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Novell Files 4 Summary Judgment Motions
Saturday, April 21 2007 @ 02:07 PM EDT

There are buckets of filings this morning, both in Novell and in IBM, but let's start with Novell -- Novell has filed four motions for summary judgment or partial summary judgment, with exhibits and declarations galore. April 20th was the deadline for filing dispositive motions in this case.

We're getting into deep waters now, because in some cases, Novell is carving out portions of SCO's claims. Even Pacer has the exact parts marked in italics, to help them keep it all straight, so don't feel bad if you get confused.

One of them is supposed to be a notice of conventional filing, but it appears to me to be the first motion again. So we're all going to be struggling a bit here. We do have the redacted memorandum in support however. Here are the four:

That last one is simple -- Novell says SCO can't prove it suffered any special damages since no slander of title ever happened (and other reasons), but the others are all somewhat interconnected and overlapping, in part, as Novell points out, due to SCO's duplicative claims under various names, but I'll do my best to at least give an overview.

Here, first, are all the Pacer entries:

04/20/2007 - 269 - Order on Motion for Extension of Time
ORDER granting [267] Motion for Extension of Time of deadlines for expert discovery. See order for deadlines set. Signed by Judge Dale A. Kimball on 4/17/07. (blk) (Entered: 04/20/2007)

04/20/2007 - 270 - Order on Motion for Protective Order
ORDER granting [268] Motion for Protective Order - SECOND STIPULATED ADDENDUM TO PROTECTIVE ORDER. Signed by Judge Dale A. Kimball on 4/20/07. (blk) (Entered: 04/20/2007)

04/20/2007 271 - Motion for Partial Summary Judgment
MOTION for Partial Summary Judgment on the Copyright Ownership Portions of SCO's Second Claim for Breach of Contract and Fifth Claim for Unfair Competition filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 272 - Memorandum in Support of Motion
MEMORANDUM in Support re [271] MOTION for Partial Summary Judgment on the Copyright Ownership Portions of SCO's Second Claim for Breach of Contract and Fifth Claim for Unfair Competition filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 273 - MOTION for Partial Summary Judgment on SCO's Non-Compete Claim in its Second Claim for Breach of Contract and Fifth Claim for Unfair Competition filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 04/20/2007) [PJ: I think this is a duplicate of 271 by mistake. No doubt it will be corrected later.]

04/20/2007 - 274 - Memorandum in Support of Motion
MEMORANDUM in Support re [273] MOTION for Partial Summary Judgment on SCO's Non-Compete Claim in its Second Claim for Breach of Contract and Fifth Claim for Unfair Competition filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit 1 - Evolution v. Prime Rate)(Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 275 - Motion for Summary Judgment
MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance filed by Defendant Novell, Inc. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 276 - Memorandum in Support of Motion
MEMORANDUM in Support re [275] MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance [REDACTED] filed by Defendant Novell, Inc. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 277 - Motion for Summary Judgment
MOTION for Summary Judgment on SCO's First Claim for Slander of Title Based on Failure to Establish Special Damages filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 278 - Declaration
DECLARATION of Allison Amadia re [275] MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance filed by Novell, Inc. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2)(Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 279 - Declaration
DECLARATION of David Bradford re [275] MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance filed by Novell, Inc.. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2 # 3 Exhibit 3)(Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 280 - Declaration
DECLARATION of James R. Tolonen re [275] MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance filed by Novell, Inc. (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 281 - Declaration
DECLARATION of Tor Braham re [275] MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance filed by Novell, Inc.. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2 Pt. A # 3 Exhibit 2 Pt. B # 4 Exhibit 2 Pt. C # 5 Exhibit 3 # 6 Exhibit 4 # 7 Exhibit 5 Pt. A # 8 Exhibit 5 Pt. B # 9 Exhibit 6 Pt. A # 10 Exhibit 6 Pt. B # 11 Exhibit 7 and Exhibit 8 # 12 Exhibit 9 # 13 Exhibit 10 # 14 Exhibit 11)(Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 282 - Notice (Other)
NOTICE of Corrected Filing by Novell, Inc. re [273] MOTION for Partial Summary Judgment on SCO's Non-Compete Claim in its Second Claim for Breach of Contract and Fifth Claim for Unfair Competition (Sneddon, Heather) (Entered: 04/20/2007)

