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Novell Motion to Dismiss Denied
Monday, June 27 2005 @ 06:26 PM EDT

Judge Dale Kimball has denied Novell's Motion to Dismiss in SCO v. Novell. Here's the Memorandum Decision and Order. He reiterates that "it is unclear under the language of the APA whether the copyrights transferred." But he says only discovery can establish for sure which party owns the copyrights.

He denies SCO's attempt to get him to consider additional materials so as to convert the motion to dismiss into a motion for summary judgment and their claim that this was an improper motion on Novell's part. However, he says that in that Circuit, "a party need not aver any specific facts in support of its general allegations of malice." Further, malice goes to a party's state of mind, and thus it can't be determined on a motion to dismiss as a matter of law, because it requires a factual determination. His job on a Rule 12(b)(6) motion is "not to weigh potential evidence that the parties might present at trial" but simply to determine if SCO's complaint is legally sufficient to state a claim for which relief may be granted. Given that the rules in that Circuit don't require much of SCO, he can't grant the motion to dismiss:

Even though Novell argues that it has evidence to support its alleged good faith basis for claiming ownership of the UNIX copyrights, the proper place to introduce that evidence and argue its significance is not on a motion to dismiss.

His prior order doesn't mean that SCO couldn't dredge up evidence sufficient to demonstrate malice at trial. And there is an issue in the law that even if Novell has its asserted privilege, excessive publication could defeat such a privilege, and that too is a question of fact. And the court can't rule as a matter of law on Novell's intent, before any discovery has been considered:

Unlike the court's ability to determine the ambiguities of a written contract, the court cannot opine on a party's state of mind when it was advancing certain legal positions. While it may be true that the plausibility of Novell's legal arguments regarding ownership is irrelevant to its state of mind, the court cannot draw inferences in favor of Novell at the motion to dismiss stage.

In short, he is a careful man, who scrupulously distinguishes between matters of law and questions of fact. So, discovery, here we come. This doesn't mean that there can't be later motions, after some discovery gives the judge something concrete to go on. And it doesn't mean he believes SCO. He can't favor either side, until discovery produces sufficient facts to reach a definitive decision. That doesn't mean he doesn't have a private thought or two.

The order references the Novell-SCO correspondence, which you can find on Novell's website or as text on this Groklaw page and from our Contracts page. Our thanks go to Janne for quickly providing the order as text.

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

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

CENTRAL DIVISION

THE SCO GROUP, INC.,

Plaintiff,

vs.

NOVELL, INC.,

Defendant.

MEMORANDUM DECISION AND
ORDER

Civil Case No. 2:04CV139DAK

This matter is before the court on Defendant Novell, Inc. (“Novell”)’s motion to dismiss. The court held a hearing on the motion on May 25, 2005. At the hearing, Defendant was represented by Michael A. Jacobs, Thomas R. Karrenberg, and John P. Mullen, and Plaintiff was represented by Edward Normand, Brent O. Hatch and Sean Escovitz. The court took the motion under advisement. The court has considered the memoranda submitted by the parties as well as the law and facts relating to the motion. Now being fully advised, the court renders the following Memorandum Decision and Order.

BACKGROUND

In its Complaint, SCO brought a single cause of action against Novell for slander of title. SCO alleges that Novell has publicly and falsely represented that it owns the UNIX and UnixWare copyrights and that such false representations have caused it damage.

SCO’s predecessor in interest, Santa Cruz Operations Inc., and Novell entered into an Asset Purchase Agreement (“APA”) dated September 19, 1995. Under the APA, SCO alleges

1

that its predecessor paid Novell 6.1 million shares of SCO common stock, valued at over $100 million at that time, to acquire from Novell “all right, title, and interest in and to the UNIX and UnixWare business, operating system, source code, and all copyrights related thereto.” Compl. ¶ 1. However, it is unclear under the language of the APA whether the copyrights were transferred. The court’s previous order stated that the APA did not transfer copyrights and that there were serious doubts as to whether any transfer of copyright ownership had occurred. SCO appeared to acknowledge that during the briefing of the previous motion to dismiss. However, SCO now appears to argue that copyrights may have transferred under the APA. In any event, approximately a year later, on October 16, 1996, Novell and SCO’s predecessor executed Amendment No. 2 to the APA. APA Amendment No. 2 amends the Schedule of Excluded Assets to exclude “[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [APA] required for [SCO’s predecessor] to exercise its rights with respect to the acquisition of UNIX and Unixware technologies.” Id. APA Amendment No. 2.

On May 28, 2003, Jack Messman, Novell’s Chairman, President, and CEO issued a press release stating:

Defending its interests in developing services to operate on the Linux platform, Novell today issued a dual challenge to the SCO Group over its recent statements regarding its UNIX ownership and potential intellectual property rights claims over Linux.

