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Novell Wins Again - Jury Rules Copyrights Didn't Go to SCO! - Updated 6Xs
Tuesday, March 30 2010 @ 03:28 PM EDT

It's over. The jury has found that the copyrights did not go to SCO under the APA or anything else. The verdict is in. Novell has the news up on their website already, but I heard it from Chris Brown also. Here's the brief Novell statement:
Today, the jury in the District Court of Utah trial between SCO Group and Novell issued a verdict.

Novell is very pleased with the jury’s decision confirming Novell’s ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux. Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front.

This decision is good news for Novell, for Linux, and for the open source community.

: D

Thank you, Novell, for never giving up, and never giving in. Those of us who love to use Linux will forever be thankful to you.

The next question will be: what will Edward Cahn do now that his theory that SCO had valid claims has bitten the dust? Will he pay back the loan from Ralph Yarro so as not to default on the loan? That's what they indicated they'd do, but I would like to see it in black and white, a done deal.

What a waste of money this all has been, and if the only folks who get paid in the end are Cahn's lawyers and SCO's lawyers, something is seriously rotten in this picture.

Here's a quick report from Chris:

I camped out across the street at the Royal Eatery diner with a clear view of the courthouse entrance from my table.

Around 11:45am I saw the jury's lunch being delivered from the diner I was in. When he'd returned at around 12:00, I asked him if the jury was in a good mood. He said they were, but that they always are since he's got the food.

I had a business call that a server of ours was down about 5 blocks from the courthouse, so I started walking back to the parking garage. I'd figured that if they were just having lunch there wouldn't be any news for an hour or so.

As I got just North of the courthouse, I saw SCO's counsel walking south toward the court. The group included Mr. Singer, Mr. Normand, Mr. Tibbitts, Darl McBride, and others.

Mr. Edward Normand pointed back toward the courthouse and told me they jury had returned a verdict. I turned around and headed back, remarking to Mr. Normand that I was almost afraid to hear the verdict. He said to join the club.

I called MSS2 and let him know, then sent off the quick email to you that they'd reached a verdict.

I also received a phone call from both individuals who had promised to call me letting me know a verdict had been reached.

On arriving in courtroom we waited about ten more minutes for Novell's counsel to arrive. Mr. Brennan and Mr. Acker were present, but not Mr. Jacobs.

I overheard Mr. Singer saying he'd only just arrived back in town this morning around 10:30am to await the verdict.

At 12:17pm Judge Stewart entered the courtroom and announced that he's been told the jury has reached a verdict. He asked that they be brought in.

The jury entered and Judge Stewart asked the marshall if it's true that the jury has reached a unanimous verdict? He answered, Yes it is.

Judge Stewart asked the jury to hand in the book containing the verdict to the "CSO" (the marshall). Juror 11 handed him the book and he then passed it to the Sandy Malley.

When asked, Ms. Malley read the verdict:

Did the the Amended Asset Purchase Agreement transfer the copyrights?

And the jury had entered, No.

Judge Stewart asked counsel if they desired the jury to be polled. Mr. Singer said yes.

Judge Stewart then asked the jury if they had unanimously found that the Amended Asset Purchase Agreement had not transferred copyrights?

Each juror was polled by number, Juror 1? Yes. Juror 2? Yes and so forth down the line until all 12 had answered yes.

Judge Stewart announced that the jury had been polled and that the decision was unanimous. He then thanked the jury saying he knows that three weeks is a long time, that he's pleased they have followed the Court's admonitions. He told them that they had performed an important task and that it was greatly appreciated.

Judge Stewart told the jury that lawyers on the case have worked a long time and that they would probably appreciate their taking a few moments and talking with them, but that they are not required to do so. He then released the jury.

After the jury left, Judge Stewart thanked the lawyers again.

As the jury left the courthouse I asked each if they would answer a few questions about the case but none did, though a few continued to chat for a few minutes with the lawyers.

MSS2 ran to the courthouse and joined Chris Brown there:
I got a phone call from Chris, saying that the verdict was in. I dropped everything and raced up to the courthouse. I missed the verdict by three or four minutes. (Chris said it was really short.)

I got there just as a couple of Darl McBride's crew were leaving, heads down. They didn't want to talk to me.

I saw Stuart Singer as he was leaving. I told him that I thought it was a very impressive display of lawyering, or words to that effect. He said, "Thank you. Obviously, we're very disappointed." He seemed subdued.

