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SCO Responds to Novell's Objection With Some Very Tricky Dance Moves - Updated 3Xs
Monday, February 14 2011 @ 06:26 AM EST

SCO has responded to Novell's Objection to the proposed sale of most of SCO's assets. Novell's objection is irrelevant, SCO claims, because SCO doesn't intend to assume and assign the 1995 APA.

Novell argued that "It follows by the Debtors' own admission that to operate the Business as defined [by] the unXis APA, unXis (or any other buyer) needs access to the copyrighted material that the Debtors licensed from Novell. In other words, any buyer of the Business must have the Debtors assume and assign their Novell copyright licenses.... Finally, and of the utmost importance, Original APA Section 9.5(c) expressly prohibits its assignment by SCO without Novell’s consent. "

Here's SCO's workaround. Instead of assuming the APA and assigning it, SCO says it will sell only what the court said it owns, UnixWare, and then it will *sublicense* the software business:

The Sublicense Agreement will grant to unXis a perpetual, non-exclusive, royalty-free right and sublicense to use the Licensed Properties consistent with the ordinary course manner in which the Debtors have done so historically.
Wait. What? Done so historically? Let's look at this claim a little more closely to see if it's true.

Here are the filings:
02/13/2011 - 1233 - Declaration Of William M. Broderick In Support Of The Motion Of The Chapter 11 Trustee For Order (1) Authorizing The Marketing, Auction And Sale Of Substantially All Of The Debtors Software Business Assets Consistent With Form Asset Purchase Agreement And Free And Clear Of Liens, Claims And Encumbrances, (2) Authorizing Assumption, Assignment, And Sale Of Certain Executory Contracts And Unexpired Leases, (3) Approving Bidding Procedures In Connection With Auction, (4) Establishing Sale Hearing Date And (5) Granting Related Relief (related document(s) 1141 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Attachments: # 1 Exhibit 1# 2 Exhibit 2 # 3 Exhibit 3# 4 Exhibit 4 # 5 Exhibit 5 # 6 Exhibit 6 # 7 Exhibit 7 # 8 Exhibit 8 # 9 Exhibit 9 # 10 Exhibit 10) (Tarr, Stanley) (Entered: 02/13/2011)

02/13/2011 - 1234 - Reply of the Chapter 11 Trustee to Objection of Novell, Inc. to Sale (related document(s) 1225 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al. (Tarr, Stanley) (Entered: 02/13/2011)

02/13/2011 - 1235 - Certification of Counsel Regarding Motion of the Chapter 11 Trustee Pursuant to Sections 105 and 363(b)(1) of the Bankruptcy Code for Order Authorizing Expansion of Scope of Retention of King & McCleary, LLC to Perform Certain Tax Return Services (related document(s) 1218 , 1230 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Tarr, Stanley) (Entered: 02/13/2011)

Here's what all the exhibits are attached to William Broderick's Declaration:
  • Exhibit 1: The proposed Sublicense Agreement between SCO and UnXis
  • Exhibit 2: AT&T/Sun Microsystems License Agreement
  • Exhibit 3: USL Software Agreement
  • Exhibit 4: Novell/Super Computers International 1995 Software Agreement
  • Exhibit 5: Santa Cruz/Samsung 1997 Software Agreement
  • Exhibit 6: Caldera/Cisco 2002 Reference Software Agreement
  • Exhibit 7: SCO Group/Northrop Grumman 2003 Reference Software Agreement
  • Exhibit 8: Caldera/Samsung 2002 Source for Support Agreement
  • Exhibit 9: Caldera/Trusted Systems on the Net 2002 Reference Software Agreement
  • Exhibit 10: 1995 Fax from Louis Ackerman at Novell to Steve Sabbath at Santa Cruz
So, in SCO's perfect world, it doesn't have to pay Novell the $3 million it owes in order to sell the assets off, I gather, because it's only sublicensing the parts of the software business it doesn't own, not selling it. Except the UnXis press release said it bought the software business. It didn't mention sublicensing anything.

