We start with 629 [PDF], Novell's Motion in Limine No. 2 to Determine that First Amendment Defenses Apply to Slander of Title and 630 [PDF], Novell's Motion in Limine No. 3 to Determine that SCO is a Limited Purpose Public Figure. We already have Novell's motion in limine #1 as text here. You can find all of SCO's motions in limine as text that it also filed on February 8th in the previous article.

We'll divide up Novell's motions by category. On this page, you'll find the motions related to SCO's slander of title claim. As you read them, think about the SCO Group's position, that they would even sue Novell over this, and ask yourself, How reasonable are these people? It seems to me that in SCO's preferred universe, they get to make accusations and assertions in public, and no one is allowed to respond on pain of litigation. Is that America to you? No. Seriously. Here's SCO's Second Amended Complaint [PDF], so you can read their claim for yourself and form a reasoned opinion.

If you have some time to donate to this effort, please help us finish them up as text. We have readers who depend on screen readers, for one thing, and PDFs are a bit harder to work with, so from early days, Groklaw has tried to make the PDFs available also in plain text, and if you can lend a hand, that would be lovely. If we all do just a little bit, it's not burdensome on anyone. However, if you are already working on the Comes v. Microsoft exhibits, please continue with that project, if you don't mind.

As we did with SCO's motions, we'll leave off headers and signatures, for the sake of speed, so go by the PDF for anything important.

Novell's Motion in Limine #2, 629 [PDF]:

NOVELL'S MOTION IN LIMINE No. 2 TO DETERMINE THAT FIRST AMENDMENT DEFENSES APPLY TO SLANDER OF TITLE

I. INTRODUCTION

SCO claims that Novell slandered SCO's alleged title to the UNIX copyrights by falsely stating that SCO did not own the UNIX copyrights. (Second Am. Compl. ¶¶ 9-10, 91-92, Dkt. No. 96.) Novell has asserted the First Amendment as a defense. (Novell's Answer ¶ 136, Dkt. No. 115.) The First Amendment protects corporations, as the Supreme Court recently confirmed. Citizens United v. FEC, 2010 U.S. LEXIS 766 (U.S. Jan. 21, 2010) (Ex. 2A). Novell moves for a ruling that First Amendment defenses apply to SCO's slander of title claim, because the First Amendment applies to any claim based on an alleged "injurious falsehood."

I. FIRST AMENDMENT DEFENSES APPLY TO SLANDER OF TITLE

The Supreme Court held in New York Times Co. v. Sullivan, 376 U.S. 254, 280 (1964), that the First Amendment requires a public official to prove that a defamatory falsehood about his official conduct was made with "actual malice," meaning "knowledge that it was false or with reckless disregard of whether it was false or not." The Supreme Court later extended this defense to claims by private individuals who are "limited public figures."¹ The Supreme Court also extended this defense to claims for invasion of privacy and intentional infliction of emotional distress that are based on allegedly false or offensive speech. See Time, Inc. v. Hill, 385 U.S. 374, 390-91 (1967) (private individuals must prove "actual malice" on invasion of privacy claim based on allegedly false report on newsworthy matter); Hustler Magazine v. Falwell, 485 U.S. 46, 51-53 (1988) (First Amendment applies to intentional infliction of emotional distress claim based on "outrageous" caricature of Jerry Falwell, a public figure).

The Supreme Court relied on the same principle in all of these cases: First Amendment defenses to tort claims based on allegedly false speech are essential to ensure adequate "breathing space" for "uninhibited, robust, and wide-open debate" on matters of public concern. See, e.g., New York Times, 376 U.S. at 269-72; Time, 385 U.S. at 388; Hustler, 485 U.S. at 52.

Federal courts have relied on this principle in extending the First Amendment to other claims directed against an allegedly wrongful statement. The Tenth Circuit affirmed dismissal of an injurious falsehood claim based on a "negative outlook" bond rating, finding that this was a constitutionally protected opinion, and plaintiff had failed to identify any false statement of fact. Jefferson County Sch. Dist. No. K-1 v. Moody's Investor's Services, Inc., 175 F.3d 848, 856 (10th Cir. 1999). The Tenth Circuit held that the First Amendment also barred antitrust and tortious interference claims, rejecting the argument that those claims involved conduct rather than speech. Id. at 856-60. The Tenth Circuit cited the Supreme Court's concern about "the chilling effect on protected speech that might ensue if damages could be recovered on emotional distress claims for publications that were not provably false." Id. at 857, citing Hustler, 485 U.S. at 53-55. It also noted that the Ninth Circuit and other courts had "reject[ed] a variety of tort claims based on speech protected by the First Amendment," including trade libel, tortious interference, and disparagement.² Id.; see Bose Corp. v. Consumers Union, 508 F. Supp. 1249, 1270-71 (D. Mass. 1981) (First Amendment applies to product disparagement claim), rev'd on other grounds, 692 F.2d 189 (1st Cir. 1982), aff'd in relevant part, 466 U.S. 485 (1984).

Similarly, the California Supreme Court held that First Amendment protections "apply to all claims whose gravamen is the alleged injurious falsehood of a statement" as "constitutional protection does not depend on the label given the stated cause of action." Blatty v. New York Times, Co., 42 Cal. 3d 1033, 1042-1043 (1987).³ Thus, the First Amendment applies to claims for trade libel, negligence, and intentional and negligent interference with economic advantage that "have as their gravamen the alleged injurious falsehood of a statement..." Id. at 1037.

SCO's slander of title claim is explicitly based on Novell's allegedly false statement that SCO does not own the UNIX copyrights. While no court appears to have addressed whether slander of title is subject to the First Amendment, the above cases compel the conclusion that it is subject to the same First Amendment defenses that apply to any claim based on "injurious falsehood." Slander of title is closely related to injurious falsehood, trade libel, and other torts to which the First Amendment has expressly been held to apply. As Dean Prosser noted:

There is a tort which passes by many names. Sometimes it is called slander of title, sometimes slander of goods, or disparagement of goods, or trade libel, or unfair competition, or interference with prospective advantage....Under whatever name, the essentials of the tort appear to be the same. It consists of the publication...of false statements concerning the plaintiff, his property, or his business.

