decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books

Gear

Groklaw Gear

Click here to send an email to the editor of this weblog.


You won't find me on Facebook


Donate

Donate Paypal


No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.


What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments


Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
Annotating SCO's Appellate Reply Brief
Monday, November 22 2010 @ 05:07 AM EST

We've been quietly working on a project to annotate SCO's Reply Brief [PDF] in its appeal, noting every statement that we think isn't accurate and providing whatever evidence we can find to support the annotation. Now that we've got the ball rolling, would you like to help us finish? If so, feel free to do so in your comments, which I can then add to the project. When we're all done, I'll leave an update saying so, and meanwhile this is a work in progress.

Here's SCO's appeal brief, its initial filing, and here's Novell's opposition brief, which you may wish to have handy too. I've put our annotations in blue and indented to make them easier to find.

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

No. 10-4122
IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

__________________________________

THE SCO GROUP, INC.,

Plaintiff-Appellant,

v.

NOVELL, INC.,

Defendant-Appellee.

________________________________

On Appeal from the United States District Court for the District of Utah
Hon. Ted Stewart, Presiding
No. 2:04-CV-00139-TS

____________________________________

REPLY BRIEF FOR APPELLANT, THE SCO GROUP, INC.

ORAL ARGUMENT REQUESTED

____________________________________

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
[address, phone, fax]

Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax]

Stuart Singer
BOIES, SCHILLER & FLEXNER LLP

TABLE OF CONTENTS

STATEMENT OF FACTS ........................................................................................1

ARGUMENT .............................................................................................................5

I. THE DISTRICT COURT ERRED IN DENYING SCO'S MOTION
FOR JUDGMENT UNDER RULE
50(b).......................................................5

A. The Amended APA Transferred Copyrights That SCO
"Required."............................................................................................5

B. The UNIX and UnixWare Copyrights Are "Required" by
SCO. ....................................................................................................13

1. The UNIX and UnixWare Copyrights Are Required for
SCO to Protect the Source Code Underlying Its
Business. ...................................................................................13

2. The Copyrights Are Required for SCO to Exercise
Source-Code Licensing Rights. ................................................16

3. The Copyrights Are Required for SCO to Pursue the
Legal Claims It Acquired Under the APA................................17

II. IN THE ALTERNATIVE, THE DISTRICT COURT ABUSED
ITS DISCRETION IN DENYING SCO'S MOTION FOR A
NEW TRIAL AND ITS ALTERNATIVE CLAIM FOR
SPECIFIC PERFORMANCE........................................................................18

III. THE DISTRICT COURT ERRED IN CONCLUDING THAT
NOVELL RETAINED BROAD WAIVER RIGHTS TO DIRECT
SCO TO ABANDON LEGAL CLAIMS AGAINST IBM...........................21

A. Novell's Waiver Rights Did Not Extend to the IBM Software
Development Agreement.....................................................................21

i

B. Novell's Interpretation Must Be Rejected Because It Would
Give Novell the Ability to Destroy SCO's Benefits Under the
APA. ....................................................................................................22

C. Novell Breached the Covenant of Good Faith and Fair Dealing
in the Amended APA. .........................................................................24

IV. THE DISTRICT COURT ABUSED ITS DISCRETION IN
MAKING CRITICAL EVIDENTIARY RULINGS THAT
PREJUDICED SCO.......................................................................................25
A. The District Court Wrongly Informed the Jury of Prior
Judicial Decisions Rendered Against SCO. ........................................25

B. The District Court Improperly Permitted Novell to Rely on
Language in the APA That Was Replaced..........................................28

C. The District Court Erred By Admitting Hearsay That SCO
Was "The Most Hated Company in Tech." ........................................30

CONCLUSION........................................................................................................31

ii

TABLE OF AUTHORITIES

Cases

Bateman v. United Parcel Service, Inc.,
31 Fed. Appx. 593 (10th Cir. 2002) ..............................................................30

Rohrbaugh v. Celotex Corp.,
53 F.3d 1181 (10th Cir. 1995) .......................................................................10

SCO Group, Inc. v. Novell, Inc.,
578 F.3d 1201 (10th Cir. 2009) ............................................................. passim

SCO Group, Inc. v. Novell, Inc.,
No. 2:04CV139DAK, 2008 WL 2783523 (D. Utah July 16, 2008) .............17

Sparks v. Rittenhouse,
314 Fed. Appx. 104 (10th Cir. 2008) ............................................................10

iii

STATEMENT OF FACTS

SCO paid approximately $50 million in stock (A2187:106-07; A2206:183-
[PJ: When Novell bought USL and UNIX lock, stock and barrel, it paid "in excess of $300 million" -- cash, not stock -- according to Jim Tolonen's testimony at trial:
Q Now when Novell acquired UNIX System Laboratories, did it acquire all of the company's assets or only a subset?

A It acquired the entire business.

Q How much did Novell pay to acquire all of the UNIX System Laboratories business?

A I believe it was something in excess of $300 million.

You'll find that on page 2011 of the transcript or page 21 of the PDF. When Michael DeFazio's testimony was played from his deposition at the trial, he said Novell valued the UNIX and UnixWare businesses at the time of the APA at $800 million, most of it attributable to UNIX, not UnixWare. SCO didn't have that much, and so they bought only the UnixWare business, and they didn't pay cash:
A....And it was very clear to me very quickly that since most of the financial value we placed on the combination of those two businesses was attributable to the UNIX source licensing royalty stream that in fact that idea by Doug Michaels was very good, and although we had to rework some of the financials that that idea would allow us to get to an agreement, whereby we could provide the UnixWare business to SCO at a price much closer to what they could afford.

Q. Do you recall, Mr. DeFazio, what value you attributed to both of the businesses combined?

A. I believe that our initial proposal going into that meeting was for a composite value of about $800 million. That's my recollection.

Q. Do you have a recollection of what portion of the $800 million you attributed to the source code portion of the business?

A. Certainly the majority of that 800 million would be attributed to the source code business, but I don't recall 8 the specific fraction.

$50 million wasn't enough to pay for both. And you can see why Novell would have been so very deeply concerned about making the deal bulletproof so as to protect that huge revenue stream. So if SCO wishes to say it was able to buy something valued at $800 million -- or even using the $300 million figure -- for only $50 million in stock, not even cash, how does it explain the copyrights suddenly being devalued so radically in such a short time period?

Also, I can't resist pointing out that in SCO's first appeal brief, this is what it told them it paid:

In 1993, Novell purchased the UNIX business from AT&T for $300 million. (06100.) In 1995, Santa Cruz purchased the UNIX business from Novell under the APA, for consideration to date of approximately $250 million. (00265;06101; 04637.)
Go figure. Here's SCO's explanation back then:
Novell sought to sell everything it owned related to UNIX, but after initial negotiations, the parties realized that Santa Cruz could not afford to pay the full price in cash or stock. (08611-12¶¶6-7.) Accordingly, as a financing device, the parties agreed that Novell would retain an interest in 95% of "SVRX Royalties," defined as the per-copy fees that existing licensees paid to Novell for distributions of certain pre-UnixWare versions of UNIX System V designated in the APA as "SVRX" for "System V Release __." (00265-66;00287;00315-16;00360-63.) In addition, Novell received a conditional interest of up to $84 million in UnixWare sales through 2002 (00265-66;00321¶c) — an interest that expired without ever vesting (04638¶15).
That of course is hilariously wrong. Novell retained 100%, but paid SCO 5% for doing the collection. Read the APA for yourself:
(b) Royalties. Buyer agrees to collect and pass through to Seller one hundred percent (100%) of the SVRX Royalties as defined and described in Section 4.16 hereof. Seller agrees to pay Buyer an administrative fee of five percent (5%) of the SVRX Royalties. Seller and Buyer further acknowledge and agree that Seller is retaining all rights to the SVRX Royalties notwithstanding the transfer of the SVRX Licenses to Buyer pursuant hereto, and that Buyer only has legal title and not an equitable interest in such royalties within the meaning of Section 541(d) of the Bankruptcy Code.
SCO seems to think no one can read, or at least not with comprehension, or that the court won't bother.]
84; A2351:735-36), plus additional revenue streams one of which was estimated at $50 million for the year 1995 alone (A2224:248; A2235:292; A2350:730-32), for
[No. Because the APA was not signed until September 19, 1995, the annualized portion of the SRVX Unix License Fees (collectible by Santa Cruz as agent for Novell) cannot amount to more than 72/360 days or approximately $10 million. In any case, SCO paid nothing out of its own pocket. It gave over stock valued, they said, at $50 million; the rest, whether 10 or 50 million came from other companies as royalties that Novell was getting prior to the APA and which it continued to get afterward too, the only difference being that SCO collected it for Novell and handed it over. That's not "paying" $100 million, and it's a distortion of what actually happened to put it that way.]
"all of Seller's right, title and interest" in "all rights and ownership of UNIX, UnixWare and Auxiliary Products" (A3160), subject only to certain exclusions.
[PJ: This is in reference to the SVRX licence revenue stream, meaning the UNIX business that SCO did not buy, so this isn't payment for the UnixWare business that SCO did buy. It was the business that Novell retained and hired SCO to collect for it, with SCO getting a 5% fee. So this is really disingenuous on SCO's part to pretend it was payment for what SCO bought. For example, the $50 million figure is mentioned in the testimony of SCO witness Duff Thompson on Day 3 of the trial:
A. Well, it is pretty clear. Novell was interested in making sure that it got those royalties. It did not want SCO to go out and do anything to disrupt that royalty stream. I don't have the exact numbers in my mind, but my recollection is it was something like $50 million a year in royalties. It wasn't just, you know, a couple hundred thousand dollars. It was $50 million a year of royalties. Novell did not want them disrupting any of this royalty income.
So this is SCO in the section supposedly about facts, established facts, in essence re-arguing something that failed to convince the jury.]
The exclusion of all copyrights was subsequently amended in Amendment No. 2 so that copyrights "required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies" were not excluded from the sale, and thus remained within the encompassing reach of all "right, title and interest," including all "ownership" rights in UNIX and UnixWare that was sold to SCO.
[Note that this contradicts what the Court of Appeals wrote it understood SCO's position to be, in this footnote in the court's ruling:
2 We think the parties' dispute over whether Amendment No. 2 retroactively changed the APA or affected a clarification as of October 16, 1996 is ultimately much ado about nothing. None of the claims in this litigation depend on the meaning of the APA during the time period prior to Amendment No. 2. Moreover, while both parties attribute different meanings to the APA and Amendment No. 2, neither party argues that Amendment No. 2 was meant to substantively change the intent of the APA; both SCO and Novell agree that it merely clarified or affirmed the original intent of the transaction. Compare Aplt. R. Br. 10 ("Amendment No. 2 clarified the APA to confirm that the copyrights had been transferred thereunder.") with Aple. Br. 40 (Amendment No. 2 merely "affirm[ed] that Santa Cruz had a license under the original APA to use Novell's UNIX and UnixWare copyrighted works in its business") (emphasis added).
It also contradicts this November 1996 Novell press release, released after Amendment 2 was signed, that says Novell sold its UnixWare products. This 1995 joint Santa Cruz-Novell press release signed one day after the APA was signed by both, which says Novell sold its UnixWare business.]
This appeal focuses on whether these contractual agreements, and the evidence surrounding them, properly allow a finding that none of the UNIX and UnixWare copyrights were required by SCO to exercise its rights in the UNIX and UnixWare technologies it acquired.
[PJ: SCO here subtly turns the language around just enough to make if more favorable to its interests. What Amendment 2 says is it would get copyrights required to exercise its rights with respect to the *acquisition" of the technologies. It doesn't say, as SCO morphs it, that the question here is whether none of the copyrights were required to exercise "its rights" in the technology "it acquired". That's not at all the same thing.

Incidentally, this Novell press release from November 26, 1996, meaning after Amendment 2, which was signed on October 16, 1996, says Novell sold off the following: "The first comparable period following Novell's divestiture of its personal productivity applications and UnixWare product lines and the company's reduction of channel inventory was the third fiscal quarter of 1996." As you can see it doesn't say Unix and it only says "UnixWare product lines". That's it. ]

The proposition that the district court's denial of SCO's Rule 50(b) motion rests upon and the lynchpin of Novell's case is that SCO acquired the assets, including the UNIX and UnixWare source code, except for the UNIX and UnixWare copyrights, to which SCO received only a license to use the UNIX and

UnixWare copyrights. Even viewed through the prism of drawing inferences in Novell's favor, the salient facts cannot support that proposition.

