decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
SCO Replies to Novell's Counterclaims - Updated - As Text
Monday, October 16 2006 @ 11:54 PM EDT

SCO has filed its Reply to Novell's Amended Counterclaims [PDF]. No major excitement, on first run through. I made some quick notes, but basically SCO is like a fighter shoved against the ropes, defensively trying to keep his eyes from getting hit again rather than trying to land any blows himself. You can find Novell's Counterclaims here, if you would like to follow along more carefully with SCO's denials, paragraph by paragraph. If anyone wishes to do a comparative chart, that would be nice.

Of course SCO asserts that it owns the copyrights, and that Novell thinks so too, really. And SCOsource division isn't the same thing as a SCOsource license so it doesn't owe Novell any money for the Sun and Microsoft licenses. Etc.

Well, if it told it the way you or I would, with hundreds of exhibits a la IBM, it might have an SEC problem, I'd say, for not mentioning back in 2003 that Novell was sending it letters back then telling SCO Novell still owned the copyrights.

SCO lists the following defenses: absolute and conditional privileges, the First Amendment to the Constitution, the doctrines of waiver, laches and delay, estoppel, unclean hands, statute of limitations, failure to mitigate, lack of causation, and failure to state a claim upon which relief can be granted. It asks that Novell's counterclaims be dismissed with prejudice and as soon as pigs fly or we end up in the alternate universe where SCO owns some copyrights, that is exactly what the court will do. Not. Meanwhile, on Planet Earth, I'd say SCO is in trouble.

Here are the paragraphs that stood out to me:

15. Admits that to help bridge the gap between the purchase price of the UNIX busineess and the price Santa Cruz could afford, the parties agreed to a narrow exception to the complete transfer of the UNIX business; that pursuant to this exception Novell retained the right to continue receiving royalties that SCO then collected from then-existing SVRX licensees for their distribution of binary (object) code versions of System V products pursuant to sublicensing agreements; and that Novell retained the right to conduct audits, and direct Santa Cruz to take certain actions, to protect that binary royalty stream. SCO, however, denies each and every other allegation of paragraph 15...

18. Admits that Novell retained certain rights to audit Santa Cruz's administration of the SVRX binary royalty stream...

34. Admits that Caldera hired Darl McBride as its President and Chief Executive Officer in June 2002 and that Mr. McBride was responsible for Caldera's strategic direction, with input from other executives of the company...

37. Admits that SCO launched the SCOsource initiative to review, enforce, and defend SCO's ownership of its UNIX intellectual property (including copyrights); admits that SCO announced the SCOsource initiative in January 2003 but did not enter into an agreement under its licensing program until August 2003; and denies each and every other allegation of paragraph 37...

50. Admits that SCO, through its SCOsource division, entered into agreements related to UNIX and Unix Ware with Sun Microsystems, Inc., and Microsoft Corporation (in that order) and that the Microsoft agreement covered UNIX compatibility products; but denies each and every other allegation of paragraph 50, including the allegation that the Sun and Microsoft agreements were part of the SCOsource licensing program.

51. Admits that the Sun and Microsoft agreements in part produced the profitable quarter....

122. Admits that, after Santa Cruz thwarted Novell's unauthorized unilateral attempt in April 1996 to give IBM a buyout of its UNIX binary-royalty obligations and expand IBM' s UNIX source code rights, Novell agreed to certain mutual obligations set forth in Amendment No. 2 concerning future potential buyouts by SVRX licensees of the binary royalties described in paragraphs 15 and 152 above...

138. Admits that, under Sections 1.2 and 4.16 of the APA, SCO agreed to collect and pass through to Novell 100% of the royalties that SCO then collected from then-existing SVRX licensees for their distribution of binary-code versions of System V products pursuant to sublicensing agreements.

160. Denies the allegation that SCO owes Novell monies under the APA, and states that Novell is not entitled to an accounting.

*************************************

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE
[Address]
[Phone]
[Fax]
Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[Address]
[Phone]
[Fax]
Stuart H. Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[Address]
[Phone]
[Fax]
Stephen N. Zack (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[Address]
[Phone]
[Fax]

Attorneys for Attorneys for The SCO Group Inc.,

IN THE UNITED STATES DISTRCT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.,


Plaintiff/Counterclaim-
Defendant,

v.

NOVELL, INC

Defendant/Counterclaim-
Plaintiff.

SCO'S REPLY TO NOVELL'S
AMENDED COUNTERCLAIMS

Case No. 2:04CV00139
Judge Dale A. Kimbal

Plaintiff and counterclaim-defendant, The SCO Group, Inc. ("SCO"), by and through its counsel, replies to the amended counterclaims of defendant and countercIaim-plaintiff, Novell, Inc. ("Novell"), as follows:

PARTIES

1. Admits the allegations of ¶ 1, except denies knowledge sufficient to form a belief as to the truth of the allegations of the third sentence of ¶ 1.

2. Admits the allegations of ¶2.

JURISDICTION

3. Admits, based on the Court's Order dated June 9,2004, that the Court has jurisdiction over SCO's Second Amended Complaint.

