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To read comments to this article, go here
What Goes to Trial? - Updated
Monday, August 13 2007 @ 04:17 PM EDT

I've had a chance now to think a bit on what's left after the court's ruling Friday. SCO's statement yesterday seems to indicate that they are looking at what they can do next, so I'm doing the same.

As best I can make out, not decided yet is who owns the copyrights to all modifications made to the Unix code after the date of the APA in 1995. One would assume mostly Santa Cruz and successors, but we've reported on Groklaw earlier that Novell for sure holds some copyrights at least up to 1998, and HP, Intel and others may own some, and it's going to be a trick to sort it all out. To whatever degree SCO can prove it has copyrights, however, it may pursue its claims for copyright infringement with respect to any derivative works SCO created. That's if there were any copyright infringements, which so far I don't see. And of course the GPL issue remains, and I believe it handily takes care of both arms and both legs of the Black Knight. Then there is the arbitration, which could knock this out also, as I'll explain in a minute. In the case of IBM, additionally, I think SCO will be limited to whatever it already listed by the end of discovery. Red Hat and end users in general is a separate analysis.

SCO can pursue breach of contract claims against Novell with respect to SuSe Linux based on a non-compete clause between those two. Again, though, that would only be if SCO could demonstrate that any code belonging to it was in Linux, which it's been struggling to do since 2003 even when it had the entire UNIX codebase to work with. Now it has less. That doesn't say SCO can win any of this, just saying this is what couldn't be decided by law and so must go to a jury for a fact determination. That seems to be what remains on the table from SCO's side. And all the counterclaims are still on the table too, both Novell's and IBM's. So, unless there is a settlement, there will still be trials in both litigations.

I'm seeing some new FUD in response to the judge's ruling in SCO v. Novell, so let me explain a few things, using Paul McDougall's article in Information Week, "Novell's Victory Over SCO Could Have Downside For Linux Users", as a template. The most important thing to understand is that both Novell and IBM will go to trial insofar as this ruling is concerned.

I'll put my commentary in colored text interspersed so you can distinguish the Information Week story and my explanations:

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

The free software world spent the weekend celebrating after a judge nixed SCO's ownership claims over Unix and, by extension, Linux. But the ruling did not specifically address SCO's charge that Linux is a Unix knock off--and a case that could have settled that question for good may now fade away as a result of Friday's decision.

No. It's the Linux world that was celebrating. Free software was never in the SCO saga, although I'm sure everyone is happy. It's been about the Linux kernel, the SCO claims, not free software. Also, SCO never had any ownership rights in Linux, only a claim that it had found some Unix System V code in there, which it would never identify to the kernel guys so they could remove it, and judging by what has been filed in the IBM case might just be nothing at all.

Also, the judge didn't rule that SCO has no copyrights, just not the ones it said it had, the UNIX and UnixWare copyrights that SCO falsely claimed had transferred under the APA. The judge pointed out numerous reasons why he ruled that Novell didn't transfer them under the agreement to Santa Cruz, including both Darl McBride, SCO's CEO, and Ralph Yarro, the Chairman of the Board, asking Novell unsuccessfully for them just before they launched SCOsource. So the judge apparently concluded that they not only didn't get them, they knew they didn't have them.

To recap, Utah federal court judge Dale Kimball on Friday ruled that SCO does not own the Unix operating system and that the rights belong to Novell. The decision eviscerates SCO's four-year-old lawsuit against Novell.

It certainly eviscerates SCO's case against Novell in most respects. For example, its slander of title claims against Novell are dead now. And not even rewriting Utah's anticompetition law could save them. What the judge ruled was that SCO doesn't own the UNIX and UnixWare copyrights that Novell got from USL. Of course, while it hasn't come up yet in this litigation, I personally doubt that anybody owns any copyrights in that old stuff, and if you read the settlement agreement in the BSDi case and Judge Debevoise's ruling in the NJ case, you'll see why. You'll find them on our Contracts page, if you are curious.

