Novell has done what it said it would do, file a motion asking for partial summary judgment, specifically on its Fourth Claim for Relief for declaratory judgment on the grounds that SCO was without authority to enter into the SCOsource licenses:
478 -
Filed & Entered: 12/21/2007
Motion for Summary Judgment
Docket Text: MOTION for Summary Judgment on Novell's Fourth Claim for Relief filed by Defendant Novell, Inc.. (Sneddon, Heather)
479 -
Filed & Entered: 12/21/2007
Memorandum in Support of Motion
Docket Text: MEMORANDUM in Support re [478] MOTION for Summary Judgment on Novell's Fourth Claim for Relief [REDACTED] filed by Defendant Novell, Inc.. (Attachments: # (1) Exhibit 1)(Sneddon, Heather)
480 -
Filed & Entered: 12/21/2007
Declaration
Docket Text: DECLARATION of David E. Melaugh re [478] MOTION for Summary Judgment on Novell's Fourth Claim for Relief [REDACTED] filed by Novell, Inc.. (Attachments: # (1) Exhibit 2 # (2) Exhibit 5 # (3) Exhibit 6 # (4) Exhibit 7 # (5) Exhibit 8 # (6) Exhibit 9, Pt. 1# (7) Exhibit 9, Pt. 2 # (8) Exhibit 9, Pt. 3# (9) Exhibit 10 # (10) Exhibit 12)(Sneddon, Heather)
481 -
Filed & Entered: 12/21/2007
Notice of Conventional Filing
Docket Text: NOTICE OF CONVENTIONAL FILING of Memorandum in Support of Novell's Motion for Summary Judgment on its Fourth Claim for Relief, and Declaration of David E. Melaugh filed by Defendant Novell, Inc. [FILED UNDER SEAL] (Sneddon, Heather) We have the redacted version of the memorandum in support already, so we can dive right in. As you see, there are a gazillion exhibits attached to the Declaration, and as soon as they are all uploaded, we'll plug them in here too. Most of them you've seen before, things like the Asset Purchase Agreement. But we'll scurry about and upload those soon too. I just knew you'd want to know about this right away. Update: OK, they're all there now, except for the sealed ones, which are as usual the ones you would like to see the most, like the agreement with Cymphonix and Computer Associates and some internal presentations. I'd pay to see those.
Here's the Memorandum in Support as text, thanks once again to Steve Martin:
*****************************
MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice
[address]
[phone]
[fax]
ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
Heather M. Sneddon, #9520
[address]
[phone]
[fax]
Attorneys for Defendant and Counterclaim-Plaintiff Novell,
Inc.
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
THE SCO GROUP, INC., a Delaware corporation,
Plaintiff and Counterclaim-Defendant,
v.
NOVELL, INC., a Delaware corporation,
Defendant and Counterclaim- Plaintiff.
|
MEMORANDUM IN SUPPORT OF
NOVELL'S MOTION FOR SUMMARY
JUDGMENT ON ITS FOURTH CLAIM
FOR RELIEF
[REDACTED pursuant to the August 2,
2006 Stipulated Protective Order]
Case No. 2:04CV00139
Judge Dale A. Kimball |
1
I. INTRODUCTION
With the Court's permission, Novell brings this additional
Motion for Summary Judgment to further refine and narrow the issues
for trial. This motion is based substantially on the Court's August
10, 2007 Order resolving the parties' motions for summary judgment.
(Docket No. 377, "Order.") To decide this motion, the Court need
only apply the plain prohibitions found in the APA to the equally
plain text of SCO's SCOsource licenses.
The APA prohibits SCO from modifying existing SVRX Licenses and
from entering into new SVRX Licenses. That prohibition is subject
only to limited exceptions, and those exceptions do not apply here.
SCO thus was without authority to enter into or amend those
licenses.