And William Broderick provides a Declaration swearing by heaven, so to speak, that this is perfectly normal, just a typical sublicensing arrangement. He actually declares under penalty of perjury that there is no difference between the old deals and the proposed new one:

13. I have reviewed and am familiar with the Asset Purchase Agreement by and between The SCO Group, Inc. and SCO Operations, Inc. and unXis, Inc. (the “Agreement”), including the Sublicensing Agreement attached thereto as Exhibit “C.” A true and correct copy of the Sublicensing Agreement is attached hereto as Exhibit 1. The Sublicensing Agreement, which grants a sublicense to unXis, is substantially similar to third-party source-code license agreements executed by SCO and each of its predecessors with respect to the Software Business: AT&T, USL, Novell, and Santa Cruz. True and correct copies of third-party source-code license agreements executed by (i) AT&T with Sun Microsystems, Inc., (ii) USL with U.S. Amada, Ltd., (iii) Novell with Supercomputers International, and (iv) Santa Cruz with Samsung Electronics, Co., Ltd., respectively, each of which are attached hereto as Exhibits 2-5.

14. Furthermore, the Sublicensing Agreement attached as Exhibit “C” to the Agreement is substantially similar to third-party source-code license agreements historically executed by Caldera/SCO. A true and correct copy of the third-party source-code license agreements executed by Caldera/SCO with (i) Cisco Systems, (ii) Northrop Grumman Space and Mission Systems Corp, (iii) Samsung Electronics, Co., Ltd., and (iv) Trusted Systems on the Net, Co., Ltd., respectively, is attached hereto as Exhibits 6-9.

15. Accordingly, SCO, along with its predecessors with respect to the Software Business, have historically, in the ordinary course of such business, executed third-party source-code license agreements (including all copyrights necessary thereto – and notwithstanding any issues as to whether such successor owned, licensed or otherwise had the right to use the same). Pursuant to the Sublicense Agreement, SCO is granting a nonexclusive third-party source-code license, among other things, in nearly identical form to which it has historically done without objection from Novell. Indeed, as outlined in paragraph 13 above, Novell similarly licensed source-code to third-parties in the course of conducting the Software Business.

16. Moreover, Novell provided the third-party source-code license agreement form to SCO and suggested to SCO that it should proceed in the same manner, utilizing substantially the same form of source-code license agreement Novell had used historically. A true and correct copy of a UnixWare transition team document from Novell (Lou Ackerman) to Santa Cruz (the “Transition Document”) is attached hereto as Exhibit 10. In the Transition Document, Novell requests that Santa Cruz confirm it intends to:

1. Use the standard Software Agreement and Sublicensing Agreement currently used by Novell, with the exception of the necessary name and address changes, for any new customers,

2. Use the current UnixWare product schedules with the necessary name and address change where appropriate, and

3. Use the existing schedules for SVRx and Auxiliary Products with the necessary name and address changes when appropriate.

17. Finally, as noted above, SCO, along with its predecessors with respect to the Software Business, have historically, in the ordinary course of such business, executed third-party source-code license agreements. Pursuant to the Sublicense Agreement, SCO is granting a nonexclusive third-party source-code license, among other things, in nearly identical form to which it has historically done without objection from Novell.
I don't think he read that last exhibit carefully enough. It is a fax dated November 1995, and it includes this paragraph:
I have also asked John Maciaszek to investigate the approval process we should use on any agreement requiring the use of non-standard terms and conditions. I would prefer that there be a method in place that has an SCO employee authorizing any agreement that uses non-standard T's & C's since these will be executed by Novell employees. Currently Novell has a two signature approval on any Special or Standard Pricing Letter where the Director in charge of the Business Unit that owns the product signs off in addition to the Regional Controller.
That seems clearly to indicate that Novell knew it would still have rights post closing to control some of the software business and had to sign off on certain types of deals. The UnXis plan doesn't seem to have any recognition of those Novell rights, and if Novell has to sign off on certain kinds of deals, how can SCO ignore the APA, which is the document that gave Novell those rights? And that's why Novell is objecting.