04/20/2007 - 283 - Notice of Conventional Filing
NOTICE OF CONVENTIONAL FILING of (Memoranda and Declarations) filed by Defendant Novell, Inc. (Sneddon, Heather) (Entered: 04/20/2007)

Whew. $55 worth of Pacer downloads for a single article, and IBM still to go. I haven't read it all yet, obviously, particularly the declarations and exhibits, but I'll explain the parts I have read as best I can. Let's try to take it all in, bit by bit.

First the slander of title motion, number 3 on the list:

I'm taking these in the order they make logical sense to me, since I'm the one having to try to explain them. This motion will be familiar to us. Novell waited for discovery to be over to respond at last to the court's earlier ruling back in June of 2005 on Novell's second motion to dismiss, which stated that until discovery was done, it wasn't possible to rule on the slander of title issues, because it wasn't possible to know which party owned the copyrights. SCO claims it was slander of title for Novell to publicly state that SCO does not own the UNIX copyrights.

Well, discovery is done now, so here is Novell once again now that it says there are no facts still in dispute. The copyrights simply never transferred to SCO, Novell argues, under the APA, any amendments or the bill of sale, and SCO can't prove that they did, so it certainly can't prove that what Novell said about that was false, and if not false, all the rest of SCO's allegations of slander, etc., melt away. Novell would like a ruling that nothing it said was slander of title, breach of contract, or unfair competition on the simple grounds that what it said was true. Of course, it's a lot more dense and complex than that.

As you will recall, similar issues about copyrights and slander of title claims were brought to the court before, in two earlier Novell motions to dismiss. On the first, the court ruled that it was too early to decide, gave SCO an opportunity to refile to plead special damages better, but added "Although the case will obviously require contract interpretation, at this stage of the litigation, the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a Section 204(a) writing."

On the second motion to dismiss, the court said "it is unclear under the language of the APA whether the copyrights transferred" but felt only discovery could establish for sure which party owned the copyrights. Well, discovery is pretty much over now, so here is Novell, and its memorandum in support of this motion [PDF] it opens early on like this:

This Court visited similar issues in the context of Novell’s motion to dismiss filed prior to discovery in this action. After discovery, Novell can now demonstrate that there is no genuine dispute of fact precluding judgment as a matter of law in Novell’s favor on both issues. Therefore, Novell is also entitled to summary judgment on SCO’s claims for slander of title and specific performance.

In other words, it is answering what the judge earlier wrote, specifically this section of the order:

However, the court’s prior order would not preclude a finding of malice after fact discovery is complete. The court’s prior order was necessarily limited to the allegations of the Complaint and the attached documents. The court cannot rule as a matter of law on Novell’s intent at the motion to dismiss stage before any discovery is considered in the case. Unlike the court’s ability to determine the ambiguities of a written contract, the court cannot opine on a party’s state of mind when it was advancing certain legal positions. While it may be true that the plausibility of Novell’s legal arguments regarding ownership is relevant to its state of mind, the court cannot draw inferences in favor of Novell at the motion to dismiss stage.

Furthermore, the court notes that even if the asserted privileges were applicable, there is an issue regarding whether excessive publication would defeat application of the privileges. “Statements that are otherwise privileged lose their privilege if they are excessively published, that is, ‘published to more persons than the scope of the privilege requires to effectuate its purpose.’” ... The issue of whether there has been excessive publication is a question of fact.... Therefore, the court cannot conclude as a matter of law that any qualified privilege applies to Novell’s statements.

Facts revealed in discovery, Novell now argues, are indisputable, so there are no further issues of who is correct as to the facts. And it concludes like this:

The APA explicitly excluded “all copyrights” from the assets to be transferred by Novell to Santa Cruz. SCO’s attempt to rewrite “all copyrights” as “some copyrights” fails because it is contrary to the plain language and to the parol evidence rule.