In addition, Amendment 2 to the APA prohibits SCO from modifying
or entering into "buyout" licenses of SVRX rights, without
exception. Because, again, it is plain from the face of SCO's
SCOsource license with Sun that it modifies a prior SVRX buyout,
SCO was without authority to enter the Sun SCOsource license.
II. STATEMENT OF UNDISPUTED FACTS
The Court is generally familiar with the facts of this matter,
which are briefly repeated below. (See Order at 2-42.)
The APA and its Prohibitions
1. The Asset Purchase Agreement prohibits SCO from modifying
existing SVRX Licenses and from entering into new SVRX Licenses.
(Declaration of David E. Melaugh in Support of Novell's Motion for
Summary Judgment on its Fourth Claim for Relief, filed herewith
("Melaugh Decl."), Ex. 9 (APA) at § 4.16; Order at 92.)
2. SCO can amend existing SVRX Licenses only "as may be
incidentally involved through its rights to sell and license
[UnixWare software]" or "to allow a licensee under a particular
SVRX License to use the source code of the relevant SVRX product(s)
on additional
1 (2)
CPU's or to receive an additional distribution, from [SCO], of
such source code." (Id.; see also Melaugh Decl., Ex.
10 (Amendment No. 1) ¶ 10 (amending APA § 4.16).)
3. SCO can enter into new SVRX Licenses only "as may be
incidentally involved through its rights to sell and license
[UnixWare software]." (Id.)
4. In addition, before entering into "any potential transaction
with an SVRX licensee which concerns a buy-out of any such
licensee's royalty obligations," SCO must obtain Novell's consent.
(Melaugh Decl., Ex. 12 (Amendment No. 2) at § B.) This
prohibition is subject to no exceptions.
SCOsource
5. SCO's "SCOsource" program was, fundamentally, a campaign to
extract licensing revenue based on SCO's now-rejected claim to own
the SVRX copyrights. (Order at 29 ("SCOsource ... was an effort to
obtain license fees from Linux users based on claims to Unix System
V intellectual property.").)
6. SCO has never claimed SCOsource had anything to do with SCO's
UnixWare derivative rights.
Sun's SCOsource License
7. In 1994, Sun Microsystems, Inc. ("Sun") entered into an SVRX
License with UNIX Systems Laboratories. Sun's 1994 SVRX License was
a "buy-out," as that term is used in Amendment No. 2 (Order at 94;
Melaugh Decl., Ex. 12 (Amendment No. 2).)
8. In 2003, SCO entered into a "Software License Agreement" with
Sun. (Melaugh Decl., Ex. 11 at SCO1287208; Order at 94.) That
agreement is explicitly intended to "amend and restate" the 1994
license agreement.
9. SCO characterizes the 2003 Sun Software License Agreement as
a "SCOsource" license. (Melaugh Decl., Ex. 14 (SCO interrogatory
response listing SCOsource licenses) at NOVTR 4238, 4241.)
2 (3)
10. Both the 2003 Sun SCOsource license and the 1994 license are
"SVRX Licenses" within the meaning of the APA. (Order at 41,
101.)
11. The principal effects of the Sun SCOsource license were
to:
REDACTED
Microsoft's SCOsource License
13. In 2003, SCO entered into a "Release, License and Option
Agreement" with Microsoft. (Melaugh Decl., Ex. 13 (Microsoft
SCOSource license).)
14. SCO characterizes the 2003 Microsoft Release, License and
Option Agreement as a "SCOsource" license. (Melaugh Decl., Ex. 14
(SCO interrogatory response listing SCOsource licenses) at NOVTR
4238, 4241.)
15. The 2003 Microsoft SCOsource license is an SVRX License.
(Order at 41, 101.)
REDACTED
Other SCOsource Licenses
REDACTED
3 (4)
REDACTED
18. These licenses were each entered into under standardized
terms. "The central feature of [these] other SCOsource agreements
is the covenant not to sue and the waiver of claims by SCO for the
companies' internal Linux usage." (SCO's Memo. in Opp. to Novell's
Motion In Limine No. 2 to Preclude SCO from Contesting
Licenses Conveying SVRX Rights are "SVRX Licenses," Docket No. 421
("SCO SVRX Opp."), at 3.)