4. Admits, based on the Court's Order dated June 9,2004, that the Court has jurisdiction over Novell's counterclaims.

VENUE

5. Admits the allegations of ¶ 5.

FACTS

A. UNIX

6. Admits the allegations of ¶ 6.

7. Admits the allegations of ¶ 7, except denies the allegation that AT&T transferred to Novell only "active" UNIX licensing agreements.

B. Linux

8. Admits that Linus Torvalds purportedly developed the Linux operating system by consulting and referring to other materials; admits that numerous other parties have also

2

contributed to Linux, including parties who wrongfully contributed SCO's UNIX
intellectual property; but denies information or knowledge sufficient to form a belief as to the truth of each and every other allegation of ¶ 8.

9. Admits the allegations of the first sentence of P 9, but denies the second sentence of P 9 to the extent it alleges that SCO intellectual property in Linux is legally and properly available to the public.

C. The Asset Purchase Agreement Between Novell and The Santa Cruz Operation, Inc.

10. Admits that in 1995, Novell ("Seller") and The Santa Cruz Operation, Inc. ("Santa Cruz") entered into negotiations resulting in the transfer to Santa Cruz of "all of Seller's right, title and interest in and to the assets and properties of Seller relating to the [UNIX and UnixWare] Business" (the "UNIX business"), including the copyrights in UNIX and UnixWare; but denies each and every other allegation of ¶ 10.

11. Admits that Santa Cruz was founded and operated as a UNIX development, porting, distribution, support, and consulting company; and admits the other allegations of ¶11.

12. Admits the allegations of ¶ 12.

13. Admits the allegations of ¶ 13.

14. Admits that the APA transferred to Santa Cruz "all of Seller's right, title and interest in and to the assets and properties of Seller relating to the [UNIX and UnixWare] Business," including (among other things) the copyrights in UNIX and UnixWare, the assignment of thousands of contracts and licenses, source code and binary code to UNIX and UnixWare, and the other assets listed in the first sentence of ¶ 14; admits that Santa Cruz agreed to complete (subsequent to the transaction set forth in the APA)

3

a "Merged Product" for the Intel platform; but denies each and every other allegation of
¶ 14.

15. Admits that, to help bridge the gap between the purchase price of the UNIX business
and the price Santa Cruz could afford, the parties agreed to a narrow exception to the
complete transfer of the UNIX business; that pursuant to this exception Novell retained
the night to continue receiving royalties that SCO then collected from then-existing
SVRX licensees for their distribution of binary (object) code versions of System V
products pursuant to sublicensing agreements; and that Novell retained the right to
conduct audits, and direct Santa Cruz to take certain actions, to protect that binary
royalty stream. SCO, however, denies each and every other allegation of ¶ 15; and to
the extent ¶ 15 purports to state a legal conclusion, states that no response is required.

16. Admits the allegations of the first three sentences of ¶ 16 to the extent those allegations
refer only to the SVRX binary royalty stream (as described in ¶ 15, above); and admits
the allegations of the last sentence of ¶ 16.

17. Admits the allegations of T 17, except denies the allegation that Novell retained, or that
the parties to the APA intended for Novell to retain, the copyrights in UNIX and
UnixWare under Schedule 1.1(b) or any other schedule or provision of the APA.

18. Admits that Novell retained certain rights to audit Santa Cruz's administration of the
SVRX binary royalty stream; denies each and every other allegation of ¶ 18; and to the
extent 118 purports to state a legal conclusion, states that no response is required.

4

19. Admits the allegations of ¶ 19 only to the extent they refer to the rights and obligations
of the parties with respect to the SVRX binary royalty stream (as described in ¶ 15,
above).

20. Admits the allegations of the first three sentences of T 20, but denies each and every
other allegation of ¶ 20.

D. Novell's Alleged Ownership of the UNIX Copyrights

21. Admits that the APA transferred to Santa Cruz all of Novell's right, title, and interest in
and to Novell's assets and properties relating to the UNIX business; admits that certain
limited assets were excluded from the transfer; but denies each and every other
allegation of ¶ 21, including the allegation that the APA did not transfer to Santa Cruz
the copyrights in UNIX and UnixWare.

22. Denies the allegations of T 22; and to the extent ¶ 22 purports to state a legal
conclusion, states that no response is required.

23. Admits that Novell and Santa Cruz executed Amendment No. 2 to the APA; and to the
extent ¶ 23 purports to state a legal conclusion, states that no response is required.

24. Denies the allegations of ¶ 24; and to extent T 24 purports to state a legal conclusion,
states that no response is required.

25. Denies the allegations of ¶ 25 (including subparagraphs a-d); and to the extent ¶ 25
(including subparagraphs a-d) purports to state a legal conclusion, states that no
response is required.

26. Denies the allegations of ¶ 26; and to the extent ¶ 26 purports to state a legal
conclusion, states that no response is required.

