # ]

What happens now to SCO vs IBM?
Authored by: Anonymous on Tuesday, August 30 2011 @ 07:03 PM EDT
Does this give IBM an opportunity to ask for SCO vs IBM (or at least significant
parts of it) to be dismissed? Or does the case remain in limbo until SCO either
emerges from bankruptcy or ceases to be?

[ Reply to This | # ]

footnote 14
Authored by: Anonymous on Tuesday, August 30 2011 @ 07:07 PM EDT
That footnote explaines exactly why the first appeal should have failed,
saving years of expensive litigation in multiple courts by many parties,
and possibly helping Novell and SCO avoid selling their businesses.

[ Reply to This | # ]

  • footnote 14 - Authored by: Tkilgore on Tuesday, August 30 2011 @ 08:38 PM EDT
    • footnote 14 - Authored by: Wol on Wednesday, August 31 2011 @ 06:03 AM EDT
      • footnote 14 - Authored by: Anonymous on Wednesday, August 31 2011 @ 06:55 AM EDT
        • Not facts or law - Authored by: Anonymous on Wednesday, August 31 2011 @ 09:34 AM EDT
          • No - Authored by: Anonymous on Thursday, September 01 2011 @ 12:49 PM EDT
            • No - Authored by: Tkilgore on Thursday, September 01 2011 @ 06:01 PM EDT
              • No - Authored by: PJ on Thursday, September 01 2011 @ 08:04 PM EDT
                • No - Authored by: Tkilgore on Thursday, September 01 2011 @ 11:23 PM EDT
Best Bits thread
Authored by: calris74 on Tuesday, August 30 2011 @ 07:16 PM EDT
the question for purposes of the Rule 50 analysis is not whether SCO presented compelling evidence but whether the "evidence points but one way." It does not
Short, sharp, to the point - Love it :)

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Tuesday, August 30 2011 @ 07:19 PM EDT

Thank you for all the wonderful work on Groklaw that helped bring this day


[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Tuesday, August 30 2011 @ 07:21 PM EDT
Why, why, oh for hell's sake WHY, have none of the creditors
moved to have the case converted to a Chapter 7? Or if so,
why has the bankruptcy judge not granted such a motion?

SCO's continued payout of "administrative" expenses to its
lawyers is nothing more than a backdoor out of paying the
creditors a single red cent.

I'd be very pissed if I were Novell, and if the trustee had
any hand in letting the lawyers bleed SCO dry, I would sue
them for negligence.

Isn't there something like a fiduciary duty of a bankruptcy
trustee to *preserve* the estate for the benefit of the

Nuke the damn thing and put everything on the chopping
block. They are insolvent, plain and simple. That stupid
lawsuit lotto, for what little it's worth, can be put on the
chopping block with the rest of SCO's assets.

And I strongly suspect that UniXis is in on this somehow.

[ Reply to This | # ]

W00t !!
Authored by: tizan on Tuesday, August 30 2011 @ 07:29 PM EDT
Oxford just accepted woot as a proper word ...just in time
for celebration no ?

Well done everybody and thanks for the patience and meticulous work by all and
specially PJ.

tizan: What's the point of knowledge if you don't pass it on. Its like storing
all your data on a 1-bit write only memory !

[ Reply to This | # ]

Appeals deadlines please?
Authored by: PolR on Tuesday, August 30 2011 @ 07:32 PM EDT
Wonderful news. Congratulations PJ, it sounds like red dress time.

Does anyone knows what are the deadlines for SCO to appeal? Please tell us, then
we may watch the time fly and tell when it is actually over and buried (or

[ Reply to This | # ]

Really only one thing to say
Authored by: thorpie on Tuesday, August 30 2011 @ 07:39 PM EDT


Oh, & thank you PJ, thank you very, very much

The memories of a man in his old age are the deeds of a man in his prime - Floyd, Pink

[ Reply to This | # ]

Thanks for commentary all the way to the finish
Authored by: leopardi on Tuesday, August 30 2011 @ 07:55 PM EDT

Thanks, PJ, for your running commentary on this ultra-marathon, and all of the organization, archiving and analysis that went with it. I feel that my entire legal education, for whatever it's worth, has been by following the SCO saga (and patent battles) on Groklaw. For that, too, I am grateful.

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: rpalmer on Tuesday, August 30 2011 @ 08:16 PM EDT

Thank you and congratulations, you look maahvelous in your red dress.

Thanks also to Novell's management, their lawyers, and IBM's management and
their lawyers. It's been a spectacular display over the years.

