SCO accused Novell in its opening argument four times of slander of title "to this very day". And in questioning Duff Thompson yesterday, the lawyer asked him if he saw evidence of slander of title to the present, and he said yes. It indicates a desire for damages covering the entire time period.

However, Novell points out that prior rulings by this court and the appeals court found that Novell was in fact the owner of the copyrights, among other things, and Novell thinks it is grossly unfair that it can't be allowed to mention those salient facts to the jury, if the judge is going to allow SCO to claim damages "to this day":

In view of the foregoing, the Court should permit Novell to introduce evidence that Novell’s representatives acted with knowledge of the following three facts:

1. Judge Kimball ruled on August 9, 2004, that “the APA did not transfer any copyrights” and “the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a [17 U.S.C.] Section 204(a) writing”;

2. Judge Kimball ruled on August 7, 2007 that “Novell is the owner of the UNIX and UnixWare copyrights”; and

3. The Tenth Circuit recognized on August 24, 2009 that “Novell has powerful arguments to support its version of the transaction.”

SCO's attorney Stuart Singer may have gotten carried away with his theatrical indignation. And when a party slips like this, what lawyers call opening the door, it can indeed have consequences. Novell was just waiting for a moment like this.

Here's the motion:

03/11/2010 - 790 - MOTION to Allow Evidence Responding to SCO's Allegation that Novell's Slander Continues "To This Very Day" filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit A-Trial Testimony, # 2 Exhibit B-Order)(Brennan, Sterling) (Entered: 03/11/2010)

The issue presented by this Motion is not whether prior adjudications are relevant to ownership. Instead, the issue presented is whether awareness that those rulings were made is relevant to whether Novell’s representatives "continue[d] to assert ownership" and "continue[] to republish that slander" "to this very day" with either knowledge that those assertions are false or reckless disregard for their truth. Clearly, awareness of those rulings is relevant to state of mind. Thus Novell should be permitted to introduce evidence that those accused of publishing and authorizing publications on its behalf were aware of those rulings.

Necessarily, such evidence will include disclosure of the contents of the rulings themselves; which SCO will argue is unfairly prejudicial and potentially misleading. But SCO created that problem for itself when it opened the door by repeatedly asserting in its opening statement, and eliciting testimony, that Novell’s supposed slander "continues to this very day." Moreover, the risks SCO has created can be minimized by a limiting instruction to the jury that they may consider the evidence only to determine the state of mind with which publications were made, and not to determine who owns the copyrights. Because any residual risk cannot be said to substantially outweigh the enormous probative value of this evidence, the evidence should come in. See Fed. R. Evid. 403.

As Novell’s representatives “continue[d] to assert ownership” and “continue[d] to republish that slander” from June 9, 2004 “to this very day,” they did so knowing that a sitting United States District Judge had ruled that the APA, without amendments, “did not transfer any copyrights”; and that there was “substantial doubt as to whether the APA,” even “as amended by Amendment No. 2,” satisfied the statutory requirements to transfer the copyrights. Certainly evidence that Novell’s representatives were aware of that fact is probative of whether they “continue[d] to assert ownership” and “continue[d] to republish that slander” either knowing that those assertions were false or with reckless disregard for their truth.

I have about reached the impression that the only reason SCO is pursuing this claim is so they can at least act sincere about SCOsource. They are vulnerable, after all, to Novell's claim of slander of title, not to mention IBM's counterclaims eventually, and Novell has at least some evidence that SCO knew when it began its litigious course that it knew it did *not* own the copyrights but went ahead anyway. Now *that's* what I'd call slander of title, personally. So maybe all the extreme emotion and pounding on the table is to silence that little voice in the jury's mind saying, but SCO *knew*.

Exhibit A is 7 pages of Stuart Singer's opening argument, by the way, which is lovely to have, and his questioning of Thompson. It's from the dailies, which is what we were thinking we might need to order when we thought no one had attended on our behalf on Wednesday. This is their normal purpose, to be used by the parties.

I've removed the headers, just for time:

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NOVELL’S MOTION TO ALLOW
EVIDENCE RESPONDING TO
SCO’S ALLEGATION THAT
NOVELL’S SLANDER CONTINUES
“TO THIS VERY DAY”

Q. Are you aware of continued assertions of ownership to UNIX copyrights by Novell to this very day?

A. Yes. (Tr. at 275:8-10 [emphasis added].)¹

• "Then in December of 2003, another important date as you'll learn, Novell goes public again, says they have the copyrights, and starts a web page where it continues to assert ownership of the UNIX copyrights to this very day." (Id. at 13:21-25 [emphasis added].)

