Novell Moves to Dismiss With Prejudice

Groklaw ^ | 10 August 2004 | Pamela Jones

[ShadowAce]

Here is Novell's Motion to Dismiss, the Memorandum in Support of the Motion to Dismiss, the Declaration of Bruce Lowry and the Declaration of David E. Melaugh, plus their Motion for Leave to File an Overlength Memorandum and the Order granting them leave. Lots to read, but the first two may take a few more minutes to show up on the server.

I suggest you start with the declarations and then the ExParte Motion to File an Overlength Memorandum, and then the Motion to Dismiss and then the Memorandum. And I wrote that before I knew that the Motion and Memorandum would turn out to be the last to show up.

What I see is that they are telling the judge several things:

• SCO didn't tell the judge the whole story, they say, but rather they quoted "selectively and misleadingly", to "drum up any basis for these specious allegations." Hence Novell takes on the task of showing the complete documents, exhibits galore, to show the judge the context and the complete articles and press releases and letters that they say SCO cherry picked a few quotes and then used misleadingly. That's why they needed to get permission to file an overlength memorandum, so as to detail each item SCO misrepresents.

  Take a look at the Melaugh declaration, for example. He tells the judge that he did a LexisNexis news search for the words IBM and SCO and got 2,845 results, starting with the month and year that SCO filed the lawsuit. Next, he narrowed it down by choosing as cutoff date the first Novell public statement, and he still got 317 articles. They present the judge with beginning chunks of the first 50 of each search, asking that he take judicial note of the huge media frenzy around SCO. Even the court itself lists it as a "high profile" case on the Court's website. This is the backdrop to Novell's statements. They also attach SCO's complaint in the Red Hat case and its opening brief in support of its motion to dismiss the Red Hat case, and both the original complaint and the amended complaint in the IBM case, as well as their Answer to IBM's Counterclaims. They throw in letters we have read on Novell's site, and some press releases for good measure, but in each case they cross reference them with SCO's Amended Complaint. See, Your Honor, they are saying, how they didn't tell you the straight, complete story?

• The circumstances under which Novell spoke out form the backdrop to their Motion to Dismiss, and the Court itself said that the case presents a significant copyright issue, yet SCO continues to assert it and only it has undisputed copyright rights as if it were an unassailable fact. Are they not giving what you wrote full weight, Your Honor? is the implication. You said in your ruling that for a statement to be malicious, it has to be knowingly false. Obviously, SCO can't "surmount these hurdles."

• This is a public dispute, and it was SCO who made it so not only by suing IBM, but by sending the 1500 threatening letters and sounding off in the media. "SCO has done everything it can to stoke that firestorm." Additionally, it has started or is defending against "at least six lawsuits before five judges in four states and two countries."Under those circumstances, Novell has the legal right to speak without being threatened with litigation for doing so. It's not malice if both parties sincerely believe they have valid rights and each asserts a claim. Without Novell making such a claim while knowing it was false, which obviously isn't the case in light of the judge's own order, SCO is a dead duck. As a matter of law, its Amended Complaint should be dismissed. (That means there is no issue of fact for a jury to ponder. Matters of law are the judge's job.)

• SCO didn't request declaratory judgment that it owns the UNIX copyrights, only pressing a slander to title claim. That's a hint to the judge that SCO may not be so sure itself who owns the copyrights. Novell then wisely quotes from the Judge himself. Could there ever be better authority? This judge said there are "substantial Section 204(a) issues" with the APA and the Amendment 2, and that "the agreements raise substantial doubt" as to whether the APA as amended qualifies as a copyright transfer writing and doubt as to "whether there was any intent to transfer copyrights".

• On damages, the only thing SCO added was that other parties in other lawsuits with SCO have relied on Novell's assertions regarding copyrights belonging to them, to SCO's alleged detriment.

The Motion to Dismiss is short and sweet: SCO's complaint, they say, should be denied for failure to state a claim upon which relief may be granted. That's legalese for: "This case is ridiculous." SCO claims Novell slandered them, but they can't prevail because:

• Novell has a privilege to publicly assert a rival claim to the UNIX copyrights (meaning, it's not slander if it's true or you have a good faith belief that you own the UNIX copyrights, not SCO);
• Novell has a privilege to publish its rival claim to parties with a common interest in the UNIX copyrights (like all Linux users, but especially all those companies being sued by SCO or suing or maybe worried about getting sued someday); and
• SCO can't allege malice, a necessary element, given the Court's earlier Order. Remember, Your Honor, how you said it wasn't a bit clear, but we made some convincing arguments? If *you* are not sure SCO has the copyrights, and you are the judge here, how can Novell be called malicious for saying so too?

[ShadowAce]

SCO grist for the mill

[ShadowAce]

SCO ping

[rit]

You would think that with all the license agreements involved it would be clear who owns the copyright for Unix, but that would be a wrong assumption. Consider ksh (a standard shell distributed with Unix). AT&T still retains copyright on ksh, and many standard shell commands and utilities. Go figure.

[rdb3]

The Penguin Ping.

Got root?

[TechJunkYard]

You would think that with all the license agreements involved it would be clear who owns the copyright for Unix, but that would be a wrong assumption.

There is one other thing that struck me as I worked on the transcript. I like to do that myself, when I can't understand a legal document fully. Then it hit me. If it is unclear whether a copyright transfer happened, my understanding is that the prior owner, in this case, Novell, remains the owner. Copyrights can't transfer without a sufficient writing, so if the judge dismisses on the basis that the APA plus Amendment A are insufficient and they didn't transfer the copyright or it's not clear that they did, that's the ball game as far as ownership, and SCO can't do a thing about copyright infringement without a copyright. They'd have to do something to try to get ownership, and there you are, back in the loop, with Lanham Act claims heading right at them.