The APA does not contain an express license to SCO to use the UNIX and UnixWare source code and technologies. In addition, the record contains no testimony from the numerous witnesses on both sides of the transaction about the negotiation of any license to SCO.

[Actually Allison Amadia repeatedly testified that she believed the APA granted explicit licenses to do all the things that SCO can do under the agreement:
Q. The asset purchase agreement does not use the word "license" in describing Santa Cruz' rights; correct?

A. Well, that goes to the fundamental question of what is a license. When you grant someone the right to do something with technology that you own, that's a license. It doesn't have to use the word "license" for it to be a license.

Q. So your view is the asset purchase agreement sets out an implied license; is that right?

A. No. It sets out a license. It just didn't use the word "license," which isn't required for it to be a license.

Q. So other than by implication, how would you know when you read the APA that there is a license if it doesn't use the word "license"?

A. Because you specifically read the provisions that show you what you're allowed to do. So it says, you have a right to take this code. You have a right to develop derivative works to this code. You have a right to market it. You have a right to distribute it, et cetera. ...

I'm saying that the APA explicitly said that Santa Cruz could do certain things, and that was an explicit license agreement, even though it didn't use the word "license."...

Q. So your testimony that Paragraph A of Amendment 2 which does not use the word "license" affirms that Santa Cruz had a license under the asset purchase agreement, which also does not use the word "license"; is that right?

A. Several licenses under the APA, yeah....

Q. So your testimony is that Santa Cruz agreed to give Novell over $100 million in payments for an unwritten and implied license to use the copyrights; is that right?

A. No, that's not right.

Q. Your testimony is that they paid over $100 million in payments, and part of the rights that they received was an implied, unwritten license to use the copyrights; correct? A. No.

Q. What's incorrect?

A. It's not an implied license. It was expressed. It was very clear what they were getting the rights to do in my mind.

Not that SCO paid $100 million.]
The testimony of Novell's lawyer, Tor Braham, concerning the original exclusion of copyrights does not show that any such license was negotiated, even though, by Novell's lights, the license would have been essential to the transaction if the copyrights were being withheld. Amendment No. 2 does not speak of confirming an "implied license" or creating an "express license."
[ Actually, Braham did talk about a license, which he brought up when asked by Novell attorney Michael Jacobs how Santa Cruz could run its UnixWare business without owning the copyrights:
Q. And did you have an understanding of how the structure of the Asset Purchase Agreement would work if copyrights were excluded, ownership of copyrights were excluded as an asset being transferred to Santa Cruz? How would the deal work? How would -- for example, how did you understand Santa Cruz would go forth and prosper in the UnixWare business without copyrights?

A. It had access -- it had physical ownership, in terms of the actual physical embodiment, of the disketts, the manuals, the people who understood it, the computers that had the UnixWare business, the software on it. And, essentially, it had a license to use that to then build a new version of UnixWare, and it would own the copyrights in what it built on top of the base UNIX and UnixWare software that it had a copy of. And it would go forth and license that to third parties, sell it. And because its embodiment, its improvements on that were its copyrights, they had complete ability to exploit the business.

I emphasized the section for ease of reading it, and you can see that he did mention that Santa Cruz didn't need the copyrights, because they had a license.]
While it is true that the original APA had an exclusion of copyrights in the schedule of assets being transferred, that language was replaced by Amendment No. 2 a totally unnecessary move if only a license was being provided to SCO.
[Actually, Novell didn't think it was necessary. It was more a favor, because Santa Cruz wanted it. And Allison Amadia said that the meaning of the deal did not alter at all, so what difference would it make in any case if the language changed as long as the meaning was the same?]

The extrinsic evidence on the intent of the transaction is mixed only on the Novell side of the transaction, not on the Santa Cruz side. The five Santa Cruz witnesses, all of whom have no affiliation with or interest in SCO, testified consistently that a transfer of copyrights was intended. (A2280(Mohan); A2287(Michels); A2290-91(Michels); A2275-76(Wilt); A2395-96(Sabbath); A2364- 65(Madsen).)

[But which of them were in any way involved in the legal drafting? Remember, the original plan was that Novell would sell everything. But then it turned out that Santa Cruz didn't have the money to pay for everything. So it is possible or at least conceivable that some of the witnesses are sincere and just never got the memo when plans changed. Or they didn't bother to read it. Doug Michels testified he, to this day, has never once even read the APA, let alone negotiate it. Kim Madsen, the paralegal, never heard anybody mention copyrights, if you recall, had only a "general memory" of Amendment 2, and her testimony was contradictory to her then-boss Steve Sabbath's, who actually contradicted himself, as well as being contradictory to the APA language. Jim Wilt also said he never heard anyone mention copyrights, and anyway he was more involved in the beginning than at the end, and Mohan said he wasn't involved in the negotiations at all, only at a high level. So these SCO witnesses were consistent in saying that they never discussed copyrights with anybody.]
What is extraordinary in this case is that SCO also presented

2

testimony from five Novell executives who agreed that transfer of the copyrights was intended. (A2183-84(Frankenberg); A2204(Frankenberg); A22192(Thompson); A2251(Chatlos); A2253(Chatlos); A2336(Mattingly).)

[Actually, when Robert Frankenberg was shown the APA, Novell's attorney asked him about the excluded assets list, and this is what he testified:
Q. The agreement also says that excluded are all copyrights, correct?

A. Correct.

That was his testimony. He went on to say that the APA and the board of directors' minutes were not consistent with what his intentions were, but he was asked if anything were to happen at a board meeting that wasn't right, he'd speak up, and he said he would, but he didn't do that in 1995. So it was lame testimony, because nothing he said matched what was in black and white. And if you recall, on cross, Novell's attorney brought out that when Frankenberg first met with the Novell team, he told them he did have a memory of the copyrights being excluded. Later, after Duff Thompson got him alone, he changed his story, and he revealed he knew that Thompson has a lot of SCO shares. Ed Chatlos' wife works for SCO, and she has shares too, plus he wasn't there for Amendment 2. As for Ty Mattingly, he showed up with documents from his garage that he'd told SCO about in 2009 but no one told Novell until he took the stand. Blech. Why? Because, he said, he thought Novell was wrong. And he had been told what a previous witness had said, he revealed, which is a no no. So the judge and jury had multiple reasons to discount his testimony, I would think. He came across as a pal of SCO general counsel Ryan Tibbitts, which he is, showing up to help a friend by saying that a term sheet was more accurate and believable than the later board of directors' minutes. And he is another one of SCO's witnesses with a pile of SCO shares.]
While Novell notes that certain of these witnesses had a financial interest in SCO, their testimony was consistent with the testimony of Novell's CEO and in-house attorney who had no such financial interest, and with all of the Santa Cruz witnesses. Novell's CEO at the time, Robert Frankenberg, stated that it was his intent at "the beginning of the transaction," "throughout the transaction," and "when the transaction closed" to "sell the copyrights in UNIX and UnixWare" to SCO. (A2204;A2828.) Novell's former in-house counsel working on the transaction, Burton Levine, went so far as to suggest that it would have been unethical and counter to the intent of the deal to withhold the copyrights. (A2295.)
[I'm not sure I'd refer to Burt Levine's taped deposition testimony on this point, or any other, if I were SCO, which happily I'm not. Perhaps SCO forgot, as Levine did as well at least until reminded of it in cross examination in his deposition, that Mr. Levine, right after the APA was signed, had an opportunity to rework Schedule 1.1(b) of the excluded assets and he did not remove copyrights from the list.

Levine is also the guy who at the beginning of the cross exammination is asked if he recalls if the APA had anything in it about intellectual property and he says he can't recall, nor does he recall if he worked on the APA or on a later Amendment:

Q. And as you sit here today are you sure that any drafting that you did relating to the Novell-Santa Cruz deal was in connection with this particular September 19th, 1995 contract as opposed to an amendment to this contract?

A. No, I can't recall specifically, you know, what work I did on one versus the other.

Q. Do you remember any particular provisions in this contract as you sit here today?

A. No.

Q. Memories can fade over time?

A. Yes.

Q. You would agree with me that a contract is written to govern the rights and obligations of the party; isn't that right?

A. I believe that's usually the purpose of it.

Q. Do you recall as you sit here today that there were any provisions in this September 19, 1995 contract relating to intellectual property as assets?

A. No, I don't recall.

Do you find that convincing as to his abilities to recall important matters? Here's part of Burt Levine's 2007 deposition [PDF] in SCO v. Novell, if you'd like to read it all. It's funny, in that his testimony after he's testified two different ways, is that Amendment 2 changed nothing. He also says he wasn't involved in Amendment 2 in any way. Here's another set of snips from his deposition [PDF], the part quoted above, if you would like to see all the times and events he can't recall. Also he wasn't Novell's in-house counsel in any exclusive sense. He testifies he was in New Jersey, and that there were other lawyers with Novell as employees in NJ and in Utah, and the head of Novell's legal department was David Bradford. Oh, and he says he never met Tor Braham, the guy who actually drafted the APA for Novell's side. And by February of 1996, Levine had gone to Santa Cruz as an employee.]

Novell relies heavily on the testimony of its in-house lawyer Alison Amadia, who drafted Amendment No. 2. Amadia admitted on cross-examination that if copyrights were required for SCO to exercise its rights with respect to its acquisition of UNIX and UnixWare, they were transferred through the Amended APA. (A2728-29:A2177-78.)

[That's the opposite of what she said, as I read her testimony. Ms. Amadia on direct testified that she was instructed by Novell when working on Amendment 2 not to allow copyrights to transfer:
A. Well, after my communication with Tor Braham and my review, I basically was directed by Novell legal and business not to alter the original A.P.A. with respect to copyright ownership. So I received a draft from Mr. Sabbath, and I reviewed it and modified it in a way that I intended that it not effect the original copyright exclusion in the A.P.A....

Q. After you received this proposed draft by Mr. Sabbath, what did you do next?

A. We had conversations about this language, Steve and I, and I basically told him that we were not going to alter the original A.P.A. in terms of the transfer of copyrights. He indicated that, you know, he felt that Santa Cruz's business was going to be hampered if they didn't have certain rights to that which they had acquired.

That is when I said, well, we can modify this language to affirm the rights that you have acquired in terms of license grants and rights to use the technology. Then I would mark up the paragraph and send him my proposed language to that effect.

She went on to say that it was not her intent with Amendment 2 to transfer the copyrights and in fact she would have had to get approval from above to do so. She also is shown the language that Steve Sabbath had sent over, his first draft, in which it read that the copyrights had transferred, and she said the language was not acceptable to Novell. So it was altered, and then, after apparently some screaming, Sabbath signed it. Significantly she mentions the license grants that the APA gave Santa Cruz, how they were sufficient to protect and enable their business:
A. When I explained to him that, you know, if your concern is that you can't move forward in your business and develop this technology and exploit it then, you know, the license grants that are in the underlying asset purchase agreement really should meet that concern.

What we are willing to do in amendment number two is affirm those license grants and make it clear that Novell is not going to come back later and sue you for copyright infringement for the assets and for your continued development of the assets.

I don't recall if he continued to scream or if he accepted it at first explanation, but he did sign it, so I did know or feel that at the end of the transaction he had accepted the language.

Q. During the discussions that culminated in Mr. Sabbath cosigning on amendment number two, did you express to him Novell's position that it was not transferring ownership of the copyrights to Santa Cruz Operation under amendment number two?

A. Yes.

Now, under a rather badgering cross examination, she says some things that are very interesting. She does not agree with SCO's lawyer Ted Normand that what Novell gave Santa Cruz was an implied license. In fact, she says it was quite explicit, that if you tell someone they can do X, Y and Z, then you are licensing them to do X, Y and Z. Once again:
Q. The asset purchase agreement does not use the word "license" in describing Santa Cruz' rights; correct?

A. Well, that goes to the fundamental question of what is a license. When you grant someone the right to do something with technology that you own, that's a license. It doesn't have to use the word "license" for it to be a license.