Dean William L. Prosser, Injurious Falsehood: The Basis of Liability, 59 Colum. L. Rev. 425, 425 (1959) (Ex. 2B); see also Direct Import Buyers Ass'n v. KSL, Inc., 538 P.2d 1040, 1042 (Utah 1975) (slander of title and injurious falsehood are similar); Art Metal-U.S.A., Inc. v. United States, 753 F.2d 1151, 1155 (D.C. Cir. 1985) (injurious falsehood and defamation have "always been very closely related," citing Restatement (Second) of Torts § 623A comment g (1977) (Ex. 2C)).

_________________

1 Gertz v. Robert Welch, Inc., 418 U.S. 323, 351-52 (1974) ("actual malice" must be shown by individual who became public figure by "voluntarily inject[ing] himself or [being] drawn into a particular public controversy," and First Amendment requires proof of fault even by a purely private individual).

2 The Tenth Circuit cited Unelko Corp. v. Rooney, 912 F.2d 1049, 1057-58 (9th Cir. 1990) (First Amendment applies to product disparagement, trade libel, and tortious interference); Henderson v. Times Mirror Co., 669 F. Supp. 356, 362 (D. Colo. 1987) (disparagement and intentional interference claims), aff'd, 876 F.2d 108 (10th Cir. 1989); So. Dakota v. Kansas City So. Indus., 880 F.2d 40, 50-54 (8th Cir. 1989) (tortious interference), overruled on other grounds, Warfield v. KR Entm't, Inc. (In re Federal Fountain, Inc.), 165 F.3d 600, 601 (8th Cir. 1999); and Eddy's Toyota of Wichita, Inc. v. Kmart Corp., 945 F. Supp. 220, 224 (D. Kan. 1996) (tortious interference).

3 Utah courts give substantial weight to California precedents concerning First Amendment rights, especially when interpreting the corresponding right under the Utah Constitution. See West v. Thomson Newspapers, 872 P.2d 999, 1016-17 (Utah 1994) (relying on California Supreme Court precedent in concluding that "the Utah Constitution protects expressions of opinion").

NOVELL'S MOTION IN LIMINE NO. 3 TO DETERMINE THAT SCO IS A LIMITED PURPOSE PUBLIC FIGURE

I. INTRODUCTION

SCO claims that Novell slandered SCO's alleged title to the UNIX copyrights by falsely stating that SCO does not own the copyrights. (Second Am. Compl. ¶¶ 8-10, 91-92, Dkt. No. 96.) SCO relies on statements allegedly made between May 28, 2003 and March 2004. (Id. ¶ 37.) These statements were after SCO had publicly asserted that the Linux operating system was an illicit copy of UNIX and that SCO's ownership of the UNIX copyrights entitled it to assert billion-dollar claims against IBM, Novell, and thousands of other Linux vendors and users.

Novell moves for a ruling that SCO is required to prove "actual malice" under the First Amendment ("constitutional malice") because SCO injected itself into the public controversy about SCO's alleged UNIX rights and thus became a "limited purpose public figure."¹

II. UNDISPUTED FACTS

SCO actively sought media coverage of its UNIX claims before Novell allegedly slandered SCO's title. As Judge Kimball noted, SCO made a "plethora of public statements concerning IBM's and others' infringement of SCO's purported copyrights to the UNIX software." (Order in SCO v. IBM at 10, Dkt. No. 398 (Ex. 3A).) Novell replied publicly "while the public was reacting to SCO's claim that use of Linux required a UNIX license." (Order in SCO v. Novell at 30, Dkt. No. 377.) SCO's media blitz included multiple press releases and statements, as well as threatening letters to 1,500 companies, including Novell, which asserted that Linux "infringes on [SCO's] UNIX intellectual property and other rights."² (Ex. 3E at 2.) SCO's PR firm, Schwarz Communications, provided SCO with weekly reports of upcoming press interviews and monthly summaries of the massive press coverage. (Exs. 3F, 3G.)

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SCO's UNIX claims ignited a firestorm of controversy. Media comments included:

• "Has SCO fired shot to start Linux war?" (2/11/03 InfoWorld, Ex. 3J at 1.)

• "The worst case scenario for the Linux community could be that everyone running Linux would have to pay licensing fees," and "[t]here also has been some concern that SCO-Caldera is planning to charge license fees for GNU, GPL, open source, free or otherwise public domain software." (2/5/03 MozillaQuest, Ex. 3H at NOVTR 5837.)

• Is SCO "Linux' New Worst Enemy"? (2/10/03 osOpinion.com, Ex. 3I at 1.)

  SCO "has filed a Dollars 1bn trade secrets lawsuit against IBM that could derail the massive momentum built up around the free Linux operating system" (3/8/03 The Financial Times, Ex. 3M; see 3/10/03 CNET News, Ex. 3N at 2), but "analysts questioned whether the lawsuit has merit." (3/7/03, NewsFactor.com, Ex. 3L at 1.)

• SCO "sent an unsettling letter to some 1500 companies worldwide," so "[i]f you use Linux, SCO has just threatened to sue you." "If the company actually has something to show, it's past time to put some cards on the table. As it is, SCO gives the impression of trying to destroy the Linux community away with words that have little backing in the real world." (5/14/03 LWN.net, Ex. 3O at 1.)

(See also Exs. 3G, 3K, 3P to 3S (additional press coverage and press clipping summaries).