19. The Everyone's Internet SCOsource license is representative
of the rights these licenses conveyed. That license grants, with
certain limitations, the "right and license to use ... SCO IP."
(Melaugh Decl., Ex. 15 (Everyone's Internet Agreement) at §
2.1.) The definition of "SCO IP" makes clear that the license
conveys SVRX rights:
"SCO IP" means the SCO UNIX®-based Code alleged by
SCO to be included, embodied, or otherwise utilized in the
Operating System.
...
"UNIX-based Code" means any Code or Method that: (i) in its literal
or non-literal expression, structure, format, use, functionality or
adaptation (ii) is based on, developed in, derived from or is
similar to (iii) any Code contained in or Method devised or
developed in (iv) UNIX System V or UnixWare®, or
(v) any
4 (5)
modification or derivative work based on or licensed
under UNIX System V or UnixWare.
(Id. at §§ 1.7, 1.10 (emphasis added).)
III. ARGUMENT
A. SCOsource Was a Campaign Purporting to License Novell's
SVRX Copyrights.
As this Court has already observed, SCOsource was,
fundamentally, a campaign to extract licensing revenue based on
SCO's now-rejected claim to own the SVRX copyrights. (Undisputed
Facts ¶ 5; Order at 29 ("SCOsource ... was an effort to obtain
license fees from Linux users based on claims to Unix System V
intellectual property.").) Indeed, the name for the first iteration
of the SCOsource program was "SCO System V for Linux." (Melaugh
Decl. Exs. 1 at SCO1275739, 2 at SCO1270161, 3 at SCO1537795.)
One of the acts SCO undertook as part of SCOsource was to send a
letter to every Fortune 1000 company (Id., Exs. 4-7.) In
that letter, SCO asserted:
We have evidence that portions of UNIX System V
software code have been copied into Linux and that additional other
portions of UNIX System V software code have been modified and
copied into Linux, seemingly for the purposes of obfuscating their
original source.
(Id., Ex. 6 (May 12, 2003 Letter) at SCON 24113.) SCO later
followed up on that correspondence with another, more specific
letter identifying particular SVRX files, claiming:
[A]ny distribution of Linux by a software vendor or a
re-distribution of Linux by an end user that contains any of the
identified System V code violates SCO's rights under the DMCA,
insofar as the distributor knows of these violations.
(Id., Ex. 8 (Marsh Decl.) at Ex. 1.)
From start to finish, SCO never claimed SCOsource had anything
to do with SCO's UnixWare derivative rights, and any attempt by SCO
to recast SCOsource now should fail. (Undisputed Facts ¶
6.)
5 (6)
B. SCO Had No Authority to License Novell's SVRX
Copyrights.
As this Court has also observed, SCO is generally barred from
modifying existing SVRX Licenses and from entering into new SVRX
Licenses. (Undisputed Facts ¶ 1; Order at 92.) These
prohibitions are consistent with other aspects of the APA's
transactional structure: SCO doesn't own the SVRX copyrights and it
doesn't own the revenue from SVRX Licenses. (Order at 99-101.) The
APA provides only limited exceptions to that general bar, none of
which apply here.
1. SCO Had No Authority to Amend Sun's SVRX License.
Sun has entered into a variety of SVRX Licenses with Novell and
its predecessors, the most recent of which Sun executed with Novell
in 1994. (Undisputed Facts ¶ 7; Order at 94.) SCO's SCOsource
license with Sun explicitly acknowledges it is intended to "amend
and restate" Sun's 1994 SVRX License. (Undisputed Facts ¶ 8)
This Court has confirmed that the Sun SCOsource license is an SVRX
License. (Undisputed Facts ¶ 10) SCO was without authority to
amend Sun's SVRX License for two independent reasons.
