Novell Wins Again - Jury Rules Copyrights Didn't Go to SCO

Here is how the mess began:

1. In 1993, Novell buys UNIX System Laboratories and thereby acquires the UNIX copyrights and licenses.

2. In 1995, Novell initially intends to sell the complete UNIX business to Santa Cruz Operation but Santa Cruz is unwilling or unable to commit sufficient financial resources to buy the entire UNIX business outright.

3. Novell sells its UNIX-related rights to Santa Cruz Operation in an asset sale while retaining a 95% interest in SVRX license royalties.

4. The asset purchase agreement provides that Novell will sell all its right, title, and interest in all the assets identified in an appended Schedule 1.1(a).

5. The asset purchase agreement provides that, "[n]otwithstanding the foregoing, the Assets to be so purchased shall not include those assets . . . set forth on Schedule 1.1(b)."

6. Schedule 1.1(a) included within the list of "Assets" transferred "[a]ll rights and ownership of UNIX and UnixWare." Separately in the asset schedule, under the heading of "Intellectual property," it was provided that Santa Cruz Operation would obtain rights to the "[t]rademarks UNIX and UnixWare." No mention was made of copyrights.

7. Schedule 1.1(b) ("excluded assets") expressly spoke to copyrights as follows: "All copyrights and trademarks, except for the trademarks UNIX and UnixWare" and "[a]ll patents" were excluded from the deal.

8. In 1996, less than a year later, the parties agreed to an amendment to Schedule 1.1(b) ("excluded assets") that designated the following as among the excluded assets (i.e., assets not being transferred to Santa Cruz): "All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies."

9. This 1996 amendment was the source of years of convoluted litigation. What did it mean that Novel was excluding all copyrights from the sale "except for the copyrights . . . required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies"?

10. This wildly unclear language is what resulted in this vampire litigation that simply would not die. Why? Well, in 2000, SCO was acquired by Caldera, a group whose primary shareholder was a VC fund. Within a very short time, Caldera goes fishing to find out whether there is any UNIX code in Windows, Mac OS X, Linux, and versions of BSD. They hire high-powered lawyer David Boies to frame their legal strategy. By January, 2003, SCO is saying they plan to sue Linux vendors over this issue, claiming that UNIX code found its way into the Linux distributions via IBM and otherwise. Now add Microsoft to the mix, which pays a multi-million dollar sum to settle up with SCO and which incidentally helps via that settlement payment to fund the all-out attack on Linux that SCO launches. When Novell steps up to announce publicly that the UNIX-related copyrights did not belong to Caldera because they had been excluded from the asset sale, Caldera/SCO sues Novell for slander of title and other claims, pulling out of its back pocket the 1996 amendment that Novell claimed it did not even have in its files.

11. From all this came all manner of lawsuits and countersuits involving multiple parties and countless issues, but the Novell/SCO case was and is the really key case because that is where the fundamental issue would be decided: did Novell in fact transfer UNIX copyrights to SCO back in 1995/1996 or did it not? If it did, the many cases would proceed and would involve multi-billion dollar claims against the major players in the Linux world. If not, all cases would effectively die.

12. In August, 2007, the U.S. district court granted summary judgment to Novell on the key issue, finding as a matter of law (meaning, without the necessity of even holding a trial) that Novell had not transferred the UNIX-related copyrights. In August, 2009, however, the Tenth Circuit Court of Appeals reversed the district court, concluding that the issue had to be decided at a trial and could not be disposed of summarily. Well, this jury verdict is the result and it is momentous. While one never knows in legal proceedings, it may indeed be that the stake has finally been driven through the vampire's heart.

That hat never seems to be devoid of more rabbits. Most people would have had the class to fold by now, they're just wasting the courts and other peoples' time.