First, Novell challenged SCO’s assertion that it owns the copyrights and patents to UNIX System V, pointing out that the asset purchase agreement entered into between Novell and SCO in 1995 did not transfer these rights to SCO. Second, Novell sought from SCO facts to back up its assertion that certain UNIX System V code has been copied into Linux. Novell communicated these concerns to SCO via a letter (text below) from Novell Chairman

2

and CEO Jack Messman in response to SCO making these claims.

Am. Compl. ¶ 19(a). The letter included the following text: “Importantly, and contrary to SCO’s assertions, SCO is not the owner of the UNIX copyrights. Not only would a quick check of U.S. Copyright Office records reveal this fact, but a review of the asset transfer agreement between Novell and SCO confirms it. To Novell’s knowledge, the 1995 agreement governing SCO’s purchase of UNIX from Novell does not convey to SCO the associated copyrights.” The letter also stated that “[w]e believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights. Apparently, you share this view since over the last few months you have repeatedly asked Novell to transfer copyrights to SCO, requests that Novell has rejected. Finally, we find it telling that SCO failed to assert a claim for copyright or patent infringement against IBM.” Finally, the letter stated that “we demand that SCO retract its false and unsupported assertions of ownership in UNIX patents and copyrights or provide us with conclusive information regarding SCO’s ownership claims.”

On June 6, 2003, SCO sent Novell a letter in which it “brought to Novell’s attention Amendment No. 2 to the Asset Purchase Agreement.” Am. Compl. ¶ 19(b). SCO threatened to sue Novell for federal securities fraud and demanded an immediate response.

On June 6, 2003, Novell issued a press release stating as follows:

In a May 28 letter to SCO, Novell challenged SCO’s claims th s to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO’s intellectual property rights. [APA Amendment No. 2] was sent to Novell last night by SCO. To Novell’s knowledge, this amendment is not present in Novell’s files. The amendment appears to support SCO’s claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. The amendment does not address ownership of patents, however, which clearly remain with Novell.

3

Am. Compl. 19(c).

Novell also sent a letter to SCO on June 6, 2003 responding that “[y]our letter contains absurd and unfounded accusations against Novell and others, coupled with a veiled threat to publicly state those allegations in a SCO press call. Novell continues to demand that SCO cease and desist its practice of making unsubstantiated allegations, including the allegations contained in your letter of June 6, 2003.”

On June 26, 2003, Novell wrote to SCO stating that SCO’s statements regarding the ownership of copyrights “are simply wrong.” The Letter further stated that although Amendment No. 2 to the APA appears to support that SCO had the right to acquire some copyrights from Novell, “Amendment No. 2 raises as many questions as it answers” and the copyright transfer question was not clarified by Amendment No. 2 as SCO claimed in it previous press release and as Novell may have appeared to have conceded in its previous press release. The letter states that Novell is “still reviewing the Asset Purchase Agreement and other materials to determine the actual scope of rights transferred to SCO.” However, during such review, Novell “wish[ed] to make clear that [it] do[es] not agree with SCO’s public statement on this matter.” Am. Compl. ¶ 19(e).

SCO subsequently registered its claim to the UNIX copyrights with the United States Copyright Office. Novell responded to this action in a letter dated August 4, 2003. The Letter states that

We dispute SCO’s claim to ownership of these copyrights. The Asset Purchase Agreement, in Schedule 1.1(b), contains general exclusion of copyrights from the assets transferred to Santa Cruz Operation. Amendment No. 2 provides an exception to that exclusion, but only for “copyrights . . . required for [Santa Cruz Operation] to exercise its rights with respect to the acquisition of

4

UNIX and UnixWare technologies.”

In other words, under the Asset Purchase Agreement and Amendment No. 2, copyrights were not transferred to Santa Cruz Operation unless SCO could demonstrate that such a right was “required for [Santa Cruz Operation]” to exercise the rights granted to it in the APA. Santa Cruz Operation has never made such a demonstration, and we certainly see no reason why Santa Cruz Operation would have needed ownership of copyrights in UNIX System V in order to exercise the limited rights granted SCO under the APA. Nor is there any reason to think that a transfer of the copyrights required for SCO to exercise its APA rights necessarily entails transfer of the entire set of exclusive rights associated with a particular copyrighted computer program.

Unless and until SCO is able to establish that some particular copyright is “required” for SCO to exercise its rights under the APA, SCO’s claim to ownership of any copyrights in UNIX technologies must be rejected, and ownership of such rights instead remains with Novell.

Am. Compl. ¶ 19(f).

After SCO filed copyright registrations asserting ownership over the UNIX copyrights, Novell then filed applications for its own copyright registrations. Competing registration is allowed by copyright regulations and are filed in circumstances in which a party disputes a prior copyright registration filed by another party. 37 C.F.R. § 202.3(b)(10)(iii). Novell submitted declarations to the Copyright Office for recordation against SCO’s UNIX copyright registrations averring that Novell “retains all or substantially all of the ownership of the copyrights in UNIX, including the U.S. Copyright Registration referenced above.” Am. Compl. ¶ 19(h).