I suspect Darl still feels like he was robbed. It's unfortunate he had to carry
it this far and ruin his company and the livelihoods of his employees.


[ Reply to This | # ]

SCO vs Titanic
Authored by: Crocodile_Dundee on Tuesday, August 30 2011 @ 08:18 PM EDT
Looking at the image of PJ and the sinking ship in the background, I can't help
thinking that if SCO were the Titanic, it would have remained floating (by
throwing off the passengers and crew and baggage and freight, and fittings)
until it got nearly to NY as a ghost ship powered by a sheet jury-rigged as a
sail, finally running aground on the statue of Liberty.

That's not a law suit. *THIS* is a law suit!

[ Reply to This | # ]

That's all folks?
Authored by: Anonymous on Tuesday, August 30 2011 @ 08:31 PM EDT
Sure hope so.

[ Reply to This | # ]

  • That's all folks? - Authored by: hairbear on Wednesday, August 31 2011 @ 03:24 AM EDT
  • Hmmm... - Authored by: Anonymous on Wednesday, August 31 2011 @ 07:52 AM EDT
OPA files yet another Application for Compensation
Authored by: Anonymous on Tuesday, August 30 2011 @ 09:06 PM EDT
Gee, I wonder if they'll get what the want?

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Tuesday, August 30 2011 @ 09:19 PM EDT
PJ, I have followed Groklaw since the earliest days, but have never created an
account. I owe you, and all the contributors to Groklaw over the years a huge
debt of gratitude for your constant work for justice, sometimes at great
personal sacrifice.

You continue to inspire me in my own work in rather
different fields.

Thank you all, but especially you, PJ. May you continue to
have great satisfaction in your work, wherever it takes you.

[ Reply to This | # ]

Revenue stream an other open issues
Authored by: argee on Tuesday, August 30 2011 @ 09:49 PM EDT
One of the rights that the court of appeals upheld was the
right of Novell to protect its revenue stream.

In which way is this going to impact what has happened/is
happening in the bankruptcy breakup of SCO?

What, if anything is Novell going to do now that they are
sold off?

Could Novell (or its buyer) use the copyrights to extort

Lastly, since SCO has told Licensees it is not interested
in collecting the fees, can Novell step in and collect?


[ Reply to This | # ]

"Thank you to everyone who worked so hard for so many years and are still here to see this day."
Authored by: eggplant37 on Tuesday, August 30 2011 @ 09:58 PM EDT
No, thank you for your never-ending persistence and fair evidence-
based opinion. You only helped the situation. I'm happy that I got
to play but a very small part in the process, but that effort is a
mere shadow of what you accomplished here. Cheers, PJ.

[ Reply to This | # ]

Tragedy all round
Authored by: FoxyLad on Tuesday, August 30 2011 @ 10:06 PM EDT

Sorry, but I can't bring myself to celebrate. This affair is a tragedy on personal, corporate and national levels.

First up, Darl (and those who connived with him) get to live happily ever after. It sticks in my craw that his father will go on believing the cute cattle-ranching story Darl told him, instead of seeing his son for the shallow grasping scoundrel he really is. Justice has not been served.

And it's not just Darl. None of the perpetrators of this fraud have received any punishment. They all have their nice houses, directorships and fat retirement funds, and haven't even received a slap on the wrist for wasting so much time, energy and money. Let alone the multiple contempt of court orders, civil and criminal charges that should have been laid.

So the next generation of CEOs, their officers, lawyers and media shills will go forth confident that this tactic works - they can tie their opponents up in a decade of legal knots, without any fear of sanction. Without any evidence, or even a credible case. Any business of Novell's size and smaller is now vulnerable to a larger competitor legally strangling them to death. Without any evidence, or even a credible case.

In Europe, the strength of SCO's case was quickly identified and thrown out of court in a few weeks. End of story, everyone went back to productive enterprise. In the US, however, hundreds of people spent significant portions of their careers on this one case. Include all the other nuisance litigation flying around, and the chilling effect it has on small business and it adds up to a significant drain on the US economy.


All generalisations are dangerous... including this one.

[ Reply to This | # ]

Enjoy the red dress, PJ
Authored by: Anonymous on Tuesday, August 30 2011 @ 10:08 PM EDT
One of the first things I did after seeing the decision was have a celebratory
KitKat - the best red I could find on short notice...