SCO’s reliance on Amendment No. 2 is also misplaced, because Amendment No. 2 did not transfer ownership of any copyrights, and Santa Cruz already had a license and hence did not “require” ownership of the UNIX and UnixWare copyrights.

So, essentially, Novell is now asking the court for a definitive ruling, relying upon what it says are facts no longer in dispute, thanks to discovery. Novell painstakingly goes through the history of the deal and all the amendments. Novell's motion is based on the contract but also on how the negotiation history shows an intent not to transfer the copyrights. Significantly, Novell presents a declaration by the person who signed Amendment 2, Jim Tolonen, which you can find mentioned on page 22 of the PDF:

Accordingly, Jim Tolonen, the Novell executive who signed Amendment No. 2, confirms that it was never Novell’s intent to transfer copyrights by way of Amendment No. 2 (or the APA), and that he would not have signed Amendment No. 2 had he believed it would do so.

That thoroughly trumps Kim Madsen, one would have to conclude, as she signed nothing, observed some negotiations but was not an executive or as far as we know a lawyer, but rather an office manager for Santa Cruz, and in any case she stated in her deposition that she never heard copyrights discussed one way or another. In any case, it is only Novell that can intend to transfer or not a copyright it owns, and here is the Novell executive who signed Amendment 2 for Novell, and he says he wouldn't have signed it if he thought for one second that it meant the copyrights were going to transfer.

All the declarations SCO provided as parol evidence of the meaning of the agreement are inappropriate, Novell argues, because the contract has an integration clause. What is that? Basically, it's a clause that says that all prior understandings are wiped away by the final contract. No outside "evidence" as to what people thought it meant can be admissible, Novell argues, if they contradict the plain words of the contract itself:

Thus, when a contract is integrated, “extrinsic evidence is admissible only to supplement or explain the terms of the agreement — and even then, only where such evidence is consistent with the terms of the integrated document ....” Id. at 176-77 (citations omitted).

The APA includes an express integration clause, which states in relevant part:

Entire Agreement. This Agreement, and the Schedules and Exhibits hereto: (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understanding, both written and oral, among the parties with respect to the subject matter hereof....
(Brakebill Decl., Ex. 2, Section 9.5.) Novell and Santa Cruz further agreed, in connection with the Bill of Sale, that the APA is an integrated agreement not to be altered by any other understandings:
It is acknowledged and agreed ... that the Agreement is the exclusive source of the agreement and understanding between Seller and Buyer respecting the Assets.
... On the same day the Bill of Sale was executed, Santa Cruz’s outside counsel sent an opinion letter to Novell’s Board of Directors stating that:
* * REDACTED * *

I'd certainly love to read that opinion letter. This part is just saying that the terms of the contract itself preclude considering what SCO people today say the contract meant to them back then because what they are saying contradicts the plain wording of the contract. All parol evidence can do is clarify and explain, not contradict. And the contract says clearly that it supersedes all priors understandings, so it doesn't matter what SCOfolk thought it meant or what was discussed prior to signing, if any of that contradicts what was finally actually signed. And of course a lot of what SCO is saying seems to contradict what the words actually say. Novell mentions some examples:

As a matter of law, the express exclusion of “all copyrights” in Schedule 1.1(b) is not “reasonably susceptible” to SCO’s proposed interpretation of “NetWare copyrights only.” The plain meaning of “all” is all. “All copyrights” cannot reasonably be interpreted as “NetWare copyrights only.” Nor can “all copyrights” reasonably be interpreted as “all copyrights except for UNIX and UnixWare copyrights.”...

Here, too, it is clear that the exclusion of “all copyrights” was “all-inclusive,” encompassing copyrights to UNIX, UnixWare, NetWare, and any other copyrighted work. Therefore, the parol evidence offered by SCO to show that “all” means “NetWare only” must be excluded.