The declarations stated that Novell became the owner of “all right, title, and interest, including all copyrights” in UNIX, that pursuant to the APA between Novell and SCO “SCO acquired certain rights to carry out the business of licensing of UNIX,” that all copyrights were excluded from the assets purchased by SCO in the APA, that pursuant to Amendment No. 2 SCO

5

had a right to designate which copyrights it required to exercise its rights under the APA, and that as of the date of the declaration SCO had not demonstrated that any of the UNIX copyrights owned by Novell were required for it to exercise its rights. Am. Compl. ¶ 19(h). Therefore, Novell declared that it “retains all or substantially all of the ownership of copyrights in UNIX.” Id.

Once the Copyright Office issued Novell’s copyright registrations, Novell made the following press release:

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.

Am. Compl. ¶ 19(i).

Novell also issued a press release on January 13, 2004 in connection with its announcement of a Linux Indemnification Program. The press release states:

Novell also made available today additional information on the unique contractual and intellectual property rights it holds because of its position in the historical ownership chain of UNIX and UnixWare. These rights include:

  • Novell’s rights to license UNIX technology pursuant to a Technology License Agreement between SCO and Novell, including Novell’s right to authorize its customers to use that UNIX technology in their internal business operations.
  • Novell’s rights to take action on behalf of SCO under legacy UNIX SVRX licenses pursuant to the Asset Purchase Agreement between SCO and Novell.
  • As previously confirmed by Novell, copyright registrations

6

on UNIX SVRX releases, consistent with Novell’s position that it retained ownership of these copyrights.

Copies of relevant correspondence between Novell and SCO are available at http://www.novell.com/licensing/indemnity/legal.html. The rights reflected in these documents are part of the foundation for the indemnification program Novell is announcing today.

Am. Compl. ¶ 19(j).

The Amended Complaint further alleges that at the March 2004 Open Source Business Conference, Novell’s Vice Chairman Chris Stone stated that Novell still owns Unix.

DISCUSSION

Novell’s Motion to Dismiss

This is Novell’s second motion to dismiss. The court’s Order on Novell’s first motion to dismiss required SCO to amend its Complaint to more fully state special damages and denied Novell’s motion to dismiss as to the remainder of the elements relating to the slander of title claim. Before analyzing the merits of Novell’s motion to dismiss, the court must address two procedural issues raised by the parties. SCO asserts that Novell’s motion to dismiss is a successive motion to dismiss which is prohibited by Rule 12(g) of the Federal Rules of Civil Procedure. And, Novell argues that if the court considers the additional materials submitted by SCO, the court must treat its motion as a motion for summary judgment under Rule 12(b) of the Federal Rules of Civil Procedure. If the motion should be converted into a motion for summary judgment then it would not be considered a successive motion to dismiss. Therefore, the court will first determine Novell’s argument that the motion to dismiss should be converted to a motion for summary judgment.

7

1. Procedural Issues

Pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, if “matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56.” Fed. R. Civ. P. 12(b). Although the materials submitted by SCO are arguably relevant to the ownership issue, the court concludes that they are not relevant to the court’s determination of whether the privileges which Novell asserts apply in this case. The court has already determined that there appear to be valid arguments by both parties and that discovery will need to proceed before the ownership issue could be decided. Therefore, the additional materials submitted by Novell are not dispositive of the ownership issue at this stage of the litigation. Furthermore, the ownership issue does not necessarily need to be decided in order for the court to analyze the privilege issues presented in Novell’s motion to dismiss. Because the materials submitted by SCO do not relate to the present motion, the court will not consider them at this time and will not convert the motion to dismiss into a motion for summary judgment. Therefore, the court must address whether Novell’s motion to dismiss is an improper successive motion to dismiss.

Under Rule 12(g) of the Federal Rules of Civil Procedure, after filing a motion to dismiss, a party “shall not thereafter make a motion based on the defense or objection so omitted” from its first motion. Rule 12(g) requires that “a party who raises a defense by motion prior to an answer must raise all possible defenses in a single motion. Omitted defenses cannot be raised in a second pre-answer motion.” United States Fidelity & Guar. Co. v. Jepsen, 1991 WL 249706 at *2 (N.D. Ill. Nov. 14, 1991). Furthermore, under Rule 12(g), “the filing of an amended complaint will not revive the right to present by motion defenses that were available

8

but were not asserted in a timely fashion prior to amendment.” 5A Charles A. Wright, et al. Federal Practice and Procedure § 1388 (3d ed. 1998).

