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SCO Seems to Be Trying to Ramp Up AutoZone - Updated
Monday, September 22 2008 @ 09:15 PM EDT

SCO sent the AutoZone judge a letter [PDF], which leaves me in little doubt that SCO yearns to ramp up the AutoZone case, which SCO tells the judge is in part about OpenServer. The letter is styled a status report.

As you know, they had the status hearing today, and we'll have a transcript for you when it's available. Meanwhile, time to dig out the kites, so you can fly them in the wind SCO creates with its mighty spin on what happened in court in Utah in SCO v. Novell.

Here's Groklaw's AutoZone Timeline page, so you can find all the documents in the case so far. Note that the last status report, after the court ordered it, was filed by SCO on July 14, 2008. Prior to that, SCO last filed a status report [PDF] on July 16, 2007. See what I see? It's ramping up. For a year, despite a court order requiring reports every 90 days, no one bothered because SCO filed for bankruptcy and filed a Notice [PDF] with the AutoZone court letting the court know that any claims against SCO had been stayed. But SCO is not under a stay on its own claims against others, I don't believe, so who knows? Maybe they hope to have a duel with AutoZone, where only one side gets to hold a sword. Here's SCO's complaint against AutoZone, if you want to refresh your memory.

Here's the docket entry:

75 - Filed: 09/19/2008
Entered: 09/22/2008
Letter
Docket Text: LETTER to Judge Jones from Richard Pocker. (AXM)
Here's a salient paragraph from today's letter, so you can see the spin:
In the Trial Order, the Court also made and confirmed key findings regarding SCO's ownership rights in UNIX. First, the Court confirmed that SCO owns the UNIX business, that SCO owns all UNIX and UnixWare technology except pre-1996 copyrights, and that SCO has the authority to license UNIX under its SCOsource program. Importantly, the Court also found that Novell has no claim to any UnixWare royalties because any obligation SCO may have had to pay Novell a portion of those royalties expired at the end of 2002. Second, with respect to OpenServer, one of the UNIX operating systems that SCO alleges AutoZone misused, and which AutoZone has admitted using to help it migrate its applications to Linux, the Court found that "Novell never owned, or had a license to, OpenServer," that "OpenServer was Santa Cruz's flagship product through the 1990s," and that "OpenServer produces two-thirds of SCO's UNIX revenue and has thousands of customers, including small to mid-sized businesses and large corporations, such as McDonald's."

Is that how you would describe the ruling? I know. They are the amazings. Here's the August 10 ruling in SCO v. Novell, which is the ruling about copyrights staying with Novell. And here's the July 16 ruling SCO pretends is about that. SCO tells it as if they won a great victory, that they beat back a Novell claim to UnixWare licenses. That is so bogus. Novell's claim was to pre-1995 UnixWare and UNIX copyrights, and they won that. They never claimed any post-1996 UnixWare. From the July 16 ruling:

Novell acknowledges that it is not entitled to royalties from any UnixWare licenses. For example, at trial, Novell did not seek any payments with respect to the stand-alone UnixWare license in Section 3 of the Microsoft Agreement.

Novell did not ask or suggest to Santa Cruz that it should remit any portion of the fees or royalties that Santa Cruz received under any UnixWare license even where System V prior products were listed as part of those licenses. Novell never asked or suggested to Santa Cruz that it should undertake to allocate to the System V prior products any value of the fees or royalties that Santa Cruz received under any UnixWare license granting rights to such older versions of System V.

What they claimed regarding the copyrights was what they won. The court ruled, "Novell is the owner of the UNIX and UnixWare copyrights". Period. What the July trial was about was not ownership but allocation: how much of the SCOsource licenses were SVRX-based and hence Novell's? That's another part of the August 10th ruling, by the way, that there is no temporal limit on SVRX license royalties. They are Novell's to time indefinite. Here is what the court noted expiring in 2002:

The parties agree that the requirements for subsection (b)(i) to apply were never met. Pursuant to these terms, any royalty obligation that Santa Cruz could have had to Novell with respect to UnixWare products terminated on December 31, 2002.
Some victory. "The parties agree." So it wasn't something the court ruled on after a dispute. Does that match SCO's description? See what I mean about amazing?

