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SCO Files its Appeal Brief in SCO v. Novell
Friday, March 06 2009 @ 09:22 PM EST

SCO has filed its appeal brief [PDF], appealing the decision in SCO v. Novell. Novell has until April 9 to file its brief in response, plus any appeal issues it might itself wish to raise.

Evidently, the court found SCO's first filing deficient, and so it told SCO [PDF] to correct the deficiencies, which it has done. One deficiency was that SCO failed to tell the appeals court why it felt oral argument was necessary. So, SCO now tells them, in essence, that the case is *complicated*.

Tell me about it. I could write a book. SCO tells the court it expects the court will have questions, so it wants to be there in person to answer their questions. I'm not sure that's a winning argument with a court of appeals, which is generally interested in efficiency, whenever possible.

I don't know if this filing will make it, but presumably so. The summary of SCO's argument is on page 27 of the filing, page 37 of the PDF. Here it is in a PJ nutshell: "No Fair! We Want a Do-Over!"

With a bit more detail, here are their basic arguments, based on a quick reading of the summary:

  • SCO did too get the UNIX copyrights. The judge failed to consider Amendment 2 to the APA, which SCO feels replaced earlier contract language, and the judge was wrong to say Amendment 2 wasn't a sufficient copyright transfer document.
  • The judge erred in ruling that Amendment 2 only gave SCO an "implied license" to the copyrights. If that was the intent, the language would have said so, plus there wouldn't have been a changed language in the Schedule of Assets sold. Anyway, you don't need Amendment 2 if the APA had already conferred an implied license.
  • The judge didn't consider the extrinsic evidence from the witnesses even though he earlier said the APA was ambiguous on the subject of copyright transfers.
  • The judge erred in ruling that Novell had the right to waive SCO's claims against IBM, for the same ambiguous/extrinsic evidence argument. And it's not fair to let them have an "unfettered right, for whatever reason Novell chooses, to take away from SCO all of the rights under the licenses and agreements Novell had transferred."
Off the top of my head, I remember things differently. The judge certainly did consider Amendment 2. Here's one part of what he wrote:
These legal principles, however, do not suggest that the court should analyze the transfer of copyright issue without giving any consideration to the text of the original APA. Rather, the court must consider the original APA, the agreement executed in connection with the APA's closing, Amendment No. 2, and Amendment No. 2's relationship to the original APA and the agreements executed in connection with its closing. The court concludes that the proper way to analyze the issue, therefore, is to look at the Agreements in turn in the same chronological order that the parties entered the agreements.
Duh. And he wrote for pages in the 102-page ruling [text] on August 10, 2007 about the witness testimony, which he found less credible than Novell's, even if the witnesses were what one should use to decide the matter. Here's one quick sample:
The relevance of much of the testimony is questionable because few have a recollection of actual discussions regarding the transfer or retention of copyrights. Many witnesses give an opinion as to whether they think the copyrights should have transferred, but they fail to establish an adequate foundation to support their opinion.
For example, here's what the judge wrote about some of SCO's witnesses, Robert Frankenberg, Alok Mohan, Doug Michels, and Jim Wilt:
Robert Frankenberg, then-President and CEO of Novell, testified in a deposition that his initial intent in entering into negotiations, intent at the time the APA was signed, and intent when the transaction closed was that Novell would transfer copyrights to UNIX and UnixWare technology to Santa Cruz. ... This testimony is obviously at odds with the minutes of the Board meeting and the testimony of the chief drafters of the APA for Novell. Somewhat self-contradictorily as well, Frankenberg also testified that he had high-level discussions with the negotiating team and recalled discussing the fact that retaining UNIX copyrights would facilitate Novell's exercise of rights with respect to capitalizing the SVRX revenue stream and facilitate the negotiation of SVRX License buyouts.... The evidence submitted as to Frankenberg's role shows that he was not intimately involved in the deal. Frankenberg testified that he was involved in high-level discussions but was not involved in the negotiation or drafting of the APA. He further stated that he did not review the details of the deal and he signed the APA on the basis of the recommendation of his team....