5

27. Denies the allegations of ¶ 27.

E. Sale of the UNIX Business to Caldera

28. Admits the allegations of ¶ 28.

29. Admits the allegations of the first sentence of ¶ 29, but denies each and every other
allegation of ¶ 29.

30. Admits the allegations of ¶ 30.

F. Calderals Financial Position and Business Strategy

31. Admits that Caldera (like, on information and belief, Novell and nearly all other
companies) did not produce a profitable Linux business; and admits the other
allegations of ¶ 31.

32. Admits that, after Caldera's acquisition of Santa Cruz's Server Software and
Professional Services divisions, most of Caldera's revenue came from UNIX products
and services, including approximately 90% of its total revenues at the end of fiscal year
2001 and 95% of its total revenues at the end of fiscal year 2002; admits that (at least in
part because of the unauthorized use of SCO's proprietary UNIX code and other
protected materials in Linux) Caldera's actual and forecasted revenues from the sale of
LTNIX-based products declined in the fiscal quarters following the acquisition; but
denies each and every other allegation of ¶ 32.

33. Admits the allegations of ¶ 33.

34. Admits that Caldera hired Darl McBride as its President and Chief Executive Officer in
June 2002 and that Mr. McBride was responsible for Caldera's strategic direction, with

6

input from other executives of the company; but denies each and every other allegation
of ¶ 34.

35. Admits the allegations of ¶ 35.

36. Admits the allegations of ¶ 36.

37. Admits that SCO launched the SCOsource initiative to review, enforce, and defend
SCO's ownership of its UNIX intellectual property (including copyrights); admits that
SCO announced the SCOsource initiative in January 2003 but did not enter into an
agreement under its licensing program until August 2003; and denies each and every
other allegation of ¶ 37.

G. Communications Between SCO and Novell in Late 2002 and Early 2003

38. Admits that in late 2002, as part of the review of its intellectual property, SCO
contacted Novell to confirm SCO's understanding that the UNIX and UnixWare
copyrights had been transferred under the APA and to ask if Novell had documents
concerning the APA; admits that Novell counsel and other employees repeatedly and
successively asked SCO to call again at a later time after Novell had had the
opportunity to research the matter; admits that in early 2003, Novell counsel agreed to
sign a letter stating that the APA transferred all right, title, and interest in and to the
copyrights associated with the AT&T SVRX software agreements; admits that SCO
sent Novell counsel a draft of that letter but Novell responded that it was no longer
interested in UNIX and would not sign; admits that Novell did not sign the letter and
ceased communications with SCO; ftirther admits that during the aforementioned

7

conversations Novell never asserted its purported, or challenged SCO's, ownership of
the UNIX and UnixWare copyrights; but denies each and every other allegation of ¶ 38.

39. Admits that (at Novell's request, as described in T 38 above) SCO contacted Novell on
multiple occasions in early 2003; but denies each and every other allegation of ¶ 39.

H. SCO's Efforts to Protect Its Intellectual Property

40. Denies the allegations of ¶ 40.

41. Denies the allegations of the introductory sentence of ¶ 41.

a. Admits the allegations of subparagraph 41 (a).
b. Admits the allegations of subparagraph 41(b).
c. Admits the allegations of subparagraph 41 (c).
d. Admits that in 2003 and 2004, SCO properly registered its copyrights in UNIX
and UnixWare, including its copyrights in the UNIX and UnixWare releases listed
in subparagraph 41(d); denies each and every other allegation of subparagraph
41(d); and to the extent subparagraph 41(d) purports to state a legal conclusion,
states that no response is required.
e. Admits the allegations of subparagraph 41(e).
f, Admits the allegations of subparagraph 41(f).

42. Admits that on or about July 21, 2003, Darl McBride made the statement quoted in part
in T 42; but denies each and every other allegation of ¶ 42.

43. Denies that Novell did not acquiesce to SCO's ownership claims during the years
between the execution of the APA (in September 1995) and about May 2003; further

8

denies, as described below in SCO's response to subparagraph 43(b), that Novell did
not acquiesce to SCO's ownership claims in June 2003.

a. Admits that on May 12, 2003, Darl McBride sent Novell a letter setting forth the
statements therein.
b. Admits that, in response to Mr. McBride's May 2003 letter, Novell CEO Jack
Messman sent SCO a May 28, 2003 letter (published in several newspapers and
other publications) stating that "SCO is not the owner of the UNIX copyrights" -
a statement that Novell recanted in a June 6, 2003 press release stating that
Amendment No. 2 to the APA "appears to support SCO's claim that ownership of
certain copyrights for UNIX did transfer to SCO in 1996."
c. Admits the allegations of I 43(c), including the fact that Mr. LaSala's August 4,
2003 letter to SCO purported to recant the recantation in Novell's June 6, 2003
press release.

44. Admits that in September and October 2003, Novell (wrongfully) obtained copyright
registrations for UNIX-related products; denies each and every other allegation and the
characterizations in T 44; and to the extent ¶ 44 purports to state a legal conclusion,
states that no response is required.

I. The SCOsource Initiative

45. Denies the allegations of¶ 45; and to the extent ¶ 45 purports to state a legal
conclusion, states that no response is required.