Q. So your view is the asset purchase agreement sets out an implied license; is that right?

A. No. It sets out a license. It just didn't use the word "license," which isn't required for it to be a license.

Q. So other than by implication, how would you know when you read the APA that there is a license if it doesn't use the word "license"?

A. Because you specifically read the provisions that show you what you're allowed to do. So it says, you have a right to take this code. You have a right to develop derivative works to this code. You have a right to market it. You have a right to distribute it, et cetera.

...

I'm saying that the APA explicitly said that Santa Cruz could do certain things, and that was an explicit license agreement, even though it didn't use the word "license."

...

Q. So your testimony that Paragraph A of Amendment 2 which does not use the word "license" affirms that Santa Cruz had a license under the asset purchase agreement, which also does not use the word "license"; is that right?

A. Several licenses under the APA, yeah.

...

Q. So your testimony is that Santa Cruz agreed to give Novell over $100 million in payments for an unwritten and implied license to use the copyrights; is that right?

A. No, that's not right.

Q. Your testimony is that they paid over $100 million in payments, and part of the rights that they received was an implied, unwritten license to use the copyrights; correct?

A. No.

Q. What's incorrect?

A. It's not an implied license. It was expressed. It was very clear what they were getting the rights to do in my mind.

That is how she viewed the APA, that Novell as owner of the copyrights could license certain copyright rights:
Q. Now, you agree that under the plain language of Amendment Number 2 Novell has included in the transfer of assets the copyrights required for SCO to exercise its rights in UNIX and UnixWare; correct?

A. Well, the way that I wrote and intended Amendment Number 2 to be read is that this language was saying that whatever copyright rights Santa Cruz needed in order to exercise the rights it was given under the asset purchase agreement, then that would be -- they would have those rights.

Isn't that quite different from SCO's current characterization? She isn't saying SCO got the copyrights. She is saying they got a license to certain copyright rights. Normand then asks if the language couldn't be interpreted to mean the copyrights transferred, and she says she supposes so, but that isn't what she meant to do or did do, that the ambiguity if it exists to an outsider lies in the reality that she was working from Sabbath the screamer's draft, but once again notice carefully that she still doesn't say that what they got were the copyrights, but she uses the word rights, meaning licensed copyright rights, in the context of her overall testimony:
Q. Would you agree with me that it's a fair interpretation of this language that Novell has included in the transferred assets the copyrights required for SCO to exercise its rights in UNIX and UnixWare? Correct?

A. Well, so that -- yeah. I suppose it's a reasonable interpretation to say that if they required those rights under the original APA that they were transferred in this revised schedule. But the original language of this Amendment Number 2 in this section was presented by Steve Sabbath. And what we were attempting to do is work with the language that he had proposed and modify it in a way that was acceptable to us. We weren't -- so had I started from whole cloth in drafting an amendment that was affirming SCO's license rights, I wouldn't have necessarily modified Schedule 1.1(b). And if I was intending to modify them in order to transfer copyrights, I would have definitely amended Schedule 1.1(a), which listed the included assets, and we didn't do that....

Q. But in the terms of the question that I asked, would you agree with me that it's reasonable to interpret this language as saying that among the copyrights included in the transfer are those that SCO needs to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies? Correct?

A. Yes.

Did you see how she calls Amendment 2 as affirming SCO's "license rights", not their copyrights? SCO takes one little piece of what she said, as if she stopped there, but she did not. She utterly repudiated Normand's interpretation that SCO got the copyrights. Then she says in effect that if copyrights had transferred, this language would reasonably mean that they transferred, but they didn't. What transferred were license rights. I really despise how SCO twists things. If you read the whole transcript of the day, note the sidebars during her testimony before and after the break to see how Normand is caught in a misrepresentation, which he apologizes for and says he didn't mean to say. Anyway, to show you that my explanation of Amadia's testimony is accurate, notice that next Normand shows her the June 2003 press release by Novell:
Q. Let me highlight the language for you towards bottom of the first paragraph. And because you haven't seen this, let me read into the record a little bit of background. In a May 28th letter to SCO Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. And then at Number 2. 1995 SCO Novell asset purchase agreement 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 owners have certain copyrights for UNIX be transferred to SCO in 1996.

Do you see that language?

A. I do.

Q. Do you agree with that last sentence that I read into the record?

A. No, I don't. I don't agree with the last sentence.

Q. But you agree that that's a reasonable interpretation of the language that is actually used in Amendment 2; correct?

A. Without having the background knowledge of the intent of the draftsperson and the business people in that transaction, I suppose it is a reasonable interpretation. But I have that background knowledge, so for me it wouldn't be reasonable for me to interpret it that way.

See? When she agrees with him that it's reasonable to interpret the language that way, she means reasonable for an outsider, but it's not what the language means at all, just how it might look to someone who doesn't know the background and the intent of the drafter. She was the drafter however, and her testimony is consistent throughout that she didn't draft Amendment 2 to transfer the copyrights or to say that they had already transferred. To her, with her background and knowledge of the deal, it would be unreasonable, she says, to interpret the language the way Normand is trying to get her to agree is reasonable:
Q. And with respect to this language that we've been looking at, if Novell's general counsel approved the language of this press release you think his interpretation was unreasonable?

A. As I said, without having the background knowledge of the intent of the draftsperson in Amendment Number 2 and the business intent in drafting that Amendment Number 2, I don't think that would be unreasonable. But I have that knowledge, so to me it would be unreasonable.

Later, after she over and over says that the copyrights didn't transfer and would not be needed by SCO to run its business since it had licenses, Normand again asks his question:
Q. So if there are copyrights that are required for SCO to exercise its rights, like the UNIX and UnixWare trademarks, they were transferred; correct?

A. Yeah.

But she has just said that while the language says that, in fact SCO *didn't* need the copyrights. Hence they did not transfer. When she is asked if Amendment 2 sets out a process for Santa Cruz to get the copyrights, she says no, it was making it clear they didn't get them. To get them, they'd have to follow a process, all right, including an amendment about getting them, a bill of sale, meaning I presume a payment for them, etc. because nothing in Amendment 2 put any obligations on Novell to transfer anything ever. And when she is later asked by Novell's attorney Sterling Brennan about why there was no word license in the APA, she explains, after revealing that she's hungry and tired and having trouble remembering the question:
Q. I think we're near the break. I was hoping you could explain why the word "license" is not used in Amendment 2.

A. Oh, yes. So what Tor explained to me was that the original transaction was structured as an asset purchase agreement and that it morphed a little bit based upon the business dealings and consideration that basically what Santa Cruz could afford to pay. And so my understanding from that is that that to me as a licensing attorney gives me some reason to believe why there wasn't the word "license" and there wasn't, you know, provisions and titles related to licenses in the original asset purchase agreement because it was originally intended to be a full and complete asset purchase agreement including copyright transfer.

Q. And as it turned out, it was not a full asset transfer; correct?

A. No.

So that is the straw on which SCO has built its appeal.]
Consistent with this testimony, when the dispute first arose, Novell admitted to the world in a press release in 1996 that Amendment No. 2 confirmed a transfer of UNIX copyrights. (A3352; A2268:414-15(Messman); A2578:1607(Stone).) Novell CEO Jack Messman admitted at least
[I don't know if this is SCO making an error or trying to mislead. But if you read the Messman testimony, he was never asked about a 1996 press release that I can find. He was asked about a 2003 press release where at first Novell said, on seeing Amendment 2 for the first time and under pressure by SCO to say something by a deadline that day or else, that it seemed to confirm that in 1996 Amendment 2 transferred some copyrights. SCO has for years called that an admission, but really it was a place holder, saying they just got the document and at first reading it looked like it. But later Novell said it didn't, and Amadia explained that it might be reasonable for a new reader to interpret it that way, but she, having written it, knew that this was definitely not what Amendment 2 said or meant or intended.

Similarly with Chris Stone. He was not asked about a 1996 press release, only the one saying that on first reading in 2003, it seemed to support SCO's claim. Messman explained:

Q Now the statement that Novell says the amendment appears to support SCO's claims that ownership of certain copyrights to UNIX did transfer to SCO in 1996, you approved that at the time this was issued, correct?

A Yes.

Q And would you agree that after June 6th Novell engaged in the process of trying to back away from that statement?

A I don't think we were trying to back away from it. We were clarifying what appears in it.

Q Well, are you aware that on August 4th, 2003 there was a letter from Mr. LaSala to SCO that was different than what this said?

A I recall that there was a letter that said that we had done our investigation work and we now believe there is no merit to your claims that the copyrights and the patents transferred.

]

3

twice under oath that this press release was accurate and that Amendment No. 2 changed which assets Novell retained under the APA. (A2268:414-15; A2265:404.)

[Again, this is SCO characterizing that 2003 press release, later repudiated by Novell, and claiming that Messman said it was accurate and that Amendment 2 changed things. I have just reread his testimony, and I can't find him ever saying that at all.]
Novell General Counsel Joseph LaSala also admitted that as part of the transaction, SCO obtained the right to assert claims to protect its business (which for a software, including source code, business, requires the copyrights, as this Court pointed out in its prior decision). (A2675:1976-77.)
[Huh? What the Court of Appeals said was this: “We take no position on which party ultimately owns the Unix copyrights or which copyrights were required for Santa Cruz to exercise its rights under the agreement. Such matters are for the finder of fact on remand.” It also wrote: "We think SCO has presented sufficient evidence to create a triable fact as to whether at least some UNIX copyrights were required for it to exercise its rights under the agreement." And the jury, as trier of fact, decided the answer is none were required and none went from Novell to SCO.]

Further, the APA provided for a license-back to Novell to use the technology being sold which made no sense if Novell retained the copyrights to that technology. The TLA license was "a license back" to Novell, granting it "the rights to internal use of UNIX and UnixWare, even though the products were part of the assets sold." (A:2701:2068(Tolonen); A2677:1984(LaSala); A2672:1964- 65(LaSala).)

[Actually, what LaSala testified to was that it was to get a copy back of the source code, which would now be in SCO's possession, as well as license to the new product developed by SCO going forward, and "assets that had been transferred that did not include the copyrights" That last is Novell lawyer Eric Acker asking if that last is how LaSala understood it in August of 2003, and he says that's correct.

Tor Braham mentioned something else:

So, the licenses to UNIX with these other big companies, it wasn't as simple as we're granting you technology and you can put it with your computers and ship it. Within each of those relationships, there was source code, which enabled those companies to go off and develop their own flavors of UNIX and to use in their own computer systems. And, in this case, HP, there was one coming up with HP, where they were going to develop a flavor for the 64 bit microprocessor, and we wanted the flexibility -- insisted upon, and I don't even think it was controversial -- the flexibility to grant those rights to HP to allow them to do that for the benefit, ultimately, of UNIX in the marketplace.
]
Novell says that the license-back was for future derivative products, but the license-back included not only derivatives created by SCO after the sale but also the technology SCO was acquiring from Novell at the time of the sale, including the source code to all the existing versions of UNIX.1(A3114§1.6; A3160; A3381§II.A.(1).)
[SCO here misrepresents what Novell's position is. So why not read it for yourself, from Novell's brief in opposition to SCO's appeal?
SCO's reference to the Technology License Agreement ("TLA") is of no moment. (SCO Br. 6, 29-30.) The TLA merely confirms that Novell has the right to license back rights conveyed to or developed by SCO under the APA; it does not affirmatively expand the rights transferred under the APA.

SCO's Sabbath testified that the TLA would grant Novell the right to license post-APA SCO-developed code in which SCO owned copyrights. (A2403:933.) Joe LaSala, Novell's General Counsel from 2001 to 2008, similarly testified that the TLA gave Novell a license-back to all assets conveyed to SCO, as well as additional code to be developed by SCO. (A2672:1964;A2677:1984-85.) In short, all that was licensed back to Novell under the TLA were the assets transferred under the APA.

As you can see, Novell's position is exactly what SCO says it should be.]