And, I raced out so fast that I left my pen behind in my cube. I don't know what it is about me winding up at the Federal courthouse without a pen. That's the second time this trial...

Mr. Singer is, indeed, impressively skillful. There can be no doubt about that. SCO didn't lose because they didn't have resourceful lawyers. They did. They lost because they didn't get the copyrights. Not that SCOfolk ever take my advice, but I think they made a mistake bringing that icky slander of title claim. It was too far-fetched, too obviously mean and weird. I told them that by writing about it here on Groklaw back when it might have helped them, but they persisted. Who would think it might work? I find that part of the story hard to figure out. I continue to believe it was a tactical error.

So, they took in millions from Sun and Microsoft and threatened the Linux world for copyrights they don't own? Why, yes. Yes, they did. That's where it stands for now.

Of course, it's possible they might appeal. I've learned when it comes to SCO never to assume it's over, just because it should be over. But I think this verdict also means that Boies Schiller doesn't get out of the red on this case. I wonder if they will ever again take on a case with an agreement that they'll get paid up front and be responsible to take it all the way to the US Supreme Court on that dime, regardless of the actual time spent? I'm guessing no.

I also want to thank our volunteers at the courthouse and all the geeks who explained the tech over and over and over to make sure everyone understood it. And the Groklaw community for sticking with this project through thick and thin. Anyone thinking of suing over Linux now knows that the community will stand up for Linux no matter what. And we don't get tired and we don't quit.

And don't you want to thank the jury? I know I do. Did I not tell you that juries can be trusted? I hope this helps some of you cynics.

Ars technica has a bit more:

Novell expressed satisfaction with the verdict in a statement today. SCO has not responded to our request for comment.

"Novell is very pleased with the jury's decision confirming Novell's ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux," a Novell spokesperson said. "Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front."

SCO cannot continue pursuing its infringement litigation against IBM or assorted Linux users because it doesn't own the copyrights that it claims are infringed by Linux. Even if the jury had ruled in SCO's favor, the overwhelming lack of evidence of infringement would still likely make it impossible for SCO to achieve victory in its litigation campaign. It's unclear if the company will be able to evade liquidation following this latest failure in court.

SCOsource is dead in the water now from this verdict. But don't forget, IBM has counterclaims. So does Red Hat have claims, if they are interested in pursuing them any more. Even in this Novell trial, there are some issues the judge has yet to decide. This saga is not finished.

Now begins the rest of the story.

Update: And we hear what the plans are from Edward Cahn, via Tom Harvey's report in the Salt Lake Tribune. Guess what they plan to do? Sue some more, of course, you silly wabbits:

Former U.S. District Judge Edward Cahn, the trustee for SCO's bankruptcy filed in Delaware, said the company is "deeply disappointed" in the jury's verdict in the dispute over which company owned the copyrights to Unix, which is widely used in business computing.

But Cahn said SCO intends to continue its lawsuit against IBM, in which the computer giant is accused of using Unix code to make the Linux operating system a viable competitor, causing a decline in SCO's revenues.

"The copyright claims are gone, but we have other claims based on contracts," Cahn said.

See? They never quit, and they never learn. So onward! Mush! Here we go some more. I think SCO will regret this too, but as I say, they never listen to me. If they had, I could have saved them a lot of money, and their business too, I think. Sad, really. But whatever, y'all. They are addicted to litigation. They remind me of a gambler who just can't step back from the table, even though he just lost his watch, his money clip, his cuff links, and his entire money stash. So he bets his wife's diamond engagement ring so he can continue to bet some more.

The copyright claim was stronger, in my view, than the contract claims. If they couldn't prevail here, with this judge, and with the wind at their back from the strange Court of Appeals remand, where can they? Honestly, you'd need the fix to be in, I think, and even with almost everything tilted pro-SCO in Utah, it still lost. Maybe there's a lesson in this picture?

One lesson is that Morrison & Foerster live up to their nickname. What a remarkable job they have done, and Sterling Brennan with Workman. Just amazing to watch. Was it not a pleasure?

Does it ever occur to SCOfolk, though, to consider that they keep losing because they're simply wrong about the contracts, wrong about the tech, wrong about the copyrights, wrong about the history, and wrong about Linux? Doesn't the legal team have an obligation to sit the client down at some point and explain the facts of life? The contract claims depend on there being infringement. Where is it? Seven years later, could SCO step up to the plate and show some infringing code worthy of seven years of litigation? Otherwise, some of us might get the idea that this isn't actually about copyrights or contracts or infringing code.