SCO asserts that none of the defenses Novell now alleges became available because of a new matter in the Amended Complaint because its allegations with respect to malice remained the same. A slander of title cause of action requires a plaintiff to establish that “(1) there was a publication of a slanderous statement disparaging claimant’s title, (2) the statement was false, (3) the statement was made with malice, and (4) the statement caused actual or special damages.” First Sec. Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1256-57 (Utah 1989). Novell’s present motion involves different elements of the slander of title claim than those addressed in its previous motion. Novell’s previous motion to dismiss dealt with falsity and special damages. However, the present motion asserts that dismissal is appropriate because Novell’s statements are privileged and because SCO cannot allege malice as a matter of law.

Novell claims that its second motion to dismiss was triggered by the Court’s conclusions that Novell’s ownership position had legal merit and its observations that the parties’ positions regarding ownership also affected the question of malice. Novell’s motion links these two concepts together and asks the court to conclude that Novell cannot have acted with malice where the court has concluded that its legal position has merit. Novell also asserts that district courts frequently hear subsequent Rule 12 motions where such motions are not interposed for delay or harassment. In Thorn v. N.Y. City Dep’t of Social Servs., 523 F. Supp. 1193, 1196 n.1 (S.D.N.Y. 1981), the court determined that despite the consolidation language of Rule 12(g), “the court will entertain the [second motion to dismiss] because it was not interposed for delay, and its consideration will expedite the disposition of the case on the merits.”

9

The court’s previous order on Novell’s first motion to dismiss and SCO’s motion to remand obviously triggered the filing of Novell’s present motion because it acknowledged that there was a substantial question regarding copyright ownership. Even if there was some factual basis for the motion when the prior motion was brought, the motion does not appear to be brought for purposes of delay. In fact, Novell appears to be asserting these issues so that they can be ruled on before further time and money need be spent on other issues in the case. Therefore, whether or not the court’s previous order may have triggered the present motion, the court concludes it can properly analyze the merit’s of Novell’s motion.

2. Merits of Motion

Novell moves to dismiss SCO’s slander of title claim arguing that certain privileges preclude a slander of title of claim and that SCO cannot demonstrate malice as a matter of law.

A. Privileges

Novell argues that two privileges warrant dismissal of this action: (1) a privilege to publicly assert a rival claim to the UNIX copyrights; and (2) a privilege to publish its rival claim to parties with a common interest in the UNIX copyrights. As to the first privilege, Novell asserts that “[t]he law has long recognized that a publication is conditionally privileged if made to protect a legitimate interest of the publisher.” Brehany, 812 P.2d at 58.1 This privilege allows “[a] rival claimant . . . to disparage another’s property . . . by an assertion of an inconsistent legally protected interest in himself.” Restatement (Second) Torts, § 647. This privilege exists so that a rival claimant will not be deemed to have waived his claim by silence. Id. Cmt. f. As

10

to the second privilege asserted by Novell, Novell claims that “a publication [is] conditionally privileged if the circumstances lead any one of several persons having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing the common interest is entitled to know.” Restatement (Second) of Torts § 596. Although this section of the Restatement has not been cited by Utah courts, the Brehany court acknowledged that “[a] conditional privilege may also protect a legitimate interest of . . . a third person.” 812 P.2d at 58. Novell claims that this privilege is applicable because SCO has threatened the open source community with lawsuits based on its claim of ownership in the UNIX copyrights and the Amended Complaint acknowledges that Novell directed its statements to the open source community. Accordingly, Novell argues that it is privileged to inform third parties threatened by SCO of Novell’s competing property claim.

SCO argues that Novell cannot cite to any case in which the court considered the application of any privilege to a claim for slander of title. SCO claims that the absence of any such case law correctly reflects the elements of the claim for slander of title under Utah law, which provide that the defendant must have published the matter “without privilege to do so.” Dowse v. Doris Trust Co., 208 P.2d 956, 958 (Utah 1049). “The idea expressed . . . by the phrase ‘without privilege to do so’ is in common legal speech often expressed by the statement that the disparaging matter was published maliciously.” Id.

The existence of a privilege is a matter of law. See Brehany v. Nordstrom, Inc., 812 P.2d 49, 57 (Utah 1991). “Whether a publication is conditionally privileged is a question of law to be determined by the trial court, unless a genuine factual issue exists regarding whether the scope of the qualified privilege has been transcended or the defendant acted with malice.” Id. These

11

privileges may be overcome if “the plaintiff pleads and proves facts which indicate actual malice in that the utterances were made from spite, ill will, or hatred toward him.” Combes v. Montgomery Ward & Co., 119 Utah 407, 416 (Utah 1951). Because both parties admit that the privileges do not apply if there is a question of fact regarding malice, the court must determine the whether SCO has properly alleged malice.

Under Utah law, the malice element of a slander of title claim may be affirmatively proved or implied by law. First Security Bank of Utah v. Banberry Crossing, 780 P.2d 1253, 1257 (Utah 1989). The plaintiff may prove “that the wrong was done with an intent to injure, vex, or annoy,” or “because of hatred, spite or ill will.” Or, “malice may be implied where a party knowingly and wrongfully records or publishes something untrue or spurious or which gives a false or misleading impression adverse to one’s title under circumstances that it should reasonably foresee might result in damage to the owner of the property.” Id. at 1257.

