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To read comments to this article, go here
SCO Moves for Summary Judgment on Slander of Title in Novell Case
Tuesday, April 10 2007 @ 01:14 PM EDT

SCO has filed for partial summary judgment on SCO's First, Second, and Fifth Causes of Action, and on Novell's First Counterclaim. Here is the Motion for Summary Judgment [PDF], and the Memorandum in Support [PDF].

If you can't remember off the top of your heads what those claims and counterclaim are about, take a look here, where you'll find a chart of SCO's Complaint and Novell's Answer. We see from this chart that the claims SCO is asking for summary judgment on are Slander of Title (First Cause of Action), Breach of the APA and TLA (Second Cause of Action), and Unfair Competition (Fifth Cause of Action), as well as Novell's First Counterclaim (Slander of Title).

In this filing, we come to understand why SCO deposed Maureen O'Gara, as Dan Lyons reported they had on his blog, and why Novell reportedly used 3 hours of the time, according to Lyons, asking her questions about the stalking incident regarding me.

SCO uses her as a witness to try to support the idea that Novell deliberately timed its announcement that Novell owned the UNIX copyrights to harm SCO, O'Gara's claim being that Chris Stone allegedly told her that. If true, which I doubt, it might explain his sudden exit from Novell. I find it hard to believe Stone would do that, and even if in some alternate universe he did, he surely wouldn't be so stupid as to tell a journalist about it. There are SEC rules, after all. I notice he turned up in a Dan Lyons blogaroni moment the other day, saying things helpful to SCO. That's if you believe a word Lyons writes. Read on for why you just might not want to.

We figured out years ago that O'Gara was "the journalist" that SCO said had told them these things. Remember the fascinating correspondence between SCO and Novell at the time that came to light in 2004? But SCO of course pretends it has just "come to light" in discovery:

SCO has now brought to light evidence of Novell’s motives for suddenly claming ownership of the copyrights starting in late May 2003. Maureen O’Gara, a journalist covering the computer industry since 1972, recently testified that then Novell Vice Chairman Chris Stone conveyed to her, with “laughter,” that Novell was timing its ownership claims to coincide with SCO’s earnings report in order to “confound SCO’s stock position” and “upset the stock price.”

I've seen some call O'Gara pejoratively a "fiction writer". That's not a compliment for a journalist. No doubt we'll hear more about this when Novell responds, and I suggest reserving judgment on the matter. I always thought well of Stone, and this doesn't match anything I've ever seen or known about him, or Novell either. It's a serious accusation, and I wouldn't believe it, personally, on O'Gara's testimony or SCO's. SCO has a history of smearing people in court filings and then never being able to offer any real proof. Remember the failed spoliation claims? The mountain of code, the MIT deep divers, blah blah? So, I suggest we wait and see.

Let's get back to O'Gara and why you might want to take her testimony with a grain of salt. When she wrote her stalking piece, the entire staff of LinuxWorld quit in protest over what they called the ethical lapse:

We regret that Sys-Con Media has been unable to apply a standard of journalistic ethics that we can comfortably operate under. We feel that recent articles published with the consent of Sys-Con Media fail to meet minimum generally accepted journalistic codes, and because the management of Sys-Con Media has failed to acknowledge that the articles are by all informed judgment ethically unsupportable, we have decided we must find other avenues for our work.

Here's James Turner, then Senior Editor of LinuxWorld, on why he felt he had to resign:

The more informed among you may have known that the editors of the print edition of LinuxWorld Magazine have been having a bit of a running firefight with the management of Sys-Con (who publish the magazine and run a number of other magazines and web presences) in regard to Maureen O'Gara's "coverage" of the industry. Sys-Con pays Ms. O'Gara for her commentary, which to us has frequently resembled repackaged press releases and poorly researched attacks intended to incite rather than inform.

She also evidently has a dislike of Pamela Jones, who has maintained the Groklaw site and in general has done nothing worse than provide insightful discourse in regards to Open Source legal issues. O'Gara has taken every opportunity to cast disrepect on Jones, and has now outdone herself with a hatchet job in which she publishes personal information about Jones, including her religious affiliation (which she insults) and her home address and description of her living arrangements.

This is the worst kind of yellow journalism, a pure ad hominem attack intended to portray Jones as a senile religious kook not to be taken seriously. In fact, O'Gara's track record of biased and incomplete reporting shows that she is the kook, and I for one am no longer willing to affiliate myself with an organization that will pay for this type of character assasination. The editorial staff of LinuxWorld Magazine has been calling for Sys-Con to sever their affiliations with O'Gara for at least half a year, with mixed results. This is the final straw, and although I can not speak for the rest of the editorial board, I am not going to further sully my reputation by affiliation with a sleazy sensationalist such as O'Gara. I call on Sys-Con to immediate terminate all business dealings with Ms. O'Gara, or I will find another outlet for my work.

Many others condemned the article. Here's Brian Proffitt of Linux Today:

I do not bring forth this article to endorse it in any way, shape, or form. I condemn it. It is full of slander and malice. With the publication of phone numbers, addresses and (in the LinuxBusinessNews version of the story) photographs of homes and family members, it is clearly designed to intimidate Jones into silence.

Having discussed this online with Jones yesterday, I can tell you it's not going to work.

Many in the tech journalist community suspect that the information gathered for this article was being done by private investigators on behalf of SCO. SCO's own statements in their last public conference call indicate that they were more than willing to launch such an investigation. I do not know if O'Gara actually did the legwork her story claims, but I would be very interested if there were private investigators involved and if so, who paid for them....

This is nothing more than another chapter in a smear campaign that violates every shred of ethical journalism I can think of. Not only am I outraged on a personal level, but this bodes very ill on a professional level as well. If private entities or public corporations can single out "troublesome" journalists (or bloggers or even private citizens) and expose them to such scrutiny in an effort to intimidate them into silence, then we, as journalists and private citizens) all stand to lose a great deal in our pursuit of truth.

As you see, I am still here. But those are the right questions. I hope, personally, that Novell asks both SCO and Dan Lyons those questions. By all means ask who paid for the private detective. Yes, there was one. Who got the phone records, and how? Get all the email too, and the paid bill. Does O'Gara have proof of payment? Somebody had to pay for that detective. And when you find the detective, ask him who he said he was working for. Ask Forbes to look for that bill, by all means. Ask Lyons for all his email back and forth to SCO and O'Gara. Is he working with SCO trying to find me? If so, why? Why otherwise would he post on his blog that he was looking for information from anyone on how to find me just before, as we now know, SCO claimed to be trying to serve a subpoena on me? Just a happy coincidence? That's what I'd ask if I were deposing him, anyway.

O'Gara's publisher eventually apologized to me publicly:

"I apologize to our readers, to the open source community, to our LinuxWorld editors, and to Ms. Pamela Jones for publishing the article."

Then there is the ethical and legal question about pretexting. How exactly would a journalist legally get someone else's phone records? I know of no legal way. Yet she reported who I allegedly had called. Who got that info and how? That is a serious question. While I don't know the answer, Novell undoubtedly is interested in showing the jury such ethical questions, because if a witness can be shown to be unethical in one area, the jury will take what the witness testifies with a grain of salt, and well they should.

If you were to assume that Lyons is also on the SCO team (you might find this account of a conversation between Dan Lyons and journalist James Turner of interest, where bias against me on the part of Lyons shines through), then you could also now understand the likely purpose of Lyons' effort to rehabilitate O'Gara in the article he wrote about how bloggers are from the devil and all that. Remember how we puzzled about why he defended her in that article? Could it be because SCO knew it needed her to be a credible witness in the case down the road? A credible witness. Now that, methinks, will be an uphill slog.

If the impression of O'Gara is of a SCO partisan, with an agenda, and some ethical wobblies to boot, it undermines her value as a witness. After all, I think we can agree that if someone were willing to pretext, the person might be willing to lie. Ditto with Lyons. When he attacked Groklaw, printing the usual innuendo and smears, in his blogs-are-from-the-devil article, it was widely condemned. The Internet Press Guild wrote an Open Letter, which it also sent to Forbes, in protest. I didn't make it part of Groklaw's collection at the time, but here it is:

THE INTERNET PRESS GUILD
[address]

Steve Forbes
Forbes Magazine
[address, phone]

AN OPEN LETTER TO FORBES MAGAZINE

As members of the Internet Press Guild, an organization of approximately 80 writers and editors covering technology, founded in 1996, we view with some alarm the recent publication of a highly inaccurate article, "Attack of the Blogs" in your magazine.

We wish particularly to express concern over the sidebar article which lays out a road map for legal harassment and smear tactics to be used against bloggers who report critically on corporate activities. The dividing line between journalists and bloggers is a hazy one. We would think that Forbes would be the first to agree that the ability of journalists (online or print) to report on the behavior of companies without fear of reprisal is a cornerstone of the First Amendment.

There are perfectly adequate outlets for wronged parties to address negligent reporting, through libel law. This sidebar is a blueprint for corporations and private individuals to intimidate reporters and damage the investigative press that the American public depends on. While there may very well be a good story on blogging and how corporations should respond to negative blogging, this was not it.

In addition, in the article several statements are made in regards to Pamela Jones, a paralegal, journalist, and member of the IPG; her Web site Groklaw, a technology and legal news blog; and the actions of a journalist named Maureen O’Gara.

Some facts, which were publicly available, were omitted in the story or given a different connotation that misleads the readers. For example,

1) "Bloggers all but got O'Gara fired." In point of fact, the parties lobbying most heavily for the termination of her contract were not bloggers, but the editors of Sys-Con's own LinuxWorld Magazine. And the statement is doubly inaccurate, because bloggers couldn’t have gotten O'Gara "fired," since she was not an employee of Sys-Con Media. She was a freelancer, and a blogger herself.