4

The undisputed evidence of the parties' actions after the sale also reflects an understanding as to who owned the copyrights. After the sale, Novell left its UNIX copyright registrations with SCO (A2319); and Novell remarked the source code and packaging of the UNIX product being shipped at that time (i.e., containing no Santa Cruz improvements) with the Santa Cruz copyright notice. (A2609:1725-28;A2608:1723-36;A3281-88.) A few months later, when Novell tried to modify IBM's UNIX license to grant IBM expanded rights, Novell never suggested that it owned the copyrights or could do what it wanted with the license by exercising "waiver" rights under the APA to direct SCO's actions. (See, e.g., A2369:801-02.)

ARGUMENT

I. THE DISTRICT COURT ERRED IN DENYING SCO'S MOTION
FOR JUDGMENT UNDER RULE 50(B).

A. The Amended APA Transferred Copyrights That SCO "Required."

SCO's 50(b) argument is straightforward: At a minimum, the APA, after Amendment No. 2, transferred those copyrights that were "required" for SCO to exercise its rights in the UNIX and UnixWare technologies it acquired. This follows from the plain language of the APA, as amended, from the reasoning of this Court's prior decision, and from the testimony of the witnesses who were personally involved in Amendment No. 2. Novell's response does not undermine any of these three pillars of SCO's argument.

5

1. The Language of the APA, as Amended, Provided for Transfer of "Required" Copyrights. The asset transfer provisions of the APA require looking at both the schedule of assets to be sold, and the schedule of those excluded from the sale. The language transferring "all rights and ownership of UNIX and UnixWare" in the Assets Schedule transferred "a broad set of assets limited only by Schedule 1.1(b)." SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1212-13 (10th Cir. 2009). Novell suggests that because certain trademarks were specifically identified in one place in the Asset Schedule, copyrights must not have been included since they were not also specified. This suggestion ignores that the broad language of "all rights and ownership" (which clearly covers copyrights when referring to computer code), and the case law SCO cited and this Court recognized, id. at 1212-13, for this proposition is neither refuted nor distinguished. If there had been no schedule of excluded assets, it would be inconceivable that "all rights and ownership" of all UNIX and UnixWare source code did not include copyrights.

Novell's position that the copyrights were excluded must therefore rest on the language in the schedule of excluded assets. Originally there was an exclusion of "all copyrights," but this exclusion was undeniably replaced by Amendment No. 2 with the following key language: "All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [APA] required

6

for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." (A3219§A.) Thus, if the copyrights are "required," the exclusionary language does not apply and they remain within the broad category of "all rights and ownership of UNIX and UnixWare" that was transferred to SCO.

In short, Novell offers no plain language interpretation that would give any meaning to Amendment No. 2 if copyrights that were "required" by SCO were not transferred. Instead, Novell insists that the critical change made to the language of the assets schedule sought only to confirm the existence of an implied license so that SCO could make use of, but not own, the copyrighted technology. Of course, Amendment No. 2 and the APA as a whole never makes reference to such a license, and the Amendment revises schedules of assets being transferred, not assets being licensed.

2. Novell's "Implied License" Interpretation is Precluded by this Court's Prior Opinion. Novell argues (at 30) that this Court did not hold "that Amendment No. 2 referred only to ownership, not usage rights." In fact this Court stated: "[A]ny change to the set of Excluded Assets in Schedule 1.1(b) necessarily implicated those copyrights actually transferred under Schedule 1.1(a)," and that "[w]hatever the Amendment means, it refers to the ownership of copyrights, not to licenses." SCO, 578 F.3d at 1213-16 (emphasis added).

7

When Novell suggests (at 25) "that Amendment No. 2 was never intended to transfer ownership of the UNIX copyrights," it addresses a straw-man: Neither SCO nor this Court stated that Amendment No. 2 alone transferred any copyrights. It is the interaction between the broad schedule of included assets and the revised schedule of excluded assets that makes inescapable the conclusion that "required" copyrights were being transferred. That is the nature of an amendment.

Novell also insists (at 30-31) that "it was entirely consistent with this Court's mandate for the jury and district court to conclude that Amendment No. 2 did something other than transfer the UNIX and UnixWare copyrights." But here Novell confuses the question of whether the UNIX and UnixWare copyrights were in fact "required," with the question of whether those copyrights that were "required" did transfer. This Court's prior opinion explained that the amended APA sufficed as a transfer instrument because it made "clear that the parties contemplated that copyrights transfer," despite "the linguistic ambiguity concerning which particular copyrights were transferred." Id. at 1213 (emphasis added). The Court thus expressly distinguished between the two questions whether the amended APA transferred the "required copyrights," where the contract was "clear," and whether the specific copyrights at issue were "required," where the contract had "ambiguity."

8

In explaining the operation of the asset schedules, moreover, the Court explained that the language transferring "all rights and ownership of UNIX and UnixWare" in the Assets Schedule transferred "a broad set of assets limited only by Schedule 1.1(b)." Id. at 1212-13 (emphasis in original). Precisely because the original Excluded Assets had excluded "all copyrights," the Court noted that "any change to the set of Excluded Assets in Schedule 1.1(b) necessarily implicated those copyrights actually transferred under Schedule 1.1(a)." Id. at 1213 (emphasis added). With respect to the change made by Amendment No. 2 exempting the "required" copyrights from the exclusion, the Court concluded that the Amendment "excised certain copyrights from the exclusion." Id. at 1214, 1216. The Court thus specifically held that the Assets Schedule, combined with the "required" language of Amendment No. 2, transferred the "required" copyrights. Id. at 1213-16.

The Court's remand highlights the distinction between the issue the Court resolved and the question it left for trial: "We need not determine at the summary judgment stage which copyrights were 'required.'" Id. at 1218 (emphasis added). The Court explained that SCO had "presented sufficient evidence to create a triable issue as to whether at least some UNIX copyrights were required for it to exercise its rights under the agreement." Id. The question to be resolved at trial, therefore,

9

was not whether the amended APA transferred the "required" copyrights, but rather whether the copyrights at issue were or were not "required."

Finally, Novell argues (at 34-35) that SCO's position "is contrary to this Court's mandate in SCO's first appeal, and directly contradicts arguments that SCO advanced (and this Court accepted) in that appeal." On the contrary, SCO previously argued that the plain language of the APA could not support a summary judgment for Novell predicated on the notion that Amendment No. 2 simply confirmed some form of implied license. Now SCO argues that, for the same reason, the denial of SCO's Rule 50(b) motion is error. Thus, not only is that entirely consistent with SCO's prior position, but this Court's acceptance of that proposition was essential to its prior ruling and therefore should be accorded the weight of law of the case. See Sparks v. Rittenhouse, 314 Fed. Appx. 104, 108 (10th Cir. 2008) (law of the case doctrine applies "to all issues previously decided, whether explicitly or by implication," when their "resolution was a necessary step in resolving the previous appeal"); Rohrbaugh v. Celotex Corp., 53 F.3d 1181, 1184 (10th Cir. 1995) (law of the case doctrine applies to "holdings essential to the determination of the first appeal").

3. Extrinsic evidence cannot salvage Novell's position. Because Novell's position cannot be squared with either the plain language of the APA as amended, or with this Court's prior reading of the agreement, it cannot be rescued on this

10

point by extrinsic evidence. Even if Amendment No. 2's drafter, Alison Amadia, had consistently and emphatically insisted that Amendment No. 2 only served to confirm an implied license, that is simply an unsustainable position.

[This is SCO being cute again. She very clearly, as I already showed you, said the license was explicit, not implied.]
However, as detailed in SCO's opening brief (at 14, 27-28), Amadia actually conceded the correctness of SCO's position and finally admitted on cross-examination that "if there are copyrights that are required for SCO to exercise its rights, like the UNIX and UnixWare trademarks, they were transferred." (A2729:2178; A2721:2148; A2724:2160.)
[She did not. I showed you that in context, and she didn't stop there, nor is the context here provided. She clearly stated from beginning to end that the copyrights were not needed and that they most emphatically did not transfer under the APA or Amendment 2.]

Novell argues (at 28) that "even if portions of Amadia's testimony were construed to support SCO's claims that copyright ownership transferred, the fact-finders were free to rely on and credit her ample testimony that supported Novell's position." However, Amadia's testimony that Amendment No. 2 merely affirmed an implied license cannot be squared with the amended APA and this Court's prior order.

[Once again, she did not testify that Amendment 2 merely affirmed an *implied* license. It was, she testified, clearly stated what Santa Cruz could do.]
Even if the jury and judge chose to credit this incongruous testimony, while discrediting her clear, logical admissions, this testimony cannot support the verdict. At bottom, Amadia's candid admissions on cross-examination give voice to the only reasonable interpretation of Amendment No. 2.

Given the above admissions, the plain language of the provision, and this Court's prior ruling, Amadia's testimony concerning her negotiations with Steve Sabbath, SCO's general counsel, is hardly (as Novell says at 26) "sufficient for a

11

reasonable jury to find for Novell." Her testimony first confirms that Sabbath believed the original exclusion of copyrights was erroneous a clerical error and was looking for it to be fixed. (A2730:2184-85.) If Sabbath acquiesced to Amadia's language, it was because he believed that it would suffice to cure the problem, as Sabbath himself testified. (A2397:910-11(Sabbath); see also A2726-29:2169-79 (Amadia).) He may have accepted the higher test of copyrights being "required" as opposed to those "which pertain" to the UNIX business (which he had proposed in his draft), but there is no competent testimony that Sabbath believed the APA post-Amendment No. 2 did not serve to transfer copyrights.

[This is spinach, and I think SCO has to know it. Amadia testified that she told Sabbath plainly that there was no transfer of the copyrights and no error and not typo and that Novell had no intention of transferring them then or by means of Amendment 2, and that further his language was not acceptable:
Q. After you received this proposed draft by Mr. Sabbath, what did you do next?

A. We had conversations about this language, Steve and I, and I basically told him that we were not going to alter the original A.P.A. in terms of the transfer of copyrights. He indicated that, you know, he felt that Santa Cruz's business was going to be hampered if they didn't have certain rights to that which they had acquired.

That is when I said, well, we can modify this language to affirm the rights that you have acquired in terms of license grants and rights to use the technology. Then I would mark up the paragraph and send him my proposed language to that effect.

Q. Did you, in fact, prepare such a revision?

A. I did.

What rational basis would there be for him to think that it happened, that copyrights transferred after all that?]
Sabbath's assistant, Kim Madsen, testified similarly. (A2369-70:802-03.)2

Novell asserts (at 22-23) that it retained the copyrights to protect the SVRX royalty stream. But the cited testimony merely speaks to the motivations (of some Novell employees) for seeking to retain the copyrights; it does not speak to the meaning of the language transferring the "required" copyrights. Even if this testimony were relevant to the interpretation, the testimony cannot be squared with the fact that the parties later amended the APA precisely as the Tenth Circuit found to affect the balance between transferred and excluded copyrights. The only reasonable reading of the transfer language thus establishes that the APA was

12

amended notwithstanding any motives to protect the royalty stream, which was independently protected by other provisions in the APA (A3111§1.2(b)).

In sum, evidence that the amended APA did not transfer ownership of "required" copyrights and instead merely affirmed an implied license cannot be reconciled with the only reasonable interpretation of the APA and this Court's prior opinion. While the Court left open the question of whether the UNIX and UnixWare copyrights were "required," the Court did not remand the case for a determination as to whether "required" copyrights were transferred. If copyrights were "required," SCO acquired them.

B. The UNIX and UnixWare Copyrights Are "Required" by SCO.

There is undisputed evidence that the UNIX and UnixWare copyrights were and are required for SCO to protect its intellectual property, engage in source code licensing, and litigate claims.3

1. The UNIX and UnixWare Copyrights Are Required for
SCO to Protect the Source Code Underlying Its Business.

Novell's former UnixWare development manager, Andrew Nagle, testified that older UNIX code is at the heart of UnixWare. (A2610; A2623-24; A363; A2766.) Novell argues (at 40, n.7) that this testimony is "a red herring"

13

because Nagle acknowledged that SCO may have contributed millions of lines of code to the UNIX code base it acquired under the APA. But that testimony does not remotely detract from his undisputed testimony that UnixWare was nearly identical to its predecessor SVRX releases and that UnixWare, in 1996 and today, could not even run without the code from pre-APA releases of UNIX. (A2610;A2623-24;A363.) That SCO has added millions of lines of code on top of the code it acquired from Novell does not reduce the critical value or importance of that intellectual property to UnixWare.