[rit]

Let me clarify that it would be a wrong assumption is meant towards third parties not party to the numerous licenses involved. Back in the day, when it was announced that Novell purchased USL, I presumed Novell secured ownership rights exclusively for Unix and its components (including ksh commands and utilities which were normally distributed with UnixWare). Yet, AT&T stills owns and licenses the shell commands and utilities source code. This may be based on different source code, but it does make one ponder what exactly was included in the licenses.

[Orange1998]

Interesting read.

[TechJunkYard]

.. I presumed Novell secured ownership rights exclusively for Unix and its components (including ksh commands and utilities which were normally distributed with UnixWare). Yet, AT&T stills owns and licenses the shell commands and utilities source code.

I suspect that the actual, real situation with Unix licensing and copyrights is an unholy mess. Ransom Love said it was "full of other companies' copyrights". I think that a real examination of this issue might require the USL/BSDi stuff be unsealed, and nobody wants to open that can of worms.

I was kind of disappointed that Novell doesn't seem to want to push the 204(a) issue any further than this, while the case is in federal court anyway, but that would tie up the IBM/RH/AZ actions even longer. SCOG's SoT suit being dismissed for lack of malice (the amended complaint will likely fail for special damages as the original did) would probably have an effect similar to an outright ruling that Novell's still got the jewels. The fact is that Judge Kimball has already ruled that SCOG hasn't shown that the SYSV rights flowed to them through the amended APA, and that's a major setback.

If Judge Wells can see through SCOG's smokescreen in the IBM case, I think IBM will get their SJ and that'll be the next domino to fall over.

[Golden Eagle]

Interesting that Novell already publicly admitted SCO owns some of the Unix copyrights:

"Novell on Friday reluctantly acknowledged that the amendment "appears to support SCO's claim that ownership of certain copyrights for Unix did transfer to SCO in 1996." "

http://www.nwfusion.com/news/2003/0606novelbacks2.html

Even if Novell does still own some or all of the copyrights, SCO likely purchased the rights to enforce them:

"a section that gives to SCO "all claims...against any parties relating to any right, property or asset included in the (Unix) business" could be interpreted to give SCO the right to enforce the copyright"

http://marketwatch-cnet.com.com/2100-1016_3-1013229.html

[TechJunkYard]

Interesting that Novell already publicly admitted SCO owns some of the Unix copyrights:

"Novell on Friday reluctantly acknowledged that the amendment "appears to support SCO's claim that ownership of certain copyrights for Unix did transfer to SCO in 1996." "

http://www.nwfusion.com/news/2003/0606novelbacks2.html

Oh, okay then. That press release is the whole ball of wax, blows Novell's case to smithereens, we might as well all go home then.

But wait... didn't Novell later have something else to say on the matter? Yeah, I believe they did:

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. Copies of our correspondence, and SCO's reply, are available here. Contrary to SCO's public statements, as demonstrated by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

http://www.novell.com/news/press/archive/2003/12/pr03080.html

I think the judge also had some things to say on this matter...

• It is undisputed that the [Asset Purchase Agreement] did not transfer any copyrights.
• Amendment No. 2 ... does not constitute a transfer of copyrights on its own.
• There is enough ambiguity in the language of Amendment No. 2 that ... it is questionable whether [it] was meant to convey the required copyrights or whether the parties contemplated a separate writing to actually transfer the copyrights after the 'required' copyrights were identified.
• The agreements raise substantial doubt as to whether the [Asset Purchase Agreement] as amended by Amendment No. 2 qualifies as a Section 204(a) writing.
• Novell has raised persuasive arguments as to whether a sufficient writing exists and whether there was any intent to transfer copyrights under the [Asset Purchase Agreement] as amended or under a separate agreement.

http://www.groklaw.net/article.php?story=20040610202858631

Even if Novell does still own some or all of the copyrights, SCO likely purchased the rights to enforce them:

"a section that gives to SCO "all claims...against any parties relating to any right, property or asset included in the (Unix) business" could be interpreted to give SCO the right to enforce the copyright"

http://marketwatch-cnet.com.com/2100-1016_3-1013229.html

Dude, when are you going to learn that journalists are not lawyers? Your press releases don't mean jack.

What Santa Cruz Operation purchased was a Unix license administration business, from which copyrights to the software were specifically excluded. What The SCO Group thinks the Santa Cruz Operation purchased is irrelevant.

SCOG doesn't have the copyrights and never did.

[Golden Eagle]

Dude, when are you going to learn that journalists are not lawyers?

LOL, those were the exact words of a intellectual property lawyer. You're the one with the questionable source, the "journalist with a paralegal background" over at Jokelaw.

[TechJunkYard]

You're the one with the questionable source, the "journalist with a paralegal background"...

I suppose you'd care to provide some evidence that PJ is the one who wrote those documents?

[Golden Eagle]

No, I'm just pointing out the irony of you claiming my IP attorney's statements were those of a journalist, when a journalist is your #1 source for information.

[TechJunkYard]

.. a journalist is your #1 source for information.

No, actually the documents are. I mainly use that site just for the docs, since it's an excellent repository for SCO case filings, notwithstanding what PJ actually says. You'll notice that I never quote her -- just the docs.

[TechJunkYard]

LOL, those were the exact words of a intellectual property lawyer.

Oh yeah, that guy was a lawyer, wasn't he? Strange that he didn't pick up on the fact that Novell explicitly told SCOG to "waive any purported right SCO may claim to require IBM to treat IBM Code itself as subject to the confidentiality obligations...", as was Novell's right according to the same contract.

As far as that goes, whether SCOG had the right to go after alleged violators really doesn't matter since they were bound by 4.16(b) to check with Big Daddy Novell first, if the alleged violator was one of Big Daddy's licensees.