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SCO's Lawsuits Are "Dead", says OSDL's Cohen
Monday, August 08 2005 @ 11:09 AM EDT

This starts the week off nicely. OSDL's Stuart Cohen says he thinks the SCO lawsuits are "dead" in the water and so do its chosen victims:
Looking ahead, Cohen sees few roadblocks for Linux. As for the SCO suits against Linux vendors and users, which the OSDL CEO has called the best thing to accelerate Linux, Cohen said simply that he thinks the lawsuits are "dead."

"I think the case is dead," he said. "I wish the justice system would move a little bit faster, but for all practical purposes, it's dead," he said. "And if you talk to IBM or Red Hat or Novell or AutoZone or Daimler-Chrysler, they all feel like it's over."

It's very significant that the defendants (in Red Hat's case the plaintiff, but they are asking for a declaratory judgment that they are not infringing, so it's still reactive to SCO's threatening behavior) all agree that they think it's just tidying things up from here. When you are a defendant in a lawsuit, you (especially your lawyers) are usually the last to feel safe.

I know there was an article in eWeek, quoting a couple of lawyers, one of whom who said Novell wouldn't have a slam dunk in the Asset Purchase Agreement issue, but they apparently haven't followed all the details of the case as closely as they would if they were working on it personally. We're deep into that discussion already, not waiting for it to begin, and Judge Kimball has already told us he doesn't see the APA even with Amendment 2 as being a copyright transfer.

I've also noticed that someone who does headlines for eWeek is making mistakes. For example, Steven J. Vaughan-Nichols did a commentary on OpenServer 6, saying basically that he could not recommend it, and the headline was inexplicably, "OpenServer 6 is a Winner." I kept watching to see if someone would notice and correct such an obvious blooper, but no one has. The "No-Slam-Dunk" headline was less obviously wrong, but it was selective. For example, one the attorneys quoted said pointblank that SCO seems to have no case, and that didn't get a headline. So something is up with the headlines over there. But let's take the issue of slam dunk or not, and let me share with you the points I think they overlooked.

eWeek asked the two attorneys to comment on the Novell blockbuster Answer with Counterclaims. To be fair to the attorneys, it's a little hard for them to comment on a case they aren't actually part of, naturally, because they are presumably busy with cases of their own and can miss a few details, as a result. And heaven only knows it's possible to be misquoted or selectively quoted or even just to be asked to comment on just one thing, with the result that because of the nature of the question, you end up looking like you don't know about other relevant things. It's happened to me, and with fine journalists, too. But I think they both may have missed some pieces of evidence already on the table.

Both focus on the APA and Amendment 2, and because the documents aren't so obvious on the surface on the point of copyright transfer, on that basis feel that it won't be a slam dunk for Novell.

That depends on how you define "it". The APA issues are old news, of course. We're in the middle of that determination already. But it's the new claims that have shifted the focus on the Novell litigation.

First, who needs a slam dunk, anyway? Journalists look for headlines, of course, and simple solutions, but real life in the courts isn't like that. Novell just needs to prevail in the end. But the new Novell counterclaims have totally shifted the balance and the focus of that law suit. Just having the copyright issue before a judge is an enormous achievement. SCO has avoided doing so with all its power, and now they are trapped. Do you really believe, if they had any confidence they owned the copyrights, they'd have held back from asserting that right earlier? Instead, they brought that funny slander of title lawsuit, which looked like it was never going to settle the issue of who owned the copyright.

Now the issue of who is the copyright holder is squarely before the court, at last, and it wasn't SCO who put it there. That is the big news. Why do you think SCO never brought a flat-out straight copyright infringement claim? Why do you think they didn't bring a breach of contract claim against Novell, for that matter? Because they felt *confident*? Puh-lease.