2) The story also omits such aspects of O'Gara's reporting, which caused the editors to ask for her contract's termination.

These included such stalking behavior as describing the interior of Jones’ alleged apartment, publishing photographs of the exterior of her and her mother's alleged dwellings, casting aspersions on Jones' religious beliefs and referring to Ms. Jones in inflammatory terms such as 'a harridan'. Is it any wonder that the Sys-Con editors were concerned with being associated with this type of yellow journalism?

3) In addition, O'Gara, who is praised in this article, has a track record of poor reporting which had caused other Sys-Con editors to long complain about the caliber of O’Gara’s work. In fact, in the fall of 2004, the editors of LinuxWorld Magazine had taken the unusual step of publically distancing themselves from O'Gara in an open letter to the readership of the magazine.

4) The article also alleges that hackers took down the site, and cites a heavily inflated damage figure provided by the owner of Sys-Con Media as fact.

In reality, no hard evidence has ever been presented for an organized attack on the Sys-Con web sites. A much more plausible explanation is available: that the sites went down under the load of people seeking out the original article.

The story further implies that Jones either organized or condoned a denial of service attack. There is not a shred of evidence for these charges.

5) The story also implies that Pamela Jones thanked a group of hackers for forcing O'Gara out, In fact, in the example cited, she was thanking the LinuxWorld Magazine editors for standing up to O'Gara and showing appropriate journalistic ethics.

6) The story also fails to mention that in the opinion of the Society of Professional Journalists ethics committee, O'Gara had been guilty of numerous ethical breaches in her reporting.

According to Fred Brown, co-chair of the SPJ Ethics Committee, "That piece by O'Gara definitely is outside the norms of good journalism. It's bullying, insulting and harassing, and I, for one, really don't get the point of it.”

Far from O'Gara being an "intrepid reporter," her willful invasion of privacy and persecutorial reporting style deserved condemnation rather than praise....

7) The article also inaccurately states that O'Gara got Ms. Jones' phone number from the court in Nevada. According to Ms. O'Gara's own writing, she got it from a journalist:

"See, even though Groklaw treats cell phones like they were Kleenex and changes its unpublished numbers regularly, one number it left with a journalist led to this flat and - wouldn't you know it but - some calls from there had been placed to the courts in Utah and to the Canopy Group so obviously this just isn't any Pamela Jones."

Therefore, we are very concerned with this extremely one-sided and misleading portrayal of events. This is not the level of journalism we have grown to expect from Forbes.

We hope Forbes Magazine will take actions to improve editorial oversight of its product to prevent such poor articles from appearing in the future. Articles such as this one can only harm the image of Forbes in particular and the entire journalistic community in general, and are certainly not representative of the high standards we all strive for in our work.

Signed,

Joe 'Zonker' Brockmeier (email redacted): Editorial Director, Linux.com.

Daniel P. Dern (email redacted): freelance technology writer

Dennis Fowler (email redacted): Founding member IPG; Department Editor, NetNews, netWorker magazine, ACM, the Association for Computing Machinery.

Scott M. Fulton, III: Senior Partner, Ingenus editorial services

Sean Gallagher: Executive Editor, Enterprise/Vertical sites, Ziff-Davis Internet

Rishab Aiyer Ghosh: International Editor, First Monday

Angela Gunn (email redacted): Co-host, PC World's Digital Duo

Nettie Hartsock (email redacted): Writer

Dee-Ann LeBlanc: Award-winning technical journalist; Linux Games Editor, Linux Journal; Desktop Editor, LinuxPlanet.com.

Lisa Nadile: Writer

Lawrence Nyveen: Editor, Netsurfer Digest

Robin 'Roblimo' Miller: Editor in Chief, Open Source Technology Group

Jason Perlow: Sr. Contributing Editor, Linux Magazine

Brian Proffitt (email redacted): Managing Editor, Linux Today/LinuxPlanet

Oliver Rist: Senior Contributing Editor, InfoWorld

Dan Rosenbaum: Editor, fireEMS; former editor, NetGuide

Laurie Rowell: Writer

Karen G. Schneider: Contributing author, ALA Techsource; Blogger, Free Range Librarian

James M. Turner (email redacted): Products Editor, Linux Journal; Senior Contributing Editor, Linux Planet

Steven J. Vaughan-Nichols (email redacted): Senior Editor, Ziff Davis Internet; board member, LinuxWorld Advisory Board; and chairman, Internet Press Guild.

At the time, Fuat in an interview said plainly that he didn't believe at all that Groklaw was involved in any DOS attack, and of course he would be right. You can read the press release here about the IPG letter to Forbes.

So, Lyons and O'Gara both seem to stand before the court with an ethical cloud over their heads. And recently Lyons shows up again, in a SCO exhibit, again helpful to SCO's litigation agenda, writing more baloney about me, but how valuable will that be under these circumstances? I've wondered if Forbes wouldn't print the latest Lyons hate-PJ material now showing up on his blog, and that is why he was forced to join the blogosphere, ironically enough, but I wouldn't wish to place the Forbes bar too high. I might get disappointed. But if they did refuse, I commend them for mitigating their damages. It was Lyons, after all, who first insinuated a Groklaw-IBM tie. And it was he who first mentioned the court filing with a different date stamp. He seems deeply, deeply involved, no matter how you look at it, from my perspective.

He wrote on his blog the other day something to the effect that I will perhaps eventually confess I got that early filing from IBM lawyers. I can categorically state that I never received any IBM court filings from IBM lawyers, early or otherwise. The fact that he wrote that makes me wonder if he's gotten court filings from SCO lawyers. If I could depose him, I'd ask. What else does he get from SCO? IBM in the very early days of the case, like when it first filed an Answer, sent the filing to journalists, but I can only think of a couple of times that happened, but when they did it was via their PR department. How could he not know that? I still don't know on that precise court filing where it came from, but I surely know where it *didn't* come from.

The question at trial, if there ever is one, and even in the summary judgment motion, will be what kind of people are these, all helping SCO move its program forward in the media and in declarations and depositions and exhibits? Are they believable? What is their connection, if any, to SCO, and specifically do any of them stand to benefit from any future money pot? Is it all organized by SCO? And since in slander of title cases the issue is excessive publication, did SCO use them to say in public things SCO wanted to say but felt it couldn't say directly? In short, did SCO do with Lyons and O'Gara what it falsely claims IBM did with me?

And if it were me, I'd want to know if there is any Microsoft shadow in the background. Someone placed a threatening comment on Groklaw the other day, saying someday the "darkness" behind PJ would be revealed, and to "sleep well", and because of the threatening tone, I checked the logs and the comment appears to have come from an ad agency that does a lot of work for Microsoft. So I am wondering about things I didn't think about before. I remember what happened to an innocent man's reputation in the Massachusetts ODF affair.

So SCO's problem with O'Gara will be that her credibility is in question. Lyons too. Some on the jury, as well as the judges, might have questions about her testimony. I know I do. I didn't write about all these details at the time, because to me it's all icky and smarmy, and because others were speaking out, which I was and am indeed grateful for -- it's a terrible feeling to be smeared in the press, let me tell you, and I've had to endure it now for at least three years nonstop -- but now that SCO has brought it all into the litigation, I am writing about it, because Groklaw tries to cover the entire SCO litigation, and it's part of the case now.

Novell is likely planning to raise those credibility issues. And of course, O'Gara continues to write nothing but pro-SCO, antiGroklaw pieces, from what folks have told me. She can't say I never said anything nice about her, by the way. I did, right after an earlier attack on me, actually. No. I wouldn't write the same words after the stalking incident, but I do still believe in treating everyone with a measure of dignity, even if I don't approve of their conduct.

Her latest is a piece gloating, nay drooling, over what she says is the SCO plan regarding its latest motion regarding the subpoena, to have the court force me out of "anonymity" under threat of jail time, on the theory that a shout-out over the internet must be good enough service. That is, of course, legal silly putty. The lawyers must have just thrown that out to see if it would bounce, and if so, how high, for a laugh. Or to scare me. It might have scared me, I suppose, if I didn't know anything about the law and subpoenas and the First Amendment and how the Supreme Court views anonymous speech anyway. And I'm not anonymous. SCO attached as an exhibit a press release about me joining OSRM, with my name and my then-business affiliation for the world to see. This is, really, just more intimidation, I think, part of a long campaign. They just want to know where I am so they can harass me further, I believe, if not worse. I've always suspected that O'Gara publishing exact addresses with pictures of the mailbox, even, showing the number was so if something bad happened to me, SCO could claim they had nothing to do with it, that it was just some net kook. And indeed, any net kook would have known where X marked the spot, if accurately reported. But as I've said long ago, if anything bad happens to me, I think you'd all know a couple of places the police could fruitfully begin an investigation, even if it were apparently an "unfortunate accident".

Anyway, SCO goes on and on about the testimony of various pals, like Darl's good friend Ty Mattingly (at one time, at least, a SCO shareholder), and others, including a member of the SCO board of directors, who all swear on the Bible that they really thought that the copyrights transferred, that it was their intent they do so. Not that they'd mind if SCO were to win or anything, even though they might personally benefit financially and all. But none of them shows the court any document to prove it beyond what SCO already showed Judge Kimball way back when, which he already indicated wasn't enough.

I think it is actually possible that at least some of these folks are being sincere, that they indeed thought the copyrights were transferring. But thinking it isn't enough. And the lawyers had to know, I think, that there needed to be a writing, because that is what copyright law requires. If they just didn't think of it, that is unfortunate for SCO, but copyright law is what it is. There is no, "But I thought..." You must have a writing, and the lawyers had to know that and should have addressed it if they really did intend for the copyrights to transfer. From all we've seen, they didn't address it if that really was their intent. Maybe SCO should sue their lawyers and leave the rest of the world alone.