I mean, SCO owes Novell a royalty stream, under the APA. What are they saying? That they can just wipe that away forever? They can sublicense the software business and then nobody owes Novell anything any more? Nice trick. I'd like to do that with my mortgage. Anyone want to sublicense it? I'll let you have the third floor and the attic, and I'll stay in the rest, and neither of us has to pay the monthly mortgage, because I'll sublicense the mortgage to you with the proviso that you don't take on my liabilities, and I'll tell the bank I sublicensed my mortgage and so neither of us needs to pay the bank anything. Sound like a plan? I don't think the bank would agree, even if I filed for bankruptcy.

In other words, what SCO seems to be trying to do is to escape the $3 million debt, and rather than transferring it to UnXis, force Novell, after winning the litigation, to have to start all over again by having to sue UnXis, who will argue they got what they got without liabilities. Blech. And when SCO disappears into the ether? Who pays Novell then? In effect, SCO wants the benefits of the APA so it can sublicense them, but without the responsibilities that would come with assuming the APA.

But did you notice that none of the exhibits that Broderick includes show a "substantial similarity" to the UnXis deal? The grant of rights sections aren't even close, and not one of the exhibits is called a sublicensing agreement, except for the proposed one to UnXis. What should that tell us, class, about SCO's portrayal of similarity? The long list of exhibits are where what was being offered was a *license*, not a *sub*license.

Lets compare some of the grant of rights sections. For example, in Exhibit 2, there are a couple of paragraphs in the Grant of Rights section that state what Sun, the "licensee," could and couldn't do:

2.01 AT&T-IS grants to LICENSEE a personal, nontransferable and nonexciusive right to use in the United States each SOFTWARE PRODUCT identified in the one or more Supplements hereto, solely for LICENSEE'S own internal business purposes and solely on or in conjunction with DESIGNATED CPUs for such SOFTWARE PROOUCT. Such right to use includes the right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, provided that any such modification or derivative work that contains any part of a SOFTWARE PRODUCT subject to this Agreement is treated hereunder the same as such SOFTWARE PRODUCT. AT&T-IS claims no ownership interest in any portion of such a modification or derivative work that is not part of a SOFTWARE PRODUCT....

2.06. No right is granted by this Agreement for the use of SOFTWARE PRODUCTS directly for others, or for any use of SOFTWARE PRODUCTS by others, except LICENSEE'S contractors pursuant to Section 2.02, unless such uses are permitted for a particular SOFTWARE PRODUCT by specific provision in the Schedule for such SOFTWARE PRODUCT. For example, use of a SOFTWARE PRODUCT in a time.sharing service or a service·bureau operation is permitted only pursuant to such a specific provision.

This isn't a third-party deal, as William Broderick argues in his Declaration. AT&T owned Unix, the copyrights, and all, and it licensed to Sun, not sublicensed. Ditto with USL. Ditto with Novell. There's nothing third party about it, because each owned it all, the whole enchilada. By the way, isn't it fascinating to see that SCO had this contract in hand all the time it was claiming an ownership interest in all modifications and derivative works in the IBM case. Samsung's Exhibit 5 contract has the same language. What phony baloneys they always are. And now the claim that sublicensing is perfectly normal and exactly the way SCO and its predecessors have always done business. But it's obvious that Sun was quite limited in what it could do. And it was a licensee, not a third party sublicensee.

Here's Northrop Grumman's 2003 license terms in the Grants of Rights section:

3. GRANT OF RIGHTS

3.1 Subject to the provisions and during the term of this License, SCO grants to Licensee a personal, nontransferdble, nonassignable and nonexclusive limited right to use, in the United States, the Reference Software Product solely for Licensee's own internal business purposes for reference purposes only.

Such right to use does not include any right to:

1) modify such Reference Software Product or prepare derivative works based on such Reference Software Product; or

2) to distribute, to any other party, Reference Software Product; or

3) in the case of Object Code portions, if any, of Reference Software Product, to reverse engineer, reverse compile, disassemble or otherwise attempt to derive the Source Code of such portions.