[ Reply to This | # ]

"That's... that's... that's all for now folks!"
Authored by: Observer on Tuesday, August 30 2011 @ 10:34 PM EDT
I've been following Groklaw since nearly the beginning of this case. It's been a long, long wait, but finally worth it. Thanks PJ for following this one out to the very end. I know you've stepped back from day to day stuff, and it's not that often that I even come back here to read, but this is really and truly the end of this whole ugly case.

On the good side, this case has shed light on a lot of questions people have had over the years. Gold is tested in the fire they say. I suppose that has made it worth the fight.

The Observer

[ Reply to This | # ]

Thank you PJ, and all
Authored by: tce on Tuesday, August 30 2011 @ 11:05 PM EDT
Thank you PJ!

Thank you very much for the education, the values, the humor, the determination, and the leadership.

Thank you, all - maintainers, contributors, punsters.

Now, lets, see, Red, Hmmm....

Maybe a Mug to go with the button in my cube.


[ Reply to This | # ]

Thanks for 'being there' PJ...
Authored by: trevmar on Tuesday, August 30 2011 @ 11:44 PM EDT
Thanks for all you have done PJ.
Not only are you still standing, but Linux is much stronger :)

When I interviewed SCO in June 2003 I was shown a piece of code I instantly
recognized from the BSD tape as the memory manager, and was told it belonged to
SCO. But I pulled my punches a little in the article I wrote for Byte. One
doesn't like to libel companies who employ lawyers with big sticks.

A sad episode in technology history is gone, sadly only to be replaced by many,
many more travesties...

Enjoy the red dress... Thanks for all you have done, and thanks for 'being


[ Reply to This | # ]

DiDio? Enderle?
Authored by: Anonymous on Wednesday, August 31 2011 @ 12:55 AM EDT

I dislike invoking their names at all, but it seems appropriate on this, of all
days, and their silence is deafening.


[ Reply to This | # ]

Who drew the picture?
Authored by: shachar on Wednesday, August 31 2011 @ 01:05 AM EDT

The style reminds of Illad's (User Friendly Comics).


[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: wvhillbilly on Wednesday, August 31 2011 @ 01:17 AM EDT
Hooray!!! Red Dress Day, at last! PJ, thanks for all your hard work in
following this case.

I can just imagine SCO now saying, "Why we would have won this case and
gotten $5 billion to boot, if it hadn't been for that meddling Groklaw and that
terrible PJ!"

"It is written." always trumps, "Um, ah, well, I thought..."

[ Reply to This | # ]

The End Of SCO - Nice!
Authored by: SilverWave on Wednesday, August 31 2011 @ 01:57 AM EDT
Thanks PJ!

Thanks Guys!

Its been a wild ride :-)

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 | # ]

10th Circuit Affirms PJ in All Respects - Novell, Not SCO, Owns the Copyrights, etc.
Authored by: webster on Wednesday, August 31 2011 @ 02:31 AM EDT

After a snort of some child's brandy, we are sitting here in an improvised red dress with a high slit. Some might call it a towell; it's topped by the inside of a 'Skins t-shirt, red enough. We have pulled out our template and after the final sip we shall spew. Let us hope we discern a title along the way. We have reached the promised land, the border at least, though there may be a few more blocks to the throne.