The truth is that sometimes people goof. Yes. Even lawyers. But you knew that now, from watching the subpoena farces. Certainly if Novell really had intended to transfer the copyrights and SCO intended to receive them, the lawyers kind of botched the job or we wouldn't be reading the arguments about it now. Someone would be standing before Judge Kimball with a copyright transfer agreement or an agreement specifically listing the copyrights or at least mentioning that all the copyrights were included. That isn't something you leave unspecified, in my experience. And you can easily see why, looking at this mess.

What SCO argues over and over is that the APA *must* have meant everything transferred:

The APA provides for the transfer to Santa Cruz of “all right, title, and interest” in the UNIX and UnixWare source code and products and “All rights and ownership of UNIX and UnixWare.” Such language plainly includes the UNIX and UnixWare copyrights. The APA Bill of Sale, in which Novell stated that it “does hereby transfer, convey, sell, assign and deliver” to Santa Cruz “all of the Assets,” effectuated the transfer in words that exceed the requirements of the Copyright Act. Novell relies on language in the excluded assets schedule of the APA, but Amendment No. 2 to the APA expressly replaced that language to clarify that the UNIX and UnixWare copyrights were not among the excluded assets. The provision on which Novell relies simply does not exist for purposes of construing the APA.

Here's why I think this argument fails, or one reason why it does. We know for a fact that most of the trademarks did not transfer, so arguments that "everything" transferred lock stock and barrel simply are not true. To argue that the language must have meant copyrights too, because everything was supposed to transfer bumps into the trademark wall, over and over, and SCO never addresses that or even mentions it.

That's the only new argument I see, SCO's assertion that Amendment 2 obliterates and replaces the APA's list of Excluded Assets. Here's part of what they say:

In fact, Section A replaces the original Item V.A, clarifying that the Excluded Assets do not include those copyrights, which were transferred with “all the Assets” under the APA and Bill of Sale.

Amendment No. 2 clarified that the copyrights at issue were not Excluded Assets. Section A states that the Excluded Assets do not include the copyrights “required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies.” (Id.) Plainly the UNIX and UnixWare copyrights are so required.

I know. It makes no sense to me either. If they were required, then how come SCO had to ask Novell for them in 2003, or Novell says they did? How come no copyrights were registered back then, and SCO only did it in 2003? For that matter, look at the copyrights in the software, and tell me if you continue to see Novell copyrights after the date of APA. How could that happen, if SCO's story were true?

Also, I don't see anyone addressing the 1995 board meeting, wherein the board voted not to transfer the copyrights:

Novell will retain all of its patents, copyrights and trademarks (except for the trademarks UNIX and UnixWare), a royalty-free, perpetual, worldwide license back to UNIX and UnixWare for internal use and resale in bundled products, Tuxedo and other miscellaneous, unrelated technology.

Yet SCO claims the entire business transferred. Well, not the patents, for sure, and not some trademarks. X/Open got the UNIX trademark and eventually UnixWare too, so even the board notes are not 100% accurate, I don't think. We know that because SCO tried hard to get but failed to get the trademark on Unix System Laboratories, despite telling the USPTO that it bought the business and got all the assets (for the complete trademark story, go here, here, here and here. That was a story Groklaw broke, by the way, in case anyone wonders if this is journalism here or we're just whistling Dixie.). And Magistrate Judge Brooke Wells has already ruled in the SCO v. IBM case that not all the assets transferred:

THE COURT: Thank you. I'm prepared to rule on this matter at this time. First, I find that the Novell to Santa Cruz transaction did not transfer the entirety of the business, nor did the Santa Cruz to Caldera transaction.

And the thing is, Ty Mattingly was at that board meeting, and so were some others that show up here:

A meeting of the Novell, Inc. Board of Directors was held on Monday, September 18, 1995 commencing at noon Mountain Time. The meeting was held pursuant to a telephone conference call. Seven of the eight Directors were present for the meeting namely: Bob Frankenberg, Jack Messman, Elaine Bond, Larry Sonsini, Alan Ashton, Ian Wilson and John Young. Also present by invitation were David Bradford, Ty Mattingly, and Jeff Turner of Novell.

Yet not a word about all this in SCO's summary judgment motion, which of course is one way to lose. We'll no doubt see Novell raise this, unless somehow in depositions there is an answer that isn't apparent to us on the outside. But it's a huge question of fact, which is what you need to defeat a motion for summary judgment.

SCO quotes from Nimmer on Copyrights:

“As with all matters of contract law, the essence of the inquiry here is to effectuate the intent of the parties. Accordingly, even though a written instrument may lack the terms ‘transfer’ and ‘copyright,’ it still may suffice to evidence their mutual intent to transfer the copyright interest.”

SCO's problem is that it apparently was not mutual, or at least it isn't now, and there's no solid proof that it ever was mutual, not on paper. It also quotes cases that stand for the proposition that you don't have to say the word copyright, "all assets" to a business would suffice. But *all* assets didn't transfer. The trademark didn't, for example, not even with Amendment 2, so even if we say that the case applies after Amendment 2 replaced the Excluded Assets list, SCO's theory, the trademark is still excluded. And SCO owes Novell for certain license monies it collects for Novell. For that reason, I think the argument fails.

Another case says that "a one-line pro forma statement will do." And that is true. But where is that one line? SCO again uses the bill of sale, that lists "all of the Assets". All rights and ownership, SCO says, is what transferred, but we know that the trademark didn't, so you can't really say "all", and so the cases don't seem to really help. Plus Judge Kimball saw that document already. And the fact that SCO doesn't mention the trademark or the board meeting tells me that they know they are on shaky ground.

To me, it all reads more like what lawyers write up and file to make a client happy, even though they kind of have to know it can't possibly work out unless someone isn't paying attention. That can happen, so I guess this is in the it-doesn't-hurt-to-try department. I feel very bad for Chris Stone, though. So many people have been smeared in the press by this litigation. Where does he go to get his reputation back?

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

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
[address]
[phone]
[fax]

Robert Silver (admitted pro hac vice)
Edward Normand (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]

Stuart Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Devan V. Padmanabhan (admitted pro hac vice)
DORSEY & WHITNEY LLP
[address]
[phone]
[fax]
Attorneys for Plaintiff, The SCO Group, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.,

a Delaware corporation,
Plaintiff/Counterclaim-Defendant,

vs.

NOVELL, INC.,

a Delaware corporation,

Defendant/Counterclaim-Plaintiff.
SCO'S MOTION FOR PARTIAL
SUMMARY JUDGMENT ON ITS FIRST,
SECOND, AND FIFTH CAUSES OF
ACTION AND FOR SUMMARY
JUDGMENT ON NOVELL'S FIRST
COUNTERCLAIM


Civil No.: 2:04CV00139

Judge Dale A. Kimball
Magistrate Brooke C. Wells

1

Plaintiff/Counterclaim-Defendant, the SCO Group, Inc. ("SCO"), pursuant to Rule 56 of the Federal Rules of Civil Procedure and for the reasons set forth in the Memorandum in Support of SCO's Motion, respectfully moves this Court to enter partial summary judgment for SCO on its First, Second and Fifth Causes of Action and to enter summary judgment for SCO on Novell's First Counterclaim.

DATED this 9th day of April, 2007.

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

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

DORSEY & WHITNEY LLP
Devan V. Padmanabhan

Counsel for The SCO Group, Inc.

By: _____/s/ Edward Normand_______________

2

CERTIFICATE OF SERVICE

Plaintiff/Counterclaim Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing was served on this 9th day of April, 2007, via CM/ECF to the following:

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

Michael A. Jacobs
Matthew I. Kreeger
Kenneth W. Brakebill
MORRISON & FOERSTER
[address]

/s/ Edward Normand

3


Brent O. Hatch (5715)
HATCH, JAMES & DODGE, PC
[address]
[phone]
[fax]

Robert Silver (admitted pro hac vice)
Edward Normand (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]

Stuart Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Devan V. Padmanabhan (admitted pro hac vice)
DORSEY & WHITNEY LLP
[address]
[phone]
[fax]

Attorneys for Plaintiff, The SCO Group, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.,

a Delaware corporation,
Plaintiff/Counterclaim-Defendant,

vs.