SCO’s proposed interpretation is especially far-fetched in view of the plain language of the remainder of Section V of Schedule 1.1(b). Section V excluded from the transferred assets “[a]ll copyrights and trademarks, except for the trademarks UNIX and UnixWare.”... Had the parties intended to make an exception for the UNIX and UnixWare copyrights, it would have been simple to draft this clause as “all copyrights and trademarks, except for the UNIX and UnixWare trademarks and copyrights.” However, the parties chose not to do so. Instead, the “UNIX and UnixWare” exception was limited to trademarks only.

Moreover, if “all copyrights” were interpreted as “NetWare only,” then Section V.A of Schedule 1.1(b) would effectively read, “NetWare copyrights and trademarks, except for the UNIX and UnixWare trademarks.” But this interpretation would make no sense. “NetWare trademarks” do not include UNIX and UnixWare trademarks. If “all copyrights and trademarks” were limited to “NetWare only,” the exception for UNIX and UnixWare trademarks would be superfluous. Thus, the exception for UNIX and UnixWare trademarks logically implies that “all” copyrights and trademarks means “all” copyrights and trademarks, including UNIX and UnixWare.

The bizarre nature of SCO’s proposed interpretation is further demonstrated by the next clause of Section V of Schedule 1.1(b), which excludes “All Patents” from the assets to be transferred. (Brakebill Decl., Ex. 4, Section V.B.) SCO’s own witnesses have admitted that the exclusion of “all” patents excludes “all” patents from the transfer, including patents related to UNIX and UnixWare. 7 SCO thus proposes two conflicting interpretations of “all”: (1) “all patents” means “all patents, including UNIX and UnixWare patents”; but (2) “all copyrights” means “NetWare copyrights only.” SCO’s attempt to interpret “all” in two different ways in the same paragraph of the same contract is an untenable distortion of the plain language.

I know. It's very complex and as Novell says, bizarre, but that is because Novell, like IBM, is forced to disprove every wacky idea SCO comes up with in all respects. Further, Novell implies in footnote 7 on page 29 of the PDF, how reliably disinterested are some of those providing SCO's parol evidence?:

7 For example, Duff Thompson, a current member of SCO’s Board and head of its litigation committee, admitted in the declaration submitted by SCO that patents were expressly excluded from the assets transferred to Santa Cruz.... Similarly, Burt Levine, a former paid SCO litigation consultant who was represented by SCO’s counsel at his deposition, testified that Novell’s UNIX patents were not transferred to Santa Cruz....

There is a reason most contracts have such an integration clause, and its purpose is precisely to block later attempts to "rewrite" the meaning of what was agreed to by claiming that what it says isn't what was intended. All contracts are based on negotiation, and in corporate contracts this can take many months, during which time the positions each side takes can shift, and they usually do, that being the purpose of negotiating. So the final contract typically will state that any prior positions are wiped away by the final agreement signed. It is what it is, such an integration clause is saying. Nothing earlier remains valid. So read it and live by the words you signed.

Novell says the exclusion of copyrights was deliberate and that it had a reason to deliberately exclude copyrights: "Novell deliberately excluded copyrights to protect its continuing interests in UNIX and UnixWare." Santa Cruz didn't have enough money to buy everything, and once Novell had to retain significant Unix-related rights, it sought to protect itself by retaining the copyrights:

Robert Frankenberg, Novell’s CEO, directed his team to take steps to protect Novell’s UNIX-related rights and interests.... To implement this instruction, Novell’s legal team decided to exclude the UNIX and UnixWare copyrights from the assets transferred to Santa Cruz.... This exclusion ensured that the UNIX and UnixWare copyrights would not be part of the bankruptcy estate if Santa Cruz went into bankruptcy, and thus made it less likely that the bankruptcy trustee would assert an interest in these copyrights or in the related revenue streams.... Retaining ownership of the UNIX and UnixWare copyrights also strengthened Novell’s legal basis for receiving royalties and negotiating buy-outs of SVRX Licenses, and put Novell in a better position to ensure development of future versions of the UNIX operating system.

Further, Novell argues, SCO already had a license, so it didn't need the copyrights to pursue its business. It is, after all, indisputable that SCO didn't get the patents, so obviously what it got was a license to do business and use the patents despite not owning them. Ditto with the copyrights.