  Minutes later, he repeated:

• "So this is a campaign of slander, broadcast and repeated to the world that continues to this very day." (Id. at 14:8-9 [emphasis added].)

  Then SCO's local counsel returned to the same theme, ensuring it would not be lost on the jury:

• "And to this day Novell, on their web site, continues to republish that slander." (Id. at 32:16-18 [emphasis added].)

1. Judge Kimball ruled on August 9, 2004, that "the APA did not transfer any copyrights" and "the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a [17 U.S.C.] Section 204(a) writing";

2. Judge Kimball ruled on August 7, 2007 that "Novell is the owner of the UNIX and UnixWare copyrights"; and

3. The Tenth Circuit recognized on August 24, 2009 that "Novell has powerful arguments to support its version of the transaction."

1

A. Any Information Bearing on Novell's Ownership and Available to Novell's Representatives when they Are Alleged to Have Asserted Ownership Is Relevant

Any evidence tending to make the existence of that scienter "more probable or less probable" is relevant, Fed. R. Evid. 401, and therefore admissible, Fed. R. Evid. 402, unless "its probative value is substantially outweighed by the danger of unfair prejudice," Fed. R. Evid. 403 (emphasis added). Evidence that Novell's representatives had and have information supporting Novell's ownership claim, as they asserted and continue to assert "ownership" and "republish that slander" on Novell's website, makes the existence of the requisite scienter less probable; and is thus admissible unless its probative value is substantially outweighed.

B. Certain Rulings Made by Judge Kimball and the Tenth Circuit Are Now Relevant

The information available to Novell's representatives as they asserted and continue to assert Novell's ownership includes several key judicial rulings. First, in his June 9, 2004 order denying SCO's motion to remand (Dkt. 29, reproduced as Ex. B hereto), Judge Kimball ruled:

• "It is undisputed that the APA did not transfer any copyrights" (id. at 8) and

2

• "the agreements raise substantial doubt as to whether the APA as amended by Amendment No. 2 qualifies as a [17 U.S.C.] Section 204(a) writing" (id. at 10).

Second, in his August 10, 2007 order granting summary judgment (Dkt. 377), Judge Kimball ruled:

• "Novell is the owner of the UNIX and UnixWare copyrights." (Id. at 62.) And third, in its August 24, 2009 ruling reversing Judge Kimball's grant of summary judgment, the Tenth Circuit concluded:

• "Novell has powerful arguments to support its version of the transaction." SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009).

Thus as Novell's representatives "continue[d] to assert ownership" from August 10, 2007 to August 24, 2009, they did so knowing Novell was the adjudicated owner; and as they "continue[] to republish that slander" "to this very day," they do so knowing that a sitting United States District Judge reached the same conclusion and the Tenth Circuit has recognized that "Novell has powerful arguments" in support of its contention. Again, evidence that Novell's representatives were and have been aware of those facts is highly probative of whether they "continue[d] to assert ownership" knowing that those assertions were false, or with reckless disregard for their truth.

3

The issue presented by this Motion is not whether prior adjudications are relevant to ownership. Instead, the issue presented is whether awareness that those rulings were made is relevant to whether Novell's representatives "continue[d] to assert ownership" and "continue[] to republish that slander" "to this very day" with either knowledge that those assertions are false or reckless disregard for their truth. Clearly, awareness of those rulings is relevant to state of mind. Thus Novell should be permitted to introduce evidence that those accused of publishing and authorizing publications on its behalf were aware of those rulings.

Necessarily, such evidence will include disclosure of the contents of the rulings themselves; which SCO will argue is unfairly prejudicial and potentially misleading. But SCO created that problem for itself when it opened the door by repeatedly asserting in its opening statement, and eliciting testimony, that Novell's supposed slander "continues to this very day." Moreover, the risks SCO has created can be minimized by a limiting instruction to the jury that they may consider the evidence only to determine the state of mind with which publications were made, and not to determine who owns the copyrights. Because any residual risk cannot be said to substantially outweigh the enormous probative value of this evidence, the evidence should come in. See Fed. R. Evid. 403.

III. CONCLUSION

Now that SCO has opened the door, by arguing and presenting evidence to the jury that Novell's supposed slander "continues to this very day," Novell should be permitted to introduce evidence that its representatives acted with knowledge that:

• On June 9, 2004, Judge Kimball ruled, "[i]t is undisputed that the APA did not transfer any copyrights" and "the agreements raise substantial doubt as

4

to whether the APA as amended by Amendment No. 2 qualifies as a [17 U.S.C.] Section 204(a) writing";

• On August 7, 2007, Judge Kimball ruled, "Novell is the owner of the UNIX and UnixWare copyrights"; and

• On August 24, 2009, the Tenth Circuit concluded, "Novell has powerful arguments to support its version of the transaction."