NOVELL, INC.,

a Delaware corporation,

Defendant/Counterclaim-Plaintiff.
SCO'S MEMORANDUM IN SUPPORT OF
ITS MOTION FOR PARTIAL SUMMARY
JUDGMENT ON ITS FIRST, SECOND,
AND FIFTH CAUSES OF ACTION AND
FOR SUMMARY JUDGMENT ON
NOVELL'S FIRST COUNTERCLAIM

Civil No.: 2:04CV00139


Judge Dale A. Kimball
Magistrate Brooke C. Wells

1

TABLE OF CONTENTS
TABLE OF AUTHORITIES i
PRELIMINARY STATEMENT 1
STATEMENT OF UNDISPUTED FACTS 3
I. THE AMENDED APA UNAMBIGUOUSLY TRANSFERS THE UNIX AND UNIXWARE COPYRIGHTS 3
II. OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ UNDER THE APA 6
A. Testimonial Evidence 6
B. The Parties' Prior Conduct 17
C. Novell's Recent Conduct. 17
LEGAL STANDARD ON SUMMARY JUDGMENT 19
ARGUMENT 20
I. THE APA PLAINLY TRANSFERRED THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ. 20
A. The Plain Language Provides for the Transfer. 20
B. The APA Bill of Sale Exceeds the Requirements of the Copyright Act. 25
II. OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ UNDER THE APA 27
A. Testimonial Evidence 27
B. The Parties' Prior Conduct 28

2

C. Novell's Recent Conduct. 30
CONCLUSION 31

3

TABLE OF AUTHORITIES
Cases
Arthur Rutenberg Homes, Inc. v. Drew Homes,
29 F.3d 1529 (11th Cir. 1994)
26
Dean v. Burrows,
732 F. Supp. 816 (E.D. Tenn. 1989)
26
Dick Corp. v. SNC-Lavalin Constructors, Inc.,
No. 04 C 1043, 2004 WL 2967556 (N.D. Ill. Nov. 24, 2004)
26
Effects Assocs., Inc. v. Cohen,
908 F.2d 555 (9th Cir. 1990)
26
Harm v. Frasher,
181 Cal. App. 2d 405 (Ct. App. 1960)
22
Heston v. Farmers Ins. Group,
160 Cal. App. 3d 402 (Ct. App. 1984)
22
ITOFCA, Inc. v. Megatrans Logistics, Inc.,
322 F.3d 928 (7th Cir. 2003)
25
Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc.,
690 F. Supp. 298 (S.D.N.Y. 1988)
25
McDonnell v. Cardiothoracic & Vascular Surgical Assocs., Inc.,
No. C2-03-0079, 2004 WL 1234138 (S.D. Ohio May 27, 2004)
19
Radio Television Espanola S.A. v. New World Entm't, Ltd.,
183 F.3d 922 (9th Cir. 1999)
25
Relational Design & Tech., Inc. v. Brock,
No. 91-2452-EEO, 1993 WL 191323 (D. Kan. May 25, 1993)
20
S.O.S., Inc. v. Payday, Inc.,
886 F.2d 1081 (9th Cir. 1989)
21
Schiller & Schmidt, Inc. v. Nordisco Corp.,
969 F.2d 410 (7th Cir. 1992)
20
Shugrue v. Cont'l Airlines, Inc.,
977 F. Supp. 280 (S.D.N.Y. 1997)
20
Thompson v. United Transp. Union,
No. 99-2288-JWL, 2000 WL 1929963 (D. Kan. Dec. 19, 2000)
19
Volkman v. United Transp. Union,
73 F.3d 1047 (10th Cir. 1996)
19

4

Statutes
17 U.S.C. § 204(a) 26
Other Authorities
11 J. Moore, Moore's Federal Practice ¶ 56.40 (3d ed. 1998) 19
Fed. R. Civ. P. 56 19
Nimmer on Copyrights § 10.03[2] 25

5

Plaintiff/Counterclaim-Defendant, The SCO Group, Inc. ("SCO"), respectfully submits this Memorandum in Support of Its Motion for Partial Summary Judgment on Its First, Second, and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim.

PRELIMINARY STATEMENT

In a public statement issued on May 28, 2003, and for the first time since 1995, Novell claimed to own the copyrights at issue in this case. Novell announced that it had retained ownership of the UNIX and UnixWare copyrights under the Asset Purchase Agreement ("APA") whereby it sold the UNIX and UnixWare business to SCO's predecessor-in-interest, The Santa Cruz Operation, Inc. ("Santa Cruz"). SCO's claims for slander of title (Count I), breach of contract (Count II), and unfair competition (Count V), as well as Novell's counterclaim for slander of title (Count I), are each based in part on the allegation that the opposing party has laid false claim to those copyrights. SCO submits that the Court should grant partial summary judgment on those claims and summary judgment on Novell's slander-of-title counterclaim, because the APA as amended plainly transferred the copyrights to Santa Cruz.

The APA provides for the transfer to Santa Cruz of "all right, title, and interest" in the UNIX and UnixWare source code and products and "All rights and ownership of UNIX and UnixWare." Such language plainly includes the UNIX and UnixWare copyrights. The APA Bill of Sale, in which Novell stated that it "does hereby transfer, convey, sell, assign and deliver" to Santa Cruz "all of the Assets," effectuated the transfer in words that exceed the requirements of the Copyright Act. Novell relies on language in the excluded assets schedule of the APA, but Amendment No. 2 to the APA expressly replaced that language to clarify that the UNIX and

6

UnixWare copyrights were not among the excluded assets. The provision on which Novell relies simply does not exist for purposes of construing the APA.

In addition, overwhelming extrinsic evidence confirms the intent to transfer the copyrights under the APA. Such evidence includes the deposition testimony of the central witnesses on both sides of the transaction, including Robert Frankenberg, Novell's CEO at the time of the APA, who recently testified in this matter:

Q. Was your initial intent in the transaction that Novell would transfer copyrights to UNIX and UnixWare technology to Santa Cruz?

A. Yes.

Q. Was that your intent at the time when the APA was signed?

A. Yes.

Q. Was it your intent when that transaction closed?

A. Yes.

Q. And did that remain your intent, as you view it, at all relevant times?

A. Yes.

Q. So that never changed?

A. No.
In all, the intent to transfer the copyrights reflected in the unambiguous language of the APA is confirmed by the deposition testimony of no fewer than nine witnesses, including the CEOs, responsible executives, and chief negotiators for Novell and Santa Cruz, as well as the parties' conduct in the years that followed the APA.

SCO has now brought to light evidence of Novell's motives for suddenly claming ownership of the copyrights starting in late May 2003. Maureen O'Gara, a journalist covering the computer industry since 1972, recently testified that then Novell Vice Chairman Chris Stone

7

conveyed to her, with "laughter," that Novell was timing its ownership claims to coincide with SCO's earnings report in order to "confound SCO's stock position" and "upset the stock price." On June 6, 2003, after SCO had found and sent to Novell a copy of Amendment No. 2, Novell candidly recanted its ownership claims, stating in pertinent part in a press release:

Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996.
Novell has now admitted that it made its announcement of copyright ownership on May 28, 2003, without consulting the witnesses cited herein, none of whom were even at Novell at that time. Novell has also admitted that it made those claims even though it then possessed Amendment No. 2. Such evidence leaves little doubt about Novell's motivations for making its ownership claims.

In light of the transfer of the UNIX and UnixWare copyrights under the plain language of the APA and Bill of Sale, SCO is entitled to partial summary judgment on its First, Second, and Fifth Causes of Action and summary judgment on Novell's First Counterclaim.

STATEMENT OF UNDISPUTED FACTS

I. THE AMENDED APA UNAMBIGUOUSLY TRANSFERS THE UNIX AND UNIXWARE COPYRIGHTS.

1. Novell and Santa Cruz intended for the APA to transfer all of the UNIX and UnixWare business to Santa Cruz. (Ex. 1, Recital B, § 1.3(a)(i).) Section 1.3(a)(i) of the APA states:

8

It is the intent of parties hereto that all of the Business and all of Seller's backlog, if any, relating to the Business be transferred to Buyer.
(Ex. 1 § 1.3(a)(i) (emphasis added).)

2. The first provision of the APA, Recital A as amended, defines the "Business" that the parties intended to transfer:

Seller is engaged in the business of developing a line of software products currently known as UNIX and UnixWare, the sale of binary and source code licenses to various versions of UNIX and UnixWare, the support of such products and the sale of other products ("Auxiliary Products") which are directly related to Unix and UnixWare (collectively, the "Business").
(Id. at 1; Ex. 2 ¶ A.)

3. Section 1.1(a) of the APA defines the assets transferred to Santa Cruz as those identified in Schedule 1.1(a) of the APA:

On the terms and subject to the conditions set forth in this Agreement, Seller will sell, convey, transfer, assign and deliver to Buyer and Buyer will purchase and acquire from Seller on the Closing Date (as defined in Section 1.7) all of Seller's right, title, and interest in and to the assets and properties of Seller relating to the Business (collectively the "Assets") identified on Schedule 1.1(a) hereto. Notwithstanding the foregoing, the Assets to be so purchased shall not include those assets (the "Excluded Assets") set forth on Schedule 1.1(b):
(Ex. 1 § 1.1 (emphasis added).)

4. Schedule 1.1(a), in turn, identifies seven categories of "assets and properties of Seller" transferred to Santa Cruz, including:

I. All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and all copies of UNIX and UnixWare (including revisions and updates in process),

9

and all appropriate technical, design, development, installation, operations and maintenance information concerning UNIX and UnixWare, including source code, source documentation, source listings and annotations, engineering notebooks, test data and test results, as well as all reference manuals and support materials normally distributed by Seller to end-users and potential end-users in connection with the distribution of UNIX and UnixWare, such assets to include without limitation: Source Code Products . . . Binary Product Releases . . . and Products Under Development.

II. All of Seller's claims arising after the Closing Date against any parties relating to any right, property or asset included in the Business.

III. All of Seller's rights pertaining to UNIX and UnixWare under any [assignable] software development contracts, licenses and any other contracts to which Seller is a party or by which it is bound and which pertains to the . . . :

VI. All copies of UNIX and UnixWare, wherever located, owned by Seller.
(Id. Schedule 1.1(a), Items I-IV (emphasis added).) The assets identified in Item I include source code products, binary products, and products in development. (Id. Schedule 1.1(a), Item I.)

5. Through the APA Bill of Sale, executed on the Closing Date, Novell in fact transferred to Santa Cruz all of the Assets:

In accordance with Article 1.1(a) of the Agreement, Seller, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby transfer, convey, sell, assign and deliver to Buyer, without recourse, representation or warranty except as otherwise expressly provided in the Agreement, all of the Assets.
(Ex. 3 (emphasis added).)

6. Section 1.6 of the APA provided that, as part of the transaction, Santa Cruz would license back to Novell the UNIX and UnixWare technology transferred under the APA (the

10

"Licensed Technology"). (Ex. 1 § 1.6.) On the Closing Date, the parties signed a Technology License Agreement ("TLA") whereby Santa Cruz granted that license to Novell, subject to strict limitations. (Ex. 4 § II.A.) The TLA also specified that "Ownership of the Licensed Technology shall reside in SCO." (Id. § III.)