III. SCO IS A LIMITED PURPOSE PUBLIC FIGURE

The First Amendment requires a "limited-purpose public figure" to prove by clear and convincing evidence that the statement at issue was made with constitutional malice, meaning "knowledge that [the statement] was false or with reckless disregard of whether it was false or not." World Wide Ass'n of Specialty Programs v. Pure, Inc., 450 F.3d 1132, 1136 (10th Cir. 2006) (citations omitted). "Limited-purpose public figure" includes a party that has "voluntarily injected" itself or has been drawn into a matter of "public controversy." Id.; Gertz v. Robert Welch, Inc., 418 U.S. 323, 351 (1974). Whether a party is a limited-purpose public figure is a question for the court to resolve. World Wide Ass'n, 450 F.3d at 1137.

A company that invites public comment through the media may be a limited public figure. Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 273-74 (3d Cir. 1980) (company was limited public figure as to quality of beef because ads "invited public attention, comment, and

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criticism"); Bose Corp. v. Consumers Union, 508 F. Supp. 1249, 1273 (D. Mass. 1981) (company "invited public attention" by advertising new loudspeaker and was thus limited public figure) (citation omitted), rev'd on other grounds, 692 F.2d 189, 197 (1st Cir. 1982) (reversing finding of constitutional malice), aff'd, 466 U.S. 485, 513 (1984) (no constitutional malice). "Public controversy" includes commercial matters affecting the public. Steaks Unlimited, 623 F.2d at 274 (beef promotion); Bose Corp., 508 F. Supp. at 1273 (loudspeaker quality); Paterson v. Little, Brown & Co., 502 F. Supp. 2d 1124, 1141-42 (W.D. Wash. 2007) (debate over origin of DOS computer operating system).²

Here, SCO aggressively sought media coverage of its UNIX claims by press releases and public statements issued before Novell made its allegedly slanderous statements. SCO's campaign was widely viewed as an attack on the entire Linux community and the open source principles on which Linux is based, with far-reaching implications. Thousands of companies and individuals had a direct interest in the debate over whether SCO had the right to demand license fees for software that SCO had released on an open source basis, and industry players and other members of the public actively participated in the debate. SCO not only "thrust" itself to the forefront of this controversy to influence its resolution (Waldbaum, 627 F.2d at 1297, 1300), SCO created the controversy. Thus, SCO is a "limited-purpose public figure" concerning its alleged UNIX rights and must prove that Novell acted with "constitutional malice."

_______________________

1 First Amendment defenses apply for the reasons in Novell's Motion In Limine No. 2.

2 SCO's press releases are at www.sco.com, and are submitted as Exhibits 3B to 3D. SCO has admitted issuing the press releases and sending the letters. (Reply to Novell's Counterclaims ¶¶ 41, 51, Dkt. No. 121; Novell's Counterclaims ¶¶ 41, 51, Dkt. No. 120.) SCO's letter noted that its suit against IBM was "widely reported and commented upon in the press." (Ex. 3E at 2.)

3 See also Waldbaum v. Fairchild Pubs., 627 F.2d 1287, 1297, 1299 (D.C. Cir. 1980) ("viability of cooperatives as a form of commercial enterprise" was "public controversy" because "debated publicly" and had "substantial ramifications for nonparticipants"); Carr v. Forbes, 259 F.3d 273, 279 (4th Cir. 2001) ("public controversy" includes dispute that "has received public attention because its ramifications will be felt by persons who are not direct participants"); World Wide Ass'n, 450 F.3d at 1137 (debate concerning residential treatment programs for troubled teens).

NOVELL'S MOTION IN LIMINE NO. 4 TO PRECLUDE SCO FROM CONTESTING THAT NOVELL HAD AN OBJECTIVELY REASONABLE, GOOD FAITH BASIS FOR ITS STATEMENTS REGARDING COPYRIGHT OWNERSHIP.

INTRODUCTION

Judge Kimball held, as a matter of law, that Novell's statements regarding ownership of the UNIX copyrights were based on Novell's "good faith interpretation" of the contracts and were not "objectively unreasonable." SCO did not appeal -- and the Tenth Circuit did not reverse -- these rulings. Therefore, the law of the case and the mandate rule preclude SCO from presenting any evidence or argument contrary to these rulings.

I. UNDISPUTED FACTS

SCO asserted in its Second Amended Complaint that Novell breached the implied covenant of good faith by "numerous acts of bad faith," including "making false and misleading statements denying SCO's ownership of the copyrights in UNIX and UnixWare." (Second Am. Compl. ¶ 99, Dkt. No. 96.) SCO also asserted that Novell engaged in "unfair competition" by "falsely claim[ing] ownership of SCO's copyrights in UNIX and UnixWare." (Id. ¶ 122.)¹

In April 2007, Novell moved for summary judgment on SCO's breach of contract and unfair competition claims. (Novell's Mot. for Partial Summ. J., Dkt. No. 272.) SCO argued in its Opposition that the implied covenant can be breached by "objectively unreasonable conduct," and that SCO's other concurrent motions and evidence showed that "Novell's statements were false and Novell knew it." (SCO's Mem. in Opp'n at 18-19, Dkt. No. 299.) Novell replied that the implied covenant did not "prohibit[] a party from making statements about its understanding of contractual rights," and that Novell's statements were not false for the reasons in its concurrent motions. (Reply ISO Novell's Mot. for Partial Summ. J. at 15-16, Dkt No. 332.)

In August 2007, Judge Kimball granted summary judgment for Novell on SCO's unfair competition and contract claims on several grounds. (Order at 63-65, 102, Dkt. No. 377.) Judge Kimball ruled that even if SCO owned the copyrights, Novell would be entitled to summary judgment on unfair competition because "there is no evidence that Novell's public statements

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were based on anything but its good faith interpretation of the contracts." (Id. at 64.) He also held that breach of the implied covenant requires "objectively unreasonable conduct," and that "there is no evidence to demonstrate that Novell's position was contrary to its own understanding of the contractual language or objectively unreasonable...." (Id. at 65.)