9

46. Admits that SCO announced its SCOsource initiative on January 22, 2003, and that in
connection with that announcement, Darl McBride made the statement quoted in part in
¶ 46; but denies each and every other allegation and the characterizations in ¶ 46.

47. Admits that the SCOsource licensing program allows Linux end-users to enter into
intellectual property agreements that properly compensate SCO for its UNIX
intellectual property found in Linux; admits that the terms of the SCOsource
agreements are as stated therein; but denies each and every other allegation of ¶ 47.

48. Admits that SCO charges market price (including appropriate discounts) for its
intellectual property licenses; but denies each and every other allegation and the
characterization in ¶ 48.

49. Admits that on March 7, 2003, SCO filed a lawsuit against IBM based on the
allegations set forth in SCO's pleadings in that lawsuit; denies each and every other
allegation of T 49; and to the extent ¶ 49 purports to state a legal conclusion, states that
no response is required.

50. Admits that SCO, through its SCOsource division, entered into agreements related to
UNIX and UnixWare with Sun Microsystems, Inc., and Microsoft Corporation (in that
order) and that the Microsoft agreement covered UNIX compatibility products; but
denies each and every other allegation of ¶ 50, including the allegation that the Sun and
Microsoft agreements were part of the SCOsource licensing program.

51. Admits that the Sun and Microsoft agreements in part produced the profitable quarter;
admits the allegations of the second sentence of ¶ 51; but denies each and every other
allegation and the characterizations in ¶ 51.

10

52. Admits that, in May 2003, SCO sent 1,500 end-user corporations (including IBM and
Novell) a letter setting forth the statements therein; denies each and every other
allegation of ¶ 52; and to the extent ¶ 52 purports to state a legal conclusion, states that
no response is required.

53. Admits that SCO made statements (correctly quoted in part in ¶ 53) in the May 2003
letters; denies each and every other allegation of ¶ 53; and to the extent ¶ 53 purports to
state a legal conclusion, states that no response is required.

54. Admits that SCO made statements (correctly quoted in part in ¶ 54) in the May 2003
letters; denies each and every other allegation of ¶ 54; and to the extent ¶ 54 purports to
state a legal conclusion, states that no response is required.

55. Admits that SCO made statements (correctly quoted in part in ¶ 55) in its May 2003
letters to end-users; denies each and every other allegation and the characterizations in
¶ 55; and to the extent ¶ 55 purports to state a legal conclusion, states that no response
is required.

56. Admits that SCO has publicly stated that it owns the UNIX copyrights and that Linux
end-users may be liable for Hiftingement of those copyrights; admits that it has stated
on its website that "only SCO is in a position to license the use of this infringing
intellectual property"; admits that the Court's February 8, 2005 Order in the SCO v.
IBM case sets forth the statements therein; denies each and every other allegation and
the characterizations in ¶ 56; and to the extent ¶ 56 purports to state a legal conclusion,
states that no response is required.

11

57. Admits that SCO has filed lawsuits against Autozone, Inc., and Daimler Chrysler
Corporation, based on the allegations set forth in its pleadings in those lawsuits; but
denies each and every other allegation and the characterizations in ¶ 57.

58. Admits that Novell has established an indemnification program with numerous
restrictions (including, for example, the requirement that the Linux customer buy a new
upgrade) and limitations (including, for example, on the dollar amount of the
indemnification); but denies infon-nation or knowledge sufficient to form a belief as to
the truth of the other allegations of ¶ 58.

59. Admits that, in an effort to protect its UNIX copyrights, SCO has negotiated intellectual
property agreements with Linux end-users; admits that such agreements generated
revenue in fiscal year 2004; and denies each and every other allegation and the
characterizations in ¶ 59.

J. Novell's Allegations that SCO Breached the Asset Purchase Agreement

60. Denies the allegations of T 60; and to the extent ¶ 60 purports to state a legal
conclusion, states that no response is required.

61. Denies the allegations of ¶ 61; and to the extent ¶ 61 purports to state a legal
conclusion, states that no response is required.

62. Denies the allegations of ¶ 62; and to the extent ¶ 62 purports to state a legal
conclusion, states that no response is required.

Alleged Breach of the Audit Provisions

63. Admits that Section 1.2(b) of the APA provides in part:
Seller shall be entitled to conduct periodic audits of Buyer
concerning all royalties and payment due to Seller hereunder or

12

under the SVRX Licenses, provided that Seller shall conduct such
audits after reasonable notice to Buyer and during normal business
hours and shall not be entitled to more than two (2) such audits per
year.
SCO denies each and every other allegation and the characterization in ¶ 63,
including that under the APA, Novell had audit rights other than with respect to the
administration of the SVRX binary royalty stream; and to the extent ¶ 63 purports to
state a legal conclusion, states that no response is required.

64. Admits that Section 1.2(f) of the APA provides in part:
Within one (1) calendar month following each calendar month in
which SVRX Royalties [and royalties from Royalty-Bearing
Products as contemplated in Schedule 1.2(b) hereof] are received
by Buyer, Buyer shall provide to Seller, in electronic file format, a
report detailing all such royalties.
SCO denies each and every other allegation of ¶ 64.