Novell awkwardly asserts (at 36) that SCO presented no testimony to support the interpretation that Amendment No. 2 was designed "to allow SCO to bring litigation." But Novell misses the point: SCO was not required to present testimony that that Amendment No. 2 was designed to facilitate litigation. All SCO needed to show was that without the copyrights, SCO could not protect against infringement of the underlying intellectual property on which UnixWare rests and could not protect that business going forward facts that were undisputed at trial. (A2333-34:666-68(Broderick); A2398:913-15(Sabbath); A2421:997(McBride); A2599:1686-87(Maciaszek); A2364:780(Madsen); A2369:802-03(Madsen); A2386:865-66(Madsen); A2388:875; A2390-91:884- 85(Madsen); A2825:2542(Frankenberg).)

14

Nor did Darl McBride or Ryan Tibbitts "admit" that SCO does not require the copyrights. As SCO explained in its opening brief (at 36-38), McBride and Tibbitts explained that a portion of SCO's business the business of selling binary products does not require ownership of the copyrights (A2479:1225-26), but the licensing side and pursuit of legal claims do require ownership of the copyrights (A2642:1850-51).

[PJ: The problem with this argument is that it ignores the fact that "business" is defined in the APA, like this, as read by Brent Hatch while questioning Jim Tolonen at trial:
Q. It says seller is engaged in the business of developing a line of software products currently known as UNIX and UnixWare, and the sale of binary source code licenses to various versions of UNIX and UnixWare, the support of such products, and the sale of other products which are directly related to UNIX and UnixWare. Collectively, the business.
And the APA Recitals are specific:
A. Seller is engaged in the business of developing a line of software products currently known as Unix and UnixWare, the sale of binary and source code licenses to various versions of Unix and UnixWare, the support of such products and the sale of other products which are directly related to Unix and UnixWare (collectively, the "Business").

B. The Boards of Directors of each of Seller and Buyer believe it is in the best interests of each company and their respective stockholders that Buyer acquire certain of the assets of, and assume certain of the liabilities of Seller comprising the Business (the "Acquisition").

C. In connection with the Acquisition Buyer will issue to Seller 6,127,500 shares of Common Stock of Buyer (the "Shares").

D. In connection with the acquisition by Seller of the Shares, Buyer and Seller desire to set forth certain agreements with respect to the governance of Buyer following the closing of the Acquisition.

So that is describing Novell's business, developing and supporting software. But it explicitly says that it is not selling the entire business to SCO, just parts of it. So SCO's "business" is less than this definition, surely not expanded beyond it. And that is what Amendment 2 is referencing, SCO's narrowly defined business of developing and supporting software, not suing people. And in fact the APA continues:
1.1 Purchase of Assets

(a) Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, Seller will sell, convey, transfer, assign and deliver to Buyer and Buyer will purchase and acquire from Seller on the Closing Date (as defined in Section 1.7), all of Seller's right, title and interest in and to the assets and properties of Seller relating to the Business (collectively the "Assets") identified on Schedule 1.1 (a) hereto. Notwithstanding the foregoing, the Assets to be so purchased shall not include those assets (the "Excluded Assets") set forth on Schedule 1.1 (b):

Notice that what SCO got was some assets "relating to the Business", which has already been defined as developing and supporting software. So when Amendment 2 says that the Excluded Assets list was revised to read: "All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies" it is referring back to the APA and the acquisition of the assets defined as being in the business of developing and supporting software.]

Novell maintains (at 38-39) that SCO could run the UnixWare binary business without the copyrights, just as Santa Cruz had "successfully distributed the OpenServer flavor of UNIX . . . without owning the copyrights in the underlying UNIX code." The UNIX and UnixWare copyrights are nevertheless required if SCO is to protect the code underlying the business. (A2333-34:666- 68(Broderick); A2398:913-15(Sabbath); A2421:997(McBride); A2599:1686- 87(Maciaszek); A2364:780(Madsen); A2369:802-03(Madsen); A2386:865- 66(Madsen); A2388:875; A2390-91:884-85(Madsen); A2825:2542(Frankenberg).)

[PJ: Why can't Novell protect it? Why does it have to be SCO? Novell had an interest to protect here, and could be relied on to monitor its own copyrighted code.]
If third parties can use the code underlying UnixWare with impunity, the market for the sale and distribution of UnixWare will disappear. The instant dispute regarding the ownership of the UNIX and UnixWare copyrights arose precisely for that reason. Because it is undisputed that an implied license would not give SCO
[PJ: That's not why the dispute arose. SCO got dreams of milking Linux for big bucks, but in the end their allegations of copyright infringement turned into nothing, once it filed its puny list of laughably not-their-own code or not copyrightable code they claimed was infringed.]
the right to enforce the copyrights, ownership of the copyrights was required.

15

2. The Copyrights Are Required for SCO to
Exercise Source-Code Licensing Rights.

Novell does not dispute that the copyrights to pre-APA UNIX code are required for SCO to license UnixWare source code if UnixWare contains pre-APA UNIX code. Instead, Novell responds (at 41) that SCO, "as a matter of law, could license any new software it created," and that "SCO did not have any independent authority to license old code" neither of which addresses source code licensing of the UnixWare code. (A2825:2543-44; A2222:241-42; A2333-34:666-68; A2290:503-04; A2275:442-43; A2397-98:912-15.) Novell seeks to perpetuate the fiction that UNIX and UnixWare are distinct and separate, where in fact all the evidence at trial established that UnixWare was simply the brand name for the most recent update of the same UNIX SVRX operating system. (A2610; A2623-

[PJ: You just read the APA, which listed them separately, did you not? They are two different products. UnixWare isn't Unix, only Unix plus some other stuff on Intel chips. You can't run UnixWare on anything else. SCO's market was only Unix on Intel. That's not the Unix universe by any stretch. Michael DeFazio described the two in his video deposition under questioning by Michael Jacobs played at trial:
A. The UNIX System V source licensing business was the outgrowth of the original way that we provided UNIX system technology to the marketplace where we provided it in source form customers were adapted it to their marketplace needs, they in turn would ship a binary version of the operating 16 system to their customers, pay us a royalty. The UnixWare business was Novell actually developing a final binary form version of the UNIX operating system that was targeted to Intel specific X86 computer systems, basically PCs and servers and providing that product, that operating system product in binary form into the marketplace.

Q. And initially did Santa Cruz express an interest in purchasing both of the businesses?

A. Yes, when Ed Chatlos, I and Ty Mattingly visited them, 1 as I related earlier, the idea was that we would sell all of the UNIX system, both the UNIX system business to Santa Cruz.

Q. And is that in fact what happened?

A. No, it is not. The value that we, Novell placed on the combination of those two businesses was much, much larger than Santa Cruz was in a position to pay for the business, and so they basically in that meeting I referred to said this is too expensive, whether we agree with your value or not, it's still too expensive. We, Santa Cruz, in the form of Doug Michaels came up with an idea and said, why don't we just buy the going forward business, the UnixWare business from you. Why don't you, Novell, retain the source licensing business.

I don't know why SCO persists in telling this story that Unix and UnixWare are the same. They are not.

And not "all the testimony" at the trial supported SCO's fiction, either. Tor Braham, for example, described UnixWare as a flavor or UNIX, related only to Intel as he testified about why Novell decided to sell UnixWare off:

A. Once they bought it, they found that they were not in the strongest position to support and proliferate UNIX. They had their own battles to fight around other technologies, Netware, GroupWise, others. And they began to feel that they couldn't invest all the resources that would be desirable to make it as successful as possible, and they were developing a set of technologies, a particular flavor or brand of UNIX called UnixWare, and they had worked on that, and there was a feeling that they were not in the best position to continue to develop it and to market that particular flavor to exploit. Now, UnixWare was addressed to the Intel -- the Intel microprocessor hardware, and there was a feeling that -- which is where Microsoft had the greatest dominance. And there was a feeling at Novell that emerged that we want this to be successful, but we can't put all the wood behind this arrow ourselves, and, if we can find another home for UnixWare, that would be desirable if it could be somebody who would really go after that business more agressively and with more focus than we can.
As you can see, he says it was a brand or flavor of Unix, related to Intel hardware, but that is what everyone else had too, a flavor. AIX is a flavor. HPUx is too. All the UNIX source code early licensees from the '80s were perfectly free to build their flavor with as much of the UNIX code as they wanted, and they build enormously successful businesses without owning the UNIX copyrights, just the copyrights on their own home-grown development on top of what they had licensed, as Braham testified further:
Q. And how did that compare with your understanding of the basic structure of the relationship with other vendors of UNIX flavors?

A. Well, those other vendors had licenses to UNIX from -- to their version of UNIX and would build their own improvements on their versions of UNIX to which they also had their own copyrights and ownership. Everybody is -- everybody starts out with a foundation and then they build their own house on top of it, and they have the ability, then, to sell that house or exploit that house as they wish, but -- so, everybody sort of starts with a basis that they get a license to, and then they go off and build what is actually theirs on top of it.

]
24; A2766; A363.) Accordingly, as was also shown without dispute at trial, in 1996 UnixWare was nearly identical to the prior versions of UNIX, and even today UnixWare would not even function if the old UNIX code from which it was developed were removed. (Id.) Even Novell's head of the UNIX division, Michael DeFazio, admitted that "the intellectual property in UNIX was an
[PJ: Obviously even if it were identical in every way possible, that doesn't make it SCO's, as Braham explained. And DeFazio was deposed on January 2005 video deposition, but it's sealed, unfortunately, so it was only at the trial that we got to hear snips of it. Earlier he was an IBM witness by a 2003 declaration, and he gave another declaration in 2006. Here's what he actually testified to by video deposition at trial:
Q. I believe you testified earlier that you understood Novell to have retained significant assets in that sale; is that right?

A. That is correct.

Q. And did the retained assets include, as you understand it, important intellectual property and significant substantive rights under the UNIX System V source code license agreement such as the I.B.M. related agreements and the Sequent related agreements?

A. Yes, that's correct....

Q. Was it your understanding that the A.P.A. at the time was intended to transfer the copyrights for UNIX to Santa Cruz?

A. No. The A.P.A. as it was written retained it and my understanding was that the retention was a way the team crafted the words to implement the goal of bulletproofing this financial asset stream. I was not involved in any discussions within Novell or certainly with Santa Cruz that talked about transferring the copyright or not transferring it. It just appeared this way in the A.P.A. and that's what was executed....

Q. Let me rephrase the question. In your view was the UNIX, was it the intent of Novell to transfer the intellectual property of the UNIX program to Santa Cruz through the asset purchase agreement?

A. To the extent that that was a part of that business, yes, that would be my understanding.

Q. And was the intellectual property in UNIX an important part of the going forward UnixWare business?

A. Yes.

Does that match what SCO just wrote? Some IP did transfer, like some trademarks. It doesn't say copyrights. It says "intellectual property" and that isn't necessarily copyrights.]
important part of the going forward UnixWare business" and that it was Novell's intent "to transfer the intellectual property of the UNIX program to Santa Cruz through the asset purchase agreement." (A2766:2321.) Thus, even fourteen years later, let alone in 1996, the UnixWare source code simply could not be licensed

16

without also licensing the vast and essential "SVRX" or "old UNIX" code in UnixWare.4

3. The Copyrights Are Required for SCO to Pursue the
Legal Claims It Acquired Under the APA.

Characterizing the assignment to SCO of "all of seller's claims" as "boilerplate," Novell asserts (at 42-43) that this provision did not transfer the copyrights to SCO. But again Novell mischaracterizes SCO's argument and the clear meaning of the amended APA. SCO has not argued that the foregoing provision itself directly transferred the copyrights; SCO argues that UNIX and UnixWare copyrights are "required" for SCO to bring those claims, and that the amended APA transferred all copyrights SCO required to exercise any of its rights in the UNIX and UnixWare business.

