Court Rules: Novell owns the UNIX and UnixWare copyrights

It sure has been a long time since the last SCO related post. It looks to finally be the beginning of the end for this whole fiasco. From Groklaw:

Hot off the presses: Judge Dale Kimball has issued a 102-page ruling [PDF] on the numerous summary judgment motions in SCO v. Novell. Here it is as text. Here is what matters most:

[T]he court concludes that Novell is the owner of the UNIX and UnixWare Copyrights.

That’s Aaaaall, Folks! The court also ruled that “SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent”. That’s the ball game. There are a couple of loose ends, but the big picture is, SCO lost. Oh, and it owes Novell a lot of money from the Microsoft and Sun licenses.

Judge Kimball asks the parties, in view of the ruling in Novell, which “significantly impacts the claims and counterclaims asserted” in IBM, to prepare by August 31 “a statement of its view of the status of this case and, more specifically, the effect of the SCO v. Novell decision on each of the pending motions.”

Here’s the conclusion:

For the reasons stated above, the court concludes that Novell is the owner of the UNIX and UnixWare copyrights. Therefore, SCO’s First Claim for Relief for slander of title and Third Claim for specific performance are dismissed, as are the copyright ownership portions of SCO’s Fifth Claim for Relief for unfair competition and Second Claim for Relief for breach of implied covenant of good faith and fair dealing. The court denies SCO’s cross-motion for summary judgment on its own slander of title, breach of contract, and unfair competition claims, and on Novell’s slander of title claim. Accordingly, Novell’s slander of title claim is still at issue.

The court also concludes that, to the extent that SCO has a copyright to enforce, SCO can simultaneously pursue both a copyright infringement claim and a breach of contract claim based on the non-compete restrictions in the license back of the Licensed Technology under APA and the TLA. The court further concludes that there has not been a change of control that released the non-compete restrictions of the license, and the non-compete restrictions of the license are not void under California law. Accordingly, Novell’s motion for summary judgment on SCO’s non-compete claim in its Second Claim for breach of contract and Fifth Claim for unfair competition is granted to the extent that SCO’s claims require ownership of the UNIX and UnixWare copyrights, and denied in all other regards.

Furthermore, the court concludes, as a matter of law, that the only reasonable interpretation of the term “SVRX License” in the APA is all licenses related to the SVRX products listed in Item VI of Schedule 1.1(a) to the APA. Therefore, Novell is entitled to a declaration of rights under its Fourth Claim for Relief that it was and is entitled, at its sole discretion, to direct SCO to waive its claims against IBM and Sequent, and SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent. Accordingly, Novell’s motion for partial summary judgment on its Fourth Claim for Relief for declaratory judgment is granted, and SCO’s cross-motion for summary judgment on Novell’s Fourth Claim for Relief is denied.

Finally, the court concludes, as a matter of law, that the only reasonable interpretation of all SVRX Licenses includes no temporal restriction of SVRX Licenses existing at the time of the APA. The court further concludes that because a portion of SCO’s 2003 Sun and Microsoft Agreements indisputably licenses SVRX products listed under Item VI of Schedule 1.1(a) to the APA, even if only incidental to a license for UnixWare, SCO is obligated under the APA to account for and pass through to Novell the appropriate portion relating to the license of SVRX products. Because SCO failed to do so, it breached its fiduciary duty to Novell under the APA and is liable for conversion.

The court, however, is precluded from granting a constructive trust with respect to the payments SCO received under the 2003 Sun and Microsoft Agreements because there is a question of fact as to the appropriate amount of SVRX Royalties SCO owes to Novell based on the portion of SVRX products contained in each agreement. Furthermore, because Novell has obtained the information that it would otherwise obtain through an accounting during the course of this litigation, the court denies Novell’s Ninth Claim for Relief for an accounting. However, the court also notes that SCO has a continuing contractual obligation to comply with the accounting and reporting requirements set forth in the APA.

What does this all mean? The case against IBM is all but a moot point now, since Novell owns the IP that SCO is suing over. In addition, SCO owes a substantial amount of the previous license money (95% at a worst case for them) to Novell. It’s pretty much game over at this point. Most of us thought this would be the end result, but in my mind there are many open questions that may never be answered. Will there be a criminal case against Yarro and/or McBride? Was this the longest running pump and dump scheme in history? What was the real reason behind Microsoft obtaining one of the original licenses from SCO and will that angle even be pursued now that Novell and Microsoft are pals? Was the recent Microsoft Novell deal structured as it was by Microsoft in anticipation of this and if so did Novell even see it coming? What was Sun’s intention in getting one of the original licenses from SCO? At the time they were fairly anti-Linux, but part of it seemed to be related to them moving toward OpenSolaris. If it’s really Novell IP how is that deal impacted and what legal ground does OpenSolaris stand on? What was the real impact of this case on Linux in general and on companies like Red Hat specifically? I have many more questions, but will be tossing them around a bit and looking for more information that will surely become available in the coming weeks. Stay tuned.

–jeremy

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One Response to Court Rules: Novell owns the UNIX and UnixWare copyrights

  1. corey says:

    Finally! I hope that the SEC digs into the dealings of this near criminal organization. I bet that Yaro and Mcbride have some really well-padded bank accounts as a result of this scam.

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