65. Admits the allegations of ¶ 65.

66. Admits the allegations of ¶ 66.

67. Admits that Novell sent SCO a November 21, 2003 letter (correctly quoted in part in
¶ 67) requesting the information set forth therein; denies each and every other
allegation of T 67 (including subparagraphs a-d); and to the extent ¶ 67 (including
subparagraphs a-d) purports to state a legal conclusion, states that no response is
required.

68. Admits that Novell sent letters to SCO on December 29, 2003, and on February 4,
2004, referencing Novell's November 21, 2003 letter.

69. Admits that SCO responded to Novell's letters as set forth in SCO's letter dated
February 5, 2004; but denies each and every other allegation of ¶ 69.

13

70. Admits that Novell sent SCO a March 1, 2004 letter (correctly quoted in part in ¶ 70),
requesting the information set forth therein; denies each and every other allegation of
¶ 70; and to the extent T 70 purports to state a legal conclusion, states that no response
is required.

71. Admits that Novell sent a letter to SCO on April 2, 2004, requesting the information
set forth therein.

72. Admits that Novell sent SCO a November 17, 2004 letter (correctly quoted in part in
¶ 72) requesting the information set forth therein.

73. Admits that SCO responded to Novell as set forth in SCO's letters; but denies each
and every other allegation and the characterizations in ¶ 73; and to the extent ¶ 73
purports to state a legal conclusion, states that no response is required.
Alleged Breach of the Obligation to Pass Through Royalties.

74. Admits that SCO was obligated to remit "all royalties, fees and other amounts due
under all SVRX Licenses (as listed in detail under item VI of Schedule 1. 1 (a) hereof
and referred to herein as 'SVRX Royalties')"; admits that the term "SVRX Licenses"
is not listed in a "Definitions" or "Recitals" section of the APA. SCO denies each
and every other allegation of ¶ 74, including any attempt by Novell to define the term
"SVRX Licenses" to include anything other than royalties that SCO collected from
then-existing SVRX licensees for their distribution of binary-code versions of System
V products pursuant to sublicensing agreements.

75. Denies the allegations of ¶ 75; and to the extent ¶ 75 purports to state a legal
conclusion, states that no response is required.

14

76. Admits that SCO entered into agreements with Sun and Microsoft, but denies each
and every other allegation and the characterizations in ¶ 76.

77. Denies the allegations of 177; and to the extent ¶ 77 purports to state a legal
conclusion, states that no response is required.

78. Admits that SCO has not remitted royalties from its licenses with Sun and Microsoft;
denies each and every other allegation of ¶ 78, including the allegation that SCO
entered into "SVRX Licenses" with Sun or Microsoft; and to the extent ¶ 78 purports
to state a legal conclusion, states that no response is required.

79. Admits that SCO has entered into intellectual property agreements, the terms of
which are set forth therein; but denies each and every other allegation of ¶ 79.

80. Denies the allegations of ¶ 80; and to the extent ¶ 80 purports to state a legal
conclusion, states that no response is required.

81. Admits that Amendment No. I to the APA added Section 1.2(e) (correctly quoted in
part in ¶ 81); but denies each and every other allegation of ¶ 81; and to the extent ¶ 81
purports to state a legal conclusion, states that no response is required.

82. Admits the allegations of the first sentence of ¶ 82; but denies the second sentence of
¶ 82 to the extent it alleges that the intellectual property licenses and Sun and
Microsoft agreements required Novell's prior approval or were "SVRX Licenses";
and to the extent ¶ 82 purports to state a legal conclusion, states that no response is
required.

15

Alleged Breach of Amendment No. 2

83. Admits that, without quoting any part of Subsection B5 of Amendment No. 2 to the
APA, Novell correctly and selectively quotes in part the other four Subsections;
denies each and every other allegation of ¶ 83; and to the extent ¶ 83 purports to state
a legal conclusion, states that no response is required.

84. Admits that Novell accurately quotes in part Subsection 134 of Amendment No. 2 to
the APA; and to the extent ¶ 84 purports to state a legal conclusion, states that no
response is required.

85. Admits the allegations of the first sentence of ¶ 85; admits that the second sentence of
¶ 85 correctly quotes in part the 1994 Sun Agreement; admits that, through that
agreement, Unix Systems Laboratories (USL) granted Sun Microsystems certain
rights to UNIX System V technology that Sun had previously licensed through UNIX
software and sublicensing agreements with USL's predecessor, AT&T; denies each
and every other allegation of ¶ 85; and to the extent T 85 purports to state a legal
conclusion, states that no response is required.

86. Admits that ~ 86 correctly quotes in part a letter from SCO to Novell dated February
5, 2004; but denies each and every other allegation and the characterizations of ¶ 86.

87. SCO admits that the first sentence of T 87 correctly quotes in part a selected phrase in
the 2003 Sun Agreement; denies each and every other allegation of ¶ 87; and to the
extent ¶ 87 purports to state a legal conclusion, states that no response is required.