Novell asks that the court enter summary judgment that neither the APA nor Amendment No. 2 nor Amendment 2 plus the Bill of Sale transferred ownership of the copyrights to Santa Cruz. SCO's theory of the case has changed several times, Novell points out in footnote 1:

1 SCO’s position in this litigation has shifted on copyright ownership. Initially, SCO focused its ownership claim on Amendment No. 2 to the APA, a contract that was executed more than one year after the APA was signed... (repeatedly referring only to the “Asset Purchase Agreement, as amended” by Amendment No. 2 as having transferred the copyrights).) Subsequently, SCO argued that the original APA transferred copyrights to SCO even before Amendment No. 2 was executed...(arguing that the APA, standing on its own, acted to transfer the UNIX copyrights from Novell to Santa Cruz).)

Now SCO is back to Amendment 2 but adding the bill of sale together with it and asserting that the two together are a copyright conveyance instrument, but Novell points out the following:

The first reason that Amendment No. 2 does not satisfy Section 204(a) is that it did not include any provision that purported to transfer ownership of copyrights. Amendment No. 2 did not state that copyrights “are hereby transferred,” “have been transferred,” or even “will be transferred.” Rather, it merely revised the definition of the “Intellectual Property” category of “Excluded Assets” under Schedule 1.1(b) by adding an exception for copyrights “required” for Santa Cruz to exercise its rights. ...

Further, unlike the APA, Amendment No. 2 was not accompanied by a separate “Bill of Sale” or similar document that transferred additional assets....

Nor did Amendment No. 2 purport to retroactively change the scope of assets transferred by the Bill of Sale that was previously executed in connection with the APA. On the contrary, Amendment No. 2 stated that it “amended” the APA “[a]s of the 16 th day of October, 1996,” which was thirteen months after the APA was signed on September 19, 1996, and ten months after the Bill of Sale was executed on December 6, 1995.... Thus, Amendment No. 2 did not retroactively cause the Bill of Sale to transfer copyrights that were expressly excluded from transfer by the APA and Amendment No. 1....

Another reason why Amendment No. 2 fails to constitute the required “instrument of conveyance” that it did not specify which copyrights, if any, should be transferred....

A final reason that Amendment No. 2 does not constitute an “instrument of conveyance” under Section 204 is that Santa Cruz did not “require” ownership of Novell’s UNIX and UnixWare copyrights to exercise its rights under the APA. In fact, because the APA excluded “all copyrights” from the transfer, Santa Cruz indisputably did not own the copyrights during the ten months between the execution of the Bill of Sale at the closing on December 6, 1995, and entry of Amendment No. 2 on October 16, 1996. Nevertheless, Santa Cruz was able to pursue its UNIX business during this time period without any problems caused by its lack of ownership of the copyrights.

Since, Novell argues, SCO can't prove it owns the copyrights, all the claims or portions of claims based on Novell allegedly "slandering" SCO by saying SCO didn't own the copyrights have to be tossed, most specifically the slander of title claim itself. Here's one small piece of Novell's argument on that score:

To prevail on its slander of title claim, SCO must establish:
1. Novell published a slanderous statement disparaging SCO’s title;

2. the statement was false;

3. the statement was made with malice;

and 4. the statement caused actual or special damages.

First Sec. Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1256-67 (Utah 1989).

As demonstrated above, the Bill of Sale did not transfer the UNIX and UnixWare copyrights from Novell to Santa Cruz, because the APA excluded “all copyrights” from the transferred assets. Amendment No. 2 also did not transfer the copyrights for multiple reasons. Therefore, Novell is entitled to summary judgment on SCO’s slander of title claim because SCO cannot establish that Novell’s assertion that it owned the copyrights was false.

This puts the pressure on SCO now to respond by essentially proving it does own the copyrights and that it can prove all the above four points, which it has found very difficult to do so far or at least that there is one material fact still in dispute.