Novell contends that although SCO’s Amended Complaint alleges that Novell’s statements were made maliciously and in bad faith, in light of the court’s prior order, SCO cannot demonstrate that Novell’s statements were knowingly false or that they were made from spite, ill will, or hatred. Novell relies on a defamation case that found a privilege as a matter of law because “conclusory allegations do not state a claim for malice if the facts as alleged cannot otherwise support a finding of malice.” Id. at 1061-62.. Echtenkamp v. Loudon County Pub. Schs., 263 F. Supp. 2d 1043, 1061-62 (E. D. Va. 2003). Additionally, Novell relies on Timpanogas Highlands, Inc. v. Harper, 544 P.2d 481, 486 (Utah 1975), in which the court found that where a party “had sufficient basis for believing that it had rights under the contract . . . there is no foundation upon which it could be found that it willfully and knowingly recorded a

12

false or fraudulent instrument for the purpose of slandering the defendant’s title.” Furthermore, in Fischer v. Bar Harbor Banking & Trust Co., 857 F.2d 4 (1st Cir. 1988), the court held that the privilege protects a defendant even when the defendant’s assertion of rival ownership is adjudicated to be incorrect if the issue was not so obvious that it can be found that the defendant acted with malice. Id. at 8-9.

SCO argues that its Amended Complaint precludes the application of any such privilege because it sufficiently pleads malice and alleges that Novell has exceeded the scope of any otherwise applicable privilege. Under Rule 9(b) of the Federal Rules of Civil Procedure, SCO need only aver a state of mind such as malice generally. Fed. R. Civ. P. 9(b); See Phelps v. Wichita Eagle-Beacon, 886 F.2d 1262, 1269-70 (10th Cir. 1989) (“In evaluating the sufficiency of plaintiff’s allegations, we cannot ignore the plain language of Rule 9(b) of the Federal Rules of Civil Procedure, which permits ‘malice, intent, knowledge, and other condition of mind of a person’ to be ‘averred generally.’”).

In this Circuit, a party need not aver any specific facts in support of its general allegations of malice. SCO has alleged that Novell’s false public statements regarding ownership of UNIX copyrights were made “intentionally,” “maliciously,” and “with utter disregard for the truthfulness thereof.” Am. Compl. ¶ 25. SCO further alleges Novell’s purpose and motivation for making its public statements. For example, SCO’s June 6, 2003 letter to Novell stated that SCO had a direct statement from an executive employee at Novell that the timing of Novell’s May 28, 2003 press release was intended to coincide with SCO’s earnings announcement that occurred later that day. Novell also admitted in its June 6, 2003 press release that Amendment No. 2 was not in its files, but it had been willing to opine on the ownership

13

issue before it fully investigated the issue. SCO claims that Novell has engaged in this course of conduct because of its new ties to the Linux community and its attempt to cause SCO to lose business.

Unlike claims for slander of title, courts may routinely resolve defamation claims at the motion to dismiss stage because a court can glean from the statement and context itself whether the statement at bar is capable of a defamatory meaning. A court cannot determine from a defendant’s public statement of ownership itself whether the claim is false or whether the statement is made maliciously. “[M]alice calls in question a defendant’s state of mind and does not lend itself readily to summary judgment.” Lawrence v. Moss, 639 F.2d 634, 639 (10th Cir. 1981); see also Church of Scientology In’l, 238 F.3d 168, 173 (2d Cir. 2001) (noting that even on a claim of defamation that “resolution of the falsity and actual malice inquiries typically requires discovery”).

“The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff’s complaint alone is legally sufficient to state a claim for which relief may be granted.” Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991). SCO has made general and specific allegations of malice. Even though Novell argues that it has evidence to support its alleged good faith basis for claiming ownership of the UNIX copyrights, the proper place to introduce that evidence and argue its significance is not on a motion dismiss. Novell argues that based on the court’s prior ruling, the issue of who owns the UNIX copyrights is not obvious and Novell therefore cannot be held to have acted with malice in asserting its opinion on that issue. However, the court’s prior order would not preclude a finding of malice after fact discovery is complete. The court’s prior order was necessarily

14

limited to the allegations of the Complaint and the attached documents. The court cannot rule as a matter of law on Novell’s intent at the motion to dismiss stage before any discovery is considered in the case. Unlike the court’s ability to determine the ambiguities of a written contract, the court cannot opine on a party’s state of mind when it was advancing certain legal positions. While it may be true that the plausibility of Novell’s legal arguments regarding ownership is relevant to its state of mind, the court cannot draw inferences in favor of Novell at the motion to dismiss stage.