Alok Mohan, CEO of Santa Cruz at the time of the APA, testified that he believes Santa Cruz bought the whole business, including copyrights.... But he was not aware that the subject of UNIX copyrights was specifically addressed in the contract.... Mohan testified that he was involved in the negotiations "only at a high level," not in the "detail level of negotiations."... He was also not involved in the "specific drafting of the documents," was not on a distribution list of individuals at Santa Cruz to receive drafts of the agreement, and did not recall the firm or attorneys Santa Cruz hired to represent it in the transaction.... He testified that "the issue of copyrights in or out was not discussed with me."... Furthermore, he contends that Novell did not tell him that it had kept the copyrights, but he also admits that Novell did not tell him that it had given them to Santa Cruz either.... He did believe, however, that Santa Cruz "tried to make the document represent . . . the intent . . . . And we captured, I thought at that time, what the intent was." ...

Doug Michels, Senior Vice President of Santa Cruz at the time of the APA, stated in his deposition 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 is 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."... Michels testified that he was very involved in the initiation of the APA, but that he was only involved in two or three meetings with Novell after the initial discussion about the deal.... He did not draft any language of the APA or review drafts of it. He does not recall "even vaguely" any debates in which he participated regarding the drafting of the APA.... He also does not recall any discussion by anyone either at Novell or Santa Cruz regarding the transfer or retention of UNIX copyrights....

Jim Wilt, a business development executive at Santa Cruz, testified that it was his understanding and intent during the negotiations that SCO would acquire Novell's entire UNIX and UnixWare business, including the copyrights.... He viewed the copyrights as essential to the acquisition of a software company. ... Although SCO refers to Wilt as the lead negotiator for Santa Cruz, Ed Chatlos testified that Wilt "dropped out" in the latter half of the negotiations of the Santa Cruz-Novell deal and Wilt, himself, concurred that he was less active at the end of the negotiations when the APA was being drafted. ... He also testified that the lawyers did the drafting of the APA. Wilt testified that he did not recall anyone from Novell stating that copyrights were being transferred....

See what I mean? But read it for yourself. Here's my favorite part, maybe because it's about a paralegal:
SCO also relies on the understanding of Kimberlee Madsen, a paralegal in Santa Cruz's legal department.... She testified that she participated in the negotiations leading up to the drafting of APA and reviewed and drafted some of the agreement.... She testified that it was always her understanding that the UNIX copyrights were part of the assets Santa Cruz purchased and she could not recall anyone in the negotiation team discussing the retention of copyrights.
And what might *that* indicate, if you are not SCO? If a person who helped draft the APA and attended the meetings, some of them, never heard anybody specifically mention retaining the copyrights, does that tell us that they were not retained or that nobody was talking about the copyrights because they were on the excluded assets list, maybe? Here's her deposition, if you are desirous of digging a bit deeper. And here's one salient sentence from her testimony that day: "I don't recall any conversations with Novell pertaining to copyrights." How in the world would a paralegal draw up copyright transfer language if no one ever even brought it up? Not once?

Why appeal something that you are so likely to lose? I don't know. But even if the appeals court were to rule that the judge should go back and reeeeally pay attention to the witnesses, or that it has to go to a jury to decide, what conclusion would he/they still likely come to? You don't have to be a lawyer to figure that out, so why do this?

Because this is SCO, which has its own alternate universe.

I notice on first quick reading that SCO doesn't seem to be appealing anything from the July 16, 2008 ruling. We'll see if Novell does. If I were Novell, I sure would.

Here are the filings (warning for those on dial-up or other slow connection -- the appeal brief is 87 pages/300 kilobytes, and the Appendix with exhibits is 182 pages/6 megabytes):

03/04/2009 - Appellant's deficient brief filed by SCO Group. Type of deficiency: No prior/related appeals statement, no reasons for oral argument (Appendix is fine). Appellant's brief due on 03/16/2009 for SCO Group.

03/06/2009 - Errata sheet filed by SCO Group. Original and Served on 03/06/2009. Manner of Service: US mail.

03/06/2009 Appellant brief filed by SCO Group. Original and 7 copies.. Served on 03/06/2009 by email. Oral argument requested. Appendix filed (partial). Original and 2 copies. Appendix pages: 16,917. Appellee's brief due 04/09/2009 for Novell, Inc.

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