In November 2008, Judge Kimball entered a final judgment dismissing SCO's unfair competition and contract claims (as well as other claims) per his prior rulings. (Final Judgment at 1, Dkt. No. 565.) SCO appealed other rulings, but did not challenge the dismissal of its contract and unfair competition claims or the ruling that SCO failed to present evidence that Novell lacked an objectively reasonable, good faith basis for stating that SCO did not own the copyrights.² The Tenth Circuit did not reverse that ruling; on the contrary, it held that Novell had "powerful arguments" to support its position on copyright ownership, and that this issue presented "ambiguities" that "could legitimately be resolved in favor of either party." SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009).

II. THE LAW OF THE CASE AND THE MANDATE RULE BAR SCO FROM DISPUTING THAT NOVELL'S STATEMENTS WERE REASONABLE.

The law of the case doctrine bars relitigation of "issues previously decided, either explicitly or by necessary implication." Rohrbaugh v. Celotex Corp., 53 F.3d 1181, 1183 (10th Cir. 1995) (citation omitted).¹ This doctrine precludes relitigation of issues decided for one claim that are relevant to a different claim. See St. Paul Fire & Marine Ins. Co. v. Heath

2

Fielding Ins. Broking Ltd., No. 91 Civ. 0748 (MJL), 1995 U.S. Dist. LEXIS 19847, at *30-35 (S.D.N.Y. Dec. 30, 1995) (Ex. 4A) (law of the case bars negligent misrepresentation claim in view of prior dismissal of negligence claim). It applies to an alternate ground for a ruling, United States v. Sanchez, 35 F.3d 673, 678 (2d Cir. 1994), as well as to a ruling that the evidence is legally insufficient to support a claim. Rohrbaugh, 53 F.3d at 1183 (applying law of case to ruling that evidence was legally insufficient to show that plaintiff was a foreseeable buyer whom defendant had a duty to warn). This doctrine is subject to three "exceptionally narrow" exceptions for (1) substantially different evidence in a later trial; (2) intervening change in controlling legal authority; or (3) a clearly erroneous decision whose application would work a manifest injustice. United States v. Alvarez, 142 F.3d 1243, 1247 (10th Cir. 1998). ⁴

Here, Judge Kimball dismissed SCO's contract and unfair competition claims based on his ruling that SCO presented no evidence that Novell lacked an objectively reasonable, good faith basis for its statements regarding copyright ownership. SCO could have appealed this ruling, but failed to do so. None of the narrow exceptions apply. Therefore, Judge Kimball's ruling is binding law of the case that bars SCO from relitigating this ruling.

The mandate rule requires the same result. As this Court held in denying Novell's Rule 60(b) motion, "the mandate rule prevents a court from considering an argument that could have been, but was not, made on appeal." (Order at 3, Dkt. No. 620.) SCO could have argued on appeal that it had presented evidence that Novell lacked a good faith basis for its statements. SCO did not make this argument. Therefore, the Court should preclude SCO from presenting any evidence or argument that Novell did not have an objectively reasonable, good faith basis for its statements regarding copyright ownership.

___________________

1 SCO's contract and unfair competition claims include other theories not at issue in this motion;
references to these claims herein are limited to the "false assertion of copyright ownership" claim.

2 Copies of SCO's appellate briefs, as well as Judge Kimball's summary judgment ruling and the Tenth Circuit decision, were included with Novell's Motion In Limine No. 1. SCO's appellate briefs did not even mention Judge Kimball's determination that Novell had a reasonable, good faith basis for its statements.

3 See Williamsburg Wax Museum, Inc. v. Historic Figures, Inc., 810 F.2d 243, 250-251 (D.C. Cir. 1987) ("legal decision made at one stage of litigation, unchallenged in a subsequent appeal when the opportunity to do so existed, becomes the law of the case for future stages of the same litigation, and the parties are deemed to have waived the right to challenge that decision at a later time").

4 See also United States v. Alexander, 106 F.3d 874, 878 (9th Cir. 1997) (district court's failure to apply law of the case to previous ruling constituted abuse of discretion where none of the exceptions were met); Thomas v. Bible, 983 F.2d 152, 155 (9th Cir. 1993) (same).

3

Novell's #5, 632 [PDF]:

NOVELL’S MOTION IN LIMINE NO. 5 TO PRECLUDE SCO FROM RELYING ON NOVELL’S JUNE AND AUGUST 2003 STATEMENTS AS FACTUAL ASSERTIONS OF COPYRIGHT OWNERSHIP.

SCO claims that Novell slandered its title by asserting that “Novell, and not SCO, owns the UNIX and UnixWare copyrights.” (Dkt. No. 96, ¶ 91.) SCO’s complaint points to statements allegedly made by Novell from May 2003 to March 2004. (Id., ¶ 37.) However, SCO has distorted the substance of these statements. In particular, Novell’s June and August 2003 statements cannot reasonably be read as asserting copyright ownership as an objective fact. Thus, SCO should be barred from relying on these statements at trial to support its slander of title claim.¹

I. SCO MUST PROVE THAT NOVELL’S STATEMENTS CAN REASONABLY BE INTERPRETED AS FACTUAL ASSERTIONS OF COPYRIGHT OWNERSHIP

Slander of title requires publication of a false statement “disparaging claimant’s title.” First Sec. Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1256-67 (Utah 1989). Whether a statement is reasonably capable of a wrongful meaning is a question of law for the Court. West v. Thomson Newspapers, 872 P.2d 999, 1008 (Utah 1994). A court “must carefully examine the context in which the statement was made,” and cannot make this determination by “viewing individual words in isolation.” Id. at 1009. A statement is not actionable if the context makes clear that “the speaker is expressing a subjective view” or “interpretation,” rather than “claiming to be in possession of objectively verifiable facts.” Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1227 (7th Cir. 1993); see West, 872 P.2d at 1018-20 (view that politician misrepresented position to get elected was non-actionable opinion based on inference from true facts).²

