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Novell Files Motion for Partial Summary Judgment
Saturday, December 02 2006 @ 02:42 AM EST

This just isn't SCO's week. Here it is, leaning against the ropes in SCO v. IBM, and here comes Novell. It has filed a motion for partial summary judgement, asking the court to rule that the APA gives Novell the right to waive the contract claims SCO has against IBM and Sequent:
Novell asks the Court to declare that Novell has the authority pursuant to Section 4.16(b) of the 1995 Asset Purchase Agreement (“APA”) to take the following actions: (1) to direct The SCO Group, Inc. (“SCO”) to waive its purported claims against IBM under the SVRX license agreements between IBM Corporation (“IBM”) and AT&T and between Sequent Computer Systems, Inc. (“Sequent”) and AT&T, and (2) because SCO refused (and still refuses) to follow that direction, to waive those claims on SCO’s behalf. In addition, Novell respectfully requests that this Court declare that SCO is obligated to recognize Novell’s waiver of SCO’s purported claims against IBM and Sequent.

The memo in support puts it like this:

Novell’s motion presents a single issue: whether the express terms of a 1995 contract authorize Novell to direct SCO to waive its purported legal claims for alleged breaches of SVRX license agreements with IBM and with Sequent, and to take action on SCO’s behalf when SCO refuses to so waive, where the plain language of the 1995 contract gives Novell “at its sole discretion and direction” the right to take such action concerning “any SVRX License,” and the IBM and Sequent SVRX license agreements are SVRX Licenses under the 1995 contract’s plain meaning of that term.



If Novell wins its motion here, obviously that makes it simpler to decide some of the IBM motions. There's a certain complexity to having the two cases going on at once, and now that the judge has indicated that IBM's motions will go forward, it matters to have some of the Novell issues decided.

Pacer records the following new filings:

12/01/2006 171 - MOTION for Partial Summary Judgment on Novell's Fourth Claim for Relief filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 12/01/2006)

12/01/2006 172 MEMORANDUM in Support re 171 MOTION for Partial Summary Judgment on Novell's Fourth Claim for Relief [REDACTED pursuant to the August 2, 2006 Stipulated Protective Order] filed by Defendant Novell, Inc.. (Sneddon, Heather) (Entered: 12/01/2006)

12/01/2006 173 - DECLARATION of Kenneth W. Brakebill re 171 MOTION for Partial Summary Judgment on Novell's Fourth Claim for Relief [REDACTED pursuant to the August 2, 2006 Stipulated Protective Order] filed by Novell, Inc.. (Attachments: #1, Exhibit 1 Part 1 (pp. 1-48 of Novell-Santa Cruz Asset Purchase Agreement); #2, Exhibit 1 Part 2 (continuation pp. 49-97, schedules and amendments); # 3, Exhibit 2, 3 , (the Novell-Santa Cruz Operating Agreement and Amendment 1 to the APA); #4, Exhibit 4-8 (Amendment 2 to the APA, and IBM-AT&T contracts); #5, Exhibit 12-15 and 17 - (AT&T and Novell/Santa Cruz contracts with IBM, including the IBM buyout); #6, Exhibit 23 (SCO Group's 10K for the period ending October 31, 2003); #7, Exhibits 24-27 (SCO-IBM/Sequent correspondence); #8, Exhibits 28-41, (part of the deposition of Jack Messman and Novell-SCO correspondence); #9, Exhibit 42 - Part 1 (Caldera 10K for the period ending October 31, 2002, part 1); #10, Exhibit 42 - Part 2 (10K continued); #11, Exhibits 43-45 (part of Ed Chatlos deposition)(Sneddon, Heather) (Entered: 12/01/2006)

12/01/2006 174 NOTICE OF CONVENTIONAL FILING of Memorandum and Declaration of Kenneth W. Brakebill in Support of Novell's Motion for Partial Summary Judgment on Its Fourth Claim for Relief [FILED UNDER SEAL pursuant to the August 2, 2006 Stipulated Protective Order] filed by Defendant Novell, Inc. re 171 MOTION for Partial Summary Judgment on Novell's Fourth Claim for Relief (Sneddon, Heather) (Entered: 12/01/2006)

If the attachments in the Pacer filing seem confusing, you're not alone. It's because they are listed as attachments, and several exhibits can be in one attachment, and also there are some exhibits missing, no doubt sealed, but the Declaration by Kenneth Brakebill lists them more clearly. For those of you on dialup, Exhibit 23 is over 200 pages long.