88. Admits that SCO did not notify, consult with, or seek the prior approval of Novell
prior to concluding the transaction with Sun set forth in the 2003 Sun Agreement; but

16

denies each and every other allegation and the characterizations of ¶ 88, including the
allegation that that transaction was a "potential buy-out" under Amendment No. 2 to
the APA.

Alleged Breach of Section 4.16(b) of the APA

89. Admits that Novell correctly quotes in part Section 4.16(b) of the APA, but denies
that this is the only pertinent part of that section.

90. Admits that SCO sent letters to various companies, including IBM and Sequent,
setting forth the statements therein; but denies each and every other allegation in ¶ 90,
including the allegation that the licenses referenced in those agreements were "SVRX
Licenses."

91. Admits that SCO terminated its software license agreements with IBM and Sequent;
admits that it sent Sequent an August 11, 2003 letter of termination; but denies each
and every other allegation in ¶ 91, including especially the allegation that the
terminated licenses were "SVRX Licenses."

92. Admits that SCO did not seek Novell's prior written consent to terminate the IBM
and Sequent licenses; admits that Novell sent letters to SCO on June 9, 2003 and
October 7, 2003, setting forth the statements therein; but denies each and every other
allegation of ¶ 92, including especially the allegation that the terminated licenses
were "SVRX Licenses."

93. Admits that Novell correctly quotes in part Section 4.16(b) of the APA, but denies
that this is the only pertinent part of that section; denies each and every other

17

allegation of ¶ 93; and to the extent ¶ 93 purports to state a legal conclusion, states
that no response is required.

94. Denies the allegations of ¶ 94; and to the extent ¶ 94 purports to state a legal
conclusion, states that no response is required.

95. Admits that SCO reftises to acknowledge Novell's purported right to take certain
actions on "Its own behalf'; denies the allegation that Novell has that right; and to the
extent ¶ 95 purports to state a legal conclusion, states that no response is required.

96. Admits that Section 4.16(b) of the APA (correctly quoted in part in ¶ 96) sets forth
the terms therein; but denies each and every allegation of ¶ 96, including any attempt
by Novell to define the term "SVRX Licenses" to include anything other than
royalties that SCO collected from then-existing SVRX licensees for their distribution
of binary-code versions of System V products pursuant to sublicensing agreements.

97. Admits that SCO entered into agreements with Linux end-users, Sun, Microsoft, and
others; but denies each and every other allegation in ¶ 97, including the allegation that
those agreements are "SVRX Licenses."

98. Admits that SCO never sought approval from Novell to enter into the intellectual
property licenses or Sun and Microsoft agreements; denies each and every other
allegation of T 98; and to the extent ¶ 98 purports to state a legal conclusion, states
that no response is required.

99. Denies the allegations of ¶ 99; and to the extent ¶ 99 purports to state a legal
conclusion, states that no response is required.

18

FIRST CLAIM FOR RELIEF

100. Repeats and re-alleges its answers to the allegations of all prior paragraphs as if fully
set forth herein.

101. Denies the allegations of ¶ 101; and to the extent ¶ 101 purports to state a legal
conclusion, states that no response is required.

102. Denies the allegations of ¶ 102; and to the extent ¶ 102 purports to state a legal
conclusion, states that no response is required.

103. Denies the allegations of ¶ 103; and to the extent ¶ 103 purports to state a legal
conclusion, states that no response is required.
104. Denies the allegations of ¶ 104; and to the extent ¶ 104 purports to state a legal
conclusion, states that no response is required.

SECOND CLAIM FOR RELIEF

105. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

106. Admits that Novell sent SCO a November 21, 2003 letter requesting the information set
forth therein, but denies each and every other allegation in ¶ 106 (including
subparagraphs a-d).

107. Denies the allegations of T 107; and to the extent ¶ 107 purports to state a legal
conclusion, states that no response is required.

108. Denies the allegations of T 108; and to the extent ¶ 108 purports to state a legal
conclusion, states that no response is required.

19

109. Denies the allegations of T 109; to the extent ¶ 109 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 109.

THIRD CLAIM FOR RELIEF

110. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

111. Denies the allegations of ¶ 111; and to the extent ¶ 111 purports to state a legal
conclusion, states that no response is required.
112. Denies the allegations of ¶ 112; and to the extent ¶ 112 purports to state a legal
conclusion, states that no response is required.

113. Denies the allegations of T 113; to the extent ¶ 113 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 113.

114. Denies the allegations of ¶ 114; to the extent ¶ 114 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 114.

115. Admits that, as of April 30, 2006, SCO had a total of $9,524,000 in cash and cash
equivalents, $9,100,000 in available-for-sale marketable securities, and $3,340,000 in
restricted cash, of which $140,000 is designated to pay for experts, consultants, and
other litigation expenses, and the remaining $3,200,000 of restricted cash is payable to
Novell for its retained binary royalty stream; denies each and every other allegation in

20

¶ 115; to the extent ¶ 115 purports to state a legal conclusion, states that no response is
required; and states that Novell is not entitled to the relief it seeks in ¶ 115.