1

II. NOVELL’S JUNE 6, 2003 LETTER AND PRESS RELEASE DID NOT ASSERT THAT NOVELL OWNS THE UNIX COPYRIGHTS

SCO’s complaint alleges that Novell’s June 6, 2003, letter “call[ed] SCO’s claims of copyright ownership ‘absurd’ and ‘unsubstantiated.’” (Dkt. No. 96, ¶ 37(d)(emphasis added).) This is incorrect. Novell did not refer to “SCO’s claims of copyright ownership.” Rather, Novell stated: “Your letter contains absurd and unfounded accusations against Novell and others.” (Ex. 5A.) The cited SCO letter accused Novell of (1) “maliciously…intend[ing] to harm SCO’s share value”; (2) timing a press release “to coincide with [SCO’s] earnings announcement”; and (3) “deceptive” conduct to “depress SCO’s stock price in violation of the Federal securities law.” (Ex. 5B.) Calling these accusations “absurd” is not a denial of SCO’s ownership claim, especially since Novell’s attached press release stated that Amendment #2 “appears to support” SCO’s claim. (Ex. 5A.) Novell’s letter cannot reasonably be read as asserting that SCO did not own the copyrights, and cannot be relied on to prove slander of title.³

III. NOVELL’S JUNE 26, 2003 LETTER DID NOT ASSERT THAT NOVELL OWNS THE UNIX COPYRIGHTS

SCO asserts that Novell’s June 26, 2003, letter to SCO “called SCO’s claims of ownership of UNIX and UnixWare 'simply wrong.’” (Dkt. No. 96, ¶ 37(e).) This is another distortion. Novell said that “SCO’s statements” are wrong, referring to SCO’s assertion that it owns “all of the intellectual property rights associated with UNIX and UnixWare,” including “the patents” and other rights. (Ex. 5C (emphasis added).) Novell explained that there was no evidence that “SCO owns all of the patents associated with UNIX and UnixWare.” (Id.) Novell was correct. SCO does not own the UNIX patents, as SCO’s witnesses have admitted.⁴ Thus, SCO cannot own “all” UNIX intellectual property, including patents. Novell’s further comment that Amendment No. 2 “raises as many questions as it answers” (id.), is a true statement that the amendment is unclear. See The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009) (the “language of Amendment No. 2 concerning the transfer of copyrights is ambiguous”).

IV. NOVELL’S AUGUST 4, 2003 LETTER DID NOT ASSERT THAT NOVELL OWNS THE UNIX COPYRIGHTS

SCO cites the statement in Novell’s August 4, 2003, letter that Novell “disputes SCO’s claim to ownership of these copyrights.” (Dkt. No. 96, ¶ 37(f).) But the only “fact” asserted is that Novell “disputes SCO’s claim,” which is correct. And SCO ignores the rest of the letter, which explains that (1) the APA excluded copyrights from the transfer; (2) the Amendment No. 2 exception is limited to copyrights “required” for Santa Cruz Operation to exercise APA rights; and (3) “[u]nless and until SCO is able to establish that some particular copyright is ‘required’ for SCO to exercise its rights under the APA, SCO’s claim to ownership of any copyrights in UNIX technology must be rejected.” (Ex. 5D.)

All of these points are correct. The Tenth Circuit held that the APA, by itself, “unambiguously excludes the transfer of copyrights.” The SCO Group, 578 F.3d at 1210. It also found that whether the copyrights transferred because they were “required” to exercise APA rights presents a triable issue that “could legitimately be resolved in favor of either party.” Id. at 1215-19. Novell’s statement of its subjective view on a legitimate dispute is not actionable.

________________

1 Novell’s Motions In Limine Nos. 6 to 8 concern Novell’s statements in December 2003 and early 2004; application of common law privileges to Novell’s statements; and Novell’s statements in copyright applications. As noted in Motions In Limine Nos. 6 and 7, Novell’s June and August 2003 statements were in private letters to SCO and thus cannot be potentially actionable until Novell later published them on its website, with copies of the parties’ other related correspondence.

2 See also Mast v. Overson, 971 P.2d 928, 932-33 (Utah Ct. App. 1998) (statements not defamatory as a matter of law when made in “ongoing heated debate” in reply to plaintiff’s public “assertions of wrongdoing”); Jefferson County Sch. Dist. No. R-I v. Moody’s Investor’s Servs., 175 F.3d 848, 855-57 (10th Cir. 1999) (“negative outlook” bond rating too subjective to state claim for injurious falsehood).

3 Oddly, SCO’s complaint cites Novell’s statement that Amendment #2 “appears to support” SCO’s ownership claim as a “wrongful assertion” by Novell of ownership rights in UNIX.” (Dkt. No. 96, ¶ 37(c).) This makes no sense. The plain meaning is to the contrary.

4 See Novell’s 4/20/2007 Sum. Jgt. Mot., Dkt. No. 276 at 23 & n. 7 (citing evidence that two SCO witnesses admitted that the APA’s exclusion of “all patents” meant that SCO did not own UNIX patents). SCO did not dispute this point in its opposition. (See Dkt. No. 325.)

NOVELL'S MOTION IN LIMINE NO. 6 TO PRECLUDE RELIANCE ON STATEMENTS IN DECEMBER 2003 AND MARCH 2004 THAT DO NOT CONSTITUTE FACTUAL ASSERTIONS OF COPYRIGHT OWNERSHIP.

INTRODUCTION

SCO's slander of title claim points to various statements that allegedly assert that "Novell, and not SCO, owns the UNIX and UnixWare copyrights." (Dkt. No. 96, ¶¶ 91, 37.) Novell demonstrated in its Motion In Limine No. 5 that SCO should be barred from relying on Novell's June and August 2003 statements because they cannot reasonably be read as asserting copyright ownership as an objective fact. Novell hereby moves to bar SCO from relying on Novell's later statements in December 2003 and March 2004 because they merely reiterate Novell's subjective opinion that Novell owns the copyrights, and are thus not actionable as a matter of law.