Furthermore, the court notes that even if the asserted privileges were applicable, there is an issue regarding whether excessive publication would defeat application of the privileges. “Statements that are otherwise privileged lose their privilege if they are excessively published, that is, ‘published to more persons than the scope of the privilege requires to effectuate its purpose.’” Krouse v. Bower, 20 P.3d 895, 900 (Utah 2001). The issue of whether there has been excessive publication is a question of fact. See Brehany, 812 P.2d at 58. Therefore, the court cannot conclude as a matter of law that any qualified privilege applies to Novell’s statements. Accordingly, Novell’s motion to dismiss is denied.

CONCLUSION

For the reasons stated above, Novell’s Motion to Dismiss is DENIED.

DATED this 27th day of June, 2005.

BY THE COURT:

__[signature]__
DALE A. KIMBALL,
United States District Judge

15

1 Novell recognizes that no Utah court has recognized this section of the Restatement, but it argues that Utah courts have adopted other portions of the Restatement applicable to conditional privileges. See Brehany, 812 P.2d at 58.


  


Novell Motion to Dismiss Denied | 107 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections
Authored by: Anonymous on Monday, June 27 2005 @ 07:01 PM EDT
So PJ can fix 'em.

[ Reply to This | # ]

Off topic here please
Authored by: fudisbad on Monday, June 27 2005 @ 07:05 PM EDT
For legal filings, current events and 3rd amended complaints.

Please make links clickable, as per the example.

---
See my bio for copyright details re: this post.
Darl McBride, show your evidence!

[ Reply to This | # ]

Novell Motion to Dismiss Denied
Authored by: Nick Bridge on Monday, June 27 2005 @ 07:08 PM EDT
Personally, I'd like to see the copyright ownership issue decided.

[ Reply to This | # ]

Counterclaims, here we come
Authored by: overshoot on Monday, June 27 2005 @ 07:36 PM EDT
And now comes before the Court the reason that Novell took on a heavyweight litigator: they're going to answer this Complaint, and the answer will be Biblical reminiscent of Crocodile Dundee.

[ Reply to This | # ]

I smell a rat
Authored by: Anonymous on Monday, June 27 2005 @ 08:16 PM EDT

Is Daddy Hatch whispering in someone's ears? Why is SCO getting such
preferential treatment? Why are they getting so much time to produce evidence
they should have produced long ago? Does Microsoft face the same burdens as IBM
and Novell?

How many other plaintiffs get this kind of favoritism? No wonder companies run
for a settlement as soon as they get sued.

Novell-SCO is going to trial. More open-ended discovery. SCO will get its jury.
Years more of SCO lies. Autozone and Red Hat stayed forever. Maybe Merkey and
Wallace, too.

These are very nasty precedents Kimball is setting. IBM, Novell, FSF and
everyone connected with open source had better be prepared for a blizzard of
nuisance litigation, because those filing these lawsuits will never have to
produce any evidence.

Kimball also has the Merkey case, I think. God help us.

Kimball said SCO has an "astonishing" lack of evidence in the IBM
case. What difference does that make? Even if IBM and Novell win, they could
very well be Pyrrhic victories.

The bad guys have every right to be dancing in the streets. SCO will have every
right to proclaim victory at their upcoming conference call. Who are we to
contradict them?

[ Reply to This | # ]

Predecssor in interest
Authored by: Sky Pilot on Monday, June 27 2005 @ 08:24 PM EDT
Anyone else notice this:

"SCO’s predecessor in interest, Santa Cruz Operations Inc., and Novell entered into an Asset Purchase Agreement (“APA”) dated September 19, 1995."

Does that mean that Kimball has accepted that SCOG really is the successor in interest to the Santa Cruz Operation? I thought that was still debatable.

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Novell Motion to Dismiss Denied
Authored by: kawabago on Monday, June 27 2005 @ 09:08 PM EDT
Sounds like he wants to give SCO enough rope to hang themselves, again! As he
says, it is unclear in the APA whether the copyrights transferred. We know from
copyright law that there must be a document that clearly transfers the rights or
they are not transferred. So he's telling SCO to produce a document that
transfers the copyrights and we all know they don't have one!



---
TTFN

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Fantastic! Now we'll get to see who owns the copyrights!
Authored by: Anonymous on Monday, June 27 2005 @ 10:04 PM EDT
I'm glad Kimball denied Novell's motion to dismiss.

This makes it even harder on SCO. Novell now gets to do discovery on SCO's
claim of ownership of copyright to Unix. SCO will now have to cough up any
(if it exists) documentation that the copyrights were transferred from Novell
to oldSCO then from oldSCO (now Tarantella) to newSCO/Caldera. We all
know that the transfer documents don't exist from oldSCO to newSCO.

This will blow SCO's case against IBM.

Yeah! for Novell getting a Litigator. We now have litagation to wage against
SCO! Yeah!