As for specific performance, "SCO claims that it is entitled to an order directing Novell to specifically perform its obligations under the APA by executing all documents needed to transfer ownership of the copyrights to SCO." But since neither the APA nor Amendment 2 gave Santa Cruz any rights to copyrights, Novell argues it is "entitled to summary judgment on SCO’s claim for specific performance because SCO cannot establish that Santa Cruz had the right to obtain title to the copyrights." There is also an interesting footnote on page 46 of the PDF:

11 SCO has also requested that this court require Novell to transfer to SCO “the UNIX and UnixWare business, without subjecting any portion of that business, other than the SVRX binary royalty stream, to Sections 4.16, 1.2(b), and 1.2(f).” (Id., ¶ 108.) This appears to be an unjustified attempt to place a binary limitation on Novell’s authority and rights under Sections 1.2(b), 1.2(b) and 4.16 of the APA. This attempt fails for the reasons set forth in Novell’s pending Motion for Partial Summary Judgment on its Fourth Claim for Relief (PACER No. 155) and pending Motion for Partial Summary Judgment or Preliminary Injunction (PACER No. 148). Therefore, Novell is entitled to summary judgment on the “Section 4.16” portion of SCO’s Third Claim for specific performance.

So Novell concludes that it is entitled to summary judgment:

The APA explicitly excluded “all copyrights” from the assets to be transferred by Novell to Santa Cruz. SCO’s attempt to rewrite “all copyrights” as “some copyrights” fails because it is contrary to the plain language and to the parol evidence rule. SCO’s reliance on Amendment No. 2 is also misplaced, because Amendment No. 2 did not transfer ownership of any copyrights, and Santa Cruz already had a license and hence did not “require” ownership of the UNIX and UnixWare copyrights.

For all of these reasons, Novell requests the Court to enter summary judgment that neither the APA nor Amendment No. 2 transferred ownership of the copyrights to Santa Cruz, and that SCO’s slander of title and specific performance claims fail as a matter of law.

The special damages motion, #4 on the list:

Novell provides a number of reasons why it should prevail:

Special damages are “out-of-pocket losses” that must be the “direct and immediate” result of the slander of title. Special damages must also consist of “a realized or liquidated” pecuniary loss. SCO cannot meet its burden of establishing special damages on the following grounds:

First, SCO’s allegation that its SCOsource licensing program was harmed by Novell’s assertion of rights does not support a claim for special damages as a matter of law. Given the evidence SCO has put forward demonstrating public skepticism regarding its infringement claim, SCO cannot establish that any failure of its licensing program “resulted from” the alleged slander and not some other cause. Moreover, SCO cannot establish that it was harmed by Novell’s assertion of ownership because if the alleged “cloud” on its title is removed, SCO will remain in possession of the copyrights and will be able to pursue any legitimate claim to royalties. SCO cannot support a claim for special damages based on the present failure of its licensing program as a matter of law.

Second, SCO’s allegation that Novell’s statements hurt SCO’s stock price states a claim that has been repeatedly rejected as the basis for a claim for special damages. Harm to a plaintiff’s stock price is not the “direct and immediate” result of a slander, and it is not a “realized or liquidated” pecuniary loss and cannot support a claim for special damages as a matter of law.

Third, SCO’s assertion that it is entitled to attorneys fees to clear its title in this action is a claim that has been rejected in this Court and others around the country, and cannot be sustained as a matter of law.

Fourth, SCO has not produced any evidence of any pecuniary loss based on its efforts to research and pursue copyright registration, or to counter Novell’s statements with its customers. SCO cannot support its burden of showing special damages because it has failed to meet its evidentiary burden.

For all of the above reasons, Novell is entitled to summary judgment on SCO’s slander of title claim on the grounds that SCO cannot establish special damages.

In the event SCO can demonstrate some special damages in connection with registration, point four, Novell asks in the alternative that SCO be limited to that and nothing more.

The motion for partial summary judgment on the copyright ownership portions of SCO's 2nd claim for breach of contract and 5th claim for unfair competition, number 1 on the list (#271):

Novell presents the following arguments in its motion:

Novell is entitled to summary judgment on the “copyright ownership” portions of SCO’s claims for unfair competition and breach of the implied covenant of good faith because:

1. As a matter of law, Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights does not state a claim for unfair competition under Utah common law or Utah statutory law. Statements about property ownership do not fit within the categories of “unfair competition” that have been recognized by the Utah courts, and the Tenth Circuit has rejected a similar attempt to extend these categories to encompass allegedly false statements. The Utah Unfair Competition Act does not apply because Novell’s statements were made before the Act became effective in May 2004, and making statements about property ownership does not fit within the statutory definition of “unfair competition.”