7. Schedule 1.1(b) identifies assets excluded from the transfer to Santa Cruz. Item V.A identifies "All copyrights and trademarks, except for the trademarks UNIX and UnixWare."

8. Amendment No. 2 to the APA, however, revised Schedule 1.1(b) so that Item V.A. now reads:

All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.
(Ex. 5 § A (emphasis added).)

II. OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ UNDER THE APA.

A. Testimonial Evidence.

9. The APA provided for the public disclosure of the transaction through a "joint press release with respect to the subject matter of this Agreement." (Ex. 1 § 4.7.) Novell and Santa Cruz issued that press release on September 20, 1995. (Ex. 6 at 222; Ex. 7 at 22-23.) It states in pertinent part:

According to the terms of the agreement, SCO will acquire Novell's UnixWare business and UNIX intellectual property.

11

(Ex. 8 at 2 (emphasis added).)

10. Robert Frankenberg was the President and CEO of Novell at the time of the APA. (Ex. 7 at 7.) On February 10, 2007, Mr. Frankenberg testified:

Q. Was your initial intent in the transaction that Novell would transfer copyrights to UNIX and UnixWare technology to Santa Cruz?

A. Yes.

Q. Was that your intent at the time when the APA was signed?

A. Yes.

Q. Was it your intent when that transaction closed?

A. Yes.

Q. And did that remain your intent, as you view it, at all relevant times?

A. Yes.

Q. So that never changed?

A. No.
(Id. at 135.) Mr. Frankenberg never contradicted that testimony.

11. Indeed, Mr. Frankenberg understood that the APA's sale of all rights and ownership included the copyrights:

Q. Is it your understanding that that sale of all rights and ownership of UNIX and UnixWare would include copyrights associated with UNIX and UnixWare?

MR. JACOBS: Objection, calls for a legal conclusion.

A. I guess I have to answer the question?

(By Mr. Singer) Yes, you should if you understand the question.

A. Okay. I understand. Yes.

Q. Now, did you ever give any directions to the team that was negotiating the deal, including Mr. Thompson, Mr. Chatlos, that they should transfer all right and title and interest to UNIX and

12

UnixWare but retain copyrights for UNIX and UnixWare from being sold?

A. No.

Q. Did you ever tell anyone at Santa Cruz Operation that copyrights for UNIX and UnixWare were not part of the technology being sold?

A. No.

Q. Did you ever authorize anyone at Novell to tell anyone at Santa Cruz that copyrights were not being sold as part of the transaction?

A. No.
(Id. at 19.)

12. Ty Mattingly was the Vice President for Strategic Relations at Novell at the time of the APA. (Ex. 9 at 10-11.) He also participated in the APA negotiations as Mr. Frankenberg's personal liaison with the Novell negotiating team. (Id.) Mr. Mattingly testified:

Q. Do you know whether in this case Novell is asserting that the copyrights were not transferred?

A. Well, I mean, I have read enough about the case early on. I haven't stayed real current lately. But I mean, obviously we're here today because Novell is asserting that the copyrights were not sold with the Unix business to SCO, and obviously SCO would assert that they purchased the Unix business from us lock, stock and barrel.

Q. And do you have a view as to the merits of Novell's assertion, such as you understand it?

A. I do.

Q. And what is your view?

A. Well, my firm belief is that we sold the Unix business to SCO, and that is why SCO paid us roughly 125 million dollars at that point because they bought the Unix business from us basically in its entirety. The only things that did not go with that was a kind of an agent relationship whereby SCO was collecting the SVRX royalties from existing OEMs at the time we sold that business and then giving the bulk of those moneys back to Novell.

* * *

13

Q. Would it be fair to say that the transfer of the Unix copyrights to SCO was consistent with your view of this overall strategy?

MR. BRAKEBILL: Objection, mischaracterizes testimony.

A. So I can still answer? Yeah. I mean, absolutely. I believe that when they bought the business, when they paid us 125 million dollars, that the negotiations that we were involved with there was about selling them the entire business, the software, which would have included the copyrights.
(Id. at 29-32 (emphasis added).)

13. Duff Thompson was the Novell executive responsible under Mr. Frankenberg's direction for the sale of the UNIX and UnixWare business. (Ex. 10 ¶ 4.) After the transaction closed, Novell appointed Mr. Thompson to serve as its representative on the Santa Cruz Board of Directors. (Ex. 11 at 6.) Mr. Thompson testified:

Q. And a bundle of rights you believed included -- looking back on it, you believed the structure of the deal meant that the bundle of rights included the copyrights?

A. No. At the time I believe it included the bundle of the copyrights, at the time.

Q. Well, I'm a little confused because I thought you said this morning that you don't recall any specific discussion about copyrights.

A. Yeah, but that doesn't mean that that's not what I understood we were doing at the time.

Q. So you —

A. So the fact that I may not have had a specific discussion that I can recall 11 and a half years later should not be taken to mean I don't recall what our intention was in selling the business. It is impossible for me to parse in my mind the assignment that we received to sell the -- to sell the entire business, all of Unix and UnixWare to SCO, and to somehow also in that same breath say, except the copyrights.

I just -- I don't understand that kind of thinking, and certainly I just have to tell you that that kind of trick play was not something that Bob Frankenberg would have directed, nor is it something he

14

would have stood for. It's not something I would have done. If we had intended not to transfer the copyrights, we would have been very careful to say, you don't get the copyrights. And it wouldn't have been an oblique reference. It would have been, you get all the business except the copyrights. Not, you get all the business.
(Id. at 132-133 (emphasis added).)

14. Ed Chatlos was the Novell Senior Director for UNIX Strategic Partnerships and Business Development at the time of the APA. (Ex. 12 ¶ 4.) He was also Novell's chief negotiator of the APA. (Id. ¶ 6.) Mr. Chatlos explains:

It was always my understanding and intent, on behalf of Novell, that the UNIX source code and its copyrights were part of the assets SCO purchased. I do not recall anyone else ever suggesting that Novell would retain any copyright relating to UNIX, nor was I present for any discussion, general or specific, during the negotiations that contradicted my understanding of the transaction described herein. None of my superiors at Novell ever informed me that Novell was not transferring the UNIX copyrights to SCO. Likewise, I never communicated to SCO in any way that the UNIX copyrights were not being sold to SCO. Nor am I aware of any instance in which anyone from Novell ever informed SCO in any way that the UNIX copyrights were not being sold to SCO as part of the transaction.

Given my central role in the negotiations, I believe I would have known if the parties had agreed that Novell would retain UNIX copyrights. My intent and understanding as the lead negotiator for Novell was that Novell was transferring the copyrights to SCO in the APA. At the time the transaction was signed and closed, I did not observe anyone at Novell or SCO stating or acting as if Novell had retained any UNIX copyrights. If they had, it would have been contrary to the intent and structure of the deal as I understood it and communicated with SCO. In fact, from the time the APA transaction closed in 1995 until this day, it has been my understanding and belief that Novell sold the UNIX copyrights to SCO as of the time of the closing in 1995.
(Id. ¶¶ 9-10 (emphasis added).) In his recent deposition in this case, Mr. Chatlos confirmed his views regarding the transfer of the copyrights. (Ex. 13 at 37-39.)

15

15. As he testified at his deposition in this matter, Burt Levine was an attorney at Novell at the time of the APA. (Ex. 14 at 15-23.) Mr. Levine reviewed and revised drafts of the APA. (Id. at 163-64.) After the Business was transitioned to Santa Cruz in February 1996, Mr. Levine worked as an attorney for Santa Cruz. (Id. at 22-23.) Mr. Levine testified that under the APA the "intention was to convey all of these ownership and auxiliary ownership rights to the asset including copyright." (Id. at 68.) He further testified:

Q. Mr. Levine, from the time of the APA in 1995 until you left Santa Cruz in 2000, did you ever hear anyone whether inside or outside of Santa Cruz or inside or outside of Novell say that Novell had retained the UNIX or UnixWare copyrights?

A. No.

Q. If you had heard anyone make such a statement, would that have been a surprise to you?

A. Very much so, yeah.

Q. And why do you say "very much so"?

A. My personal experience with the couple of years that I spent at Novell was that it was a very ethical company and I, I was very impressed with that.

Q. And how does that fact bear on your answer, the fact that you had the view that Novell was an ethical company?

A. Was ethical and I believe that being an ethical company in its dealings with its partners or transferees or whatever it is that they would not resort to withholding information or trying to withhold something that the transferee in this case would be entitled to.
(Id. at 154-55 (emphasis added).)
Q. In looking at the first paragraph Roman I of Schedule 1.1(a) of the Asset Schedule, and that language says, quote, All rights and ownership of UNIX and UnixWare, including, but not limited to all versions of UNIX and UnixWare, and all copies of UNIX and UnixWare, including revisions and updates and progress, dot, dot, dot, including source code, dot, dot, dot, such assets to include without limitation the following, and then there's a list of source

16

code products, binary product releases, products under development and other technology, do you see that language?

A. I do.

Q. How does that language bear on your understanding at the time of the APA and today that the UNIX copyrights and UnixWare copyrights were among the assets transferred under the APA?