  1. The Circuit has teased us since January so that it can produce an unpublished affirmance. Unpublished means that the Court sees it as a routine affirmance with no fancy law and little precedental value. Groklaw begs to differ. In our local courts there is a way to ask to have the decision published in the big books so that it can be cited with more authority. No doubt Novell will ask to have this done if possible. We trust some reply can give the particulars, if any. The world should be able to cite readily to what SCO and UnXis don't own.
  2. The decision is remarkable in its legal sandbox context. Those remarks must include: that it is only twenty pages; that it includes a factual history and a procedural history; then a discussion of the law and arguments. They were all short but encompassed a mass of material. This is why it took seven months. They raked this mountain down to a molehill. The court basically saw SCO's claim as lame in light of the Asset Purchase agreement with its lopsided fee structure, its precise exclusion of assets, and its reservation of rights. p. 5.
  3. This decision did not arise in a vacuum. The "legal context" re v ferenced above needs amplification in the context of reality. This same Circuit caused years of delay and wasted millions of dollars by throwing out the first judgment. That judgment was founded on the parol evidence rule and Federal copyright law that were designed to eliminate wasteful trials like this. They did it because they sympathized with SCO who had been denied their sacrosanct jury trial by what turns out to be an extremely sharp judge. The way he saw it was exactly how it turned out. So the Circuit couldn't dare to disturb good law for the sake of a jury trial and then proceed to take away that jury trial. The decision is unanimous. The outcome is simple and clear. They rest at night knowing that no matter what they say, justice has been done for the millionaires and paupers who are the only ones that can afford to get before them.
  4. Another glass, please. The cynicism is surging. We may choke on the context of FUD. One can not pass further without the de riguer reference to the Monopoly. Remember it funded both sides of this supposed litigation. They wanted to kill linux and found some troll tools. They provided SCO the wherewithall to litigate and allowed Novell to survive with the infamous linux patent covenant and coupons. So Darl, the lawyers, the courts, the press were all playing their Monopoly jihadist FUD roles to attack linux in the courts and corporate hearts. It exists so to whatever extent, it is succeeding.
  5. Excuse the digressions and back to the Order and Judgment. The evidentiary issues were the most fertile ground for reversal. The Circuit could blame the judge and not befoul the jury. But to do so they would have to say that Judge Stewart abused his discretion. This is hard to do unless the judge goes wild. On the admission of the summary judgment rulings the Circuit did find prejudice to SCO! But they also found prejudice to Novell by the reversal admissions. They also noted that the judge repeatedly and "ardently" cautioned the jury. But most of all they saw that SCO was warned, could have avoided the mess with the sacrifice of a period of damages, but chose to argue culpable slander of title "to this very day." Amen. p. 7-10. That's a long chunk of this discussion. It reflects a bit of reckless lawyering. They at least got an issue out of it, but lost more. Taking every perceived advantage is not always an advantage.
  6. They spend a page on the next issue, testimony on the APA without reference to Amendment 2. The Circuit told SCO, "Duh, people can't testify what they don't know about!" with the unusual citation by a blue stamp on the back of the paragraph, "Common Sense." SCO wanted to use a high-falutin' Novell witness to testify about Amendment 2 that happened a year after he left Novell. They all are getting paid for this issue. However, in all fairness give credit to the detailed Novell lawyering that anticipated and countered this at trial. It was a significant omission before the jury that made the APA appear as one-sided as it was toward Novell.
  7. SCO asks for Judgment as a matter of law ignoring the jury verdict under Rule 50. This is fraught with irony. The Circuit reviews the facts justifying the verdict. SCO is no longer enamored with their precious jury trial so dear to them in the first trial and appeal. The Circuit sticks with the trial judge in all the decisions he made. pp. 14-20. One couldn't read the phrase "implied covenant of good faith and fair dealing" without thinking of Lodsys' triplicity.
  8. The SCOnks are pi$$ed. Two thirds of that $35 million and more that went to their attorneys should have gone to them. Their witnesses had to admit as much on the stand. Since it is not going to them, and true to the Troll Code, they are going to make sure that money and more is spent by those that wouldn't settle with them. They will file en banc and on to SCOTUS. The next guy, or the same guy next time, will know they had better settle. Who knows? Maybe Novell in its new state will quit.
Pithy comments aside, it is a great day for PJ and Groklaw. Dozens of millions of dollars of anti-Open Source FUD has dissipated thanks to PJ's intelligence, energy and wit. She has dragged the internet into a new era and shown what learning by community can be. She has been the high light on the point and the pilot that steers past the rocks in dark waters. We are deeply grateful and fortunate to share this experience with you.


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

[ Reply to This | # ]

Thankyou too
Authored by: maroberts on Wednesday, August 31 2011 @ 02:52 AM EDT
As well as helping to sink SCO, by creating this site you have given us an
education over the years as to the operation of the legal processes, and is
probably been one of the few classes I've actually looked forward to attending.

[ Reply to This | # ]

Hold on, what's going on, here!
Authored by: Ian Al on Wednesday, August 31 2011 @ 04:35 AM EDT
OK, the author was the United States Court of Appeals _ Tenth Circuit.

The last work of theirs that we read was all about science fiction, time travel,
changing the course of history and surreal philosophy.

It was, rightly, critically damned as being logically incoherent.

Now we get this highly factual and historical piece that expertly explores all
the facets of the story and reveals inner detail that was lost to the general
observer. The complex nature of the original family of SVrX licenses is a case
in point.

This piece even explains the arguments of BS&F before patiently pointing out
that they are... are... not affirmed.

It starts the SCOG part of the story by relating that SCOG were trying to extort
money from Linux users and that, when Novell, as owners of the copyrights needed
for this business plan, refused to take part, SCOG set out on the path of
baseless, vengeful and malicious litigation against them.