I. SCO MUST PROVE THAT NOVELL'S STATEMENTS CAN REASONABLY BE INTERPRETED AS FACTUAL ASSERTIONS OF COPYRIGHT OWNERSHIP

Slander of title requires a false statement "disparaging claimant's title." First Sec. Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1256-67 (Utah 1989). Whether a statement is reasonably capable of a wrongful meaning is an issue of law for the Court. West v. Thomson Newspapers, 872 P.2d 999, 1008 (Utah 1994). A court "must carefully examine the context in which the statement was made."¹ Id. at 1009. A statement is not actionable if the context makes clear that "the speaker is expressing a subjective view" or "interpretation," rather than "claiming to be in possession of objectively verifiable facts." Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1227 (7th Cir. 1993). Thus, the Utah Supreme Court held that an implied charge that a politician lied to get elected was not actionable as a matter of law because it was an inference based on the undisputed fact that he had changed his position on a key issue after being elected. West, 872 P.2d at 1018-20; see also Mast v. Overson, 971 P.2d 928, 934 (Utah Ct. App. 1998) (statements not defamatory when replied to "assertions of wrongdoing" in "spirited public

1

debate"); Jefferson County Sch. Dist. No. R-I v. Moody's Investor's Servs., 175 F.3d 848, 855-57 (10th Cir. 1999) ("negative outlook" rating too subjective to state injurious falsehood claim); Partington v. Bugliosi, 56 F.3d 1147, 1153-54 (9th Cir. 1995) (account of controversial criminal trials not actionable because rational interpretation and opinion about ambiguous subject).

II. NOVELL'S DECEMBER 2003 STATEMENT IS A SUBJECTIVE OPINION ON A LEGITIMATE DISPUTE BASED ON ITS PRIOR STATEMENTS

SCO's complaint relies on Novell's press release dated December 22, 2003.² (Dkt. No. 96, ¶ 37(i).) The full text of that press release is as follows (Ex. 6A (emphasis added)):

Novell believes it owns the copyrights in UNIX, and has applied for and received copyright registrations pertaining to UNIX consistent with that position. Novell detailed the basis for its ownership position in correspondence with SCO. Copies of our correspondence, and SCO's reply, are available here. Contrary to SCO's public statements, as demonstrated by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

The clear import of this statement is that Novell "believes" it owns the copyrights for the reasons "detailed" in its prior correspondence with SCO, copies of which are available on Novell's website, with SCO's reply.³ This is Novell's subjective view on a disputed legal issue that the Tenth Circuit found "could legitimately be resolved in favor of either party." See The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009) (further noting that the "language of Amendment No. 2 concerning the transfer of copyrights is ambiguous").

Novell's statement that it "continues to assert" ownership confirms the subjective nature of Novell's belief. This is the language of argument, not objective fact. This argumentative tone

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is reinforced by Novell's concurrent publication of SCO's reply of September 10, 2003, asserting that SCO "disagree[s] with [Novell's] analysis and conclusions," and that Novell's interpretation "ignores certain provisions of the relevant documents and does not consider the agreements between Novell and SCO as a whole." (Ex. 6B.) Novell's publication of its June 26 and August 4, 2003 letters also did not constitute a statement of copyright ownership because Novell's June letter did not claim ownership and its August letter merely expressed the qualified opinion that SCO did not own the copyrights "unless and until" SCO could show that a particular copyright was "required" to exercise APA rights. (Id.; see Novell's Motion In Limine No. 5, at 3.)

III. NOVELL'S MARCH 2004 TRADE SHOW REMARKS MERELY REPEAT NOVELL'S PRIOR OPINION

SCO's complaint alleges: "At the March 2004 Open Source Business Conference in San Francisco, Novell's Vice Chairman Chris Stone proclaimed during his keynote address that Novell 'still own[s] UNIX.'" (Dkt. No. 96, ¶ 37(k).) SCO has relied on a transcript it prepared of a CNET broadcast, which states (Ex. 6C at 5):

"Sorry Darl, again. Al Gore didn't invent the Internet and you didn't invent Linux or intellectual property law. We still own Unix. And we believe, that Unix is not in Linux, and that Linux is a free, and is an open distribution, and should be. And always will be."

Here, the context is dispositive. SCO had filed this suit against Novell two months earlier. (Dkt. No. 1. 1/20/2004 Complaint.) This was an "Open Source" conference for the Linux community that was the target of SCO's threats and was thus already aware of the Novell/SCO dispute and massive related media coverage. (See Novell's Motion In Limine No. 3 and Exs. 3B to 3S.) Thus, the context "informed the reader/listener that the statements were merely another installment in the continuing heated debate." See Mast, 971 P.2d at 933. The only reasonable interpretation is that Mr. Stone was repeating Novell's subjective view that it owned the copyrights for the reasons in its letters, which is not actionable as a matter of law.

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1 West held that a charge of "manipulat[ing]" the press was not defamatory in the context of a "heated political battle" and in view of its "casual, albeit critical" tone, which most readers would view as "exaggerated commentary." Id. at 1009-10. The Utah Supreme Court recently emphasized that West requires "a context-driven assessment" of whether a statement is reasonably susceptible to a defamatory meaning, which requires the court to "weigh competing definitions and make sense of context," and thus "leaves no room for indulging inferences in favor of the nonmoving party." O'Connor v. Burningham, 165 P.3d 1214, 1221-22 (Utah 2007).

2 SCO's complaint also alleges that Novell stated in a January 13, 2004 press release that Novell
"retained ownership of [UNIX] copyrights." (Dkt. No. 96, ¶ 37(j).) SCO has not designated any press release with this statement as a trial exhibit, and thus cannot rely on any such statement.