A. Do you mean the fact that these are listed specifically as categories?

Q. I mean to ask you about the scope of Roman I.

A. Oh, the scope of Roman I with or without this listing, all rights and ownership of UNIX and UnixWare, that gives all the components of the business, including physical components and intellectual components, to my mind will carry with it the transfer of any copyrights that apply to them.
(Id. at 156-58 (emphasis added).) 16. Bill Broderick was a contract manager in the UNIX licensing group at Novell and Santa Cruz. (Ex. 15 ¶¶ 6-7.) He was also a member of the Novell APA Transition Team. (Id. ¶ 10.) Mr. Broderick states:
My understanding of the sale of the UNIX assets from Novell to Santa Cruz was that the UNIX copyrights were transferred. To the best of my knowledge, from the time of the closing of the APA in 1995 until after SCO asserted legal claims concerning its Linux- related rights in 2003, Novell never contested SCO's ownership of the UNIX copyrights.
(Id. ¶ 7 (emphasis added).)

17. In his recent deposition, Mr. Broderick testified that his understanding is based on (among other things) Novell's explanation of the transaction during "company-wide meetings" as well as discussion in "contracts transition team," including discussion about "changing the copyright notices in the source code to Santa Cruz Operation, Inc." (Ex. 16 at 48-51.)

17

18. Alok Mohan was CEO of Santa Cruz at the time of the APA. (Ex. 6 at 8.) Mr. Mohan has testified in this case:

THE WITNESS:

A. My belief is that we bought the business, except for the revenue stream. And when we bought the business everything came with it.

BY MR. BRAKEBILL:

Q. You believe that Santa Cruz got the Unix copyrights to through the APA; is that right?

A. I believe —

MR. NORMAND: Objection to form.

THE WITNESS:

A. I believe I bought the whole business. That includes all kinds of stuff. And -- and, you know, that's the answer, I think we bought -- we got the whole thing.

BY MR. BRAKEBILL:

Q. Okay. But you haven't -- you haven't confirmed -- is -- is part of the —

A. Yes, they are —

Q. Is Unix copyrights part of the Unix business?

A. Absolutely.

Q. Okay. So you believe that Santa Cruz got the Unix copyrights?

A. Santa —

MR. NORMAND: Objection to form.

THE WITNESS:

A. Santa Cruz got the whole business. Includes lots of things. Copyrights are part of it.

* * * *

Q. What is the basis of your opinion that Santa Cruz got the business?

MR. NORMAND: Objection to form.

THE WITNESS:

18

A. That -- that's --that was the whole discussion and intent, negotiations. That's my recollection of what we were doing.
(Id. at 138-40 (emphasis added).)

19. Doug Michels founded Santa Cruz and was its Senior Vice President at the time of the APA. (Ex. 17 ¶¶ 2-3.) He states:

In connection with the 1995 purchase from Novell, the parties agreed that (as is accurately explained by both Mr. Wilt and Ms. Madsen) Novell could retain the existing binary royalty stream even though the entire UNIX business, source code and related assets, including copyrights, were transferred to Santa Cruz.
(Id. ¶ 9 (emphasis added).) In his recent deposition, Mr. Michels repeatedly confirmed that the parties to the APA intended for Novell to transfer and for Santa Cruz to acquire the UNIX and UnixWare copyrights:
Q. To the extent that you did, what did you mean by that?

A. Well, I meant that the only way that I know of, and anyone on my team knew of to buy a software business is to buy the copyrights, and there's no way we would have ever done a deal to buy a software business where we didn't get the copyrights and all the other intellectual property. That's what you're buying. And especially in the case of UNIX, with its convoluted intellectual property history, and whatnot, to not get that stuff would be to not do the deal. And so it was implicit in everything we did, everything we thought. Every single person on my team understood that. The lawyers understood. The business development people understood it. The people at Novell understood it. I mean, it — it's just so essential. It's -- you know, it's like breathing oxygen, you know, I mean, you just — there's no way that deal could have happened without getting the copyrights.

* * * *

A. I know that everybody involved in this negotiation knew the copyrights were being transferred. I know that.

19

Q. How do you know that?

A. Because I was there and I know it. That's -- I -- I know what -- I know there were discussions. I know there was shared vision. I know we all understood what it meant to buy a software company. You know, I've known these people for many years. It -- it just wasn't ambiguous. It wasn't something that was ambiguous.
(Ex. 18 at 134-38 (emphasis added).)

20. Jim Wilt was the lead negotiator for Santa Cruz. (Ex. 19 ¶ 7.) Mr. Wilt testified with respect to his declaration executed on November 23, 2004:

Q. You say in paragraph 8, quote, "It was my understanding and intent during those negotiations that SCO would acquire Novell's entire UNIX and UnixWare business, including the copyrights. I do not recall and do not believe that there ever was any instance in which anyone at SCO or Novell ever stated or exhibited any contrary intent or understanding to me or anyone else." Is that an accurate statement?

A. That's an accurate statement.

Q. You say in the back half of paragraph 9, quote, "It was my intent on behalf of SCO to acquire, through the APA, Novell's entire UNIX and UnixWare business, including the UNIX and UnixWare source code and all associated copyrights, and I believed then, open parens, as now, close parens, that Novell's intent was to sell all of those assets and rights." Is that an accurate statement?

A. Yes, that's an accurate statement. You wouldn't have had a business without having the copyrights and trademarks.

Q. You say in paragraph 12, quote, "I do not recall anyone on either side of the negotiations or transaction ever suggesting that Novell would retain a copyright relating to UNIX or UnixWare. I am not aware of any discussions, whether general or specific, during the negotiations that contradict my understanding of the transaction as set forth in this declaration." Is that an accurate statement?

A. That is an accurate statement.

20

(Ex. 20 at 76-78.) Independent of his previous declaration, moreover, Mr. Wilt repeatedly testifed to the parties' intent under the APA was for Novell to transfer and Santa Cruz to acquire the UNIX and UnixWare copyrights. (Id. at 28-29.)

21. Kimberlee Madsen was a member of the Santa Cruz legal department at the time of the APA and Amendment No. 2 and assisted in the negotiations. (Ex. 21 ¶¶ 3-4.) She explains:

It was always my understanding that the UNIX source code and its copyrights were part of the assets Santa Cruz purchased and were transferred to Santa Cruz at the closing in December 1995.

I do not recall anyone in the negotiation teams ever saying, or suggesting, that Novell would retain any UNIX copyrights. The negotiation team for Santa Cruz never discussed the possibility, as far as I am aware, that Novell sought to retain any UNIX copyright.

Since the transaction closed in 1995 until Novell publicly announced in 2003 that it still owned the UNIX copyrights, it was my understanding and belief that neither party disputed that Santa Cruz had acquired the UNIX copyrights in 1995.

* * * *

My understanding from the negotiations and discussions leading up to the Amendment was that Amendment No. 2 was intended to confirm, among other things, the parties' intent and agreement that Santa Cruz had obtained ownership of the UNIX copyrights under the APA and that Novell had received no rights with respect to UNIX source code under the APA.
(Id. ¶¶ 9-11 (emphasis added).) In her recent deposition in this case, Ms. Madsen confirmed that the parties' intent and understanding at the time of negotiations was that the APA transferred the copyrights to Santa Cruz. (Ex. 22 at 73-75, 81.)

21

B. The Parties' Prior Conduct.

22. Shortly after the closing of the APA in 1995, Santa Cruz obtained physical possession of UNIX copyright registrations from Novell; those registrations remain in SCO's possession to this day. (See, e.g., Exs. 23-25.)

23. Since 1995, without objection from Novell, Santa Cruz and SCO shipped countless UNIX-related products with copyright notices affixed to them. (See, e.g., Ex. 26 ¶ 3; Exs. 27-28.)

24. Since 1995, without objection from Novell, Santa Cruz and SCO entered into hundreds of license agreements for UNIX products that not only contain express representations and warranties of SCO's rights and ownership in the intellectual property required to provide the licensed product, but also indemnify licensees against any third-party claims for copyright infringement. (See, e.g., Ex. 30 §§ 13-14; Ex. 31 § 2.4; Ex. 32 § 7.02; Ex. 33 ¶ 28.)

25. Before May 28, 2003, Novell never contested SCO's public statements and conduct asserting ownership of the UNIX copyrights. (Ex. 33 ¶ 7; Ex. 34 ¶ 7.)

26. There is no evidence that Novell publicly asserted ownership of UNIX copyrights between the date of the APA and May 28, 2003.

C. Novell's Recent Conduct.

27. On March 6, 2003, SCO filed its lawsuit against IBM alleging, among other things, that IBM had violated its UNIX Software and Sublicensing Agreements by disclosing UNIX-derivative source code. (Ex. 35 at 32-50.)

22

28. On May 28, 2003, Novell publicly announced that it, and not SCO, is the owner of the UNIX copyrights. In a letter to SCO CEO Darl McBride that Novell published to the world, Novell CEO Jack Messman stated:

Importantly, and contrary to SCO's assertions, SCO is not the owner of the UNIX copyrights. Not only would a quick check of U.S. Copyright Office records reveal this fact, but a review of the asset transfer agreement between Novell and SCO confirms it. To Novell's knowledge, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights. We believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights.
(Ex. 36 at NOV 000043054.)

29. The Novell executives who negotiated or were primarily responsible for the APA in 1995, including Messrs. Frankenberg, Mattingly, Thompson, Chatlos, and Levine, were no longer with Novell in 2003. (Ex. 39 at 219-221.) Novell did not consult with them before announcing its alleged ownership of the copyrights. (Ex. 40 at 27, 60; Ex. 41 at 90-91.)

30. A few days after its May 28, 2003, announcement, Novell received from SCO a copy of Amendment No. 2, which Novell had said it did not have in its files and had not reviewed. (Ex. 37 ¶ 13.) On June 6, 2003, Novell stated in a press release:

Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996.
(Ex. 38 at NOV 000043059.)