3.2 No right is granted by this License for the use of Reference Software Product directly for others, or for any use of Reference Software Product by others.

3.3 No right is granted to Licensee to allow anyone other than Licensee's employees to use Reference Software Product. The term "employees" as used in this License means both direct and contract employees.

If SCO were asking to make a deal like this with UnXis, I don't think there would be any issues. But notice the same section in the UnXis agreement, the Grants of Rights section that we just saw in the earlier agreements, and notice how very, very different it is:
1. GRANT OF RIGHTS

1.1 Sublicensor grants to Sublicensee a personal, nontransferable (except as provided in Section 9), nonexclusive, non-sublicenseable (except as provided herein), royalty free right and sublicense to use the Licensed Properties, as defined in the Purchase Agreement, which shall include the copyrights owned by Novell, Inc., as determined in the Memorandum Decision and Order Denying SCO's Renewed Motion for Judgment as a Matter of Law, or in the Alternative, for a New Trial and by the Findings of Fact and Conclusions of Law of the United States District Court of Utah on June 10, 2010, in accordance with this Agreement, including the right to modify and create derivative works of such Licensed Properties.

1.2 Sublicensee shall not have the right to, and agrees that it shall not, sublicense, distribute or otherwise provide, disclose or transfer the Licensed Properties, in whole or in part, to any third party except as provided below in this Section 1. Sublicensee shall maintain the Licensed Properties in strict confidence in accordance with the confidentiality provisions of this Agreement.

1.3 (a) Sublicensee may create and sublicense binary products of the Licensed Properties solely in conjunction with Sublicensee's use of the Acquired Assets, as defined in the Purchase Agreement.

(b) Sublicensee may distribute such binary products of the Licensed Properties and any other modifications or derivative works based upon the Licensed Properties on terms consistent with the terms and conditions ofthis Agreement.

(c) Sublicensee may permit access to Licensed Properties by its contractors and allow use of Licensed Properties by its contractors, provided such access and use is exclusively for Sublicensee in connection with work called for in written agreements between Sublicensee and such contractors in accordance with Section 1.3(1) of this Agreement.

(d) Any claim, demand or right of action arising on behalf of a contractor from the furnishing to it or use by it of Licensed Properties shall be solely against Sublicensee.

(e) Contractors shall agree to the same responsibilities and obligations and other restrictions pertaining to the use of Licensed Properties as those undertaken by Sublicensee under this Agreement.

Do I even need to explain how different this is? And what does it mean to SCO that they purport to grant UnXis a right to use Novell's copyrights?

Compare that language with Exhibit 9, the Caldera agreement, which you might think would be more like a third-party sublicense, if anything would be, in that Caldera never owned the copyrights:

3. GRANT OF RIGHTS

3.1 Subject to the provisions and during the term of this Agreement, Caldera grants to Licensee a personal, nontransferable, nonassignable and nonexclusive limited right to use the Reference Software Products that are identified in one or more Exhibits hereto, solely for Licensee's own internal business purposes. Such right to use does not include any right to:

(a) modify such Reference Software Products or prepare derivative works based on such Reference Software Products; or

(b) to distribute, to any other party, Reference Software Products; or

(c) in the case of object code portions, if any, of Reference Software Products, to reverse engineer, reverse compile, disassemble or otherwise attempt to derive the source code of such portions.

3.2 No right is granted by this Agreement for the use of Reference Software Products directly for others, or for any use of Reference Software Products by others unless such uses are permitted for the associated Caldera Software Products in the applicable Exhibits for such Caldera Software Products.

3.3 No right is granted to Licensee to allow anyone other than Licensee's employees to use Reference Software Products unless such uses are permitted by a specific provision in the Exhibits for the associated Caldera Software Products. The term "employees" as used in this Agreement means both direct and contract employees.