And here's the meat of the copyright infringement claim from SCO's complaint against AutoZone:

17. Registrations in the Copyrighted Materials have also been obtained by SCO and its registrations in the following additional registrations of software code:
UNIXWARE 7.1.3 TX 5-787-679 UNIX SYSTEM V RELEASE 3.0 TX 5-750-270
UNIX SYSTEM V RELEASE 3.1 TX 5-750-269
UNIX SYSTEM V RELEASE 3.2 TX 5-750-271
UNIX SYSTEM V RELEASE 4.0 TX 5-776-217
UNIX SYSTEM V RELEASE 4.1ES TX 5-705-356
UNIX SYSTEM V RELEASE 4.2 TX 5-762-235
UNIX SYSTEM V RELEASE 4.1 TX 5-762-234
UNIX SYSTEM V RELEASE 3.2 TX 5-750-268
18. SCO and its predecessors in interest created the Copyrighted Materials as original works of authorship, and, as such, the Copyrighted Materials constitute copyrightable subject matter under the copyright laws of the United States. The Copyrighted Materials were automatically subject to copyright protection under 17 U.S.C. Section 102(a) when such programs were fixed in a tangible medium of expression. Copyright protection under 17 U.S.C. Section 102 and 103 extends to derivative works. Derivative works are defined in 17 U.S.C. Section 101 to include works based on the original work or any other form in which the original work may be recast, transformed, modified or adapted.

19. The Copyrighted Materials include protected expression of code, structure, sequence and/or organization in many categories of UNIX System V functionality, including but not limited to the following: System V static shared libraries; System V dynamic shared libraries; System V inter-process communication mechanisms including semaphores, message queues, and shared memory; enhanced reliable signal processing; System V file system switch interface; virtual file system capabilities; process scheduling classes, including real time support; asynchronous input/output; file system quotas; support for Lightweight Processes (kernel threads); user level threads; and loadable kernel modules.

20. On information and belief, parts or all of the Copyrighted Material has been copied or otherwise improperly used as the basis for creation of derivative work software code, included one or more Linux implementations, including Linux versions 2.4 and 2.6, without the permission of SCO.

21. Defendant has infringed and will continue to infringe SCO’s copyrights in and relating to Copyrighted Materials by using, copying, modifying, and/or distributing parts of the Copyrighted Materials, or derivative works based on the Copyrighted Materials in connection with its implementations of one or more versions of the Linux operating system, inconsistent with SCO’s exclusive rights under the Copyright Act.

22. Defendant does not own the copyright to the Copyrighted Materials nor does it have permission or proper license from SCO to use any part of the Copyrighted Materials as part of a Linux implementation.

See any OpenServer anywhere? However, in SCO's Report on Discovery, back in 2005, SCO told the court this:
Contrary to public statements by AutoZone in open court and an Internet posting of AutoZone's former Senior Technology Advisor to the effect that no SCO libraries were copied during AutoZone's migration to Linux, the limited discovery ordered by this Court has uncovered extensive copying (over 110,000 copies) of what SCO believes to be programs containing SCO proprietary OpenServer code.
AutoZone immediately filed an outraged denial:
SCO contends that AutoZone has copied tens of thousands "of what SCO believes to be programs containing SCO proprietary code." (SCO Report at 2.) The implication of this and similar representations in the SCO Report is that AutoZone has copied tens of thousands of SCO programs or files. In reality, the expedited discovery process revealed the existence of only a handful of unique SCO files on AutoZone's servers, and AutoZone has licenses to use virtually every one of these files....

In this case, despite nine months of discovery, SCO is unable to establish that code found on AutoZone's computers infringes any code in which SCO can legitimately claim to own any rights it could assert against AutoZone. This would appear to be one of the principle reasons SCO decided not to file a motion for preliminary injunction against AutoZone, in addition to the fact that any claim for preliminary injunction would be moot because AutoZone voluntarily deleted all SCO compiled code from its servers as an accommodation to SCO.