31. Novell has admitted that Amendment No. 2 was present in its files prior to May 28, 2003. (Ex. 41 at 82-83.)

23

LEGAL STANDARD ON SUMMARY JUDGMENT

In this Motion, SCO asks the Court to resolve the issue of copyright ownership that lies at the heart of the parties' respective slander-of-title claims and that forms the basis in part for SCO's contract and unfair-competition claims. Under Federal Rule of Civil Procedure 56, a "party seeking to recover on a claim . . . may . . . move . . . for a summary judgment in the party's favor upon . . . any part thereof." The Advisory Committee Notes to the 1946 amendment to Rule 56 state: "The partial summary judgment is merely a pretrial adjudication that certain issues shall be deemed established for the trial of the case. This type of adjudication . . . serves the purpose of speeding up litigation by eliminating before trial matters wherein there is no genuine issue of fact." Accord McDonnell v. Cardiothoracic & Vascular Surgical Assocs., Inc., No. C2-03-0079, 2004 WL 1234138, at *1 (S.D. Ohio May 27, 2004) (Ex. A.).

"[I]t is now well established that a court may 'grant' partial summary 'judgment' that establishes the existence or nonexistence of certain facts, even though no actual judgment is entered on a claim." 11 J. Moore, Moore's Federal Practice ¶ 56.40[2] at 56-279 (3d ed. 1998) (footnote omitted). "A partial summary judgment ruling may dispose of only a single issue relevant to a claim . . . . In availing itself of the ability granted by Rule 56 to issue orders which resolve significant questions, a court can focus the litigation on the true matters in controversy." Id. at 56-280 to 56-281.

Summary judgment is appropriate where the plain language of a contract is unambiguous. Thompson v. United Transp. Union, No. 99-2288-JWL, 2000 WL 1929963, at *6 (D. Kan. Dec. 19, 2000) (Ex. B) (citing Volkman v. United Transp. Union, 73 F.3d 1047, 1050 (10th Cir. 1996)).

24

ARGUMENT1

I. THE APA PLAINLY TRANSFERRED THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ.

A. The Plain Language Provides for the Transfer.

The APA provided for the transfer of the UNIX and UnixWare copyrights where it indisputably provided for the transfer of:

  • All of Novell's "right, title, and interest in and to" the UNIX and UnixWare source code and products (¶¶ 3-4), and
  • "All rights and ownership of UNIX and UnixWare," including "without limitation" the source code, source code products, binary products, and products in development (¶ 4).
Under the case law, each of these provisions provides for the transfer of the copyrights.

"In a non-consumer setting such as this, a transfer of all right, title and interest to computer programs and software can only mean the transfer of the copyrights as well as the actual computer program or disks." Shugrue v. Cont'l Airlines, Inc., 977 F. Supp. 280, 285-86 (S.D.N.Y. 1997) (transfer of "all right, title, and interest" unambiguously transferred copyrights); see also Relational Design & Tech., Inc. v. Brock, No. 91-2452-EEO, 1993 WL 191323, at *6 (D. Kan. May 25, 1993) (Ex. C) (concluding that "all rights in the program (including the copyright) were transferred" to purchaser because contract provided for transfer of "all rights" in the program); Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir. 1992) (copyrights transferred by wording leaving "little doubt" that seller sold "all the assets" of

25

business); cf. S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1088 (9th Cir. 1989) (the phrase "all rights of ownership" plainly includes ownership of both software and associated copyrights).

Under Section 1.1(a) of the APA, Novell and Santa Cruz agreed that on the Closing Date Novell would "sell, convey, transfer, assign and deliver" and Santa Cruz "purchase and acquire" at minimum "all right, title and interest in and to the assets and properties" identified in Schedule 1.1(a) of the APA. (¶ 3.) In turn, Schedule 1.1(a) identifies seven categories of "as assets and properties" transferred to Santa Cruz, including:

"All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and all copies of UNIX and UnixWare (including revisions and updates in process) and all appropriate technical, design, development, installation, operations and maintenance information concerning UNIX and UnixWare, including source code," source code products, binary products releases, and products under development.
(¶ 4.) The APA thus plainly provides for the transfer — without limitation — of all right, title, and interest in the UNIX and UnixWare source code and products, and all rights and ownership of UNIX and UnixWare, including a non-exhaustive list of express assets and properties. In providing for the transfer of all rights, Section 1(a) and Item I plainly include the copyrights.

There can be no question, moreover, that the transfer of the copyrights in fact took place. Section 1.1(a) of the APA defines the assets and properties to be transferred on the Closing Date as the "Assets." (¶ 3.) On the Closing Date, Novell and Santa Cruz executed the Bill of Sale, which provides:

In accordance with [Section] 1.1(a) of the Agreement, Seller, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby transfer, convey, sell, assign and deliver to Buyer, without recourse, representation or warranty except as otherwise expressly provided in the Agreement, all of the Assets.

26

(¶ 5.) The Bill of Sale thus expressly effectuated the transfer, conveyance, sale, assignment, and delivery to Santa Cruz of "all of the Assets," as provided by Section 1.1(a) of the APA. As the Assets plainly included "all rights and ownership" of UNIX and UnixWare, including the copyrights, the Bill of Sale in fact transferred the copyrights to Santa Cruz on the Closing Date.

The TLA confirms that Novell transferred the copyrights to Santa Cruz on the Closing Date. "It is a general rule that several papers relating to the same subject-matter and executed as parts of substantially one transaction, are to be construed together as one contract." Harm v. Frasher, 181 Cal. App. 2d 405, 412-13 (Ct. App. 1960); Heston v. Farmers Ins. Group, 160 Cal. App. 3d 402, 417 (Ct. App. 1984) ("The two documents are interrelated and must be read together for purposes of interpretation.").

Section 1.6 of the APA expressly provided for a license back to Novell of the same UNIX and UnixWare technology indisputably transferred to Santa Cruz under the APA (the "Licensed Technology"). (¶ 6.) On the Closing Date, Santa Cruz granted that license to Novell in the TLA, subject to strict restrictions, specifying that "Ownership of the Licensed Technology shall reside in SCO." (Id.) Section 1.6 and the TLA would be senseless had Novell retained ownership of the copyrights. Novell would not have needed a license to the Licensed Technology, let alone agreed to a license subject to strict restrictions, and ownership of the Licensed Technology would have resided in Novell, not Santa Cruz. Simply put, Novell would have licensed the technology to Santa Cruz, not the other away around. In reading the APA in harmony with the plain language of the TLA, the Court may properly conclude, on this basis alone, that the APA transferred the copyrights to Santa Cruz.

27

Other touchstone provisions of the APA confirm the transfer of the copyrights. The first provision of the APA, Recital A as amended, explains:

Seller is engaged in the business of developing a line of software products currently known as UNIX and UnixWare, the sale of binary and source code licenses to various versions of UNIX and UnixWare, the support of such products and the sale of other products ("Auxiliary Products") which are directly related to Unix and UnixWare (collectively, the "Business").
(¶ 2.) Recital B and Section 1.3(a)(i) then express the intent to transfer the entire Business to Santa Cruz through the APA. Recital B provides:
The Board of Directors of each Seller and Buyer believe it is in the best interests of each company and their respective stockholders that Buyer acquire certain of the assets of, and assume certain of the liabilities of Seller comprising the Business (the "Acquisition").
(Ex. 1, Recital B (emphasis added).) Similarly, Section 1.3(a)(i) expressly states that "It is the intent of parties hereto that all of the Business and all of Seller's backlog, if any, relating to the Business be transferred to Buyer." (¶ 1.) Such provisions do not even suggest any limitation on the transfer of the Business and its assets. On the contrary, they expressly set forth Novell's intent to transfer the entire Business. There is no exclusion of copyrights.

Throughout the course of this litigation, Novell has not acknowledged, much less explained, the provisions setting forth the transfer of, as well as the intent to transfer, all of the Assets. Instead, Novell has relied on Item V.A of the Excluded Assets Schedule in the original APA, but that Item literally no longer exists. Amendment No. 2 to the APA revised Item V.A "to read" as follows:

All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement

28

required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.
(¶ 8.) To perpetuate the alleged exclusion of the UNIX and UnixWare copyrights in Item V.A, Novell has read the original APA and Amendment No. 2 in isolation. In fact, Section A replaces the original Item V.A, clarifying that the Excluded Assets do not include those copyrights, which were transferred with "all the Assets" under the APA and Bill of Sale.

Amendment No. 2 clarified that the copyrights at issue were not Excluded Assets. Section A states that the Excluded Assets do not include the copyrights "required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." (Id.) Plainly the UNIX and UnixWare copyrights are so required. SCO's rights with respect to its acquisition of UNIX and UnixWare technologies include:

  • The rights to develop, license, and support UNIX and UnixWare products to evolve the Business transferred under the APA. (¶ 1-2.) Absent a license, only the owner of the UNIX and UnixWare copyrights has such rights. Those copyrights were plainly required for Santa Cruz to exercise its rights to run the Business.

  • All rights and ownership in UNIX and UnixWare source code and products. (¶¶ 3-4.) Only the owner of the UNIX and UnixWare copyrights has the authority to exercise such unlimited rights. Those copyrights thus were clearly required for Santa Cruz to exercise its other, unlimited rights in the source code and products.

  • Claims arising after the Closing Date against any parties relating to any right, property, or asset included in the Business. (¶ 4.) Without the copyrights, Santa Cruz could not have

    29

    pursued such claims for the unauthorized use and distribution of its UNIX and UnixWare code and products.

  • All rights pertaining to UNIX and UnixWare under any assignable contract or license. (Id.) Because without the copyrights Santa Cruz would have been powerless to enforce covenants and conditions in such contracts or licenses, the copyrights were required for Santa Cruz to exercise those rights.