2. As a matter of law, Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights does not state a claim for breach of the implied covenant of good faith under the governing California law.California courts have generally applied the implied covenant to fill gaps in the express contractual provisions to effectuate the purpose of those provisions. Here, there is no contractual provision that even suggests that the parties are prohibited from making statements regarding their interpretation of the contract. Moreover, the California Supreme Court has held that alleged bad faith denial of the existence of contractual obligations does not support a tort claim.

3. By its own admission, SCO’s claims require it to prove that Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights is false. SCO cannot establish the required falsity for the reasons set forth in Novell’s concurrent Motion for Summary Judgment on SCO’s First Claim for Slander of Title and Third Claim for Specific Performance.

Then, in its memo in support of this motion, it provides some detail:

As demonstrated below, Novell is entitled to summary judgment on the “copyright ownership” portions of SCO’s unfair competition and good faith covenant claims because:
1. As a matter of law, Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights does not constitute “unfair competition” and hence cannot support a claim based on this theory.

2. As a matter of law, Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights does not breach the implied covenant of good faith, and hence cannot support a claim based on this theory.

3. SCO cannot establish that Novell’s assertion that SCO does not own the UNIX and UnixWare copyrights is false for the reasons set forth in Novell’s concurrently-filed Motion for Summary Judgment on SCO’s First Claim for Slander of Title and Third Claim for Specific Performance (“Novell’s Summary Judgment Motion on SCO’s First and Third Claims”). Therefore, Novell’s assertion cannot support a claim for unfair competition or breach of the implied covenant of good faith....

SCO’s unfair competition claim alleges that “Novell has falsely claimed ownership of SCO’s copyrights in UNIX and UnixWare....” (Brakebill Decl., Ex. 1, Second Amended Complaint, ¶ 122.) In response to a motion for a more definite statement that Novell filed in 2006 in this action, SCO stipulated that its unfair competition claim is based on “Utah statutory and/or common law.”

We're talking now about Yarro's Law, as I've dubbed it. Here are the reasons Novell lists why it can't be used regarding statements about copyright ownership:

1. Utah Common Law Does Not Recognize an Unfair Competition Claim Based on Allegedly Defamatory Statements....

Controlling Tenth Circuit precedent, affirming a decision by Judge Winder of this Court, entitles Novell to summary judgment on SCO’s attempt to plead a slander of title claim in the guise of a Utah common law claim for unfair competition...

Here, too, SCO’s allegation that Novell “falsely claimed ownership” of UNIX and UnixWare copyrights does not state a common law claim for unfair competition as either “palming off” or “misappropriation.” Here, too, SCO’s claim is duplicative of its slander of title claim. Therefore, this Court should decline SCO’s invitation to “create a new cause of action under the umbrella of unfair competition which would essentially be identical to an already wellestablished cause of action and would offer no further protection of commercial values.” ...

2. The Utah Unfair Competition Act Does Not Apply to Novell’s Statements Regarding Copyright Ownership....

The Utah Unfair Competition Act (the “Act”) was newly enacted as Chapter 5A of the Title 13 of the Utah Code, effective as of May 3, 2004. This Act does not apply here for two independent reasons. First, all of Novell’s allegedly false statements identified in SCO’s Second Amended Complaint took place between May 28, 2003 and March 2004, before the Act became effective on May 3, 2004....

Novell’s statements regarding copyright ownership do not constitute “cyber-terrorism,” “infringement of a patent, trademark, or trade name,” a “software license violation,” or “predatory hiring practices.” Therefore, as a matter of law, these statements cannot support a claim for violation of the Utah Unfair Competition Act.

So much for Utah law. What about California, the governing law of both the APA and the TLA?