Also, SCO filed its lawsuit against Novell in January of 2004, as you can verify on our Novell Timeline page, so it's not a 4-year-old lawsuit. Perhaps he was thinking of the IBM litigation, which was filed in March of 2003. But we put all these resources on Groklaw so journalists have a way to get the facts accurately.

Kimball said that an asset transfer agreement between Novell and SCO did not give SCO ownership over Unix, as SCO claimed. End of story.

It's not the end of the story. First of all there are Novell's counterclaims, on top of the explanation above.

What Kimball did not rule on, however, was SCO's allegation that Novell's SUSE Linux distribution is a Unix rip off and thus violates what SCO said was its copyright over Unix. Kimball had previously punted that aspect of the case to an arbitrator in France. A hearing is pending but is now likely moot.

Not quite right. First of all, the arbitration request was filed in Paris, but the arbitration itself is in Switzerland. Second, Kimball didn't punt all copyright issues over to arbitration. Here's what went there, issues involving UnitedLinux, contractual issues, mainly, as to whether SCO has any rights to talk about copyright violations, in light of the UnitedLinux story. The judge just ruled on copyright issues involving the APA and the TLA, which issues did not go to arbitration. Here's part of the decision on what was involved and would go to arbitration:
SCO's Second Amended Complaint also claims for the first time that Novell's distribution of SuSE Linux infringes SCO's alleged UNIX copyrights, constitutes unfair competition, and a breach of contract. SuSE Linux is a version of the Linux operating system developed by SuSE Linux, GmbH, a wholly-owned subsidiary of Novell. SCO, SuSe, and two other Linux vendors (Turbolinux and Conectiva) jointly developed a standard form of the Linux operating system, referred to as "UnitedLinux." In connection with developing UnitedLinux, the parties entered two contracts: the Master Transaction Agreement ("MTA"), and the UnitedLinux Joint Development Contract ("JDC"). These two contracts are collectively referred to as the UnitedLinux contracts.

The UnitedLinux members agreed that each member would have a broad license to use the technology included in the UnitedLinux Software, including any related intellectual property rights of the other members. The contracts provided that "All intellectual property rights related to the UnitedLinux Software (with the exception of certain "Pre-existing Technology" and "Enhancements" thereto) shall be assigned by the members to a new company, UnitedLinux, LLC. In addition, the contracts provided that "[e]ach member shall have a broad, royalty-free license to all intellectual property rights in the UnitedLinux Software, entitling each member to "use, copy, modify, distribute, market, advertise, sell, offer for sale, sublicense . . . in any manner the Software, including the rights to make derivative works of the Software, to provide access to the Source Code and/or Object Code to any third party, to incorporate the Software into other products or bundle the Software with other products for its own business purposes and any other unlimited right of exploitation." The contracts further state that the UnitedLinux Software shall be subject to any existing "open source" licenses.

Significant to the present motion before the court, the UnitedLinux contracts require any disputes arising under the contracts to be "finally and exclusively settled under the Rules of Arbitration of the International Chamber of Commerce then in force (Rules) by three arbitrators appointed in accordance with said Rules." After SCO asserted claims relating to SuSE in its Second Amended Complaint, on April 10, 2006, SuSE submitted a Request for Arbitration against SCO pursuant to the terms of the arbitration clause in the UnitedLinux contracts. SuSE contends in the arbitration that the UnitedLinux contracts preclude SCO from asserting that SuSE Linux infringes any copyrights of SCO because they divested SCO of ownership of any copyrights in technology included in UnitedLinux, they conferred a broad license on SuSE to use the technology included in UnitedLinux, and they contained an agreement by SCO that any open source code included in UnitedLinux would remain subject to the terms of any open source license. Therefore, SuSE has requested a declaration in the arbitration that (1) SCO is precluded from asserting copyright infringement claims against SuSe and that (2) the UnitedLinux contracts divested SCO of ownership of any copyrights related to technology included in UnitedLinux, except for pre-existing technology and enhancements. ...