The copyrights at issue thus were required for Santa Cruz to exercise these and other rights it obtained with its acquisition of the UNIX and UnixWare technologies. Novell cannot seriously argue otherwise.

B. The APA Bill of Sale Exceeds the Requirements of the Copyright Act.

Under the case law, the transfer language in the Bill of Sale far exceeds the requirements of Section 204 of the Copyright Act.

"As with all matters of contract law, the essence of the inquiry here is to effectuate the intent of the parties. Accordingly, even though a written instrument may lack the terms 'transfer' and 'copyright,' it still may suffice to evidence their mutual intent to transfer the copyright interest." Nimmer on Copyrights § 10.03[2] (collecting cases); Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc., 690 F. Supp. 298, 301 (S.D.N.Y. 1988) (invoice and short letter transferring ownership of products without mention of copyrights suffice). No particular language or "magic words" are required. Radio Television Espanola S.A. v. New World Entm't, Ltd., 183 F.3d 922, 927 (9th Cir. 1999). The word "copyright" is not required. See, e.g., ITOFCA, Inc. v. Megatrans Logistics, Inc., 322 F.3d 928, 931 (7th Cir. 2003) (transfer of "all assets" to a business suffices); Dick Corp. v. SNC-Lavalin Constructors, Inc., No. 04 C 1043,

30

2004 WL 2967556, at *4 (N.D. Ill. Nov. 24, 2004) (Ex. D) (explaining that "a writing need not use the term 'copyright' to effectuate a valid transfer"); Dean v. Burrows, 732 F. Supp. 816, 823 (E.D. Tenn. 1989) (endorsed check, with no mention of the word, "complies with the requirements"); see also Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990) (explaining that "a one-line pro forma statement will do").2

In this case, the APA provided for the transfer by Novell and acquisition by Santa Cruz of the Assets, including all rights and ownership of UNIX and UnixWare. (¶¶ 3-4.) On the Closing Date, the parties executed the Bill of Sale effectuating the transfer of all the Assets:

In accordance with [Section] 1.1(a) of the Agreement, Seller, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby transfer, convey, sell, assign and deliver to Buyer, without recourse, representation or warranty except as otherwise expressly provided in the Agreement, all of the Assets.
(¶ 5.) Under the applicable authority, the language identifying the Assets by reference to Section 1.1(a) of the APA easily meets the statutory requirements and the language providing for the transfer, conveyance, sale, assignment and delivery of the Assets far exceeds the requirements.

31

More to the point, the Bill of Sale manifests the intent to transfer all rights and ownership of UNIX and UnixWare, including the copyrights.

The APA unambiguously provided for the transfer to Santa Cruz of all right, title, and interest and all rights and ownership of UNIX and UnixWare. The Bill of Sale unambiguously effectuated that transfer and complied with the Copyright Act. Based on the plain language of the APA and its Bill of Sale, SCO is entitled to partial summary judgment on the transfer of the UNIX and UnixWare copyrights to Santa Cruz under the APA.

II. OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ UNDER THE APA.

The overwhelming extrinsic evidence, including the testimony of all the central witnesses and the parties' conduct during the years that followed the APA, confirms SCO's position.

A. Testimonial Evidence.

On September 20, 1995, pursuant to the APA, Novell and Santa Cruz issued a joint press release announcing the transaction. In that press release, Novell admitted that "SCO will acquire Novell's UnixWare business and UNIX intellectual property." (¶ 9.)

The following witnesses who were with Novell at the time of the APA have testified, in no uncertain terms, that Novell intended to transfer the copyrights under the APA:

  • Robert Frankenberg, CEO of Novell at the time of the APA. (¶¶ 10-11.)
  • Ty Mattingly, Novell's Vice President for Strategic Relations, member of the Novell negotiating team, and Mr. Frankenberg's liaison to the negotiations. (¶ 12.)
  • Duff Thompson, the Novell senior executive assigned by Mr. Frankenberg to oversee the transaction and Novell's representative on the Santa Cruz Board after the sale. (¶ 13.)

32

  • Ed Chatlos, the chief negotiator for Novell. (¶ 14.)
  • Burt Levine, a Novell attorney who reviewed and revised drafts of the APA, was familiar with the negotiations, and worked for Santa Cruz after the sale. (¶ 15.)
  • Bill Broderick, a contract manager in the UNIX licensing group at Novell and Santa Cruz, and a member of the Novell transition team. (¶¶ 16-17.) The following witnesses who were with Santa Cruz at the time of the APA have testified that the parties intended for the APA to transfer the copyrights to Santa Cruz:
  • Alok Mohan, CEO of Santa Cruz at the time of the APA. (¶ 18.)
  • Doug Michels, founder and Senior Vice President of Santa Cruz at the time of the APA. (¶ 19.)
  • Jim Wilt, the chief negotiator for Santa Cruz. (¶ 20.)
  • Kimberlee Madsen, a member of the Santa Cruz legal department who assisted Mr. Wilt in the negotiations. (¶ 21.)
Thus, to date, no fewer than nine witnesses have given sworn deposition testimony in support of SCO's position.3 (¶¶ 10-21.)

B. The Parties' Prior Conduct.

The parties' conduct during the years that followed the APA confirms the transfer of the copyrights under the APA and belies Novell's current litigation position. Such conduct includes:

33

  • With the closing, Santa Cruz obtained physical possession of UNIX copyright registrations, which remain in SCO's possession to this day. (¶ 22.)
  • Since 1995, without objection from Novell, Santa Cruz and SCO shipped countless UNIX-related products with Santa Cruz or SCO copyright notices affixed. (¶ 23.)
  • Since 1995, without objection from Novell, Santa Cruz and SCO entered into hundreds of license agreements for UNIX products that not only contain express representations and warranties of SCO's rights and ownership in the intellectual property required to provide the licensed product, but that also indemnify licensees against any third-party claims for copyright infringement. (¶ 24.)
  • Before May 28, 2003, Novell did not contest Santa Cruz's or SCO's public statements and conduct asserting ownership of the UNIX copyrights. (¶ 25.)
  • There is no evidence that Novell publicly asserted ownership of UNIX copyrights between the Closing Date of the APA and May 28, 2003.
Such conduct establishes that Santa Cruz understood it had obtained the copyrights in 1995 and that Novell was aware of and agreed with that understanding.

34

C. Novell's Recent Conduct.

On May 28, 2003, for the first time since the execution of the APA, Novell asserted ownership of the copyrights at issue. (¶ 28.) The evidence reveals that Novell's ownership claims were minted anew to thwart and harm SCO. (Ex. 29 at 11-13; ¶¶ 27-31.) Novell made those claims without consulting the Novell executives who had actually negotiated or been responsible for the APA in 1995. (¶ 29.) On June 6, 2003, after SCO had found and sent to Novell a copy of Amendment No. 2, Novell candidly admitted:

Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996.
(¶ 30.) Although in early 2003 Novell denied having Amendment No. 2, Novell has now admitted that the amendment was found in its files prior to May 28, 2003. (¶¶ 30-31.) Such evidence leaves little doubt about Novell's motivations for making its contested ownership claims.

35

CONCLUSION

SCO respectfully submits, for the foregoing reasons, that the Court should grant SCO's Motion for Partial Summary Judgment on Its First, Second, and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim.

DATED this 9th day of April, 2007.

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

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

DORSEY & WHITNEY LLP
Devan V. Padmanabhan

Counsel for The SCO Group, Inc.

By: ______/s/ Edward Normand___________

36

CERTIFICATE OF SERVICE

Plaintiff/Counterclaim Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing SCO's Memorandum in Support of Its Motion for Partial Summary Judgment on Its First, Second, and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim was served on Defendant, Novell, Inc., on this 9th day of April, 2007, via CM/ECF to the following:

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

Michael A. Jacobs
Matthew I. Kreeger
Kenneth W. Brakebill
MORRISON & FOERSTER
[address]

/s/ Edward Normand

37

1 The facts are cited in this Part as "¶ __", referring to the relevant paragraph number(s) in the foregoing Statement of Undisputed Facts.

(Referenced here)
2 Even a subsequent confirmatory writing suffices to effectuate a valid transfer. Arthur Rutenberg Homes, Inc. v. Drew Homes, 29 F.3d 1529, 1532 (11th Cir. 1994) ("[T]he requirements of 17 U.S.C. § 204(a) can be satisfied by an oral assignment later ratified or confirmed by a written memorandum of the transfer."); Nimmer, supra, § 10.03[3] ("[I]f a prior oral grant is subsequently confirmed in writing, it validates the grant ab initio as of the time of the oral grant.").

In addition, courts avoid the nonsensical and inefficient situation created by divided ownership of tangible and non-tangible property. See Schiller, 969 F.2d at 413 (court should not interpret agreement to divide ownership of property from ownership of copyrights for that property; such divided ownership creates "diseconomies" because a "stand off" would ensue between the property holder, whose ability to exploit the property he owns is significantly curtailed, and the copyright holder, who of course cannot exploit the copyright without the tangible property).

(Referenced here)
3 Such witnesses, including Messrs. Frankenberg, Mattingly, Chatlos, and Wilt, testified that the original Item V of the Excluded Assets Schedule was intended to exclude copyrights in Netware, not in UNIX or UnixWare. (Ex. 7 at 21-22; Ex. 9 at 52; Ex. 13 at 40-41; Ex. 16 at 104-07; Ex. 20 at 29-30, 35.) Moreover, witnesses with personal knowledge of the negotiation and intent of Amendment No. 2 have testified that that amendment was intended to clarify or confirm that the copyrights were transferred under the APA. (Ex. 11 at 24; Ex. 18 at 100-03; Ex. 20 at 35; Ex. 21 ¶ 11.)

(Referenced here)

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