I am in awe that this expert and insightful history is actually intended as
appeal court ruling.

Could my personal prejudice be colouring my evaluation of this work? No, that
could never happen!

Ian Al
Patented inventions must be obvious. You could never work them out from the
patent disclosures.

[ Reply to This | # ]

Big thanks Groklaw and PJ - I feel sorry for SCO staff :(
Authored by: TiddlyPom on Wednesday, August 31 2011 @ 07:28 AM EDT
The SCO case has panned out as all of us thought it would.
  • The winners are the public at large who are using Linux (and derivative like Android) in ever larger numbers.
  • The losers are the somewhat deluded SCO management team (who were themselves hoodwinked by their puppet-masters - whom I don't need to mention ;) )
The really annoying thing is that that adoption of Linux was somewhat slowed down by this whole regrettable saga (whilst certain proprietary software companies laughed behind their hands).

Having used (Old)SCO Unix in the past (before Darl got his hands on its remains) - I do feel sorry for the SCO employees who had their livelihoods destroyed by this process. If Darl/New SCO had co-operated with the open source community then perhaps they would still have had a future.

As others have stated above - this marks the end of one of the first major battles - the war continues on. Microsoft, Oracle and Apple are doing everything they possibly can to prevent Linux (and open source software in general) becoming more popular and (in general) losing every step of the way. Patents are very dangerous but even if Oracle win their current battle, they will ultimately lose the war. What it will do is to make Java much less popular and probably (and ultimately) irrelevant. Try and restrict what people can do with something and people will stop using it. IMHO Google *should* have used Ruby (or Python) instead of Java (on Android) anyway.

Wear that Red Dress with pride PJ - you deserve this day :)

Microsoft Software is expensive, bloated, bug-ridden and unnecessary.
Use Open Source Software instead.

[ Reply to This | # ]

When asked for a response
Authored by: Scott_Lazar on Wednesday, August 31 2011 @ 07:32 AM EDT
When asked for a response, Darl McBride, former CEO of the former SCO group,
formerly Caldera International replied:

"We would have gotten away with it too if it weren't for you meddling

LINUX - VISIBLY superior!

[ Reply to This | # ]

Novell is NOT affirmed to own the copyrights.
Authored by: Anonymous on Wednesday, August 31 2011 @ 08:01 AM EDT
All this ruling affirms is that SCO does NOT own the copyrights.

Novell's ownership of copyrights (stretching back to AT&T) and whether there
are any valid copyrights not released into the public domain for Novell to
assert (if they wanted to) is still a murky issue. To whatever extent Novell
owned them, they did NOT transfer to SCO.

That's VERY different from finding there are valid copyrights, and that Novell
has clear title to them.

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Wrong conclusion.
Authored by: Anonymous on Wednesday, August 31 2011 @ 09:02 AM EDT
I can't understand how you determine "So, SCO loses again, and likely this
is as far as it will go. Technically, SCO can ask the US Supreme Court to hear a
further appeal, but that is very unlikely to happen [...]"

How long does it to take you to recognize a pattern? SCO is in the situation
where any punishment it is handed out, it hands right on to its debtors,
inflated by the bills of the lawyers and the trustee.

Since its main debtors are its foes, they can just go on to hit them where it
hurts and keep printing money on presses they don't own.

There is nothing short of the actors getting thrown into jail that will stop
this farce. And there are high bars for throwing someone into jail just because
he is going to court for fun and losses. As long as you don't lose your status
as a citizen, you have the right to plead for what you consider your right.

So most certainly SCO is going to take this additional step for burning time,
money, and nerves of its opponents. Why should they stop when they are having
such a glorious losing streak at the expense of people they hate?

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: DeepBlue on Wednesday, August 31 2011 @ 09:55 AM EDT
Thanks to PJ and everyone here at Groklaw for tracking this thing through 8 long
years - what a journey!!

All that matters is whether they can show ownership, they haven't and they
can't, or whether they can show substantial similarity, they haven't and they

[ Reply to This | # ]

Authored by: Anonymous on Wednesday, August 31 2011 @ 12:33 PM EDT
The next BK court hearing will *not* be cancelled.


