Novell Files Motion to Dismiss SCO's Claims

News.com is reporting that Novell has filed a motion to dismiss, on the grounds that SCO hasn't proven that Novell doesn't own the copyrights and thus SCO can't establish that it owns Unix and UnixWare copyrights. The motion also seeks dismissal on the grounds that the allegations don't establish specific grounds for damages. "They are precisely the type of general allegations of some speculative injury that the special damages pleading requirements for a slander of title action are meant to avoid." SCO released a statement from whatever cave they have been hiding in all week.

Here is a snip from the article:

That's legalese for: they haven't got a case. They missed an important step. To bring a slander of title action, you must be the owner of the property. They can't prove that they own the copyrights to Unix and UnixWare, because Novell claims they do. Thus, they are hinting, they brought the wrong kind of case. They didn't prove the precise amount of money damages they have suffered, and they can't, under the circumstances, so they can't win. Damages must be precise, not just speculative, and all they presented to the court was vague "We've been damaged in some way" allegations, and since they have no clear title to the copyright, they can't prove the damages element until they prove they actually own the copyrights.

In a slander of title action, there are necessary elements you have to prove to win. It's like when you hit the ball in baseball, you don't get a home run unless you actually run around and touch all the bases. You can't just stand there and say, It's out of the ballpark, so I don't need to bother running around. In slander of title, one of the elements you must "touch" to get your "home run" is "that special damages were sustained thereby", and special here means specific, that you can show to the penny exactly what you lost. I'll explain more about slander of title elements in the next article.

Lamlaw's Lewis Mettler said they'd goofed by choosing a slander of title action instead of breach of contract and that it would prove fatal to their claims, and it looks like he just might be right.

Also this morning on Groklaw:

Novell Notifies SCO

Thursday, February 12 2004 @ 05:00 AM EST

It seems SCO did not obey Novell's instructions by the deadline. Consequently, Novell in a new letter, dated February 11, takes the following action:

"Accordingly, pursuant to Section 4.16(b) of the Asset Purchase Agreement, Novell, on behalf of The SCO Group, hereby waives any purported right SCO may claim to require Sequent (or IBM as its successor) to treat Sequent Code as subject to the confidentiality obligations or use restrictions of Sequent's SVRX license."

Here is Section 4.16(b) of the Asset Purchase Agreement, which you can find, along with all the Amendments and Schedules on the Legal Docs page, which has a permanent link on the left of the page:

"(b) Buyer shall not, and shall not have the authority to, amend, modify or waive any right under or assign any SVRX License without the prior written consent of Seller. In addition, at Seller's sole discretion and direction, Buyer shall amend, supplement, modify or waive any rights under, or shall assign any rights to, any SVRX License to the extent so directed in any manner or respect by Seller. In the event that Buyer shall fail to take any such action concerning the SVRX Licenses as required herein, Seller shall be authorized, and hereby is granted, the rights to take any action on Buyer's own behalf. Buyer shall not, and shall have no right to, enter into future licenses or amendments of the SVRX Licenses, except as may be incidentally involved through its rights to sell and license the Assets or the Merged Product (as such term is defined in the proposed Operating Agreement, attached hereto as Exhibit 5.1(c)) or future versions thereof of the Merged Product."

The letter also references Software Agreement No. SOFT-000321 et seq, which may be referring to the Sublicensing Agreement.

Here is the entire letter, and the original is available here.

***************************************************

Joseph A. LaSala, Jr.
Senior Vice President
General Counsel and Secretary

VIA FACSIMILE AND CERTIFIED MAIL
RETURN RECEIPT REQUESTED

February 11, 2004

Mr. Ryan Tibbitts
General Counsel
The SCO Group
[address]

Mr. Ronald A. Lauderdale
Vice-President, Assistant General Counsel
International Business Machines Corporation
[address]

Re: Sequent Computer Systems

Dear Counsel:

Reference is made to the following:

Asset Purchase Agreement by and between The Santa Cruz Operation, Inc. and Novell, Inc. dated as of September 19, 1995, and more particularly to Section 4.16(b) of that agreement;
Software Agreement No. SOFT-000321, et seq., between AT&T Information Systems Inc. and Sequent Computer Systems, Inc. ("Sequent's SVRX license);
Letters dated May 29, 2003 and August 11, 2003 from The SCO Group to Sequent Computer Systems, Inc.;
Letter dated August 14, 2003 from IBM to The SCO Group;
Letter dated October 7, 2003 from Novell, Inc. to The SCO Group regarding IBM Code; and
Letter dated February 6, 2004 from Novell, Inc. to The SCO Group regarding Sequent Computer Systems.

In its February 6 letter to The SCO Group, Novell directed "SCO to waive any purported right SCO may claim to require Sequent (or IBM as its successor) to treat Sequent Code as subject to the confidentiality obligations or use restrictions of Sequent's SVRX license." The letter defined Sequent Code as code developed by Sequent, or licensed by Sequent from a third party, which Sequent incorporated in its UNIX variant but which itself does not contain proprietary UNIX code supplied by AT&T under the license agreements between AT&T and Sequent. Novell directed SCO to take this action by noon, MST, February 11, 2004.

SCO has failed to take the actions directed by Novell.

Accordingly, pursuant to Section 4.16(b) of the Asset Purchase Agreement, Novell, on behalf of The SCO Group, hereby waives any purported right SCO may claim to require Sequent (or IBM as its successor) to treat Sequent Code as subject to the confidentiality obligations or use restrictions of Sequent's SVRX license.

Sincerely,

/s/ Joseph A. LaSala, Jr.

cc: Mr. Darl McBride
President and CEO

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