Regardless of why SCO elected not to move for a preliminary injunction, no legitimate reason existed for SCO to file its Report with the Court. The Report was unnecessary and contained numerous misstatements and omissions. Because of SCO's decision not to move for a preliminary injunction, AutoZone submits that all issues in this case are now properly stayed pending the resolution of the related IBM, Novell, and RedHat cases without need for further briefing by either party regarding any issue.

Unfortunately, this is the judge who ordered discovery when SCO never even asked for it, so likely SCO suspects that their best hope is in an attempted resurrection in Nevada. (I can't help but notice that the letter was filed on the 19th but only showed up on the 22nd, too late for any commentary that might have been helpful prior to the hearing.) After all, Autozone had raised the issue that SCO had to be able to prove it owns the copyrights to be able to bring a copyright infringement action, and so everything was stayed until there was a ruling on that in IBM. SCO seems to want to suggest that the issue of ownership is now resolved. But it forgets something I remember from the AutoZone hearing on September 9, 2004, when AutoZone's attorney, David Stewart, was arguing for an emergency stay:

Stewart: If the court in Utah rules that Novell did not assign the copyrights, there is no case. This case is over.

Judge Jones: Sounds likely. I'm not so ruling, yet, because I don't have anything in front of me, but that sounds -- sounds to me like you're right on.

In fact, the simple truth is, Judge Dale Kimball's ruling in SCO v. Novell back in August 10, 2007 was that Novell did not assign the copyrights:

For the reasons stated above, the court concludes that Novell is the owner of the UNIX and UnixWare copyrights.
He said SCO *might* have some in anything it developed post 1995, but SCO has yet to point to any such code. Not a single line:
The parties, however, have not specifically addressed whether any of SCO's copyright infringement claims are based on copyrights SCO may have obtained in derivatives of the technology included in the Assets. In the copyright ownership discussion, Novell recognized that SCO would have the copyright to the new merged product. Novell also recognized that joint copyright notices are used that demonstrate a copyright ownership by SCO as of 1996.
They would have had copyright on the merged product they intended to develop. But assuming they must have a copyright and proving it are two different things. Where are the registered copyrights?

So, the spin factory is starting to whir, and this time it's supposedly all about OpenServer. So, hold on to your hats. Here we go again. Or maybe I should say still. SCO is unable to just say, Sorry. My bad.

Update: Two more docket entries, just telling the lawyers to sign up for the digital court system:

76 - Filed & Entered: 09/23/2008
Notice of Non-Compliance with Special Order 109
Docket Text: (2nd Notice) PURSUANT TO SPECIAL ORDER 109: that Douglas Bridges, Scott E. Grant and James Allen Harvey are in violation of Special Order 109. Participation in the electronic filing system became mandatory for all attorneys effective January 1, 2006. You are required to register for the Courts Case Management and Electronic Case Filing (CM/ECF) program and the electronic service of pleadings. Continued failure to abide by Special Order 109 will be brought to the courts attention for appropriate action. Please visit the Courts website www.nvd.uscourts.gov, then select CM/ECF Info, to register the Attorney(s). (no image attached) (RFJ)

77 - Filed & Entered: 09/23/2008
Notice of Non-Compliance with Special Order 109
Docket Text: (2nd Notice) PURSUANT TO SPECIAL ORDER 109: that Mark J. Heise, Robert A. Magnanini and David S. Stone are in violation of Special Order 109. Participation in the electronic filing system became mandatory for all attorneys effective January 1, 2006. You are required to register for the Courts Case Management and Electronic Case Filing (CM/ECF) program and the electronic service of pleadings. Continued failure to abide by Special Order 109 will be brought to the courts attention for appropriate action. Please visit the Courts website www.nvd.uscourts.gov, then select CM/ECF Info, to register the Attorney(s). (no image attached) (RFJ)

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

September 18, 2008

VIA HAND-DELIVERY

The Honorable Robert C. Jones
United States District Judge
District of Nevada
[address]

Re: The SCO Group, Inc. v. AutoZone, Inc. CV-S-04-0237-RCJ-LRL

Dear Judge Jones:

In anticipation of the status conference that the Court has scheduled for this Monday, September 22, 2008, and in light of the recent trial decision in the SCO v. Novell litigation. The SCO Group, Inc. ("SCO") respectfully submits this status report to apprise the Court of developments in that case since our last update on July 14, 2008.