3 Novell's December 22, 2003 press release and the related correspondence is available at http://www.novell.com/ news/press/archive/2003/12/pr03080.html. Clicking the "here" hyperlink in the press release brings up copies of Novell's letters to SCO of June 26 and August 4, 2003, and SCO's reply of September 10, 2003. (See Ex. 6B.)

NOVELL’S MOTION IN LIMINE NO. 7 TO DETERMINE THAT COMMON LAW PRIVILEGES APPLY TO ALLEGEDLY DEFAMATORY PUBLICATIONS

SCO alleges that Novell slandered SCO’s title to certain copyrights by asserting that Novell, and not SCO, owns those copyrights. (Dkt. 96 at ¶ 91.) According to SCO, Novell published that allegedly defamatory matter in: (1) a public letter dated May 28, 2003; (2) private correspondence sent to SCO in June and August 2003; (3) copyright applications submitted to the United States Copyright Office in September and October 2003; and (4) various other public announcements, including a December 22, 2003 press release that republished hitherto private correspondence with SCO. (Id. at ¶ 37.) By this motion, Novell seeks rulings in limine that (a) its private correspondence to SCO is not actionable because it is protected by the common law litigation privilege; and (b) its broader publications are not actionable unless SCO can prove that Novell acted solely out of malice or bad faith because they are subject to the recipient’s and rival claimant’s privileges.¹

I. ARGUMENT

All of Novell’s allegedly defamatory publications were made after SCO sent demand letters to Novell and to 1,500 other companies, in which SCO published its own claim that it owned the copyrights at issue in this case and demanded that the recipients pay for licenses.² (Dkt. 121 at ¶ 52.) Under these circumstances, a rule imposing liability on Novell for disputing SCO’s ownership would be unfair both to Novell and to the third parties from whom SCO wants to extract licensing fees, and it is not the law. Slander of title requires a false statement made “without privilege,” Dowse v. Doris Trust Co., 116 Utah 106, 110-11, 208 P.2d 956 (1949), and Novell’s publications were privileged.

Novell’s publication of its ownership claim in private pre-litigation correspondence to SCO, responding to SCO’s demand letter, is protected by the litigation privilege, which is

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absolute. See Price v. Armour, 949 P.2d 1251, 1256 (Utah 1997) (quoting Restatement (Second) of Torts [“Rest.”] § 587) (“A party to a private litigation … is absolutely privileged to publish defamatory matter … in communications preliminary to a proposed judicial proceeding … if the matter has some relation to the proceeding”).³

Novell’s broader publications, in turn, are protected by two other, conditional privileges. First, “[t]he law has long recognized that a publication is conditionally privileged if made to protect a legitimate interest of the … recipient.” Brehany v. Nordstrom, 812 P.2d 49, 59 (Utah 1991) (citing, inter alia, Rest. § 595); see also Rest. § 646A (privilege applies to slander of title).⁴ Second, a further privilege applies specifically to a rival’s publication of its claim to property (including intangible property). Rest. § 647; see also id. cmt. b (privilege is “applicable to … injurious falsehood”); Jack B. Companies v. Nield, 751 P.2d 1131, 1134 (Utah 1988) (“slander of title … is … injurious falsehood”). Novell seeks in limine rulings that its public disclosures are covered by both privileges. See O’Connor v. Burningham, 165 P.3d 1214, 1224 (Utah 2007) (“Whether a statement is entitled to the protection of a conditional privilege presents a question of law; whether the holder of the privilege lost it due to abuse presents a question of fact”). Taking them in order, the other recipients of Novell’s publications—to whom SCO also sent demand letters—have a legitimate interest in ascertaining the true ownership of the copyrights SCO is threatening to sue them on, so the recipient’s privilege also applies. See Rest.

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§ 595. And the rival claimant’s privilege applies, by definition, to any assertion by Novell that it owns the copyrights claimed by SCO.

SCO bears the burden of overcoming the conditional privileges “by proof of malice or excessive publication.” Brehany, 812 P.2d at 59. Novell also requests that the Court rule in limine that SCO cannot show excessive publication because it is suing Novell for publishing to precisely those third parties that have interest in the true ownership of the copyrights, and any publication to disinterested parties is irrelevant to SCO’s supposed damages. See Rest. § 599 cmt. b (“If the harm done by the abuse is severable, and can be distinguished from the harm done by a part of the publisher’s conduct that would properly be privileged, he is subject to liability only for the excess of harm resulting from his abuse”); see generally O’Connor, 165 P.3d at 1224 (the Restatement’s teachings on privilege “enjoy close ties to common sense and thus appear worthy of our confidence”). The only remaining issue that would leave for the jury to decide is whether Novell made those publications in bad faith, solely out of ill-will, and with no intent to protect the legitimate interests of the recipients. See Rest. § 603 cmt. a. (“if the publication is made for the purpose of protecting the interest in question, the fact that the publication is inspired in part by resentment or indignation at the supposed misconduct of the person defamed does not constitute an abuse of the privilege”); id. at § 647 cmt. b (rival claimant’s privilege “permits the publisher to assert a claim … provided that the assertion is honest and in good faith, even though his belief is neither correct nor reasonable”).

II. CONCLUSION

This Court should rule, in limine, that (1) Novell’s publication of its ownership claim to SCO is subject to the absolute litigation privilege; and (2) any broader publication of that claim is conditionally protected by the recipient’s interest and rival claimant’s privileges.

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1 A companion motion in limine (no. 8) addresses the Noerr-Pennington privilege applicable to Novell’s copyright applications.

2 SCO was also the first to go public, as more fully explained in Novell’s motion in limine no. 3.

3 For convenient reference, Restatement sections cited herein are reproduced in Exhibits 7A-7F hereto. As SCO itself has elsewhere observed: “Thus, for example, the sending of a demand letter, settlement letter, or a cease and desist letter is absolutely privileged.” SCO’s Mem. Supp. Mot. Summ. J. at 5, SCO Group, Inc. v. IBM, No. 2:03CV294 (D. Utah Sep. 25, 2006). Arguably, this privilege also protects Novell’s publications to the broader Linux community. See Krouse v. Bower, 20 P.3d 895, 900 (Utah. 2001) (“The excessive publication rule, in the context of judicial proceeding privilege cases, is to prevent abuse of the privilege by publication of defamatory statements to persons who have no connection to the judicial proceeding”).