See any substantial similarity to the UnXis agreement? I don't either. But SCO is saying, in effect, that if Caldera could license, so can they. But look a little more closely. What was Caldera licensing? It was not Unix or UnixWare. This is an agreement licensing Caldera's Linux product, not Unix: "WHEREAS, Caldera is a licensor, manufacturer and distributor of Caldera, third party Open Source software and related products, materials and services..." it begins. It didn't create most of the software, but this has nothing to do with Unix or UnixWare.

I couldn't make this stuff up. They are so sloppy. And yet so devilishly clever and serpentine at the same time. These are just things I'm noticing in a quick reading off the top of my head. I'm sure we'll notice many more details later.

Yet Edward Cahn, SCO's Ch. 11 Trustee, scornfully writes:

Novell objects to the sale of the Software Business merely for the sake of objecting. The Novell Objection is irrelevant and without merit as it once again asserts that the Trustee cannot sell the Software Business without paying the piper – namely Novell – by assuming and assigning the Novell Santa Cruz APA (the “1995 APA”) and paying Novell in excess of $3 million. It is evident that Novell has not even read the sale agreement with unXis, Inc. (the “Sale Agreement”) or the Trustee’s omnibus reply [Docket No. 1156] (the “Omnibus Reply”) to, among other things, Novell’s earlier reservation of rights with respect to the Sale Motion. The Trustee does not seek to assume nor assign the 1995 APA, or any agreements with Novell, and therefore the Novell Objection is non-responsive to the Sale Motion and should be disregarded. Since the Sale Agreement does not impermissibly affect Novell’s rights, Novell has no valid grounds on which to object to the sale – so Novell simply regurgitates prior objections, without application to the transaction contemplated by the Sale Agreement. Specifically, Novell incorrectly asserts that (i) the Debtors must assume and assign all of the “Original APA Agreements” (referred to herein as the 1995 APA) and (ii) the Debtors must pay the full amount of the Novell judgment and costs in order to assume the “Original APA”. (See generally Novell Objection at ¶¶ 15-20). None of these statements are true.
I'm not sure it's wise for SCO to bring up the subject of truth.

Of course Novell will have an opportunity to respond. And I'm guessing it will be a scorcher.

Update: It occurs to me that I should show you what Judge Ted Stewart wrote about the copyrights in his June 10, 2010 order, since SCO references his definition of "Novell's copyrights":

After its deliberations, the jury found that the amended Asset Purchase Agreement ('APA') did not transfer the UNIX and UnixWare copyrights from Novell to SCO....

There was substantial evidence that Novell made an intentional decision to retain ownership of the copyrights. For instance, Tor Braham, outside counsel for Novell and lead drafter of the APA, testified that Novell was selling to Santa Cruz the UnixWare business and retaining the UNIX business. Mr. Braham testified that the exclusion of the copyrights was agreed upon by the parties. Mr. Braham stated that the purpose for excluding the copyrights was to protect Novell's interest in the UNIX business that it had retained.

Mr. Braham's testimony is supported by James Tolonen, Novell's Chief Financial Officer at the time of the APA and Amendment No. 2, who testified that the copyrights were purposefully excluded from the assets to be transferred to Santa Cruz. Mr. Tolonen explained that retaining the copyrights was: (1) "part of [Novell's] strategy and really necessary under the nature of the transaction"; (2) necessary because Santa Cruz was relatively small and could not afford the entire value; (3) necessary to avoid ownership issues with other products; and (4) necessary because of concerns with the long-term viability of Santa Cruz.

That testimony is further supported by Michael Defazio, an executive vice president at Novell at the time of the APA, who testified that the intent of the APA was not to transfer the copyrights and that the copyrights were retained as a way to "bulletproof" Novell's financial asset stream....

SCO relies on Recital A in arguing that SCO acquired the "Business," which is defined as "the business of developing a line of software products currently known as Unix and UnixWare, the sale of binary and source code licenses to various versions of Unix and UnixWare, the support of such products and the sale of other products which are directly related to Unix and UnixWare." SCO, however, ignores Recital B which states that Santa Cruz would only acquire "certain assets." Those "certain assets" are set forth in more detail in Schedule 1.1(a) and do not include the excluded assets set out in Schedule 1.1(b). Under the plain language of the original APA, the copyrights were excluded from the transaction.