It's the Novell counterclaims that are more likely candidates for a slam dunk, not the copyright issue. I marvel that anyone would opine on slam dunks, frankly, until SCO at least has a chance to respond, but if we are going to throw out ideas, here's something to chew on. The copyright ownership issue isn't just a matter of he said, she said. There is evidence on paper, too, and so far, it's pretty much all on Novell's side. For example, we have the 1995 Novell Board of Director minutes on the eve of the deal, saying that copyrights would be retained. That's not imperfect memories trying to recall what happened. It's contemporaneous evidence on paper. SCO produced a Bill of Sale, but it really doesn't seem to help their cause, because It references the exclusions in the Technology License Agreement, it limits the assets transferred to the Assets as defined in the Agreement (showing the entire business apparently wasn't transferred lock, stock and barrel), and it says that the Bill of Sale merely memorializes the sale and does not expand or add to the Agreement. If it seems to, the Agreement controls.

On Novell's side again, we have found UnixWare copyright notices listing Novell showing up long after the deal with Santa Cruz. If you have UnixWare, try it for yourself, and you'll see. Here's the copyright notice you'll see when you start up UnixWare 2.1.2:

Copyright 1996 The Santa Cruz Operation, Inc. All Rights Reserved.
Copyright 1984-1995 Novell, Inc. All Rights Reserved.
Copyright 1987, 1988 Microsoft Corp. All Rights Reserved.
How do I know? Santa Cruz employee Roger Binns back in 1998 wrote an email which you can find on the internet telling us so. You find that notice in emails on the subject on the Internet for years after the deal went down, indicating that Novell is telling the truth and that they did retain the copyrights, while Santa Cruz got copyrights on anything new from the time of the deal onward. That too isn't a matter of people struggling to remember the four corners of a deal a decade or so later. It's evidence on paper.

So far, we have nothing much on SCO's side but SCO saying, "But we must have gotten the copyrights. We paid them money."

Judge Kimball has already indicated that SCO needs to come up with something on paper that says the copyrights transferred, or else. So while no one, I think, can expect a slam dunk on that issue, it's already played out pretty far, and so far SCO is obviously losing on that point. It's only on the issue of whether Novell said more than it should have, for example, that Kimball kept SCO's slander of title corpse warmed up a little longer.

One attorney, John Ferrell, opines that all the rest of Novell's counterclaims are a sideshow:

John Ferrell, a founding partner of Palo Alto, Calif.-based technology law firm Carr & Ferrell LLP, said, "The claims and counterclaims involving rejected audit demands, public slander, missed royalty payments, false securities filings, and the like, are all sideshows; contract interpretation is the big-top, main event."
I beg to differ. Legally, he's correct that this is the piece that matters to all the rest of SCO's legal fantasies, except for the contract claims against IBM, but practically speaking, those "side shows" are very likely to make it difficult for SCO to make it to the main event in one piece. That is the piece the two forgot to mention. Oh, and another thing. SCO has yet to show any copyrights that have been infringed. The judge said so, and so, naif that I am, I would suggest that might make the APA business of very little practical value to SCO, even if it were to prevail on the copyright issue. From IBM's standpoint, it doesn't matter who holds the copyright. They've already apparently convinced the judge that unless SCO comes up with something new, they are not infringing the copyrights in question in any way.

In real life, practical considerations are often more weighty than theoreticals or legal purity. One attorney, Thomas Carey says SCO v. IBM stands for "procedural purity," meaning, I think, that in his eyes the judge is giving SCO too many chances to prove its case, or at least a sufficiency. I am aware that some of you would agree. He also is quoted as saying he can't make sense of the deal, and he views it as, "I hereby sell you a rock. But I retain title to the rock. What kind of sense does that make?" However, it was actually more like this. SCO wanted the rock and all the mineral rights within and underneath it, but they didn't have enough money, so Novell sold them the rock and the right to build a hotel on it, but they retained the underground mineral rights, so should somebody stike oil while digging in the yard, it's not the hotel owner who gets to claim it. Nothing odd about that. It happens all the time.

And speaking of not making sense, if Novell did sell everything, including all the copyrights, why would Santa Cruz have to pay 95% of everything to Novell? For what?


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