4 Property interests are a “legitimate interest” within the ambit of the recipient’s interest privilege. See Rest. § 595 cmt. d.

NOVELL'S MOTION IN LIMINE NO. 8 TO PRECLUDE SCO FROM RELYING ON NOVELL'S APPLICATIONS FOR COPYRIGHT REGISTRATION

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In paragraph 91 of its operative Second Amended Complaint (Dkt. 96), SCO alleges that "Novell ... slandered SCO's title ... to its ... copyrights," inter alia, "by making false oaths of ownership to public officials." SCO has reference to declarations made by Novell in support of applications for copyright registration that Novell made to the United States Copyright Office, pursuant to 17 U.S.C. § 409. By this motion, Novell seeks an order precluding SCO from relying on Novell's applications to support its slander of title claim. This motion is made pursuant to Federal Rule of Evidence 105, and on the ground that Novell's applications are a privileged exercise of its First Amendment right to petition the Government.

I. ARGUMENT

The right "to petition the Government" is enshrined in the First Amendment to the United States Constitution.

In recognition of this right, the United States Supreme Court has held that ... organizations are immune from liability under antitrust laws for actions constituting petitions to the government. [Citations.] Over the years, courts have extended this immunity doctrine, referred to as the Noerr-Pennington Doctrine [citation], to "protect ... against tort claims as well as antitrust claims." Searle v. Johnson, 646 P.2d 682, 684 (Utah 1982).

Anderson Devel. Co. v. Tobias, 2005 UT 36, ¶ 26, 116 P.3d 323, 332. "An exception to this immunity doctrine exists for actions constituting a 'sham.'" Id. at ¶ 27, 116 P.3d at 332. A "sham" petition, as opposed to a genuine petition, is one that is both objectively baseless and subjectively made for an improper purpose. See Professional Real Estate Inv., Inc. v. Columbia Pictures Ind., Inc., 508 U.S. 49, 57, 113 S. Ct. 1920 (1993) ("an objectively reasonable effort to litigate cannot be sham regardless of subjective intent").

"[T]he right to petition extends to all departments of the Government," including "administrative agencies," California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510, 92 S. Ct. 609 (1972), such as the United States Copyright Office. Novell was exercising

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this right when it applied to register its copyrights. Thus unless Novell's applications were a sham, no tort liability can arise from them. See Anderson, 2005 UT at ¶ 26.

Judge Kimball granted Novell summary judgment on the copyrights ownership issue. (Dkt. 377 at 62.) Although that grant was reversed on appeal, the fact that Judge Kimball made it demonstrates that Novell's assertions of ownership in support of its applications to register those copyrights were not objectively baseless. See Harris Custom Builders Inc. v. Hoffmeyer, 834 F. Supp. 256, 261-62 (N.D. Ill. 1993) ("An action that is well enough grounded, factually and legally, to survive a motion for summary judgment is sufficiently meritorious to lead a reasonable litigant to conclude that they had some chance of success on the merits"). Moreover, the Tenth Circuit has ruled:

If we were to interpret the contract based initially only on the APA itself—without regard to Amendment No. 2—we agree that its language unambiguously excludes the transfer of copyrights. ... [¶] ... [T]he contractual language of Amendment No. 2 concerning the transfer of copyrights is ambiguous.

SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1210 (10th Cir. 2009). The Tenth Circuit further observed: "Novell has powerful arguments to support its version of the transaction." Id. at 1215. Those determinations likewise conclusively establish Novell's objective reasonableness.¹ Thus the sham exception to the petitioner's immunity does not apply, see Professional Real Estate, 508 U.S. at 57 ("an objectively reasonable effort ... cannot be sham"), and the First Amendment bars SCO from relying on Novell's privileged applications to support its slander of title claim.

Here in the Tenth Circuit there is a wrinkle. The Tenth Circuit has stated that outside the antitrust context, "the Petition Clause protects objectively reasonable lawsuits from being enjoined, but requires a court to look at the underlying statute to determine whether the initiator

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of the suit can be held liable." Cardtoons v. Major League Baseball Players Ass'n, 208 F.3d 885, 890 n. 4 (10th Cir. 2000) (en banc). However, that statement "is dicta," and "[n]umerous other courts have ... held that the Petition Clause places limits on liability for the commission of a range of common law torts." Scott v. Hern, 216 F.3d 897, 914 & n. 9 (10th Cir. 2000) (citing cases); see also Sosa v. DirecTV, Inc., 437 F.3d 923, 938 (9th Cir. 2006) ("we are doubtful that ... Cardtoons survives the Supreme Court's decision" in BE & K Construction Co. v. NLRB, 536 U.S. 516, 525, 122 S. Ct. 2390 (2002)). Even if this Court were to apply the criticized dicta from Cardtoons, the Utah Supreme Court is the final authority on "the underlying statute" (viz., Utah defamation law) to which Cardtoons says the Court should look "to determine whether the initiator ... can be held liable," and the Utah Supreme Court has apparently recognized that the petitioner's immunity and correlative sham analysis applies to all Utah torts. See Anderson, 2005 UT at ¶ 26, 116 P.3d at 332; see also Scott, 216 F.3d at 915 (finding Cardtoons dicta inapposite where Colorado courts had already "articulated an objectively-reasonable-litigation standard" for state law tort).

II. CONCLUSION

Because Novell's constitutionally-protected applications for copyright registration cannot give rise to tort liability, SCO cannot rely on them to support its slander of title claim.

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1 In a companion motion in limine (no. 4), Novell demonstrates at greater length that its objective reasonableness is law of the case.