Interestingly, this will cost SCO even more money. SCO will now have to fight
on two fronts - against Novell and against IBM. The better to train SCO of its

remaining funds.

Novell itself can now claim slander of title against SCO! Yeah!

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The private thoughts of Judges
Authored by: McLae on Monday, June 27 2005 @ 10:51 PM EDT
IMHO Judge Kimball is indeed being carefull. After the fiasco of the US vs MS
verdict being overturned due to the judge making thoughtless remarks, carefull
means no possible hint of Bias can show.

Lack of bias now means less possibility of later problems. High marks to the
judge for doing this the smart way.

---
Thomas (The McLae)

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The trolls go marching one by one, hurrah, hurrah
Authored by: The Mad Hatter r on Monday, June 27 2005 @ 11:55 PM EDT


Wow - anything that isn't cut and dried and the troll brigade pops up again. You
gotta love them, they'll never give up cause their artichoke hearts are pure (no
comment on their real hearts).

And they are soooo predictable.


---
Wayne

telnet hatter.twgs.org

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It's a tricky ruling to read
Authored by: error27 on Tuesday, June 28 2005 @ 01:56 AM EDT
"Novell's previous motion dealt with falsity and special damages. However,
the present motion asserts that dismissal is appropriate because Novell's
statements are privileged and because SCO cannot allege malice as a matter of
law."

[From memory]
Last time the judge didn't rule on the falsity issue because he said there may
be facts that would give the copyrights to SCO. He dismissed the lawsuit
because there were no special damages listed.

This time he says, "Yeah, you may be protected by privilege but maybe you
voided the privilege by talking _too_ much about your rights. We'll have to
decide that after discovery."

About malice, Novell says, "You admitted in your first ruling that it was
hard to tell who owned the copyrights. We believed we did own the copyrights so
we weren't lying."

In the ruling the Judge says, "I know what _I_ thought about the
copyrights, but I don't know what _you_ thought about the copyrights. At first
you said you owned them, then SCO came out with the new documents and you said
you didn't and then later you said you did again. Maybe you thought you didn't
own the copyrights, we'll have to decide that after discovery."

My feeling from square one has been that the judge wants to figure out who owns
the copyrights. He knows that if he dismisses the case now he's not doing
anyone a favour in the long run.

While you can't argue with his reasoning, it is clear that Kimball went a lot of
effort finding a way to deny Novell's motion. For example, SCO's lawyers argued
that there was no such thing as privilege in slander of title cases. Kimball
isn't impressed with this so he provides his own arguments.

The judge basically did a bunch of free really good lawyering on SCOs behalf so
that the question of who owns the copyrights could get decided.

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Judge on the high wire
Authored by: webster on Tuesday, June 28 2005 @ 02:19 AM EDT
Wouldn't it be nice if the laws of man operated as simply and consistently
as the laws of nature. Take gravity for example: it is always with us; there
are no exceptions; and it is never misapplied. The old master of the highwire
may stumble but then make that stumble seem part of his performance. He is
trying to hide something or distract from the not so obvious.
There are things fundamentally amiss with this case and everyone knows it.
Novell knows it. That's why they immediately turned around and filed a second
Motion to Dismiss. SCO knows it. They are pleased and surprised to have this
front in their FUD remain open. The Judge knows but he is plodding forward
expecting that his grey hair and black robes will help him bluff his way out of
the corner where he has painted himself. The Judge has been noted as one whose
comments disclose his thoughts and help to manage the case. So why does he make
such comments if he is to act inconsistently with them? So what kind of bind is
he in?
1. This case came to him as a copyright case from state court and he kept
jurisdiction of it. It is not a copyright case. It is a Slander of Title case.
One does not have to resolve the copyright issue to resolve the Slander of
Title issue. It is enough to show that there is a genuine copyright issue, not
resolve it. The Judge has ventured into dreamland. He speculates that
copyrights might appear with further discovery, summary motions or even trial.
If there were any copyrights, this case would not exist. If there were any
copyrights, they would have been disclosed by now. The judge himself has said
as a matter of fact and law that the APA and other documents were insufficient
to transfer a copyright. So two parties arguing over nonexistent copyrights in
a slander of title suit don't necessarily translate into Federal Copyright
Jurisdiction which he has assumed. Suppose there was an agreement not to assert
a copyright claim, such as it is, against each other. That's not a Federal
Copyright issue. So the judge's problem in this regard is that if he dismisses
for no falsity or malice due to a privilege of arguing the issue of copyright
ownership, he is contradicting his previous finding of jurisdiction. He would
be resolving the case without resorting to a federal issue. SCO could appeal
and say he was wrong to maintain jurisdiction and the result bears them out.
Does he really think he could send this case to a jury without any copyrights?
2. The judge is loathe to do anything dispositive. Most judges are loathe
to do anything dispositive. Look what happened in that Grokster case. The
judge granted a summary judgment. Now it comes right back at him and he has to
try it again anyway. Great. He will have to instruct a jury to do mindreading
and discern intentions. Better to let it go to trial where whatever appeal
issues are not obviated by trial will be collected in one nice bundle for the
brilliant appeals court. The parties are just fighting over money after all.
What the court does just affects their bargaining position.
Consider the following story and pardon its possible repetition. Once upon
a time there was a judge who had a genius for efficiency yet fairness. Even as
a part-time,retired judge, he could do the work of three regular judges. They
decided to put him into the backed up civil division and handle motions. He
heard cases and ruled in writing withing a day. He cleaned up the backlog in a
few weeks. He did something very radical: he applied the rules. There were no
after-the-fact extensions, no out of time pleadings, no agreed upon
reschedulings. There were sanctions, dismissals and deadlines. The Chief Judge
of course had to remove him. He caused too many appeals, motions for
reconsideration, clients suing their lawyers and great gnashing of teeth.
So Kimball will wait. The earth will not move. The parties will get their
discovery.
3. The Judge doesn't like Novell. He doesn't like them showing him up
with this turnaround Motion to Dismiss. They are cramming his own words down
his throat and possibly revealing him as unfair or prematurely conclusory. He
didn't like them enough to find for them the first time either. The single most
important aspect of persuading the trier of fact, the judge or the jury, is that
they like you. While this is obvously true for a jury, it is also true for a
judge. At a recent CLE (Continuing Legal Education) the teacher (yt) cautioned
against neglecting this principle. Remind your clients to dress respectfully,
don't eat or drink anything, don't read the newspaper, don't call out, but if
you do don't swear, don't sleep, but if you do don't snore, and don't fondle (or
be fondled by) your neighbor. Novell did all these things. Seriously the Court
may have some subliminal sentiments for SCO or their attorneys.
3 It may not be his style based on these two cases, i.e. Novell and IBM.
He can point but he won't shoot. He does not want to be the one that makes the
house of cards fall. Not before discovery if ever. He made this same decision
before so he will make it again. It's not a good sign.