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In my dreams
Authored by: YurtGuppy on Wednesday, August 31 2011 @ 01:37 PM EDT
Cahn gives the empty husk to Ralph as the first-in-line creditor.
IBM takes up their case with Ralph holding the bag.

a small fish in an even smaller pond

[ Reply to This | # ]

"sometimes it's about honor"
Authored by: Yossarian on Wednesday, August 31 2011 @ 03:49 PM EDT
IMO there are a couple of good business reasons:

1) Teach everybody around that "if you sue IBM for no good
reason then you may end up like SCO".

2) Positive PR. Plenty of nerds just hate SCO and would
love IBM for beating SCO.

3) Clear Linux. Have the court find facts that will prevent
the next owner of UNIX from pulling another SCO.

[ Reply to This | # ]

10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Wednesday, August 31 2011 @ 04:12 PM EDT
YAYE! Thank you PJ!!!

Unfortunately, justice delayed is justice denied, so it is hard to say that this
is justice. It is however, finally over. That in itself is something to be
thankful for.

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10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Wednesday, August 31 2011 @ 09:55 PM EDT
One thing I find quite amazing is that, AFAIK, the people who lost money by
betting it on SCO failed to take legal action against SCO management. It must
have been distressing for them to see SCO's extravagant and seemingly convincing
claims turn out to be nothing more than hyperbole. They would have been better
off putting their money into penny mining stocks.

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...And Rest
Authored by: DaveJakeman on Thursday, September 01 2011 @ 05:12 AM EDT
Eight long years waiting for this -- and I missed it. Dang!

Happened to be laid up in bed with a bad back at the time. Oh well, I'll hold
my own posthumous red dress celebration just as soon as I find one that suits.
Oh, it's so difficult to choose.

Well done PJ. It was worth it, wasn't it?

[ Reply to This | # ]

Legal loss, but otherwise SCO won
Authored by: vb on Thursday, September 01 2011 @ 03:55 PM EDT
I firmly believe that the goal of SCO was never a legal victory.

SCO was all about two things: extortion and delaying Linux. The extortion
angle (SCOsource) never worked out, but the delay of Linux happened. They
played the courts like a fiddle. That burns me up, but our current court
system presumes a certain level of integrity. There is no way to handle the
court abuse like what SCO and BSF shoveled.

For all our previous outrage, there have never been any sanctions in this legal

case. No SEC punishment. No other legal measures against SCO's illegal

Kudos to PJ for journalism beyond the ordinary.

[ Reply to This | # ]

What a shame we made so little difference
Authored by: Anonymous on Friday, September 02 2011 @ 02:41 PM EDT
As a long term Groklaw visitor (verging of the obsessive, to the severe
detriment to my day job!), the Groklaw site and the informative resource hosted
by PJ has been a truly peerless service.

It is, however, tinged with great sadness that, with all of the energy and
support that the community garnered, we were effectively mere observers in this
long running fiasco.

Ok, PJ's seminal warnings were not heeded, but, over the years, however unique
our award winning community proved, it still effectively failed to alter the sad
course of events.

As far as I can recall, our forum for speculation and debate did not, in
reality, fuel SCO's ever extreme rationale, though, could easily have
benefitted their cause with other bizzare arguments and loopholes. But
similarly, whether the Novell team actually made use of our information or not,
we have still ended up, 8 years or so down the road with all of the money
diverted away (inc to lawyers and (psuedo)trustees) from the rightful owners.

As much as I have loved and been entralled by Groklaw, it saddens me to
recognise that we, in the end, were not able influence the issue, to see justice
served. Congratulations SCO on your lesson on how to beat the system against
such a coordinated opposition.


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Other Cases - 10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the ..., etc., by pj
Authored by: Anonymous on Sunday, September 04 2011 @ 08:28 AM EDT
So does Red Hat, and IBM report these latest results to their respective courts
and formally request the decision in their favor, or do we have cases pending

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IBM - 10th Circuit Affirms in All Respects - Novell, Not SCO, Owns the Copyrights, etc., by pj
Authored by: Anonymous on Sunday, September 04 2011 @ 08:51 AM EDT
So, as an IBM Lawyer, what do you recommend for your client?


Hope you find that red dress very comfortable. Don't know how to thank you
for all your hard work. And to thank all those who have contributed, reported
spent their hard earned money getting documents and so on. Surely Groklaw has
documented a serious event in early software development, that will be
remembered decades from now. (I'd dare say centuries, but, that presumes a
certainty that honestly can't be depended on.)

[ Reply to This | # ]

I wonder what Darl would have to say?
Authored by: Anonymous on Sunday, September 11 2011 @ 11:53 AM EDT

Assuming anyone could get him to comment.


[ Reply to This | # ]

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