Novell also says (at 42) that SCO "provided no evidence of any such claims that it was entitled to pursue." Novell once again misapprehends the record. Even Novell's General Counsel Joseph LaSala admitted that SCO acquired the rights to bring legal claims to protect its business. (A1977.) This echoed DeFazio's testimony (above) and Novell's senior executive Duff Thompson's testimony "that

17

the enumerated assets Novell actually sold to Santa Cruz included legal claims that it would have against parties that were connected with the business." (A2224:249-50). After the closing of the APA, SCO pursued legal claims against Microsoft (A2371-72:807-11; A3364-66§§3.4,4.9; A3439), expressly and publicly asserting ownership of the AT&T UNIX copyrights (which Novell did not challenge). More recently, SCO's pursuit of copyright claims relating to alleged Linux infringement is another obvious example. (A3526-26.) The very reason that SCO's ownership of the copyrights became controversial was that SCO needed those copyrights to seek to protect the business it had bought from Novell against Linux infringement.

II. IN THE ALTERNATIVE, THE DISTRICT COURT ABUSED
ITS DISCRETION IN DENYING SCO'S MOTION FOR A
NEW TRIAL AND ITS ALTERNATIVE CLAIM FOR
SPECIFIC PERFORMANCE.

While SCO's Rule 50(b) argument focuses specifically on the transfer of the copyrights because they were required, SCO's alternative motion under Rule 59 for a new trial also should have been granted, because of the overwhelming evidence that the intent of the transaction was to transfer the copyrights to SCO.

Five former Novell executives and five former Santa Cruz executives, including both former CEOs, testified that the intent of the deal was to transfer the copyrights to SCO. (A218384(Frankenberg); A2204(Frankenberg); A22192(Thompson); A2251(Chatlos); A2253(Chatlos); A2336(Mattingly); A2280(Mohan); A2287(Michels); A2290-9(Michels); A2275-76(Wilt);

[Frankenburg is the CEO who, when asked by Brennan what Eiger was, testified that he didn't know:
Q. Then you had under license technology that wasn't being sold, under 4-A, NetWare and other Novell code contained in UnixWare 2.01 and Eiger. Do you see that?

A. Yes.

Q. What was Eiger?

A. I don't recall.

Q. Was it a new product?

A. I believe it was, but I don't recall exactly.

Eiger was what the APA was all about. It was the name of the product, UnixWare 2.1 containing NetWare, that SCO was supposed to develop under the agreement. You can verify this by looking at the APA under "Products Under Development". Frankenburg feels free to testify about his memories of a contract the purpose for which he no longer recalls, and SCO is telling the court to rely upon a witness who no longer recalls what Eiger was.
]

18

A2395-96(Sabbath); A2364-65(Madsen).) While it is true that the quantity of witnesses is not dispositive, the significance of SCO's trial testimony is that five of these witnesses were Novell executives at the time of the APA; and not just any executives they included Novell's CEO, Robert Frankenberg; Novell's lead negotiator, Ed Chatlos; and Novell's in-house attorney working on the transaction, Burton Levine. Their testimony, moreover, squares with the amended APA.5

Novell claims (at 48), however, that "many" SCO witnesses had "a financial stake in SCO prevailing." Novell is wrong. SCO presented five former Santa Cruz executives, none of whom had any financial interest in SCO or this litigation at the time of their testimony. Of the five witnesses SCO presented from the Novell side of the transaction, Frankenberg and Levine had no interest in SCO or this litigation, and their testimony corroborates the testimony of the other three Novell witnesses (Thompson, Chatlos, and Mattingly) who had a financial interest in SCO.

While Novell presented the testimony of three witnesses (Braham, Bradford, Tolonen), their testimony cannot be reconciled with the fact that one year later the parties removed through Amendment No. 2 the exclusionary language for all

19

copyrights. When coupled with the testimony of all of the witnesses on the SCO side, and the other Novell executives, that transfer of the copyrights was intended,6 this becomes precisely the type of situation for which Rule 59 exists.

This Court has said that the parties' course of performance is perhaps the best evidence of contractual intent, SCO, 578 F.3d at 1217, and here SCO presented extensive, detailed, and uncontroverted evidence of the course of performance post-APA. Specifically, Novell took affirmative steps to leave the pre-APA UNIX copyright registrations with Santa Cruz after the transaction closed, and re-marked the source code and packaging of the UNIX product being shipped at that time (i.e., code that contained no Santa Cruz improvements) with the SCO copyright notice. Novell asserts that SCO was entitled to place its copyright on new UnixWare versions with modified code, but that misses the point: Novell engineers put SCO's copyright notice on the UnixWare products that Novell had developed at a time when there was no new contribution of code by SCO. (A2609:1725-28; A2608:1723-36; A3281-88.)

20

What Novell did not do post-APA also is informative. Novell did not claim ownership of the copyrights to resolve the dispute with Santa Cruz over Novell's expansion of IBM's UNIX rights in 1996. (A2369:801-02.) Novell also sent out countless letters to UNIX licensees and partners explaining that the APA had transferred "Novell's existing ownership interest in UNIX System-based offerings." (A3539-80; A2313:586; A3528-33.) While Novell now says that the letters sent to customers were intended to simply inform customers they would be dealing with SCO going forward, there is no justification for Novell to express that its "existing ownership interest" in all current and prior versions and releases of UNIX System V had been transferred if Novell in fact was keeping that business and the critical copyrights reflecting ownership of the UNIX code. Ambiguity is perhaps understandable; an affirmative misstatement on this critical point is not.

For the same reasons, the district court's refusal to grant specific performance and direct Novell to transfer the copyrights now is also error.

III. THE DISTRICT COURT ERRED IN CONCLUDING THAT
NOVELL RETAINED BROAD WAIVER RIGHTS TO DIRECT
SCO TO ABANDON LEGAL CLAIMS AGAINST IBM.

A. Novell's Waiver Rights Did Not Extend to the
IBM Software Development Agreement.

Novell sought a declaration that its APA rights allowed it to countermand any action SCO took with respect to any UNIX software licensing agreement, and thus Novell had the right to force SCO to abandon its claim that IBM had breached

21

the terms of its Software Agreement by making UNIX technology contributions to Linux, a competing operating system. Novell does not dispute the detailed textual analysis (at 43-43) showing that the district court erred as a matter of law in its reading of the term "SVRX Licenses" under the APA. The IBM Software Agreement was transferred under a different Item in the Assets Schedule, not subject to the Novell "waiver" rights. Nor does Novell dispute the fact that this Court already held that Paragraph B.5 of Amendment No. 2 "would be pointless and ineffectual" if "Novell already had the right under [Section 4.16 of] the APA itself to force SCO to increase any SVRX licensee's rights to SVRX code." SCO, 578 F.3d at 1222. Nor does Novell even acknowledge the testimony of nine witnesses who testified that Section 4.16 was intended to protect Novell's interest in the SVRX royalty stream. (A2188(Frankenberg); A2254-56(Chatlos); A2223- 24(Thompson); A2276(Wilt); A2282(Mohan); A2288-90(Michels); A2331- 32(Broderick); A2396(Sabbath); A2382; A2392-93(Madsen). Even Novell's Michael DeFazio made clear that Section 4.16 was intended "to protect" Novell's legacy royalty stream. (A2764-65:2310,2313.)

[Here is what DeFazio actually said:
Q. Well, was it your understanding that Novell under the A.P.A. had the right to modify provisions or cancel provisions of SVRX source code agreements, software agreements without having any -- without protecting any interest that they had at stake in connection with the royalty rights that they had retained?

A. Novell had the right if they felt a legacy licensee was violating the license to take some actions and Novell had the right to ensure which is part of the bulletproofing that the old Santa Cruz company could not take any actions which would mess up its arrangement with those customers.

It says Novell could change licensee's terms and SCO had nothing to say about it. And IBM was a SYSV licensee.]

B. Novell's Interpretation Must Be Rejected Because
It Would Give Novell the Ability to Destroy
SCO's Benefits Under the APA.

Novell argues (at 51) that "a broad waiver right does not undermine Santa Cruz's benefit of the bargain; rather it is consistent with Santa Cruz being Novell's

22

agent," and with SCO having acquired nothing more than "the assets and rights it needed to exploit and develop UnixWare going forward." This argument fails.

Even if (contrary to fact) Santa Cruz purchased only the UnixWare licensing business, Novell should not be able to undermine that very UnixWare business by allowing third parties to give away core UNIX technology that makes UnixWare valuable. That is precisely what SCO contended IBM had done through its technology contributions to Linux. Because "the first releases of UnixWare contain all or virtually all of the technology included in the immediately prior System V releases, SVR4.2 and SVR4.2MP," SCO Group, 2008 WL 2783523, at *3, both "SVRX" products, Novell's purported waiver of SCO's efforts to protect that technology directly undermine SCO's UnixWare assets.

Novell also argues (at 53-54) that SCO's position renders Novell's Section 4.16 rights "illusory," "as it would allow SCO unilaterally to terminate an umbrella software agreement, rendering the product supplement agreement ineffective." But there is no conflict between SCO's ownership of all rights in the Software Agreements and Novell's protection of its "financial interest" in SVRX Royalties. SCO has always agreed that Section 4.16 authorizes Novell to protect this interest in royalties. In addition, IBM had already bought out the SVRX royalty obligations, and as Novell's former general counsel Joe LaSala conceded at trial,

23

allowing SCO to litigate its claims against IBM on the merits could not jeopardize those payments. (A2668-69.)

C. Novell Breached the Covenant of Good Faith and
Fair Dealing in the Amended APA.

Even if Novell has broad waiver rights, their exercise should be held subject to the covenant of good faith and fair dealing. Under California law, even broad contract rights and rights purportedly in the discretion of one party are subject to an implied obligation to act fairly and in good faith. Major v. W. Home Ins. Co., 169 Cal. App. 4th 1197, 1209 (2009).

Novell does not dispute that "the fundamental purpose of the implied covenant is that neither party will do anything that will injure the right of the other to receive the benefits of the agreement." Even if Novell's actions were based on a reasonable reading of the APA, that is irrelevant because the covenant only applies in the first place if Novell's interpretation is right. If Novell's contract interpretation of the scope of Section 4.16 is wrong, this Court need not even reach the issue of what limits apply to Novell's exercise of its Section 4.16 rights.

Novell points out that it was in its economic interest to stop SCO from proceeding with its legal claims against IBM. But a party has never been found to have acted in good faith and fairly simply because it has an economic motive for its actions. The entire point of the implied covenant is that a contracting party is

24

required to act in good faith and fairly to effectuate the purposes of the contract, rather than simply in its own economic interest. (Id.)

IV. THE DISTRICT COURT ABUSED ITS DISCRETION IN MAKING
CRITICAL EVIDENTIARY RULINGS THAT PREJUDICED SCO.

A. The District Court Wrongly Informed the Jury of
Prior Judicial Decisions Rendered Against SCO.

Novell does not dispute that it failed multiple times in its efforts to publish the reversed summary judgment decisions to the jury, that the district court rebuffed those requests stressing that "Plaintiff would be prejudiced if the jury was informed that this Court once entered judgment against it on those very claims that the jury will be asked to decide," or that, even when relenting to Novell's requests, the court noted that the publication was generally "unnecessary" and "highly prejudicial." (A2541:1465; A1094.2.)

Instead, Novell suggests that SCO "opened the door" to this "evidence" by stating during opening argument that Novell's website still had a statement claiming ownership of the copyrights, and Novell reasonably relied upon those decisions at that time in asserting those claims. But Novell asserted that it owned the copyrights in 2003, years before the court decisions, and continued to assert ownership after this Court reversed the summary judgment decision in 2009. The judicial decisions thus are not relevant to the issue of Novell's intent in publishing

25

its ownership claims. The district court was right to reject Novell's initial requests to publish the decisions.

Novell's defense (at 58-59) of the district court's decision to reverse course near the end of trial makes no sense. Dr. Botosan's damages model did not present "a skewed version of the facts" by excluding the prior judicial decisions as "a potential cause of third-party licensing decisions." The whole point and design of the model was to calculate revenues SCO would have received had Novell not claimed ownership of the copyrights in the first place. In applying this long- established and widely-accepted "but for" methodology, Dr. Botosan correctly ignored events such as these judicial opinions that would not have occurred absent the slander. If the slander had not occurred, there would have been no litigation and no judicial decisions at all.