116. Denies the allegations of ¶ 116; to the extent ¶ 116 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 116.

FOURTH CLAIM FOR RELIEF

117. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

118. Denies the allegations of ¶ 118; and to the extent ¶ 118 purports to state a legal
conclusion, states that no response is required.

119. Denies the allegations of ¶ 119; to the extent ¶ 119 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in T 119.

120. Denies the allegations of ¶ 120; and to the extent ¶ 120 purports to state a legal
conclusion, states that no response is required.

121. Denies the allegations of ¶ 121; to the extent ¶ 121 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 121.

122. Admits that, after Santa Cruz thwarted Novell's unauthorized unilateral attempt in
April 1996 to give IBM a buyout of its UNIX binary-royalty obligations and expand
IBM's UNIX source code rights, Novell agreed to certain mutual obligations set forth
in Amendment No. 2 concerning future potential buyouts by SVRX licensees of the

21

binary royalties described in ¶¶ 15 and 152 above; denies each and every other
allegation of ¶ 122; and to the extent ¶ 122 purports to state a legal conclusion, states
that no response is required.

123. Denies the allegations of ¶ 123; to the extent ¶ 123 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 123.

FIFTH CLAIM FOR RELIEF

124. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

125. Admits the allegation of ¶ 125.

126. Denies the allegations of ¶ 126; and to the extent ¶ 126 purports to state a legal
conclusion, states that no response is required.

127. Admits that, under the APA, SCO was obligated to administer the intended binary
royalty stream described in ¶ 15, above; denies each and every other allegation of
¶ 127; and to the extent ¶127 purports to state a legal conclusion, states that no
response is required.

128. Denies the allegations of ¶ 128; and to the extent ¶ 128 purports to state a legal
conclusion, states that no response is required.

129. Denies the allegations of ¶ 129; to the extent ¶ 129 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 129.

22

130. Denies the allegations of ¶ 130; to the extent ¶ 130 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 130.

SIXTH CLAIM FOR RELIEF

131. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

132. Denies the allegations of ¶ 132; and to the extent ¶ 132 purports to state a legal
conclusion, states that no response is required.

133. Denies the allegations of ¶ 133; and to the extent ¶ 133 purports to state a legal
conclusion, states that no response is required.

134. Denies the allegations of ¶ 134; and to the extent ¶ 134 purports to state a legal
conclusion, states that no response is required.

135. Denies the allegations of ¶ 135; to the extent ¶ 135 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 13 5.

136. Denies the allegations of ¶ 136; to the extent ¶ 136 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 136.

SEVENTH CLAIM FOR RELIEF

137. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

23/p>

138. Admits that, under Sections 1.2 and 4.16 of the APA, SCO agreed to collect and pass
through to Novell 100% of the royalties that SCO then collected from then-existing
SVRX licensees for their distribution of binary-code versions of System V products
pursuant to sublicensing agreements; admits that, under Section 4.16, Novell agreed to
pay SCO 5% of such binary royalties as an administrative fee; admits that T 138
correctly (and once redundantly) quotes in part selected portions of Sections 1.2(b) and
4.16(a) of the APA; denies each and every other allegation of ¶ 138; and to the extent
¶ 138 purports to state a legal conclusion, states that no response is required.

139. Denies the allegations of ¶ 139; and to the extent ¶ 139 purports to state a legal
conclusion, states that no response is required.

140. Denies the allegations of ¶ 140; and to the extent ¶ 140 purports to state a legal
conclusion, states that no response is required.

141. Denies the allegations of ¶ 141; and to the extent ¶ 141 purports to state a legal
conclusion, states that no response is required.

142. Denies the allegations of ¶ 142; and to the extent ¶ 142 purports to state a legal
conclusion, states that no response is required.

143. Denies the allegations of ¶ 143; to the extent ¶ 143 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 143.

EIGHTH CLAIM FOR RELIEF

144. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

24

145. Denies the allegations of ¶ 145; and to the extent ¶ 145 purports to state a legal
conclusion, states that no response is required.

146. Denies the allegations of ¶146; and to the extent ¶ 146 purports to state a legal
conclusion, states that no response is required.

147. Denies the allegations of ¶ 147; and to the extent ¶ 147 purports to state a legal
conclusion, states that no response is required.

148. Denies the allegations of ¶ 148; and to the extent ¶ 148 purports to state a legal
conclusion, states that no response is required.

149. Denies the allegations of ¶ 149; to the extent ¶ 149 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 149.

150. Denies the allegations of ¶ 150; to the extent ¶ 150 purports to state a legal conclusion,
states that no response is required; and states that Novell is not entitled to the relief it
seeks in ¶ 150.

NINTH CLAIM FOR RELIEF

151. Repeats and re-alleges its answers to all prior paragraphs as if those answers were fully
set forth herein.

152. Admits that, under Sections 1.2 and 4.16 of the APA, SCO agreed to collect and pass
through to Novell 100% of the royalties that SCO then collected from then-existing
SVRX licensees for their distribution of binary-code versions of System V products
pursuant to sublicensing agreements; admits that, under Section 4.16, Novell agreed to
pay SCO 5% of such binary royalties as an administrative fee; admits that SCO was

25

responsible for making additional payments to Novell for products unrelated to the
SVRX licenses and this litigation; denies each and every other allegation of ¶ 152; and
to the extent ¶ 152 purports to state a legal conclusion, states that no response is
required.