DATED: March 11, 2010 Respectfully submitted

By: /s/ Sterling A. Brennan

WORKMAN NYDEGGER
Sterling A. Brennan
David R. Wright
Kirk R. Harris
Cara J. Baldwin

MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Grant L. Kim, pro hac vice

Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.

______________

¹ Transcript excerpts are reproduced as Ex. A hereto.

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

EXHIBIT A

BEFORE THE HONORABLE TED STEWART

March 9, 2010, Jury Trial

... was present in their files. They say the amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996.

Now if that was the end of the story, it would be bad enough, a slander made and published to the entire world on the very day that SCO was announcing record earnings. But this is far worse, because not long after the June 6th retraction, Novell decided to retract the retraction and resume a campaign of slander.

So, on May 28th, we had the initial statement. On June 6th, there was a retraction. There were some letters back and forth between the parties. August 4th, Novell says that SCO's claimed ownership in the UNIX technologies must be rejected and they go back to saying they own the copyrights.

In October they go in to obtain copyright registrations themselves on UNIX, and they told the copyright office they retain all or substantially all of the ownership of the copyrights in UNIX, including the U.S. copyright registration referenced above.

Then in December of 2003, December 22nd, another important date, as you'll learn, Novell goes public again, says they have the copyrights, and starts a Web page where it continues to assert ownership of the UNIX copyrights to this very day.

In January of 2004, they launched their own program for licensing UNIX users to protect them against infringement that competes with SCO's program.

In March 2004, a Novell executive goes so far as to stand up at a convention and flat out say, we still own UNIX, even though that was a product that was sold to our client's predecessor and now belongs to SCO.

So this is a campaign of slander, broadcast and repeated to the world that continues to this very day. Mr. Hatch will talk later about the effect that this had on SCO's business. It depended on those UNIX copyrights.

Now how do we know it's a slander? You will hear tremendous amount of evidence about that in this trial. What is remarkable, though, is that this is a case where the executives at the time of the sale, on both Novell's side and Santa Cruz's side, agreed that the copyrights were sold.

Ladies and gentlemen, you're going to hear testimony in this trial from ten witnesses on both the Novell and the Santa Cruz side of the transaction which indicate that the copyrights were sold by Novell to Santa Cruz.

Our first witness, which you'll hear later today, is Robert Frankenberg. He was the president and chief executive officer of Novell. The number one guy at the time. He will testify that it was the intent of Novell to

slander.

I think we're going to need to rerun that.

[Video clip played]

MR. SINGER: SO here you have him publicly saying flat out, we still own UNIX, we still own UNIX, even though they have sold the company, they've told customers they've sold the company, we have copyright registrations, and they are continuing to slander in public.

Compare, if you will, what Mr. Stone said, we still own UNIX, to what Novell told its customers in 1995 when the deal was done. In 1995, they say Novell transferred to the Santa Cruz Operation its existing ownership interest in UNIX system-based offerings, which are defined as all releases of UNIX. And in 2003, their vice chairman stands up and says, quote, we still own UNIX. That was false, that was slander we believe you will find. And to this day Novell, on their web site, continues to republish that slander. So there will be plenty of evidence where you will be able to conclude that Novell acted recklessly, intentionally and maliciously.

But there is something more. All of this was timed to harm SCO to the max. Chris Stone, the man who stood up at the 2004 conference and said we still own UNIX, is also the Novell executive who talked to the press on May 28th, 2003, and said, here's the press release we're going ...

March 10, 2010, Jury Trial, Volume II

p. 275

... by this correspondence, SCO has been well aware that Novell continues to assert ownership of the UNIX copyrights.

Q. Mr. Thompson, are you aware of whether December 22nd, 2003 also was a date on which SCO was announcing its earnings, this time for the period ending in December?

A. I don't remember the exact date, but it was in or near this date.

Q. Are you aware of continued assertions of ownership to UNIX copyrights by Novell to this very day?

A. Yes.

Q. Now, were you the person in charge of the sale of UNIX to Santa Cruz?

A. Yes. I was given that charge by Bob Frankenberg.

Q. Based on your knowledge of that transaction, Mr. Thompson, was the statement by Novell in May of 2003 that they owned the UNIX copyright true or false?

A. It is false. It is not consistent with the transaction that we conducted.

Q. Based on your knowledge of that transaction, was the statement by Novell on December 22nd, 2003 continuing to assert ownership of the UNIX copyrights, was that true or false?

A. I believe it is false.

MR. SINGER: Thank you. That concludes my direct examination.