Novell speculates (at 59) that the district court's instruction that the district court's decisions had been reversed on appeal "decreased any potential prejudicial effect." Even assuming that the jury apprehended that the district court's decisions were reversed, the jury had been told that the judge (they were not instructed that a different judge had made the ruling in favor of Novell) agreed with a decision in favor of Novell and had ruled against SCO on the same issues that were now in front of the jury. No fair trial can occur where the presiding court reveals its position on the issues the jury will decide. There can be no confidence that a jury

26

will receive evidence impartially and deliberate freely where the presiding authority reveals which party the court believes to be right. The district court's imprimatur on Novell's position created prejudice that no curative instructions could undo.

But there is more. The district court allowed Novell to publish to the jury not only the ultimate conclusion that "the APA did not transfer any copyrights," which would have served the ostensible purpose of the publication, but also allowed Novell's counsel to read from the prior decisions that "there is no dispute that all copyrights were excluded under Schedule 1.1(b)" (referring to the replaced language of the original APA), that Amendment No. 2 "does not constitute a transfer of copyrights on its own," that the Amendment is "not retroactive to the date of the APA," and that the Amendment "provides no date for the transfer" and "does not state that a transfer of the copyrights is to occur as of the date of the amendment." (A2549-50.) Each of these statements was wrong, they were reversed by this court, and yet were presented to the jury as a decision made by the district court. The publication of the district court's prior judicial decisions thus conveyed to the jury not only the bottom-line conclusion that the same court had previously reached in favor of Novell, but also provided several erroneous pathways for the jury to reach the same conclusion.

27

Through most of the trial, the district court correctly had rejected Novell's numerous efforts to contaminate the jury with the prior, reversed decisions; its reversal of course on Novell's gambit to do so in the guise of being relevant to damages, and thus making it one of the most dramatic moments of the trial for the jury, was an abuse of discretion necessitating a new trial.

B. The District Court Improperly Permitted Novell to Rely on
Language in the APA That Was Replaced.

SCO does not argue, as Novell says (at 59), that Novell confused the jury by concealing Amendment No. 2. Novell confused the jury by pretending that the old language was still part of the APA and that Amendment No. 2 was something separate and distinct. The district court unfortunately did not prevent this charade by wrongly refusing to grant SCO's motion in limine, by overruling objections SCO had made, and by not allowing SCO to make clear with the witnesses testifying about the old language that it had, in fact, been replaced whether or not they were directly involved in the negotiation of the amendment.

Although Novell claims (at 60) that it "did nothing that might lead the jury to believe that the original APA remained operative," Novell cannot deny the numerous record citations in SCO's opening brief (at 57-58) that prove otherwise. At every step, the district court allowed Novell to address "the exclusion of copyrights" as though that were the language of the agreement and Amendment No. 2 were a separate instrument. Novell thus treated the original APA and

28

Amendment No. 2 as separate contracts, each of which, standing alone, failed to transfer the copyrights a fiction that this Court pointedly rejected. SCO, 578 F.3d at 1211. In fact, as explained above (at Part IV.A.), the district court put its imprimatur on this fiction by permitting Novell to read from the court's prior decisions.

The district court then magnified its error by not allowing SCO to ask its lead witnesses about Amendment No. 2. (A2186; A2192; A2215-16; A2238.) Novell argues (at 60-61) that "SCO wanted it both ways" by asking these witnesses about "the intent of the original, pre-amendment APA," and then blocking Novell from cross examining them with the language of the pre-amendment APA.

First, there is a difference between questioning about the intent of the original transaction, while making clear that the language was replaced (which was what SCO's denied motion in limine sought to require), and presenting replaced and removed contractual language as a basis upon which the jury could conclude that the copyrights had not been transferred. Worse yet, Novell cross examined SCO's witnesses who testified that the intent of the transaction was to transfer copyrights by presenting the alleged inconsistency between their intent and the "exclusion of copyrights" language, suggesting that their testimony could not be reconciled with the APA transaction. (See, e.g., A2192-93:129-31.) SCO was then precluded on re-direct from eliciting that the supposedly inconsistent language

29

of the APA had been excised and replaced through Amendment No. 2. This, too, is reversible error as it went directly to the central issue at trial.

C. The District Court Erred By Admitting Hearsay That SCO Was
"The Most Hated Company in Tech."

Novell does not dispute that the Business Week article was double hearsay if admitted for its truth, or that the article is obviously prejudicial. Instead, Novell argues (at 61-61) that the article was not admitted for the truth and was in any event harmless because it related to issues the jury did not reach.

The point of the expert's testimony, and the obvious purpose for showing the Business Week "most hated company" title to the jury, was not to establish that Business Week had published such an article, but to support the proposition that SCO was indeed the "most hated company" in technology and thus, could not have been damaged by Novell's slander of title. If that proposition were not true, the article would not support Novell's argument that licensees did not buy SCOsource licenses for reasons other than Novell's slander. Novell thus used the article precisely to show the truth of the matter that SCO was "the most hated company in tech." See, e.g., Bateman v. United Parcel Service, Inc., 31 Fed. Appx. 593, 597-98 (10th Cir. 2002). The fact that Novell used the article for issues the jury did not reach in their verdict is irrelevant because the proposition that SCO was "the most hated company in tech" would undermine SCO's credibility before the jury on all issues.

[Opening day of the trial, Singer objected to the most hated company in tech article, and to get it out of opening statements, he agreed that the Wall St. Journal article Novell objected to was also out of opening statements. There'd be a piece-by-piece decision by the judge on anything entered as evidence, and nothing that wasn't agreed to could be in the opening statements:
THE COURT: Are you intending to have it admitted as an exhibit during the course of trial?

MR. SINGER: We are, Your Honor?

THE COURT: Mr. Brennan.

MR. BRENNAN: Yes. Your Honor, there are several news reports and articles involved in the case. We suggested in our meet and confer with plaintiff's counsel that the agreement of the parties would be that if there were news articles that would be presented to witnesses to indicate intent or that otherwise they would be examined about, that we could reach an agreement that they could be used for that purpose. If we had that agreement, then they could use the demonstrative that's been suggested.

If, on the other hand, what was going to be done is there was going to be an article-by-article objection and there wasn't going to be a general understanding, at least these news articles could be used to present to witnesses to ask them about it, to see if they were aware of it, to find out what they did in reaction to it, but we have an objection to using this demonstrative in advance of an evidentiary ruling.

So Novell's position in this regard, Your Honor, is we don't have an objection to the use of the

22

demonstrative that's been tendered if there's an equal understanding that other news articles that would be tendered for the same purpose could also be used by Novell. So it's a bit of a tit for tat or quid pro quo sort of arrangement.

Again, we don't object if, in turn, Novell can use them for the same purpose and we're not going to have a fight over that. Otherwise, I think we're going to have to go through the process of examining each of the articles and deciding whether they independently can be admitted. And if we can't do that now, I think it's unfair to present an objected document as part of opening.

So we're mindful of the suggestion, and we're agreeable to it as long as it works both ways.

THE COURT: Mr. Singer.

MR. SINGER: Your Honor, for certain documents, we wouldn't have an objection. The Wall Street Journal, we think, is one thing. But the article which Novell plans to use in opening, which we objected to, says SCO, our client, is the most hated company in tech. And if the actual document were to be admitted into evidence, on the first page it has prejudicial statements such as they -- referring to SCO -- are a cornered rat, and I think they have rabies to boot. So that, we think, is totally improper to go before the jury.

23

THE COURT: Counsel, the Court is not going to allow you to use any exhibit in an opening statement that is not going to be clearly admissible and the other side has agreed to it. So until you can get an agreement on it, it will not be permitted in opening.

MR. SINGER: We understand both of these, then, will not be.

So, that was the agreement. But the next day, it was actually Brent Hatch for SCO who first brought up the issue of SCO being hated in his opening statement:
MR. HATCH: SCO will ask you to make an award that will just make them whole, and that's fair. To assist you in understanding and quantifying the damages to SCO, we'll present evidence through experts that these damages were conservatively calculated. You are going to hear from Dr. Gary Pisano, who is a professor at the Harvard Business School. Dr. Pisano, he is going to show in the total marketplace -- and you heard Mr. Singer talk about this, that the total possible marketplace, based on his research and looking at other independent researchers and using conservative estimates, that if you add the very likely and somewhat likely, almost 45 percent of the marketplace would have been likely purchasers of SCOsource products. Now he's going to say that even though that Novell may argue that SCO was not liked, was hated, that there were other reasons. He said he took all of those things into account and they still would have had success in the marketplace.
Then Novell expert witness Terry Musika testified about the BusinessWeek article on day 14 of the trial, or more accurately showed it in a demonstative, and SCO lawyer Brent Hatch objected but the judge let him continue:
MR. HATCH: Your Honor, he is now showing things that are not in evidence.

MR. BRENNAN: Your Honor, he is an expert witness and is entitled to rely on hearsay, which he did in his report, and these are references that were included --

MR. HATCH: But he is not allowed to publish them.

MR. BRENNAN: This is a demonstrative. If you want him to read the reference and not use the demonstrative --

THE COURT: I'm going to allow him to use them.

Sterling Brennan is so cool. Here, when Hatch says he can't publish because it's not in evidence, Brennan smoothly offers to read from the article directly instead of showing the demonstrataive. That is exactly what SCO was trying to avoid. As to the objection, note that it was answered by Brennan that hearsay is allowed, because this is an expert witness. Did SCO's expert witness not rely on hearsay? What wasn't hearsay in Christine Botosan report, which relied almost entirely on Dr. Gary Pisano's report, which in turn relied on a report by the Yankee Group.

To continue, to show you the context:

THE WITNESS: I didn't hear you, Your Honor?

THE COURT: You may go ahead.

THE WITNESS: This focus group, these customers that they are looking for we know are open source. They are the people who download it for free, they are the people who purchase through a third party like Red Hat. So what we see is that the public has reacted adversely. This as a litigation scenario, a business plan that is founded on litigation, and it is founded on the ability to go in and identify a Linux user and sue them or threaten to sue them to receive a payment in the form of a royalty payment. What Business Week says is this is the most hated company in tech. These other remarks are SCO's own remarks, can SCO afford bad press and legal costs that may become associated with this program? SCO knew that they were going to alienate and that they were going to have difficulty with this open source community, the very customers that they hope to bring in. In fact, it did happen.

BY MR. BRENNAN Q. Then were there also industry analysts who commented on this poor image that SCO held?

A. Yes. As stated here, customers with large future Linux commitments should avoid paying SCO's server license fees since they appear arbitrarily high or represent a concession to SCO's claims and will expose them to even larger fees. So the Gartner group that was mentioned by Dr. Pisano and Dr. Botosan, are telling the focus customers again that you shouldn't pay this. He is saying certainly not pay it now, because it is a claim that is unfounded at this point and it is arbitrary.

Q. Then was there also a factor regarding a lack of a marketing plan by SCO?

A. Yes. These are two SCO remarks that talk about the weakness on SCO's part of actually pursuing or developing a well thought out plan. I have not seen, nor did I see during the weeks of trial, where if we were investors and we were going to put our money into a company that said we're going to have 200 million in revenue and 100 million of profits, we would expect to see a business plan. We would expect to see a discussion of the size of the market, and how it is they are going to attract these customers, and what price they are going to sell at, et cetera. I didn't see that. What I have seen that SCO is concerned about are marketing plans. SCO is not aggressively marketing or selling the license proactively. ...

Then there is a sidebar, when SCO objects again and loses again:
MR. SINGER: This I was a party to. It was our understanding and agreement that demonstrative exhibits that would be used during trial would be shared the day before. This book was not. That is one problem. This should not be 3 used.

Secondly, a lot of the material in this book is not evidence in the case. Certainly a Business Week article is not evidence in the case. As I look at the slides that are to come in they are filled with things that are not evidence in the case. Now, he can rely on this in rendering his opinions and what he tells the jury, but he cannot show these statements from those reports and quotes from people, like e-mails that may not be in evidence, anymore than any other document not in evidence can be shown to the jury. Just because he is an expert, he can't show that to the jury and this is highly improper.

MR. BRENNAN: Your Honor, these are demonstratives and they are based largely on SCO documents. I don't purport that these will go to the jury. They are being shown like their expert, Dr. Botosan, where she wrote figures and numbers and calculations on the board. This is simply illustrating and the basis for his opinion. It is premised both on his report and the documents that are marked.