Because it is possible that the arbitrator's ruling could have little effect on the nonarbitrable claims in this case, the court concludes that only the portions of the claims relating to SuSE should be stayed in this court pending SuSE's arbitration. The claims asserted in relation to the APA and TLA should go forward. The claims are distinct enough that it would not be too great of a burden on the parties to proceed with the litigation and arbitration at the same time. The case has been on this court's docket for over two years. The case should proceed so that it is ready for trial regardless of the arbitrator's ruling on the claims relating to SuSE. If the arbitration concludes before the parties are ready for trial in this matter, then the court will address the preclusive effect of the arbitrator's ruling on the claims in this case. If this case is ready for trial before the arbitration concludes, the court will revisit the issue of whether to stay the trial on the APA and TLA claims pending the conclusion of the arbitration.

CONCLUSION

For the reasons stated above, Novell's Motion to Stay is GRANTED IN PART AND DENIED IN PART. The portions of the claims relating to SuSE are stayed pending arbitration. The parties shall proceed to litigate the remaining claims.

As you can see, the issue in arbitration isn't whether Linux is a knockoff; it's whether SCO can even ask the question in any court anywhere insofar as it relates to SUSE Linux, which is the distro at issue with Novell. And frankly, if SCO thought Linux was a knockoff of UNIX, why didn't it present evidence of that in the IBM case? I haven't seen anything like that. It's been all about code IBM wrote itself and things like errno.h. Errno.h? Puh-lease. Anyway, that is one of the items that the UNIX and UnixWare copyrights that Novell retained would cover, I believe. So it's off the table now. I'd guess the methods and concepts stuff took a mortal blow as well, since how Unix does things would likely be in the copyrights that didn't go to Santa Cruz.

Kimball also ruled in favor of Novell's request that it be allowed to order SCO to drop a lawsuit against IBM in which SCO charged that those parts of Linux that allegedly rip off Unix were contributed to the open source community by IBM.

No. Wrong again. It was ruled that Novell has the authority to waive any breach of contract by IBM and Sequent, which it already did. SCO wrongfully refused to comply, but now it must. But Novell has no authority to order SCO to drop the lawsuit. Both sides in the IBM litigation will file with the court on Aug. 31 what issues each thinks still remain in regard to all the summary judgment motions in that case, and then the judge will rule on those, and then that case will proceed to trial. Don't forget that IBM has claims against SCO that must be adjudicated, even if every claim of SCO's were knocked out at summary judgment. And again, that involves an analysis of what SCO actually does own in the way of copyrights and if there are any "infringements" that they can dream up.

Kimball has asked both IBM and SCO to submit memos summarizing where they believe the case stands in the aftermath of Friday's SCO v. Novell ruling. It seems likely the action will be dropped: After all, how can SCO continue suing IBM for stepping on rights that SCO doesn't own?

Again, SCO can claim something with respect to whatever copyrights it can dig up, if any, on anything Santa Cruz wrote after the APA. And IBM has zero interest in dropping its claims, I'd say. It wants its reputation made whole, and SCO's executives made some claims in public that still resonate in the public's mind, as this article evidences.

Linux backers are reacting with glee to all of this news. An anonymous blogger who goes by the name 'Pamela Jones' on the anti-SCO Web site Groklaw said over the weekend that he or she would "eat chocolate" to celebrate Novell's victory.

If he keeps writing I am anonymous when he knows my real name, can I sue him myself? Just horsing around, although I probably could. Groklaw isn't an "anti-SCO site" either. I wish them the very best in their mobile business ventures. I believe anonymous speech is a protected right under the US Constitution, by the way. I don't happen to be anonymous; but I believe in the US Constitution. The Federalist Papers were written by anonymous pamphleteers, you know, so I think anonymous speech is fine. Benjamin Franklin wrote anonymously too. But really, from what you've read so far, I think you can see that even if I were anonymous, I still get more facts right than the folks at Information Week, so you should probably keep reading Groklaw, no matter who wrote it. I have a track record now that supports Groklaw's value as a resource. In fact, if Information Week used it a bit more, I wouldn't have to write corrective articles. And what might be the motive for the endless gratuitous attacks on Groklaw? Didn't we just demonstrate that we were right all along? That's expertise, not bias against anyone or anything. I think it's time the anti-Groklaw guys cut it out. You were wrong, Groklaw called it right, and you should just admit it like men.