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

MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Kenneth W. Brakebill (pro hac vice)
[address, phone, fax]

ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
John P. Mullen, #4097
Heather M. Sneddon, #9520
[address, phone, fax]

Attorneys for Novell, Inc.

_______________________

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

_______________________

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff and Counterclaim-
Defendant,

vs.

NOVELL, INC., a Delaware corporation,

Defendant and Counterclaim-
Plaintiff.

_________________________

NOVELL'S MOTION FOR PARTIAL
SUMMARY JUDGMENT ON ITS
FOURTH CLAIM FOR RELIEF

Case No. 2:04CV00139

Judge Dale A. Kimball

Novell, Inc. ("Novell") moves the Court for partial summary judgment as to its Fourth Claim for Relief for declaratory relief. Specifically, Novell asks the Court to declare that Novell has the authority pursuant to Section 4.16(b) of the 1995 Asset Purchase Agreement ("APA") to take the following actions: (1) to direct The SCO Group, Inc. ("SCO") to waive its purported claims against IBM under the SVRX license agreements between IBM Corporation ("IBM") and AT&T and between Sequent Computer Systems, Inc. ("Sequent") and AT&T, and (2) because SCO refused (and still refuses) to follow that direction, to waive those claims on SCO's behalf. In addition, Novell respectfully requests that this Court declare that SCO is obligated to recognize Novell's waiver of SCO's purported claims against IBM and Sequent.

Federal Rule of Civil Procedure 56(c) permits the Court to grant partial summary judgment if the pleadings, discovery, and affidavits show that there is no genuine issue of material fact and that Novell is entitled to judgment as a matter of law. Here, the undisputed facts establish that:

1. The APA gives Novell the authority, at its sole discretion, to direct SCO to waive rights under any SVRX License;

2. The IBM and Sequent Licenses are SVRX Licenses because they license rights to the UNIX System V software listed in Item VI to Schedule 1.1(a);

3. Novell directed SCO to waive its purported rights under the IBM and Sequent SVRX Licenses;

4. SCO refused to follow Novell's direction as to both the IBM and Sequent SVRX Licenses;

5. The APA authorizes Novell to take any action on SCO's behalf when SCO fails to take action directed by Novell;

6. Upon SCO's refusal, Novell properly took action on behalf of SCO by waiving SCO's purported claims against IBM and Sequent; and

2

7. SCO improperly refused, and still refuses, to recognize Novell's authority and to abide by Novell's waiver.

Section 4.16(b) of the APA is a broad and unambiguous grant of authority to Novell. It states in plain language that Novell may, at its "sole discretion and direction," direct The Santa Cruz Operation, Inc. ("Santa Cruz") to "amend, supplement, modify or waive any rights under . . . any SVRX License . . . in any manner or respect." If Santa Cruz refuses to follow that direction, Novell is "authorized, and hereby is granted, the rights to take any action on [Santa Cruz's] own behalf." When SCO began to advance claims of SVRX License breach against IBM and Sequent, Novell subsequently directed SCO -- the admitted successor-in-interest to Santa Cruz's rights and obligations under the APA -- to waive those claims. When SCO refused to follow that direction, Novell waived the claims on SCO's behalf. SCO has ignored Novell's waiver, however, and in its co-pending lawsuit with IBM, continues to advance claims of SVRX License breach. Accordingly, Novell asks the Court to accord Novell's actions the legal effect they deserve by granting this motion.

DATED: December 1, 2006

ANDERSON & KARRENBERG

/s/ Heather M. Sneddon
Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon

-and-

MORRISON & FOERSTER LLP
Michael A. Jacobs (pro hac vice)
Kenneth W. Brakebill (pro hac vice)

Attorneys for Novell, Inc.

3

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 1st day of December, 2006, I caused a true and correct copy of NOVELL'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON ITS FOURTH CLAIM FOR RELIEF to be served to the following:

Via CM/ECF:

Brent O. Hatch
Mark F. James
HATCH JAMES & DODGE, P.C.
[address]

Via E-mail:

Stuart H. Singer
BOIES, SCHILLER & FLEXNER LLP
[address]

Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Heather M. Sneddon

3


  


Novell Files Motion for Partial Summary Judgment | 312 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections
Authored by: Anonymous on Saturday, December 02 2006 @ 02:57 AM EST



---
--Bill P, not a lawyer. Question the answers, especially if I give some.