Update 2: A reaction from Novell attorney Sterling Brennan, and what a fabulous lawyer he turned out to be! He's quoted in the Deseret News:

"This is a significant victory for Novell and, I think, a tremendous victory for the open-source community," said Novell attorney Sterling Brennan. He added that while there are still a few issues to be decided in the case and SCO has a right to appeal, "This verdict largely brings an end to this."
And Dana Blankenhorn analyzes it like this:
I think the more important point in all this is that Linux is out of court, and that whatever the merits of Microsoft’s patent claims on Linux technology it’s not dragging Linux back into court.

Any cloud overhanging use of Linux should now be clearly gone. Novell owns the copyrights.

He's right. The cloud is gone now. Even if, in an alternate universe, IBM could lose to SCO on contract claims, which I doubt could happen even in any alternate universe, any damages would be between SCO and IBM. Linux didn't sign contracts with SCO.

Oh, wait. SCO signed one, so to speak, with Linux. They call it the GPL, and if SCO goes forward, it will be a significant factor in SCO's troubles. The GPL stands in SCO's way. I told them that in 2003 and ever since.

There is no way to alter history after the fact. Truth is like a weed. It just keeps on growing, through cracks in the sidewalk if necessary.

And the truth is, thanks to a jury in Salt Lake City, Utah, and some fabulous lawyers it was a privilege to write about, Linux is now clean from SCO's claims.

Update 3: What would today be without Ms. O'Gara? So in the Huh? Department, here's what she got out of all this:

The trial saw Novell's former business executives beginning with ex-CEO Robert Frankenberg take the stand to testify that the copyrights were meant to pass to SCO. A few former Novell attorneys claimed they had reserved the copyrights without telling anybody. One of Novell's witnesses, one of its former lawyers Allison Amadia, who negotiated the amendment, even admitted under cross-examination that the amendment transferred the copyrights.
Nah. That isn't what happened, not that I heard. I guess you hadda be there. Here's one more taste:
Without the copyrights SCO has no standing to go after IBM.

SCO was also hoping to collect perhaps at much $215 million in lost business from Novell and an uncalculated amount of punitive damages, enough to put itself back on its feet.

heh heh

At least this proves one thing: she and Cahn aren't on the phone together. He just announced they will go after IBM on contract claims. So. Pretty much a wonderful day. I'm told you don't want to visit her link, unless you have anti-flash, anti-Javascript, anti-all-annoyances armor on. Turn on your SELinux firewall too. But here it is if you insist:

Update 4: Guys, docket 846 is the official jury verdict form. It has one checkbox checked on it (*Suitable for framing*). Docket 847 is fifty pages of official jury instructions:

03/30/2010 - 844 - Minute Entry for proceedings held before Judge Ted Stewart: Jury Trial completed on 3/30/2010. Jury returns a verdict for Defendant Novell, Inc. Attorney for Plaintiff: Stuart Singer, Edward Normand, Brent Hatch, Attorney for Defendant Sterling Brennan, Eric Acker, Michael Jacobs. Court Reporter: Karen Murakami. (slm) (Entered: 03/30/2010)

03/30/2010 - 845 - Witness and Exhibit List, filed by Plaintiff SCO Group, Defendant Novell, Inc.. (slm) (Entered: 03/30/2010)

03/30/2010 - 846 - JURY VERDICT for Defendant Novell. (slm) (Entered: 03/30/2010)

03/30/2010 - 847 - Jury Instructions. (slm) (Entered: 03/30/2010)

03/30/2010 - 848 - **SEALED DOCUMENT** Jury Notes. (slm) Modified on 3/30/2010: corrected to read "Jury Notes" (alt) (Entered: 03/30/2010)

Is this fun or what?

Here is what the verdict is, word for word:

1. Did the amended Asset Purchase Agreement transfer the UNIX and UnixWare copyrights from Novell to SCO?



And now I see that SCOTUSblog has chosen Novell's appeal for its list of notable petitions:
Two noteworthy petitions filed last month are Wong v. Smith, which challenges jury instructions as “coercive,” and Novell v. SCO Group, which concerns the terms of transfer of copyright ownership.
Update 5: And now we hear from SCO's attorney, Stuart Singer, that SCO will ask the judge to give them the copyrights, despite the jury's verdict:
"Obviously, we're disappointed in the jury's decision," said SCO trial lawyer Stuart H. Singer. "We were confident in the case, but there's some important claims remaining to be decided by a judge."

