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June 7, 2003

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Novell v SCO IP Fray -- More FUD

SCO-Caldera v IBM:

SCO +1, Novell -1 in SCO v Novell Unix-IP Feud

Linux and the SCO-Caldera v IBM Lawsuit

By Mike Angelo -- 7 June 2003 (C)

Novell loses big round in Unix IP fray with SCO-Caldera

SCO-Caldera v. IBM:

SCO Clears Linux Kernel but Implicates Red Hat and SuSE

IBM Files Answer to SCO's Caldera v IBM Complaint

IBM Response to SCO-Caldera Complaint Is Outrageous!


SCO-Caldera & the GNU/Linux Community:

Unix IP Note

Interestingly, it seems that SCO-Caldera does not own any Unix patents nor does it own the Unix trademark or Unix specification. Moreover, SCO might not own the Unix Copyrights either.

Novell's announcement that SCO did not obtain the Unix copyrights when it purchased Novell's Unix business could make the entire SCO IP fracas very interesting.

Of course the 1996 amendment to the 1995 Asset Purchase Agreement as discussed here today adds lots of FUD to that prior Novell announcement.

In March, Allen Brown, President and Chief Executive Officer of The Open Group, told us that The Open Group got the Unix trademark and the Unix specification.

Don Marti, Linux Journal editor, did an interesting patent search in March. He found Caldera has never had a patent assigned to it . . . So, if SCO is interested in throwing the first stone in a licensing war, all they have to play with is copyright on UNIX source code. (Follow the Patents, People, Linux Journal News Notes 6 March 2003) Please also see Microsoft licenses a SCO patent? What patent?, also by Don Marti. Links in Resources section at the end of this article.)

Considering Novell's announcement that SCO does not even own the Unix copyrights, SCO just might not have any rocks at all to throw.

On 28 May 2003, one time Unix owner Novell (NOVL) entered the SCO, Unix IP fray -- with no proof and more FUD (fear, uncertainty, doubt). Meanwhile over the ensuing week, SCO-Caldera (SCOX) dug out evidence indicating that Novell was not telling the truth.

In a statement published on Novell's Web site on 28 May 2003, Novell Chairman, President, and CEO Jack L. Messman stated, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights.

However, as we pointed out in our article about Messman's SCO IP announcement, he failed to provide any documentary evidence to back up his claim that SCO did not own the Unix copyrights and patents.

In a hyper-technical sense, it might be true that the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights. However, at least some of the truth appears to lie in a document that Novell's Messman neglected to mention -- a 1996 amendment to the 1995 Asset Purchase Agreement between Novell and SCO in which Novell sold its Unix business to SCO.

Thus while Messman's announcement, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights as stated might not be a lie, it is far from the whole truth.

That amendment, Amendment No. 2 to the Asset Purchase Agreement dated October 16, 1996, revised in part an exclusionary section in the original 1995 Asset Purchase Agreement.

A. With respect to Schedule 1.1(b) of the Agreement titled "Excluded Assets", Section V, Subsection A shall be revised to read:

All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.

In a terse, capitulating, announcement yesterday morning, Novell Statement on SCO Contract Amendment, Novell stated:

"In a May 28th letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement was sent to Novell last night by SCO. 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." (Emphases added.)

A brief press release from SCO yesterday morning also announced the 1996 Asset Purchase Agreement amendment:

Any question of whether the UNIX copyrights were transferred to SCO under the Asset Purchase Agreement was clarified in Amendment No. 2 to the Asset Purchase Agreement dated October 16, 1996.

"This amendment simply confirms SCO's long stated position that it owns all copyrights associated with the UNIX and UnixWare businesses," said Chris Sontag, senior vice president and general manager, SCOsource intellectual property division, SCO.

SCO's CEO Darl McBride and Chris Sontag said essentially the same thing in a quickly-called telephone press conference yesterday.

We discussed the announcement of the 1996 Asset Purchase Agreement amendment with SCO's Director of Corporate Communication, Blake Stowell, via e-mail yesterday.

MozillaQuest Magazine: This paragraph, "except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." seems vague. It does not specifically say which copyrights are being conveyed to SCO. Can you clarify this?

Blake Stowell: It is saying under the category of "Excluded Assets" that it is excluding all of the copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise it rights with respect to the acquisition of UNIX and UnixWare technologies.

MozillaQuest Magazine: Do you buy into Novell's statement: "To Novell's knowledge, this amendment is not present in Novell's files"?

Blake Stowell: That seems very weak to me. It sounds to me like they haven't looked through their files. Maybe they should look a little harder. We e-mailed a copy to Jack Messman, CEO, Novell yesterday evening.

On the surface, the disclosure of the 1996 Asset Purchase Agreement amendment certainly is a big win for SCO-Caldera. However, if one digs down under that surface, it might not be as big a win as it first appears to be. Parse the statements made by Novell and SCO-Caldera, and also the words in the 1996 amendment.

  • From the Amendment No. 2 to the Asset Purchase Agreement dated October 16,
  • the copyrights and trademarks owned by Novell as of the date of the Agreement

This is very vague. It does not specifically list which copyrights and trademarks were still owned by Novell on 16 October 1996. However, we know from Allen Brown, CEO of the Open Group, that Novell already had conveyed the Unix trademark and the Unix Specification to the Open Group.

  • required for SCO to exercise it rights with respect to the acquisition of UNIX and UnixWare technologies.

Good contract lawyers could have lots of fun with this one. Once again the 1996 amendment does not specifically list particular copyrights. So, the question is which copyrights are required in order for SCO to exercise it rights with respect to the acquisition of UNIX and UnixWare technologies.

To the extent that SCO could conduct a Unix business without owning some or all of the Novell Unix copyrights, those copyrights remained with Novell, under the 1996 amendment. And so far, Novell has not transferred title to any Unix copyrights in the Copyright Office.