[ Reply to This | # ]

Off Topic
Authored by: Anonymous on Saturday, December 02 2006 @ 02:59 AM EST
Read the red notes about clickies and such.

---
--Bill P, not a lawyer. Question the answers, especially if I give some.

[ Reply to This | # ]

There is no disputed fact.
Authored by: Anonymous on Saturday, December 02 2006 @ 03:07 AM EST
I don't see how SCO can get around this PSJ.
There is no dispute that the contract exists.
The language regarding Novell's ability to act on SCO's behalf is in plain and
clear.

This kills SCO's claims against IBM but not IBM's claims against SCO.

Of course, it would be nice if Judge Kimball could decide on IBM's PSJ's first.

[ Reply to This | # ]

Novell Files Motion for Partial Summary Judgment
Authored by: rsmith on Saturday, December 02 2006 @ 03:43 AM EST
It will be interesting to see SCOG try and squirm out of this one. I guess thay
will try to say that because Novell didn't give SCOG the copyrights when they
asked for them, SCOG shouldn't be bound by the waiver.

Given the plain language of the APA, and SCOG's claims as successor in interest,
I don't see a way the judge could refuse to grant this. One motion to wrap up a
large part of two lawsuits? Now that's judicial economy for you!

This might transform the end of the beginning into the beginning of the end.

From the standpoint of Linux' future, it might be better to have SCOG's claims
thrown out on their own (lack of) merits. I think the best way out would be for
the judge to grant both IBM's and Novell's PSJ motions.

The image of SCOG being left with just IBM's counterclaims, like holding a tiger
by the tail, fills me with glee. :-)

---
Intellectual Property is an oxymoron.

[ Reply to This | # ]

Timing!
Authored by: meshuggeneh on Saturday, December 02 2006 @ 03:43 AM EST
Novell could have done this earlier--much earlier.

But they politely waited for some other issues to be dealt with prior to
dropping this bomb in Darl's lap.

[ Reply to This | # ]

Oh dear, poor SCO - ROTFLMAO
Authored by: SilverWave on Saturday, December 02 2006 @ 04:02 AM EST
What goes around, comes around.

heh heh

:P

---
GPLv3 *OR LATER* has been vindicated
The "OR LATER" is vital
A GPL set in stone will be eroded over time. -SilverWave

[ Reply to This | # ]

SCO's Reply on IBM Motions
Authored by: Anonymous on Saturday, December 02 2006 @ 04:18 AM EST
Hey everyone. Just wondering if SCO's replies to IBM's motions for Summary
Judgment were ever posted on Groklaw?

[ Reply to This | # ]

Appeals?
Authored by: Anonymous on Saturday, December 02 2006 @ 04:26 AM EST
Can a summary judgment be appealed?

Suppose the APA gets a PSJ relatively and SCO appeals, will this give SCO a
longer delay than if the process goes through a different route (trial)?

[ Reply to This | # ]

  • Appeals? - Authored by: thombone on Saturday, December 02 2006 @ 06:08 AM EST
  • Appeals? - Authored by: Anonymous on Saturday, December 02 2006 @ 09:34 AM EST
  • It can - Authored by: TennSeven on Saturday, December 02 2006 @ 10:27 AM EST
  • Appeals? - Authored by: Anonymous on Saturday, December 02 2006 @ 11:52 AM EST
SCO has a slam dunk defense against this......
Authored by: blang on Saturday, December 02 2006 @ 04:27 AM EST

Hatch approaching the bar:... You see, this is not SCO. We are really Caldera,
renamed to SCO. So clearly your honor, this contract is not about us, so
Novell's Kung Fu has no power.

Kinball: So Mr Hatch, you clinet is NOT a sucessor in interest to Santa Cruz?

Hatch: Yes, that is right.

Kimball: But in the other case, you say you are?

Hatch: Yes, that is right.

Kimball: Explain?

Hatch: Yes, you see your honor, this is very complicated, yada yoda, dada,
ladder, spinxter, wasupp and all that. So you cannot possibly rule againt us.

