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17 February, 2004

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MozillaQuest Op-Ed/Analysis

The SCO v Novell Lawsuit

Novell Motion to Dismiss Holds Key to SCO Anti-Linux Claims

Mike Angelo -- 17 February 2004 (C) -- Page 2

Things for the Court to decide

In reaching a decision of whether to dismiss the SCO v Novell lawsuit, the trial court judge must first decide if there are no disputed facts for a jury to settle. Judge Kimball, the judge hearing SCO v Novell, likely will come to that conclusion because the facts are pretty much all in the 1995 Asset Purchase Agreement documents and other documentary evidence.

Although if questions of interpreting the1995 APA documents arise, Judge Kimball could decide there are factual matters in dispute that cannot be resolved in a motion to dismiss proceeding and thus deny the Motion to Dismiss. That could turn on whether the APA interpretation issues are a matter of legal interpretation that the judge must decide or they go into matters of fact, which a jury would have to decide.

  • Dismissal v Summary Judgment

Under Federal Rule of Civil Procedure (F.R.C.P.) 12 (b), if either side introduces matters outside the pleading and are not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56. Under this provision of F.R.C.P 12(b), if SCO adds new matter in its reply to Novell's Motion to Dismiss, that could throw Novell's Motion to Dismiss into the summary judgment arena.

The standards of review for a motion for summary judgment are different from those of a motion to dismiss. However, since the posture of this lawsuit now is that of entertaining a FRCP Rule 12 (b) (6) motion to dismiss, we will consider a FRCP Rule 56 motion for summary judgment beyond the scope of today's article and not further discuss summary judgment issues at this time.

Novell says SCO does not own Unix copyrights

The meat of Novell's position that SCO does not now own the controversial Unix copyrights is in Part I of Novell's Argument in its Memorandum in Support of Motion to Dismiss. Here is an excerpt of that. However, if you really want to understand this you should read Novell's entire brief. Link to that in the Resources section at the end of this article.

I. SCO HAS NOT SHOWN A VALID TRANSFER OF COPYRIGHT OWNERSHIP UNDER THE COPYRIGHT ACT, AND THEREFORE IT HAS NOT PROPERLY PLED THAT NOVELL'S STATEMENTS ARE FALSE.

SCO's Complaint is premised on the theory that the Asset Purchase Agreement and Amendment No. 2 transferred ownership of the copyrights in UNIX and UnixWare to its alleged predecessor, Santa Cruz. (Compl. p. 1, 14, 15, 17.) Therefore, SCO claims, Novell's statements that Novell still owns the copyrights are false.

The Copyright Act, however, imposes very strict requirements on purported transfers of copyright ownership. Under section 204(a) of the Act, "[a] transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." 17 U.S.C. § 204(a); Radio Television Espanola S.A. v. New World Entm't, Ltd., 183 F.3d 922, 926 (9th Cir. 1999).1 Here, the documents relied upon by SCO do not constitute such an instrument of conveyance.

Indeed, SCO admits in its own Complaint that it does not own the copyrights at issue, and that it remains for Novell to transfer them. (See Compl. p. 10, 13) (SCO requests that the Court issue an injunction "requiring Novell to assign to SCO any and all copyrights Novell has registered in UNIX and UnixWare.")

Because the Complaint fails to establish the falsity of Novell's purportedly slanderous statements, it should be dismissed.

-- Memorandum in Support of Motion to Dismiss

What if Novell wins?

What happens if the Utah Federal District Court buys Novell's argument section I, and agrees with Novell that SCO does not now own the Unix copyrights? Obviously if that happens, the Utah District Court might dismiss the SCO v Novell lawsuit. More about that further on.

The other courts involved in the SCO v Linux legal actions then might follow the SCO v Novell Court's findings. The Utah District Court is only a trial court so other trial courts are not obliged to follow the Utah District Court, although they may follow the Utah Court if they wish.

What if the other trial courts entertaining SCO v Linux lawsuits do follow a possible ruling by the SCO v Novell Court that SCO does not now own Unix copyrights. In that case any SCO claims based on Unix copyright infringements could become meaningless.

Additionally, the SCO v Novell lawsuit has been assigned to Judge Dale A. Kimball. He is the same judge that is hearing the SCO v IBM lawsuit. Thus if he rules in SCO v Novell that SCO does not now own the Unix copyrights, he is very likely to make the same ruling in SCO v IBM.

Novell's brief is very convincing and looks like a winner. However, it would be counterproductive to rush to any judgments until SCO files its reply brief.

SCO says it owns Unix copyrights

While SCO has not filed its legal reply to Novell's Motion to Dismiss, SCO's Director of Public Relations, Blake Stowell, did make a statement via e-mail to MozillaQuest Magazine Friday:

SCO owns the copyrights to UNIX. The transfer of these copyrights is made plain, clear and unambiguous in the 1995 Asset Purchase Agreement between SCO and Novell. Amendment No.2 to the Asset Purchase Agreement clarifies this position and SCO will continue to aggressively defend these UNIX copyrights in our court case against Novell. In the next 20 days, we expect that SCO's lawyers will file a response motion to this filing by Novell. (Blake Stowell)

Even if the Utah District Court finds in favor of Novell on the issue regarding current ownership of the Unix copyrights, it might not dismiss the SCO v Novell lawsuit. That's because SCO in its Novell v SCO Complaint also is asking the Court to order Novell to assign to SCO any and all copyrights Novell has registered in UNIX and UnixWare.

Thus, this mess could end up with a ruling by the SCO v Novell Court that SCO does not own the Unix copyrights now, but under the Asset Purchase Agreement Novell must assign some or all of its Unix copyrights to SCO.

For What SCO Asks the Court

1. For actual and special damages in an amount to be proven at trial for Novell's slander of SCO's title to the UNIX and UnixWare copyrights;

2. For punitive damages in an amount to be proven at trial for Novell's malicious and willful conduct as alleged herein.

3. For a preliminary and permanent injunction (a) requiring Novell to assign to SCO any and all copyrights Novell has registered in UNIX and UnixWare; (b) preventing Novell from representing in any forum that it has any ownership interest whatsoever in the UNIX and UnixWare copyrights; and (c) requiring Novell to retract or withdraw all representations it has made regarding its purported ownership of the UNIX and UnixWare copyrights.

4. For attorneys' fees, costs, pre- and post judgment interest, and all other legal and equitable relief deemed just and proper by this Court.

-- Novell v SCO Complaint


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