On July 16, 2008, the Court entered its Findings of Fact, Conclusions of Law, and Order (the "Trial Order"), ruling that:

1. The SCOsource agreements with Linux end-users were not SVRX Licenses and therefore Novell is not entitled to revenue from those agreements;

2. The 2003 SCOsource agreement with Microsoft contained an SVRX Licenses that was incidental to the UnixWare license in the agreement, and therefore SCO was authorized to enter into the SVRX License and Novell is not entitled to revenue from the agreement;

3. The 2003 SCOsource agreement with Sun also contained an authorized incidental SVRX License and Novell is not entitled to revenue attributable to that license; and

4. The same Sun agreement contained an unauthorized amendment of a prior UNIX agreement and Novell is entitled to $2,547,817 of the revenue from the Sun agreement as attributable to that amendment. (Novell originally claimed that it was entitled to all the revenue from the Sun, Microsoft, and SCOsource agreements, totaling approximately $30,000,000 plus interest, but shortly before trial, Novell conceded that it would not pursue a significant part of the Microsoft agreement but dropped its claim below $20,000,000).


The Trial Order also directed Novell to file a brief identifying the amount of prejudgment interest it seeks. On August 29, 2008, Novell filed an Unopposed Submission Regarding Prejudgment Interest, informing the Court that the parties agree that Novell is entitled to $918,122 in prejudgment interest through that date, plus $489 per day thereafter until the entry of final judgment, based on the Court's $2,547,817 award.

The Trial Order also directed Novell to file within ten days of the Order a proposed Final Judgment consistent with the Court's orders and the parties' stipulations dismissing claims. In response, Novell informed SCO and the Court that "entry of Final Judgment is inappropriate given the pendency of claims subject to an arbitration-related stay and given the Bankruptcy Court's reservation of issues pertaining to the entry of a constructive trust." SCO proposed, as Novell put it, "a resolution to Novell's objections to the entry of Final Judgment." First, based on SCO's tracing of revenue from the 2003 Sun agreement, Novell agreed that at most $625,487 of SCO's current assets were traceable as trust funds. Second, SCO proposed dismissing its stayed claims with prejudice on the basis of the Court's summary judgment order of August 10, 2007. On August 29, 2008 in its Submission Regarding the Entry of Final Judgment, Novell informed the Court of the parties' agreement as to the trust amount, but Novell stood by its position that final judgment could not be entered because of the stayed claims.

In order to have a final judgment entered as the Court had ordered, on September 15, 2008, SCO filed a Motion for Entry of Final Judgment, in which SCO requested permission to dismiss its stayed claims with prejudice on the basis of the Court's summary judgment rulings, moved the Court to enter Final Judgment in the case, and moved the Court to certify the Court-resolved claims under Rule 54(b) in the event the Tenth Circuit views the Final Judgment as lacking finality. SCO intends to appeal the Court's adverse summary judgment rulings at the earliest opportunity.

In the Trial Order, the Court also made and confirmed key findings regarding SCO's ownership rights in UNIX. First, the Court confirmed that SCO owns the UNIX business, that SCO owns all UNIX and UnixWare technology except pre-1996 copyrights, and that SCO has the authority to license UNIX under its SCOsource program. Importantly, the Court also found that Novell has no claim to any UnixWare royalties because any obligation SCO may have had to pay Novell a portion of those royalties expired at the end of 2002. Second, with respect to OpenServer, one of the UNIX operating systems that SCO alleges AutoZone misused, and which AutoZone has admitted using to help it migrate its applications to Linux, the Court found that "Novell never owned, or had a license to, OpenServer," that "OpenServer was Santa Cruz's flagship product through the 1990s," and that "OpenServer produces two-thirds of SCO's UNIX revenue and has thousands of customers, including small to mid-sized businesses and large corporations, such as McDonald's."


SCO looks forward to discussing the status of the case with the Court as scheduled.

Respectfully submitted,

Richard J. Pocker

cc: James Pisanell, Esq. (via facsimile)
David S. Stone, Esq. (via facsimile)


VIA HAND-DELIVERY

The Honorable Robert C. Jones
United States District Judge
District of Nevada
[address]


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