SCO also points to Section II of Schedule 1.1(a), which transferred "[a]ll of [Novell's] claim arising after the Closing Date against any parties relating to any right, property or asset included in the Business." However, SCO provided no evidence of any such claims that it was entitled to pursue.

Based on the above, the Court finds that SCO is not entitled to judgment as a matter of law on its claim for copyright ownership.

See anything about a right to sublicense its right to develop and sell software? Not. Also, while SCO is saying that it owns UnixWare, it actually doesn't own the copyrights to UnixWare pre-1996 either. It owns the UnixWare business and that's it. It doesn't own a thing about Unix, except whatever it developed itself. As for the bulletproof revenue stream the contract intended, SCO thumbs its nose at the contract and its intent that they signed off on.

It wouldn't surprise me to see Boies Schiller submit something like this. They have no soul, I've decided. But what a cynical bunch Blank Rome turns out to be. I bet when they were in law school, they never dreamed they'd file something like this. And when their moms ask them how it's going at work is, this isn't the case they like to tell her about. "Great, Mom. I figured out a way to help a bankrupt company avoid paying anything it owes. They pay me instead. Hahaha." Would she be proud? Just saying. "And Mom, it's all being preserved for history by the Library of Congress!"

Yes, for generations to come, if the world doesn't end, historians and law students will marvel at the SCO legal work product. It's a kind of immortality.

: D

And how'd you like to be William Broderick's mom?

Update 2: I thought of something else. What about trade secrets and know how? If you recall, Allison Amadia testified that both stayed with Novell unless needed for the contemplated Santa Cruz business:

A. Well, I can tell you that Amendment Number 2 attempted to clarify that and make it clear that whatever copyright rights, whatever specific rights under copyright law that Santa Cruz needed in order to exercise their rights to do this business that they did obtain them under the original APA. So if they needed trade secret rights in order to run their business then they acquired them.

Q. I'm not asking you about copyright, though. I'm asking you about trade secrets. That's a discrete subject matter. It's a discrete form of intellectual property; right?

A. Yes.

Q. And there are no trade secrets identified in the excluded assets schedule in the APA; correct?

A. Correct.

Q. So it falls that they must be included if they exist in UNIX and UnixWare; correct?

A. No. The excluded asset schedule is more, for lack of a better term, what we call belts and suspenders. So really what is included or what are included in Schedule 1.1(a), there really isn't an actual need to have a list of excluded assets except to indicate without, you know, any doubt that these things are not included. So the fact that trade secrets aren't excluded doesn't mean they were included.

Q. So your testimony is after the APA signed no one owned the trade secrets in UNIX and UnixWare; is that right?

A. No. After the APA was signed Novell owned the trade secrets in UNIX and UnixWare.

Q. But they're not in the excluded assets schedule. I thought that's where you said the intellectual property was excluded.

A. It doesn't have to be in there.

Q. Why not?

A. The excluded asset schedule typically is a list of items that the parties think of and agree are not included, but it's not exhaustive. What's exhaustive is the schedule of included assets.

Q. Why would one be exhausted and one not be exhausted?

A. Because it's very clear in the section that refers to the schedule that what is being sold is what is in Schedule 1.1(a).

Q. So that long language I read at the beginning of the Schedule 1.1(a) and bored the jury with, you don't regard that language which ends with the phrase, without limitation as being exhaustive; is that your testimony?

A. No. I didn't say 1.1(a) wasn't exhaustive. It is. It's limited to what is in that schedule. 1.1(b) is exhaustive.

Q. So your testimony is that Novell may have excluded other assets that it did not identify in the excluded asset schedule?

A. Yes.

Q. And your testimony would be the same with respect to know-how?

A. I was just going to say, know-how is another way. Know-how isn't mentioned in either included or excluded.

Q. And so you presume that it is excluded if it's not mentioned at all?

A. Yes.

By the way, she is absolutely correct about that being the case with the APA. If you look at the Schedules referenced, and I must warn that this document [PDF] is 98 pages long, the excluded assets schedule, on page 62 of the PDF, specifically says that excluded are anything not on the included assets list. So how can either be used without Novell's approval? In fact, her testimony was that anything not listed in the included assets section of the APA was excluded, not just the copyrights and other things on the excluded list. SCO seems to be arguing that UnXis will just do what SCO could do, as a kind of outsourced worker. But there's a difference between what Santa Cruz was contracted to be allowed to do and what SCO Group now wants to let UnXis do.

Yes, Santa Cruz got a license. But the license was given in the form of what SCO could do, a list of what they got and what they could use it to do. You can see the complete list of what Santa Cruz got under the APA in the included assets list, 4 pages beginning on page 58 of the above referenced PDF. Remember that whole interchange on cross examination of Amadia about implied or explicit licenses?

Q. So your view is the asset purchase agreement sets out an implied license; is that right?

A. No. It sets out a license. It just didn't use the word "license," which isn't required for it to be a license.

Q. So other than by implication, how would you know when you read the APA that there is a license if it doesn't use the word "license"?

A. Because you specifically read the provisions that show you what you're allowed to do. So it says, you have a right to take this code. You have a right to develop derivative works to this code. You have a right to market it. You have a right to distribute it, et cetera.

How can SCO enlarge that list of rights by sublicensing its own role, when that is not an explicit right under the APA in the included assets section or anywhere else? And how will UnXis run a business without Novell's approval of the use of the trade secrets and know how?

I mean, the APA mentions third-party licenses, but it means licenses that Novell had with third parties to use their code, and Novell got a license back on that. If SCO dumps the APA, what happens to those rights?

Santa Cruz did get "Software and Sublicensing Agreements", for sure, in that some folks, like Sun and IBM, were given the right to develop on top of what they licensed and then sell their derivative works (see IBM's agreement with AT&T, searching for keyword sublicense). But notice what IBM couldn't do:

7.09 Neither this Agreement nor any rights hereunder, in whole or in part, shall be assignable or otherwise transferable by LICENSEE and any purported assignment or transfer shall be null and void.

7.10 Except as provided in Section 7.06(b), nothing in this Agreement grants to LICENSEE the right to sell, lease or otherwise transfer or dispose of a SOFTWARE PRODUCT in whole or in part.

But isn't that what SCO Group is saying it will do with UnXis? If so, then it only has the right to do that if it does in fact assume the APA, I would think, and assign it all, which it can't do without Novell's consent. Otherwise, what rights does it have to do anything? It can only license or sublicense what it actually wrote itself, then, because all the other rights stem from the APA, and if they point to their history of what they did, they didn't allow any transfer of the licensee's rights. Is it actually arguing that it has the rights without the APA? From whom?

For example, in IBM's license agreement, note these paragraphs:

7.04 LICENSEE agrees that it will not, without the prior written permission of AT&T, (i) use in advertising, publicity, packaging, labeling or otherwise any trade name, trademark, trade device, service mark, symbol or any other identification or any abbreviation, contraction or simulation thereof owned by AT&T (or a corporate affiliate thereof) or used by AT&T (or such an affiliate) to identify any of its products or services, or (ii) represent, directly or indirectly, that any product or service of LICENSEE is a product or service of AT&T (or such an affiliate), or is made in accordance with or utilizes any information or documentation of AT&T (or such an affiliate).
Who does UnXis get the right to use the trademarks and trade secrets from under the proposed deal? From SCO Group? From Novell, then? See the murky problems?

Trying to figure out SCO's twists and turns can drive a person nuts, because it always sounds, on the surface, plausible. But when you start to look at the specifics, you have to ask, do they really expect this to fly? Even if the bankruptcy judge falls asleep at the wheel, there is bound to be litigation immediately, I would assume.


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