As it is now, if SCO-Caldera were to bring up a Unix copyright infringement suit in court, the defendant easily could ask the court to dismiss that lawsuit on the grounds that SCO-Caldera does not even own the Unix copyrights.

If Novel refuses to transfer the Unix copyrights to SCO-Caldera, then SCO-Caldera would have to sue Novell for specific performance asking the court to order Novell to transfer the Unix copyrights. Of course in such a lawsuit, SCO-Caldera would have to prove to the court that the Unix copyrights are necessary for SCO-Caldera to conduct its Unix business.

There is another little wrinkle that could work against SCO-Caldera in any such lawsuit. It's a legal doctrine known as waiver by estoppel. Simply, it means that your are governed by what you actually do rather than what you say.

Here, SCO has conducted its Unix business for some eight years without needing the subject Unix copyrights or requesting an official, Copyright Office, registration transfer of the copyrights from Novell to SKO.

Novell could defend any attempt by SCO-Caldera to force transfer of the Unix copyrights by invoking an estoppel defense. Whether such an attempt might be successful is another matter, of course.

  • From yesterday's, Novell Statement on SCO Contract Amendment, Novell said:
  • this amendment is not present in Novell's files.

This certainly is strange. Could Novell be setting the stage to deny the 1996 amendment?

The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. (Emphases added.)

The term appears seems to be a qualified admission that SCO-Caldera owns some Unix copyrights. So does the term support. Why did Novell make a qualified, rather than un-qualified, admission? Lots of FUD there.

The term certain also seems to be making reservations as to what, if any, Unix copyrights were transferred to SCO. Here in context, certain, could be construed to mean not all. There certainly is lots of vaguery there. More FUD.

When you parse Novell's 6 June announcement, it clearly has been very carefully worded to be very vague and when you get down to it, to say little or nothing. It leaves lots of doors open for Novell to refuse to actually transfer title of any Unix copyrights to SCO-Caldera over at the Copyright Office. And it leaves lots of room for Novell to mount a successful defense against any specific performance lawsuits, which SCO-Caldera might file against Novell.

  • The amendment does not address ownership of patents, however, which clearly remain with Novell." (Emphases added.)

This is a really sticky-wicket for SCO-Caldera. Software patent rights are particularly powerful tools. Moreover, if Novell were to GPL the Unix patents, that could serve as a bar to SCO-Caldera winning any infringement lawsuits regarding Linux.Ultimately and regardless of what anyone might say or claim, just exactly what Unix rights Novell did convey and/or did license to SCO is determined by what is written within the four-corners of any agreements, contracts, licenses, and so forth that Novell and SCO might have entered in to. So far, neither Novell nor SCO has made all these documents public on their Web sites.

Until such time as any Unix copyrights are transferred from Novell to SCO-Caldera, officially and particularly by name, SCO-Caldera appears to lack standing to make any copyright infringement claims regarding the Unix copyrights. Moreover, Novell still is challenging SCO-Caldera's claims that SCO-Caldera owns any Unix patents.

That's the simple version. As things stand now, the Unix copyright and patent ownership still largely is a he-said/he-said dispute between Novell's Jack L. Messman and SCO-Caldera's Darl McBride and right now, McBride is trouncing Messman. Of course the game is far from over and who is ahead could change many times as this game progresses.

MozillaQuest Magazine will take a more in-depth look at Novell's and SCO-Caldera's Unix IP rights and claims in some upcoming articles.

Stay tuned.


Please see the first two parts of our series about SCO-Caldera's IP claims plus its intentions to enforce and license its intellectual property rights.

SCO-Caldera & the GNU/Linux Community: The SCOsource IP Matter

SCO-Caldera & the GNU/Linux Community: Part 2, Under the Iceberg's Tip


Resources


Novell Statement on SCO Contract Amendment

SCO Confirms Copyright Ownership of UNIX® and UnixWare®


Novell's Unix copyright announcement?

Press release regarding "sale of its UnixWare business to The Santa Cruz Operation, Inc. (SCO)"

SCO Statement on Novell's Recent Actions

(Note: subsequent to our calling SCO's attention to the inconsistencies between this SCO press release and statements made by Darl McBride in his 30 May 2003 telephone press conference, SCO removed this press release from its Web site. However you can find it here.)


Follow the Patents, People, Don Marti, Linux Journal News Notes 6 March 2003.

SCO: Unix code copied into Linux, Stephen Shankland, CNET News.com, May 1, 2003

Linux Buzz: SCO to Reveal Allegedly Copied Code, Don Marti, Linux Journal, 15 May 2003

Microsoft licenses a SCO patent? What patent?, Don Marti, Linux Journal, 19 May 2003


The linux-kernel mailing list FAQ

Linux and the GNU Project, By Richard Stallman


UNIX is a registered trademark of The Open Group in the United States and other countries

Related MozillaQuest Articles


SCO-Caldera v IBM:


SCO-Caldera & the GNU/Linux Community: The SCOsource IP Matter

SCO-Caldera & the GNU/Linux Community: Part 2, Under the Iceberg's Tip

About the "Hey SCO, sue me" Petition


Caldera OpenLinux 3.1.1 Available

Caldera OpenLinux Workstation 3.1 -- A First Look


UnitedLinux, a Divisive Weapon for Caldera's Darl McBride -- Part I

UnitedLinux, a Divisive Weapon for Caldera's Darl McBride -- Part II

SCO's Darl McBride and MozillaQuest Magazine's Mike Angelo Discuss Caldera Linux and LSB

Caldera/SCO 3.1.1 OpenLinux Distribution Gains LSB Certification


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Don't Forget the Books

LinuxWorld in New York City -- 21-24 January 2003


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