First, SCO has no authority to "amend, modify or waive any right
under or assign any SVRX License." *Undisputed Facts ¶¶
1-2; Melaugh Decl., Ex. 9 (APA) at § 4.16(b).) That general
prohibition is subject to only two exceptions. SCO may amend
licenses "as may be incidentally involved through its rights to
sell and license [UnixWare software]" or "to allow a licensee under
a particular SVRX License to use the source code of the relevant
SVRX product(s) on additional CPU's or to receive an additional
distribution, from [SCO], of such source code." (Id.; See
also Melaugh Decl., Ex. 10 (Amendment No. 1) ¶ 10.)
Neither exception applies here.
As reflected above in Section III.A, there can be no debate that
SCOsource is, fundamentally, a program to license Novell's SVRX
rights. (Undisputed Facts ¶¶ 5-6) SVRX was not merely
"incidental" to some UnixWare license — it was at the heart
of the SCOsource licenses. That is true of the Sun SCOsource
license. Its principal effects were to:
REDACTED
6 (7)
REDACTED
Second, before entering into "any potential transaction with an
SVRX licensee which concerns a buy-out of any such licensee's
royalty obligations," SCO must obtain Novell's consent. (Undisputed
Facts ¶ 4; Melaugh Decl., Ex. 12 (Amendment No. 2) at §
B.) This prohibition is subject to no exception. There is no
dispute that Sun's 1994 agreement with Novell was a "buy-out," as
that term is used in Amendment No. 2. (Undisputed Facts ¶ 7.)
Sun's 2003 SCOsource license explicitly acknowledges that it is
intended to "amend and restate" that 1994 license. (Undisputed
Facts ¶ 8.) By definition, Sun's 2003 SCOsource license
therefore "concerns" a buy-out, and SCO was required to obtain
Novell's consent to the license. SCO did not, and was therefore
without authority to amend Sun's SVRX License.
2. SCO Had No Authority to Enter Into the Microsoft SCOsource
License.
This court has held the Microsoft SCOsource license is an SVRX
License. (Undisputed Facts ¶ 15; Order at 41, 101.) The
Microsoft SCOsource license does not, on its face, modify any
existing Microsoft SVRX license and is therefore a "new" SVRX
License. The APA prohibits SCO from entering into new SVRX
Licenses. (Undisputed Facts ¶ 1.) The APA allows only one
exception, discussed above: "as may be incidentally involved
through its rights to sell and license [UnixWare software]."
(Undisputed Facts ¶ 2.)
As with the Sun SCOsource license, there can be no dispute that
SVRX played more than a merely "incidental" role in Microsoft's
SCOsource license.
REDACTED
7 (8)
REDACTED
As the sole exception does not apply, SCO was without authority
to enter into the Microsoft SCOsource license.
3. SCO Had No Authority to Enter Into the Other SCOsource
Licenses.
SCO also entered into [REDACTED] other SCOsource licenses.
(Undisputed Facts ¶ 17.) These licenses were each entered into
under standardized terms. (Undisputed Facts ¶ 18.) Taking the
SCOsource license with Everyone's Internet as an example: the
license grants, with certain limitations, the "right and license to
use ... SCO IP." (Undisputed Facts ¶ 19; Melaugh Decl., Ex. 15
(Everyone's Internet Agreement) at § 2.1.) The definition of
"SCO IP" makes clear that the license conveys SVRX rights.
(Id.) The remaining "other" SCOsource licenses convey
similar rights to SVRX.
These licenses each convey SVRX rights and are therefore SVRX
Licenses. Because no exception applies here, SCO is barred from
entering into these new SVRX Licenses.
a. The Other SCOsource Licenses are SVRX Licenses.