First, Novell has found no reported California decision that holds that the implied duty of good faith prohibits a party to a contract from making statements related to its understanding of the rights that are conferred (or not conferred) by the contract.

Second, the implied covenant has generally been used as a “gap-filler” to “qualify or limit rights and duties otherwise arising under rules of law and specific contract language,” or “to effectuate the intentions of parties, or to protect their reasonable expectations.”...

Here, nothing in the APA suggests that it restricts the parties’ ability to make statements about their understanding of the scope of their respective rights and obligations under the contract. Thus, SCO is attempting to use the implied covenant to do far more than “filling gaps” or effectuating the purpose of the express provisions of the contract. Rather, SCO is attempting to impose a prohibition against making statements that is not even hinted at by the APA.

California law does not recognize a claim for “bad faith denial of the existence of a contract between the parties.”...Finally, there is no cogent reason for this Court to extend the implied duty of good faith to prohibit statements about rights conferred by a contract, given that SCO has asserted a slander of title claim based on the same statements.

In any case, falsity is a required element, and SCO simply can't prove that what Novell said was false, since, as Novell says it has demonstrated in its summary judgment motion on SCO’s 1st and 3rd claims, "SCO cannot prove that it acquired ownership of the UNIX and UnixWare copyrights". Novell concludes:

SCO has improperly attempted to plead its slander of title claim under the guise of duplicative claims for unfair competition and breach of the implied covenant of good faith and fair dealing. Novell is entitled to summary judgment on these duplicative claims because SCO has failed to state these claims under the applicable law, and because SCO cannot demonstrate that Novell’s statements about copyright ownership were false.

That leaves us with only one more to go, the one filed conventionally, for which we only have the redacted memorandum.

Motion for partial summary judgment on SCO's non-compete claim in its 2nd claim for breach of contract and 5th claim for unfair competition, #2 on our list (#273 and memo #274 on the docket):

Novell presents three issues in its beginning Statement of Issues:

1. Is Novell entitled to summary judgment on SCO’s claim for breach of an alleged non-compete covenant, because the contractual clause cited by SCO is merely a limitation on the scope of a license that does not impose affirmative “non-compete” obligations?

2. Is Novell entitled to summary judgment on the alternative ground that Santa Cruz’s sale of substantially all of its assets to SCO’s predecessor in 2001 constituted a “Change of Control” that terminated any non-compete obligations?

3. Is Novell entitled to summary judgment on the alternative ground that any covenant not to distribute competing products would be void under the governing California law?

This one is way too complex and deep to explain in a few sentences, so we'll tackle it after I have an opportunity to absorb it, if I ever do. But here's the section at the end stating Novell's conclusion:

SCO’s attempt to pursue a claim for breach of a covenant not to compete that is independent from its copyright claim fails as a matter of law because the alleged non-compete clause is merely a limitation on the scope of Novell’s retained license, and not an affirmative covenant not to compete. Further, any non-compete obligations were terminated by Santa Cruz’s sale of substantially all of its assets to SCO’s predecessor. Finally, even if the APA and TLA included a covenant not to compete that was not terminated by the sale of Santa Cruz’s assets, this covenant would be void under the governing California law. For all of these reasons, Novell respectfully requests that this Court grant summary judgment on the “non-compete” claim in SCO’s Second and Fifth Claims for Relief.

See what I mean about interrelated and overlapping? And we've only begun to scratch the surface. But the center of everything is that what Novell said about SCO not owning the Unix copyrights is true, or at least that SCO can't prove otherwise, which it must to sustain all SCO's claims.

Keep in mind that the real point of summary judgment motions at this stage of a case is to narrow down what issues need a trial and which can be decided by the judge as a matter of law. So while Novell can win these motions, in a sense it can't lose anything by them. The worst that happens is that it all goes forward to trial. The whole idea is that after discovery, you kind of know what should be excised from the case, and both sides normally file dispositive motions right after discovery, so that everyone knows what is still viable and still needs to go to trial, if anything.

If you note any mistakes on my part, just sing out, but this is the best I can do on a quick reading of so many documents at once. What a way to start a Saturday! It felt like a pop quiz.


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