SCO will ask U.S. District Judge Ted Stewart to award the copyrights to SCO "even if we didn't have them before," he said. "It's a setback, but it's not over."

Here's what he's referring to, the issues the parties agreed would be decided by the judge, not the jury. It's the next step. One of the issues is specific performance, meaning that SCO wants to argue that even if they didn't get the copyrights before, they were entitled under the APA and Amendment 2 to ask for the copyrights if they ever needed them. Like now, I gather. Here's the judge's order [PDF] on their various requests.

But here's a question. If it's true, as Singer reportedly told the jury in his closing argument, that SCOsource is dead and can't be revived now, why do they need the copyrights? For what use?

And speaking of specifics, if SCO is going to argue they need the copyrights now, I'd like them to have to be specific about which copyrights they are asking for and why they need them. I have serious doubts that anyone owns the copyrights that I think they'd list, so I'd like to see them demonstrate that anyone owns the copyrights currently, let alone that they should transfer.

And since the jury says the copyrights didn't transfer by the APA, if SCO wants them now, wouldn't they need to pay for them? With what?

And here is Michael Jacobs, on

Michael Jacobs, a Morrison & Foerster partner who represented Novell, said it was a win for the company -- and supporters of open-source software.

"If this verdict continues to be sustained, they will not be able to go after the Linux community," said Jacobs. Even though the case incited a religious fervor, the final verdict turned on mundane issues of contract law: whether or not Novell had transferred certain rights to SCO during an asset sale more than a decade ago. The 12-person jury answered "no" unanimously.

And believe it or not, even IBM has a comment today, and that almost never happens, found in the Ashby Jones' Wall Street Journal coverage:
"This decision demonstrates the failure of SCO's litigation strategy," said an IBM spokeswoman.
Terse, but clear. And a bit more from Jacobs and Singer:
"We are disappointed by the verdict," said Stuart Singer, a lawyer for SCO. But "there remain important issues that will be decided non-jury by the court."

"We're very pleased," said Michael Jacobs, a lawyer for Novell. "While we're not quite done, we're almost there."

BusinessWeek's Susan Decker has another quote from Jacobs:
“This is an important milestone in this long-running dispute,” said Novell lawyer Michael Jacobs of Morrison & Foerster in San Francisco. “We’re very pleased for Novell and for the Linux community.”

Still pending before U.S. District Judge Ted Stewart in Salt Lake City is whether the copyrights should be transferred to SCO for the future and whether Waltham, Massachusetts-based Novell breached the contract with SCO by not allowing SCO to go after IBM, Jacobs said.

And someday the stupidest litigation in the history of the world will be over.

Tom Harvey at the Salt Lake Tribune got a gracious reaction from Edward Cahn:

Former U.S. District Judge Edward Cahn, the trustee who is running SCO as part of its bankruptcy filed in Delaware, said he thought SCO had a strong case, adding its team was "deeply disappointed" by the outcome.

"Juries are unpredictable and that's why cases get settled," said Cahn, who attended several days of the trial. "I was quite confident we were going to prevail."

The case might have turned on the question of an amendment intended to clear up the confusing language of the original 1995 sales agreement. SCO argued it showed the parties' intention to transfer the copyrights in the sale. But Novell's attorneys presented a witness who had drawn up the amendment and said it was not intended to transfer copyrights, though she appeared to contradict that line under cross examination.

"We're very pleased for Novell, and I think this also is a big day for the open source community," said Sterling Brennan, a Salt Lake City attorney who represented Novell, along with the San Francisco firm of Morrison & Foerster.

Cahn praised Novell's legal team: "Morrison and Foerster are the best lawyers west of the Mississippi and they proved that today."

Well, they are east of the Mississippi too, actually. The firm has a global reach, which means that MoFo's are everywhere.

Update 6: An order regarding supplemental jury fees, which jurors there get if they serve more than a few days:

03/29/2010 - 843 - ORDER for Supplemental Jury Fees. Signed by Judge Ted Stewart on 03/29/2010. (asp) (Entered: 03/30/2010)

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