[ Reply to This | # ]

I'll have plenty of popcorn on hand...
Authored by: thombone on Saturday, December 02 2006 @ 06:07 AM EST
...to watch the stock tank some more on monday, partially due to this! :)

[ Reply to This | # ]

Got no sympathy for 'em. Nope.
Authored by: billyskank on Saturday, December 02 2006 @ 06:17 AM EST
Serves 'em right for all those lies they told.

---
It's not the software that's free; it's you.

[ Reply to This | # ]

What about the others?
Authored by: rsteinmetz70112 on Saturday, December 02 2006 @ 08:45 AM EST
Didn't Novell waive requirements against others as well (Daimler Chrysler and
SGI for example)?

Why weren't they included for completeness.

It seems that they could be used to show that SCO was exceeding their authority
and all Novell was trying to do was restore sanity.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

If I were Yarro's parents......
Authored by: Anonymous on Saturday, December 02 2006 @ 08:49 AM EST
I'd ground him.

Why hasn't Yarro left the building yet, leaving Darl holding the bag?

What does Stowell do to earn his keep lately, now that SCOx doesn't issue press releases?

[ Reply to This | # ]

What I like about this...
Authored by: DaveJakeman on Saturday, December 02 2006 @ 09:13 AM EST
...is that in addition to the point Novell makes, granting this motion would
bring about a certain "judicial economy", so there's another strong
motive to grant it.

SCO have established their credibility now and the first couple of dominoes of
their case have already tumbled, so why not trigger another line to help level
it?

Let's see, we've got:

1. The Wells/Kimball ruling to exclude SCO's vague, non-specific, wishy-washy
"evidence";

2. The Wells ruling to exclude the extra stuff SCO stuffed into their expert
reports after close of discovery;

And in the pipeline there's:

3. Arbitration with Novell over copyright ownership;

4. Novell pulling the plug on SCO's authority to rattle their sabre;

5. IBM's PSJ's (not forgetting counterclaims), which are giving SCO migraine
headaches as we speak;

6. Novell's request for an accounting/constructive trust/preliminary injunction
for the millions in royalties that SCO withheld.

In addition, there's SCO's recent, ahem, stock performance and their dire
financial straits.

What else can go wrong for SCO?

---
I would rather stand corrected than sit confused.
---
Should one hear an accusation, try it on the accuser.

[ Reply to This | # ]

Hovsepian still worries me
Authored by: Anonymous on Saturday, December 02 2006 @ 09:40 AM EST

Novell's new CEO, Ron Hovsepian, still seems to be pursuing this litigation,
which began under Messman. But is he obligated to?

We saw what happened to Caldera when Darl came on board. Messman, last I knew,
was supposed to remain on Novell's board through the end of October. On Nov. 2,
the deal with Microsoft was announced.

Does IBM have some leverage about whether Novell continues to show up against
SCO?

[ Reply to This | # ]

This just isn't SCO's week
Authored by: Nice Kitty on Saturday, December 02 2006 @ 10:31 AM EST
Poor, poor SCO. Their/its' intestines are unhappily roiling away. A small
reimbursement, perhaps, for the past several years of Hell they have put the
world of Good People through.

Roil, roil, toil and trouble <evil grin>.

[ Reply to This | # ]

Conflicting thoughts about Novell
Authored by: Anonymous on Saturday, December 02 2006 @ 11:13 AM EST
After the Novell/MS deal, particularly the attempted end run around the GPL, it
is much harder to see Novell in a good light. If it wasn't for that (not
insigificant) piece of stupidity, they'd still clearly be one of the good guys.

I'm coming to think that what they did with MS was well-intentioned but
stunningly naive, and they've still not figured out what they did wrong.

For now though, I'll raise a quiet cheer for this motion.

Graham.

[ Reply to This | # ]

Novell Files Motion for Partial Summary Judgment
Authored by: Anonymous on Saturday, December 02 2006 @ 12:41 PM EST
In light of the MS/Novel deal, what could the reasoning behind this be? Although
I enjoy watching SCO squirm, I'd rather see this case complete on merit of the
GPL to set a legal precedent for it and while the majority of the IBM case is no
longer really significant for the GPL, if this succeeds, then The SCO vs IBM
case would be remembered as 'that thing Novel put an end to'
Could it be possible that this request is to eliminate any more legal precedents
being set in regards to the GPL? Such a thing could feasibly damage Novel's
business, but SCO slaughtered their business, possibly under urging from the
Redmond machine, isn't it also possible that Novel may be moved into a similer
position since they've shown a proclivity to make deals with MS?
Or am I just seeing smoke, mirrors, and conspiracies where there are none?