But hold the Godiva and Toblerone for a moment. If I'm a Linux user, do I really want SCO v. IBM to be called off without a definitive ruling on SCO's claims?

If I were a betting woman, I'd bet he is a Microsoft man. I bet too that his company gets a lot of Microsoft ad money, so I think we can stop worrying about his Linux use. As for SCO's claims, the court of public opinion decided long ago that SCO had no legitimate claims, with a few holdouts of course, who may or may not have reasons for their views. But no matter, since SCO v. IBM hasn't been called off.

A victory by IBM could have quashed for good the notion that Linux infringes on Unix. If the case is dropped, then questions will still linger and might later be revived—by Novell or someone else.

IBM will pursue that victory, I'm guessing. This case will not be dropped. As I earlier explained, even if IBM won every single one of its summary judgment motions, its counterclaims are still on the table. SCO said early on that it would pursue to its utter destruction, IIRC, and I believe that will be exactly what will happen, but in any case, it's not over, and neither lawsuit will be dropped, unless there is a settlement of some kind. With normal litigation that is what you'd expect to see after a devastating ruling like this one, but SCO isn't normal, and there is some doubt as to how willing Novell or IBM would be to agree to settle. But don't forget that in SCO's statement about the ruling, it mentioned that it is an exclusive licensee of the trademark, and it has earlier indicated that it has some theory whereby an exclusive licensee can assert copyright infringement claims. I doubt it, but who knows what SCO will try? One thing I feel confident in predicting is that SCO doesn't give up. Don't you remember the DaimlerChrysler case, where SCO was practically run out of court on a rail by the judge, and they persisted in the assertion that they'd be back to pick up on that ridiculous case someday?

To boot, IBM was winning. Judge Brooke Wells last year tossed 187 out of SCO's 298 claims in the case. Now it appears the game will be called off in the top of the fifth with IBM ahead on the scoreboard.

No. Sigh. She threw out some evidence SCO tried to slip in a back door after discovery was over and said SCO couldn't add new claims. All of SCO's original claims remained, as you can read in their Complaint. The new ruling from Kimball has knocked some out, but Wells didn't do that last year. Also, SCO had 294 items, not 298, on its original Final Disclosures list. After SCO abandoned one of its items, that left 293. Most of them were "methods and concepts" for which SCO offered no code at all, the judge found. Here's part of what she wrote:
In December, near the beginning of this case, the court ordered SCO to, "identify and state with specificity the source code(s) that SCO is claiming form the basis of their action against IBM." Even if SCO lacked the code behind methods and concepts at this early stage, SCO could have and should have, at least articulated which methods and concepts formed "the basis of their action against IBM." At a minimum, SCO should have identified the code behind their methods and concepts in the final submission pursuant to this original order entered in December 2003 and Judge Kimball's order entered in July 2005.

I'm explaining this carefully mainly for historians, who hopefully will get their information from Groklaw, and not Information Week. I think maybe Information Week should start reading Groklaw with more respect, actually. At least use the resources. Seriously.

Novell has not threatened to sue Linux users, but what happens if the company, or its Unix rights, are at some point sold to a more, uh, territorial organization. You know, like Microsoft—which says other parts of Linux infringe on Windows. Indeed, Judge Kimball's affirmation of Novell's ownership of Unix makes the company a more attractive takeover target starting Monday.