153. Admits the allegations of the first two sentences and the main clause of the third
sentence of ¶ 153 to the extent the terms "SVRX royalties" and "SVRX licenses" refer
only to the intended binary royalty stream described in ¶¶ 15 and 152, above; denies
the each and every allegation of ¶ 153; and to the extent ¶ 153 purports to state a legal
conclusion, states that no response is required.

154. Admits the allegations of the first sentence of ¶ 154 to the extent they refer to the
intended binary royalty stream described in ¶ 115 and ¶ 152, above, and to payments for
products unrelated to the SVRX licenses and this litigation; denies each and every
other allegation of ¶ 154; and to the extent ¶ 154 purports to state a legal conclusion,
states that no response is required.

155. Denies the allegations of ¶ 155; and to the extent ¶ 155 purports to state a legal
conclusion, states that no response is required.

156. Admits the allegations of ¶ 156 only to the extent the phrase "royalty payments to SCO
under the SVRX Licenses" is limited to the binary royalties described in ¶¶ 15 and 152,
above.

157. Admits the allegations of ¶ 157 only to the extent the phrase "royalty payments under
the SVRX licenses" refers only to the binary royalty stream described in ¶¶ 15 and 152,
above.

26

158. Admits that SCO did not seek Novell's approval before entering into the intellectual
property agreements or Sun and Microsoft agreements; admits that, because those
agreements are not "SVRX Licenses" as intended under the APA, SCO did not report
those agreements to Novell, did not provide Novell with documentation related to
them, and did not pass through to Novell payments corresponding to them; denies each
and every other allegation and the characterizations of ¶ 158; and to the extent ¶ 158
purports to state a legal conclusion, states that no response is required.

159. Admits that the binary royalty payments due to Novell under the APA are calculated by
formula and that SCO directly receives those payments; denies each and every other
allegation and the characterizations in ¶ 159; and to the extent ¶ 159 purports to state a
legal conclusion, states that no response is required.

160. Denies the allegation that SCO owes Novell monies under the APA, and states that
Novell is not entitled to an accounting.

PRAYER FOR RELIEF

161. States that the enumerated ¶¶ 161-178 of Novell's Prayer for Relief include requests for
relief as to which no response is required. To the extent a response is required, SCO
denies that Novell is entitled to the requested or any relief

GENERAL DENIAL

SCO denies each and every allegation in Novell's Amended Counterclaims that is not
specifically admitted herein.

27

AFFIRMATIVE DEFENSES

SCO hereby asserts the following separate defenses to the purported causes of action in
Novell's Counterclaims, without assuming any burden of proof that rests with Novell with
respect to such defenses.

First Defense

Novell's slander-of-title counterclaim is barred by the absolute and conditional privileges
enjoyed by SCO.

Second Defense

Novell's slander-of-title counterclaim is barred by the First Amendment to the United
States Constitution.

Third Defense

Novell's counterclaims are barred, in whole or in part, by the doctrine of waiver.

Fourth Defense

Novell's counterclaims are barred, in whole or in part, by the doctrines of laches and
delay.

Fifth Defense

Novell's counterclaims are barred, in whole or in part, by the doctrine of estoppel.

Sixth Defense

Novell's counterclaims are barred, in whole or in part, by the doctrine of unclean hands.

Seventh Defense

Novell's counterclaims are barred, in whole or in part, by the applicable statute of
limitations.

28

Eighth Defense

Novell has failed to mitigate its alleged damages, and accordingly, any damages awarded
to Novell should be reduced to the extent of its failure to mitigate.

Ninth Defense

Novell's counterclaims are barred, in whole or in part, by lack of causation. To the
extent that Novell alleges (contrary to fact) that it has suffered damages, such damages were not
proximately caused by any act or omission of SCO, or were not reasonably foreseeable, or both.

Tenth Defense

Novell's Amended Counterclaims fails to state a claim upon which relief can be granted.
WHEREFORE, plaintiff and counterclaim-defendant SCO demands judgment dismissing
Novell's counterclaims with prejudice, along with such other and further relief as the Court
deems just and proper.

DATED this 16th day of October, 2006.

Respectfully submitted,

HATCH, JAMES & DODGE, P.C.
Brent 0. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
Stephen N. Zack
Robert Silver
Stuart H. Singer
Edward Normand

By_____/s/ Brent O. Hatch_______

Counsel for The SCO Group, Inc.

29

CERTIFICATE OF SERVICE

Plaintiff, The SCO Group, Inc., hereby certifies that on the 16th day of October, 2006, a
true and correct copy of the foregoing SCO's Reply to Novell's Amended Counterclaims was
served on Defendant Novell, Inc., by CM/ECF to:

Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon
ANDERSON & KARRENBERG
[Address]

Michael A. Jacobs
Matthew 1. Kreeger
MORRISON & FOERSTER
[Address]

/s/ Brent O. Hatch

30


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )