SCO v. Novell

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After The SCO Group initiated their Linux campaign, they made several statements that they were the owners of Unix, probably meaning (though never explicitly said) that they were the owners of the copyrights of the original ATT source code and derivatives. Novell claimed these statements were false, and that they actually still owned Unix. After Novell registered the copyrights to some key Unix products, SCO filed suit against Novell, claiming slander of title.

This is just one of a series of lawsuits in which SCO is involved. Other lawsuits in which SCO is involved are SCO v. IBM, Red Hat v. SCO, SCO v. AutoZone, SCO v. DaimlerChrysler.

1 History
2 Background information
3 The lawsuit
4 See also
5 External links

[edit] History

On September 19, 1995, the Santa Cruz Operation bought certain rights regarding Unix and UnixWare from Novell. These rights included the right to develop and market new versions of UnixWare. The Santa Cruz Operation also bought the rights to act as a licensing agent for an ancillary version of Unix. In 2000 Caldera acquired the Server Software and Services divisions of Santa Cruz Operation, as well as UnixWare and OpenServer technologies. Two years later Caldera changed its name to The SCO Group.

[edit] Background information

The conflict between SCO and Novell originated in 2003, after SCO filed suit against IBM and claimed that they owned Unix. Novell publicly responded to these allegations on May 28, 2003 by claiming that they never sold the copyrights of Unix to SCO’s predecessor, Santa Cruz Operation. On June 6, 2003, SCO held a press conference in which it revealed a second amendment to the asset purchase agreement between Novell and Santa Cruz Operation. SCO claimed this amendment supports their claim that SCO did receive the copyrights to Unix. In response to this revelation, Novell issued a press release in which it stated:

To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. The amendment does not address ownership of patents, however, which clearly remain with Novell.

While SCO publicly claimed victory, behind the scenes a series of heated letters were sent back and forth. These letters reveal that Novell continued to believe they are still the legal owners of the Unix copyrights. On October 14, 2003, Novell registered several key Unix copyrights, which was later discovered by a member of the Groklaw website. After their registration became public knowledge Novell issued a press release on December 22, 2003, stating:

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.

On January 13, 2004, Novell launched its Linux indemnification program and publicly released the letters that were sent between SCO and Novell in the previous months. SCO responded the same day with a press release that reiterated its earlier claim and announced that they were preparing to file a lawsuit against Novell.

[edit] The lawsuit

On January 20, 2004, SCO filed a Slander of Title lawsuit against Novell. This lawsuit, filed in Utah State court, requested a preliminary and permanent injunction. The injunction would require Novell to assign to SCO all copyrights that Novell registered and that Novell would retract all claims they previously made.

Novell removed the lawsuit from State court and moved it to Federal court instead. Four days later, on February 10, 2004 Novell filed a motion to dismiss the case. Novell's motion requested the court to dismiss the case for failure to state a claim upon which relief can be granted. In support of its motion Novell argues that:

SCO did not show a valid transfer of copyright ownership, because the Asset Purchase Agreement is merely a promise to assign and that the Agreement is - by law - not sufficient to transfer the copyrights to SCO.
SCO did not specify specific special damages.

In response, SCO filed several memoranda in opposition to Novell's motion to dismiss. Additionally SCO filed a motion to remand the case back to State court. Novell claimed however, that to resolve this case, interpretation of Federal Law was required, which would make this a case that belonged in Federal Court.

On May 9, 2004, Judge Dale A. Kimball heard arguments of both parties and took both motions under advisement. On June 10, 2004 Judge Kimball denied SCO's motion to remand and partially granted Novell's motion to dismiss, on a pleading technicality. The case was dismissed without prejudice, which would allow SCO to amend their complaint to include properly plead special damages.

On July 9, 2004, SCO filed an amended complaint.

On August 6, 2004, Novell filed a motion to dismiss the case with prejudice. On October 16, 2004, SCO filed an opposing memorandum. Novell filed another supporting memorandum on November 10, 2004.

On March 2, 2005, Judge Kimball granted the continuance of the hearing. The hearing was held on May 25, 2005.

On July 29, 2005, Novell filed a countersuit against SCO claiming Slander of Title, Breach of Contract, Failure to Remit Royalties and Failure to Conduct Audit Obligations. Novell is currently seeking more in damages than SCO is worth, and since SCO is quickly burning through its assets and cash on hand, Novell has asked the court to sequester this money from SCO so that it is not spent before Novell has a chance to pursue their case. Novell has also asked the court to attach SCO's assets pending adjucation of their claims. If Novell wins this motion it would force SCO to file for bankruptcy. They accuse SCO of accepting Unix SVR4 licensing money from Microsoft and Sun Microsystems without remitting back to Novell the full 100% of the monies (after which Novell would pay SCO its 5% administration fee). They also mention at the beginning of the counterclaim that SCO asked Novell to go in together with them on the Linux IP Infringement Licensing Plan. When Novell refused, SCO asked Novell to turn the copyrights over to SCO, a request Novell also refused.

On January 3, 2006, SCO filed a proposed amended complaint containing the original slander of title claim, as well as several new claims, including unfair competition, copyright infringement and breaching a purported no-compete agreement.

On April 10, 2006, SuSE (part of Novell) filed a Request for Arbitration with the Secretariat of the ICC International Court of Arbitration in Paris, France. Years earlier SCO (then named Caldera) had signed contracts with SuSE (now owned by Novell) involving UnitedLinux. In this contract the UnitedLinux members agreed that each member would have broad licenses to exploit and distribute Linux products that include UnitedLinux technology, and they agreed to arbitration of disagreements. This request by SuSE was in response to SCO's amended complaint against Novell alleging copyright infringement. The arbitration process has relatively strict timelines, unlike the U.S. courts' procedures. Novell filed a "Motion to Stay Claims Raising Issues Subject to Arbitration" in the U.S. courts, saying that four of five SCO claims (including copyright infringement) have been brought to arbitration, and thus can be stayed in the U.S. court until the Arbitration Tribunal renders its decision. Novell also filed an "Answer to SCO's 2d Amended Complaint and Counterclaims", claiming a large number of affirmative defenses, one of which accuses SCO of conducting fraud on the U.S. copyright office.

On September 22, 2006, Novell sought leave to file amended counterclaims. Through discovery, Novell had obtained copies of Unix licensing agreements between SCO and Microsoft and Sun, and alleged that upon review of the agreements, it was determined that they breached the APA. The added claims were conversion and breach of fiduciary duty. Judge Dale Kimball granted Novell's motion, as it was stipulated to by SCO.

On September 29, 2006, Novell filed a Motion for Summary Judgment, or if that was rejected, then for a Preliminary Injunction. Novell has alleged that SCO, through their agreements with Sun and Microsoft, licensed them Novell's property without paying Novell the owed royalties. Novell has asked for SCO to be forced to turn the royalties over to Novell, or, in the alternative, be forced to put the money into a Collective Trust.