Doubt over the ownership of the Unix copyright was settled last week when US District Judge Dale Kimball ruled that Novell retained them when it sold its Unix operating system business to the Santa Cruz Operation in 1995.
That decision has cast a huge shadow over the legal claims of Lindon, Utah-based SCO, which as Caldera later acquired Santa Cruz’s Unix server business before changing its name. The company had claimed that Linux contains its intellectual property, and that IBM breached a contract by putting it there.
Judge Kimball’s decision not only undermines SCO’s claims against IBM but also suggests that the company was aware that it did not own the Unix copyrights on which it based its litigation even before it launched its SCOsource intellectual property licensing business.
On January 4, 2003, [SCO CEO Darl] McBride received an email from Michael Anderer, a consultant for SCO retained to examine its intellectual property. Anderer stated that the [agreement between Novell and Santa Cruz] ‘transferred substantially less’ of Novell’s intellectual property than Novell owned, stated Kimball in his decision.
Anderer noted that Santa Cruz’s ‘asset purchase’ from Novell ‘excludes all patents, copyrights, and just about everything else’. Anderer cautioned that ‘[w]e really need to be clear on what we can license. It may be a lot less than we think’, he added.
According to Kimball’s decision, McBride had in late 2002 contacted Novell seeking records related to SCO’s intellectual property rights related to Unix. Following Anderer’s email, McBride contacted Novell on several occasions in February 2003 asking Novell to hand over the copyrights.
In the meantime, 18 days after Anderer’s email, SCO launched its SCOsource intellectual property business with McBride stating: SCO owns much of the core Unix intellectual property, and has full rights to license this technology and enforce the associated patents and copyrights.
SCO continued to ask Novell to transfer the copyrights in May of 2003, with SCO’s chairman, Ralph Yarro, also getting involved via meetings with Novell’s then vice chairman of the office of the chief executive, Chris Stone.
The two companies fought out a word of words in public over the ownership of the Unix copyrights that continued throughout 2003 and promoted SCO’s January 2004 slander of title claim against Novell.
Given the ambiguous language involved in the agreements involved in the original transfer of business from Novell to Santa Cruz, there was reasonable room for doubt as to whether the copyrights were indeed transferred.
Hence it took until last week for Judge Kimball to reach his decision that that Novell was the rightful owner of the Unix copyrights, and hence his decision that even if he had ruled otherwise, there was no evidence that Novell had acted in bad faith.
Even if the court had ruled in SCO’s favor on the copyright ownership issue, there is no evidence to demonstrate that Novell’s position was contrary to its own understanding of the contractual language or objectively unreasonable given the history of the dispute between the two parties, wrote Judge Kimball in his memorandum.
Could the same be said for SCO? Novell’s own claims for slander of title, breach of contract, and breach of covenant and good faith will go to trial on September 17, along with its claims related to constructive trust/unjust enrichment, and breach of fiduciary duty (see separate story, top stories).