For purposes of this motion, it is not necessary to examine the
licenses individually. SCO has admitted that "[t]he central feature
of the other SCOsource agreements is the covenant not to sue and
the waiver of claims by SCO for the companies' internal Linux
usage." (Undisputed Facts ¶ 18; SCO SVRX Opp. at 3.) The Court
need therefore only decide that, as a matter of law, licenses that
excuse a company's purported past and future infringement of SVRX
copyrights are "SVRX Licenses" within the meaning of the APA.
This Court has held that "the only possible interpretation of
the APA [is] that SVRX License means all contracts relating to the
list of SVRX products provided in Item (VI) of Schedule 1.1.(a)"
and the Auxiliary Products listed in Amendment 1. (order at 34, 77,
91.) It is
8 (9)
plain that a contract permitting a party to use code contained
in the SVRX products listed in the APA is a contract "relating to"
those products and is therefore an SVRX License.
SCO has, in the past, contended that because the emphasis of the
other SCOsource licenses is "the avoidance of litigation with SCO,"
these agreements are not SVRX Licenses. (SCO SVRX Opp. at 3-4.)
There is no merit to such an argument. The Court has held that
licenses granting SVRX rights are SVRX Licenses. (Order at 34, 77,
91.) Neither the plain language of the APA nor the Court's orders
interpreting that language support any argument that licenses
granting SVRX rights are SVRX Licenses unless they are primarily
litigation-avoidance agreements. Indeed, any license to
intellectual property is ultimately a litigation-avoidance
agreement — a license is an affirmative defense to a claim of
infringement. See, e.g., Evolution, Inc. v. Prime Rate Premium
Fin. Corp., No. 03-2315-KHV, 2004 U.S. Dist. LEXIS 25017, at
*15 (D. Kan. Aug. 13, 2004) ("The existence of a license, exclusive
or non-exclusive, creates an affirmative defense to a claim of
copyright infringement.") (attached as Exhibit 1). Under SCO's
logic, any license granting rights to copyrights could always be
instead characterized as a "litigation-avoidance agreement."
SCO has also contended that the other SCOsource licenses are not
SVRX Licenses because SCO did not deliver any physical software
along with the licenses. That also makes no difference.
Intellectual property is intangible. A license to use a copyright
conveys rights whether a copy of the work is appended to the
contract or not, and, again, nowhere in the APA or the Court's
orders is there anything limiting SVRX Licenses to just those
licenses that convey physical instantiations of the licensed
rights.
b. SVRX Plays More Than an "Incidental" Role in the Other
SCOsource Licenses.
Given that the SCOsource licenses are SVRX Licenses, SCO can
only enter into such licenses if they are "incidentally involved
through its rights to sell and license [UnixWare software]."
(Undisputed Facts ¶¶ 1, 3; Melaugh Decl., Ex. 9 (APA) at
§ 4.16(b).) As SCO has
9 (10)
admitted, the purpose of these licenses was to excuse the
licensee's purported infringement of SCO's intellectual property
rights. (Undisputed Facts ¶ 18; SCO SVRX Opp. at 3.) SCO has
never contended that Linux infringes its UnixWare derivative
intellectual property. (Undisputed Facts ¶ 6.) SCO has only
contended that SVRX is infringed. There can therefore be no
contention that the "incidental" exception applies.
CONCLUSION
For the reasons stated above, Novell is entitled to a
declaration that SCO was without authority to enter into the
SCOsource licenses.
DATED: December 21, 2007
ANDERSON & KARRENBERG
By: /s/ Heather M. Sneddon
Thomas R. Karrenberg
Heather M. Sneddon
-and-
MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice
Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.
10 (11)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 21st day of December, 2007, I
caused a true and correct copy of the MEMORANDUM IN SUPPORT OF
NOVELL'S MOTION FOR 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]
Stuart H. Singer
William T. Dzurilla
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
[address]
David Boies
Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]
Devan V. Padmanabhan
John J. Brogan
DORSEY & WHITNEY, LLP
[address]
Via U.S. Mail, postage prepaid:
Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]
/s/ Heather M. Sneddon
11 (12)
|