---
webster

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Santa Cruz -> Caldera
Authored by: Anonymous on Tuesday, June 28 2005 @ 04:09 AM EDT
Am I dreaming or is SCOX unable to show any documents about the alledged
copyrights Santa Cruz sold them?

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Novell Motion to Dismiss Denied
Authored by: tbogart on Tuesday, June 28 2005 @ 05:58 AM EDT
"malice goes to a party's state of mind, and thus it can't be determined on
a motion to dismiss as a matter of law"

So, as a matter of law, slander can never be dismissed? The lawyers were
completely off the deep end to even attempt this?

I MUST be missing something ... help please!

[ Reply to This | # ]

  • mod parent up - Authored by: Anonymous on Tuesday, June 28 2005 @ 07:50 AM EDT
  • No. It's correct. - Authored by: Anonymous on Tuesday, June 28 2005 @ 09:10 AM EDT
So the good old judge has decided who owns what matters.
Authored by: Anonymous on Tuesday, June 28 2005 @ 06:37 AM EDT
But doesn't copyright belong in a different court. It looks like this ends when
SCO runs out of money. Great legal system, who wins is determined by the depth
of the pocket.

But can I talk, I now live in a country ( Australia) where you can't even
mention the event ( 5 years jail), if a bunch of government thugs ( ASIO) break
into your house.

Democracy is in serious trouble.

Crazy Engineer

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Just Deserts
Authored by: BassSinger on Tuesday, June 28 2005 @ 02:55 PM EDT
Discovery, here we come. Hmm.

OK, boy & girls. Here is where we can help. Come up with all the reasons
that you can think of why Novell should need to seek all of SCO's code in
discovery, and the notes from all of its programmers since the dawn of time, or
at least since the APA. If you can think of a reason that the IBM discovery
should be discovered it would be even better.

Imagine the irony of SCO needing to produce not only its version of what they
demanded of IBM, but what they demanded of IBM as well.

Probably not going to happen, is it. But you never know when one of those
programmer's notes will include a comment about how this would be easier if we
had the copyright, or some such slip.

Oh, well, it was a nice pipe dream while it lasted...


---
In Harmony's Way and In A Chord,

Tom ;-})

Proud Member of the Kitsap Chordsmen
Registered Linux User # 154358

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Novell Motion to Dismiss Denied
Authored by: Anonymous on Wednesday, June 29 2005 @ 12:57 PM EDT
Practically any plaintiff will get this sort of treatment. Lawsuits just
generally drag on for a long time if not settled, especially when companies
(which really can't do anything quickly) are involved. About the only thing I've
been surprised by is that SCO's slander of title claim wasn't dismissed on the
grounds that Novell couldn't have known their claim to have been false, due to
that claim being a disputed matter of fact. But I'm not entirely sure that
Novell even made that argument so far.

[ Reply to This | # ]

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