[ Reply to This | # ]

The End is Near?
Authored by: RFD on Saturday, December 02 2006 @ 01:52 PM EST
I know that some commentators have speculated that Judge Kimball wants to avoid
making any decisions if he can. I have felt, however (without any real evidence
to support my speculation), that he wants to make the important decisions in
both the IBM and Novell cases, but only after the real issues are before him. I
think his plan is now coming together.

On January 23, 2007, he will hear Novell's motion for a PSJ on a constructive
trust, and I expect he will take it under advisement. On March 7, he will hear,
and take under advisement, the last of the pending PSJ's in the IBM case. By
then, he probably have the results of the SUSE arbitration. That leaves this
motion, which he may try to expedite.

At that point he will have before him all he needs to decide most of the
important issues in this case and virtually wipe out all of SOS's claims. I
would expect bankruptcy to follow shortly thereafter, especially if he rules for
Novell on the constructive trust.

I have a question for any lawyer familiar with bankruptcy procedures. If SCO
were to file for bankruptcy after Judge Kimball has heard arguments and taken
the matter under advisement, would that affect the ability of Judge Kimball to
issue a ruling on that matter?

If this were to actually happen, I suspect both IBM and Novell would then reach
settlements with the bankruptcy trustee.

---
Eschew obfuscation assiduously.

[ Reply to This | # ]

Novell Files Motion for Partial Summary Judgment
Authored by: Anonymous on Saturday, December 02 2006 @ 02:30 PM EST
If this motion is granted, would there be any reason to keep the IBM/SCO case
delayed until after this case is completed?

I.E., answering the question of whether SCO owns the copyrights is a good reason
to hold the IBM case - but if this PSJ is granted, that question becomes
irrelevant, and all that is left in the IBM case is the IBM counterclaims.

Is there any reason to hold the IBM case back if all that is left are IBM
counterclaims?

[ Reply to This | # ]

I expect to see declarations by Brodrick and Sontag
Authored by: Anonymous on Saturday, December 02 2006 @ 10:19 PM EST
saying that on information and belief, SCO will find material in discovery to
refute Novell's right to terminate.

Like the Sontag declaration that declared that he had taken a computer course,
so he's an expert in CMVC, I expect to read that Sontag took a "contracts
in business" course as part of his MBA, therefore Sontag is an expert in
contract law, and Novell is not allowed to to waive.

[ Reply to This | # ]

Novell Files Motion for Partial Summary Judgment
Authored by: Anonymous on Sunday, December 03 2006 @ 12:31 AM EST
In my view, the bigest problem that SCO will have to overcome is reflected on
pages 29-32: SCO's Contemporaneous Course of Conduct Defeats its Narrow
Interpretation of SVRX License.

Basically SCO treated IBM's license and all other Source Licenses the same way
they treated Binary only licenses - the revenue was passed to Novell and 5% was
remitted back to SCO.

Since they treated them the same before, they can't now claim that they are
different and subject to different terms. (But then we already knew that.)

Note 9: "Pursuant to the APA, SCO provided Novell with monthly reports
detailing the SVRX revenue, SCO's administrative fee, and the revenue to be
passe through to Novel. It is these reports, for November 1996 and January 1997,
respectively, that document SCO's adherence to the 100% SVRX Revenue - 5%
Administration Fee payment structure for the IBM Buyout payment. ..."

[ Reply to This | # ]

SCO's reply
Authored by: Anonymous on Sunday, December 03 2006 @ 05:28 AM EST
Based on what we've seen so far of SCO's legal strategy I expect an overlength
reply something like their Linux License for Unix logic... declaring that since
their case is really about Linux, then there is no UNIX claim to waive therefore
Novell has no case.

[ Reply to This | # ]

funny_happenins -- Novell Files Motion for Partial Summary Judgment
Authored by: Anonymous on Monday, December 04 2006 @ 06:17 PM EST
This is a two part post. I was looking at amendment 1 to the APA.

First item. Attempted to reply with a posting, and ended up on the main page
instead.

Second item.

At the bottom, it list total number of unix systems. In 1995 there were
1.356 million units. In 2002 there were 3.197 million units. So, what were the
numbers between 2002 and 2003 when SCO filed suit? I know Linux was growing,
but what exactly were the numbers?

[ Reply to This | # ]

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