This seems to be the new FUD. I've seen it in more than just this article, so I assume it's the new "get the facts" pr spreading. First of all, there is no company on earth more territorial than SCO. They win that contest hands down. And Novell has no interest in selling anything like that to Microsoft. At the moment, it holds aces. And frankly, just between us chickens, if Microsoft even tried to buy them, I'd say the antitrust issues that are already floating in the air would seriously come home to roost on Microsoft's head kerplunk, and then it would be most interesting to do discovery on precisely what role it has been playing in the SCO drama. But Novell can't go after Linux and neither could Microsoft based on these copyrights, I don't think. Novell has already waived, for starters, and it released it all under the GPL. So even if it sold them, that goes with the package, and there's no taking that back.

And whoever picks up the gauntlet next time may have deeper pockets than SCO to go up against IBM. (Or they might be smart enough not to name as primary defendant a company with $90 billion in annual revenues.)

That might be hard to achieve, considering that Boies Schiller foolishly, in my view, agreed to a cap on legal fees so that it has to go all the way through an IBM appeal for free. And let's not forget the millions that Microsoft and Sun provided SCO, with BayStar telling us that it helped on the referral of Microsoft. Does anyone have more money than Microsoft? If so, it's at a level where it surely plays no role in the outcome of legal disputes in courtrooms in Utah.

Bottom line: Novell's victory over SCO could result in one of the big questions around Linux remaining unanswered. That's not good if you're a corporate IT manager contemplating a deployment of the open source OS. Better if SCO v. IBM had been allowed to play through.

In your dreams. The market knows already what to make of the SCO claims. And stay tuned, folks. SCO v. IBM will play through, despite what you are reading in the funny papers.

And someone needs to explain to Microsoft and SCO, I think, that even if it could cook up some more devilish ways to attack Linux, it's not working. No one admires a bully. They are like a woman who has had too much plastic surgery. After a while, it's not worth doing it again, because all you get is ugly.

Update: I found this indication in an article on Groklaw from August of 2004 that OpenServer at least didn't change from 1995 until 2004, the date of the article, a date which is after SCO launched its litigation against IBM:

"SCO Group says it derives about two thirds of its revenues from OpenServer. The application is based on SCO Unix, which first shipped in 1989. The current version, OpenServer 5, was launched in 1995. SCO estimates there are about 500,000 installs of its flagship product. . . .

The article had a link to an article that day on News Factor, but the link doesn't work now. I'm sure though that the information can be confirmed, though, and that little nugget means to me that SCO has nothing to use from OpenServer against any of the parties it sued. Since SCO specifically mentioned OpenServer as its own in its statement on Sunday, this find is meaningful. It means the judge's ruling that new materials would belong to SCO if they had any is immaterial in the real world, because there weren't any, according to this article which is reporting what SCO said.

Here's what the link was, for anybody wanting to try to sleuth it out: http://www.newsfactor.com/section.xhtml?category=128?story_title= SCO-Offers-Peek-at-Latest-OpenServer-App&story_id=26139

Update 2: Someone found it. It's now here.

Update 3: More confirmaton in this IT Jungle article, "SCO OpenServer 6 Launches with Unix SVR5 Kernel", that OpenServer remained essentially unchanged until Legend:

While OpenServer 5.0.7 is notable in that it provided some limited support for UnixWare 7 applications, OpenServer 5 was based on the Unix System V Release 3.2 kernel, which is very old and has some pretty severe limitations in terms of threading, main memory, and file system support. That's why SCO bought UnixWare and the rights to the Unix operating system created by AT&T from Novell to have a more scalable Unix than OpenServer. To preserve backward compatibility with the large installed base of OpenServer customers--there could be as many as 1 million servers installed in the world that are running OpenServer and UnixWare--SCO has not messed with that kernel, even as Unix System V was updated to Release 4 and then Release 5. With Legend, that changes, and OpenServer now uses the SVR5 kernel while maintaining backward compatibility with all prior generations of OpenServer, Unix, and Xenix Unixes from SCO.

Update: McDougall has posted a kind of rebuttal. I'd appreciate it if you didn't leave any comments about his article there. Thanks. Groklaw doesn't do flame fests.


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