THE COURT: The question is whether or not all of this information is contained in his expert report?

MR. BRENNAN: I believe that they are representative of --

THE COURT: If it was included then you could have brought this up in a motion before trial, because if they are in his expert report, and if he relied on them, you had the opportunity to explain why --

MR. SINGER: I think the opportunity to -- he is now saying he relied upon this, but that is different than simply showing the jury what is on a board and --

MR. BRENNAN: They showed demonstrative exhibits and they were not --

THE COURT: I would agree. This should have been done before and I'm going to allow you to proceed.

MR. BRENNAN: Thank you.

So, this is what SCO is now appealing, but as you can see, the judge ruled as he did because he'd already let SCO do exactly the same things with its experts. Musika goes on to talk about Botosan's demonstratives, by the way, if you are curious.]

30

CONCLUSION

With respect to copyright ownership, the denial of SCO's Rule 50(b) motion should be reversed and the case remanded for trial of the issues presented by SCO's slander of title claim that the jury did not reach. In the alternative, SCO's motion for new trial (based on sufficiency of the evidence or evidentiary issues), or request for specific performance, should have been granted. The district court's judgments concerning Novell's Section 4.16 waiver rights should be reversed.

DATED this 15th day of November, 2010.

By: /s/ Edward Normand
BOIES, SCHILLER & FLEXNER LLP
Stuart H. Singer
Edward Normand

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

Counsel for Plaintiff-Appellant
The SCO Group, Inc

____________________

1 In 2002 and 2003, contrary to what Novell asserts now, the new owners of SCO asked for a document clarifying that SCO had acquired the copyrights in the 1995 APA. SCO did not request a transfer of copyrights at that time, and it made its request for clarification before either party had located Amendment No. 2. (See A2575(Stone); A2587(Stone); A002745(Jones).)

This appears to be inaccurate. In researching another issue, I came across an exhibit attached to Wayne Gray's filing [PDF] seeking permission to file an amicus brief with the 10th Circuit during the time period of SCO's first appeal in 2009. His request was denied, and I can't vouch for the exhibit, obviously, but it's of interest probably to historians at least and it contradicts what SCO here has written. So here is the filing, and Exhibit A, is a 2003 letter, unsigned but written so as to make it an agreement had Novell ever chosen to sign, which it did not, showing the clarification requested. Note that according to the letter, they asked Novell to say that it was their understanding that the APA itself, not Amendment 2, transferred all of the rights and obligations under the various AT&T SVRX Software Agreements and Sublicensing Agreements... excepting only the ongoing right to receive royalty payment streams..." It goes on to "clarify" that UNIX mark was excluded, but that the copyrights were not excluded assets. And note the date of the letter is *after* SCO told the world it had found Amendment 2, which happened in June of 2003.

2 Novell also relies on Tolonen's testimony to defend the verdict. But his testimony also cannot support a reasonable verdict because he was not even involved in the negotiation or drafting of the language of Amendment No. 2.

[Actually, he was, as I'll show you, and he signed it. But if we are going to start thinking about who can testify about Amendment 2, SCO might not enjoy the effect. I mean, they asked the Court of Appeals to give them a jury trial where they could present extrinsic evidence. But exactly who did they put on the stand who was directly involved in negotiating or drafting Amendment 2? If you go to Groklaw's page listing all the motions in limine, go down the list looking for the phrase "Lack of Personal Knowledge" and read them, read the oppositions, and then the judge's orders, and what you will see what I mean. Bill Broderick said [PDF] in his deposition that he none. Ditto Lawrence Buffard [PDF], who also couldn't recall any participation in the APA either. Robert Frankenberg said [PDF], pretrial, that he wasn't involved in the drafting of the APA, he signed it without reviewing it, didn't recall reading the schedules attached, and he wasn't at Novell any more when Amendment 2 was negotiated and signed. Duff Thompson [PDF] was superficially involved in the APA, arguably, although he couldn't recall any discussions about copyrights, but as for Amendment 2, he said he was “not given any information by either party, by either side as to how it was being negotiated” and that “I have no recollection that there was any specific input that I was asked to give nor that I actually gave that resulted in the creation of Amendment 2.” Ty Mattingly [PDF] had zero involvement in Amendment 2. He never even read it. As for Doug Michels [PDF], his testimony, while amusing and pleasant, was clear -- he wasn't paying attention to any legal details at the time or all these years later. Ed Chatlos left Novell [PDF] before Amendment 2 happened, and said he played no role in it, and ditto Burt Levine, and Kim Madsen couldn't recall any specific conversations about Amendment 2 or about copyrights for that matter. Now, the judge let all of them testify to some extent.

But in contrast to SCO's sorry list of the uninvolved or memory-challenged, notice that Jim Tolonen was the Novell executive who signed Amendment 2. So he already was more involved than SCOfolk. He testified in depth and at length about negotiations regarding Amendment 2. And his testimony includes this bit:

Q So I would like to step back in time and talk about with you how Amendment No. 2 came to be. First of all, did you work with anyone else at Novell in terms of the legal draftsmanship of Amendment No. 2?

A There was a young attorney, Allison, that worked for David Bradford that was involved. I think David also reviewed it.

Q Do you remember this young attorney, her name would be Allison Lisbon?

A Yes, that's correct.

Q Did you have any interaction with Ms. Lisbon regarding Amendment No. 2?

A Yes, I did.

Q Now before Amendment No. 2 was approved and entered into, were you aware that there had been a previous draft that had been proposed by Santa Cruz Operation?

A Yes, I was. ...

Q Now under Amendment No. 2 did Novell intend to transfer actual ownership of UNIX copyrights to Santa Cruz?

A No, absolutely not.

Q Did you ever tell anyone that Novell intended to transfer ownership of the UNIX copyrights to Santa Cruz by or under Amendment No. 2?

A No. In fact, that language was taken out of the earlier draft.

Q In any of your dealings with the Novell board of directors, did you ever suggest to the board or make any reports to the board suggesting that under Amendment No. 2 Novell was transferring ownership of the UNIX copyrights?

A No. That would have been contrary to the resolution which excluded them.

Q Now with what you just said in mind, that is that the initial resolution relative to the asset purchase agreement was by resolution of the board?

A Yes.

Q And, in particular, there was a resolution regarding exclusion of copyrights, correct?

A That's correct.

Q When you signed Amendment No. 2, did you go back to the board of directors and get approval to sign Amendment No. 2?

A No, I did not.

Q Why is that?

A It was not any change in the original asset purchase agreement exclusion, it was a clarification of the terms of that agreement.

Q If under Amendment No. 2 there had been an actual transfer of ownership of the UNIX copyrights to Santa Cruz, do you believe that that would have been a material change that would have required board of director approval by Novell?

A Yes. There would have been an easy way to do that, put it on the schedule of included assets, which we clearly did not do.

Q Why is it that you think Amendment No. 2 did not transfer ownership of the UNIX copyrights to Santa Cruz?

A It was not its intent.

Q Now we've talked about the schedule 1.1(b) of the asset purchase agreement, which is the excluded assets. Under Amendment No. 2, did Amendment No. 2 also change the schedule of included assets?

A No, it did not.

]

3 As noted in SCO's opening brief (at 33, n.6), there was no testimony at trial distinguishing among the various UNIX and UnixWare copyrights. SCO's testimony established that the group of UNIX and UnixWare copyrights was required (see, e.g., A2397:911), and there was no contrary testimony.

4 In addition, after the first trial, in a portion of its judgment that was not disturbed in the first appeal and therefore remains the law of the case, the district court held that SCO was also authorized under the APA to license the source code to all prior versions of UNIX as such when SCO licensed UnixWare. SCO Group, Inc. v. Novell, Inc., No. 2:04CV139DAK, 2008 WL 2783523, at *18 (D. Utah July 16, 2008.) SCO needs the copyrights for that purpose as well.

5 Novell claims that Amendment No. 2 would have needed to be approved by Novell's board to be effective if it indeed confirmed the transfer of required UNIX copyrights. This point is another red herring as there is no question that the Amendment was a binding agreement with SCO.

[But Novell is not arguing that Amendment 2 is not binding. They are arguing that the fact that Amendment 2 was binding, a fact that SCO here is agreeing with, would not be possible without Board approval if the Amendment confirmed the transfer of Unix copyrights, in contravention of the previous motion approved by the Board that copyrights were not being transferred. It is not disputed that the Amendment was binding. It is not disputed that Amendment 2 became binding without specific Board approval. Transfer of copyrights would have required the Board approval that it did not have. Therefore it could not have transferred the copyrights. That is a simple logical argument that contains no red herrings. ]

6 Remarkably, Novell asserts that Steve Sabbath and Kim Madsen "had

nothing to say regarding the negotiations and interpretation of the Amendment No. 2." But both clearly testified that the intent of Amendment No. 2 was to clarify that copyrights were transferred in the transaction. (A2397(Sabbath); A2395- 96(Sabbath); A2369-70:802-03(Madsen); A2364-65(Madsen).) Likewise, Novell's statement that Tolonen was the only executive who was involved with both the original APA and Amendment No. 2 is inaccurate. (Id.)

31

CERTIFICATE OF SERVICE

[See PDF]

32

CERTIFICATE OF COMPLIANCE WITH
FEDERAL RULE OF APPELLATE PROCEDURE 32(a)

[See PDF]

33

CERTIFICATE OF DIGITAL SUBMISSION

[See PDF]

34


  


Annotating SCO's Appellate Reply Brief | 91 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here
Authored by: Erwan on Monday, November 22 2010 @ 05:43 AM EST
If any.

---
Erwan

[ Reply to This | # ]

News Pick Thread
Authored by: darksepulcher on Monday, November 22 2010 @ 05:55 AM EST
Please cite the article you wish to discuss so we can all keep up.

---
Had I but time--As this fell Sergeant, Death
Is strict in his arrest--O, I could tell you--
But let it be.
(Hamlet, Act V Scene 2)

[ Reply to This | # ]

Off-Topic Thread
Authored by: darksepulcher on Monday, November 22 2010 @ 05:57 AM EST
Any on-topic discussions in here and (purely in the spirit of Thanksgiving) I'll
subject you all to a lengthy dissertation about turkey gibblets.

---
Had I but time--As this fell Sergeant, Death
Is strict in his arrest--O, I could tell you--
But let it be.
(Hamlet, Act V Scene 2)

[ Reply to This | # ]

A shocking indictment...
Authored by: Gringo on Monday, November 22 2010 @ 07:56 AM EST

SCO's Appeal Brief represents a shocking indictment of either Cahn's incompetence or downright duplicity in a fraudulent attempt to wrest the Unix copyrights from Novell. There is no excuse. Cahn was specifically charged with evaluating SCO's litigation. Cahn would therefore have intimate knowledge of SCO's position as interpreted by BS&F. Cahn attended the trial. We can assume that Cahn even read this brief, as he must have read the briefs before it, because that is his job. He cannot plead ignorance or lack of understanding, because, after all, he is an experienced judge.

SCO's brief represents the final refinements of their fiction. It twists the truth into a mobius strip of lies and thereby goes beyond the pale. It is time that Judge Cahn stood up and distanced himself from these lies and fire BS&F. Immediately after, he needs to drop this appeal and negotiate a final settlement with Novell while heading directly for Chapter 7.

[ Reply to This | # ]

Lying to the court is the new normal
Authored by: Anonymous on Monday, November 22 2010 @ 11:25 AM EST
Are we at critical mass yet? For sanctions, indictments, a severe frown?

[ Reply to This | # ]

"Novell's Waiver Rights Did Not Extend to the IBM Software Development Agreement"
Authored by: Ian Al on Monday, November 22 2010 @ 12:10 PM EST
SCO say
The IBM Software Agreement was transferred under a different Item in the Assets Schedule, not subject to the Novell "waiver" rights.
This is complete nonsense. Under SCO's theory, no SVrX contracts were transferred from Novell to SCO and SCO would not have been able to collect any royalties.

This is made clear in my comment 'Has IBM got an SVrX licence?'

---
Regards
Ian Al
SCOG: Yes, they hit the ground. The lawyers are now taking them to the centre of the Earth. The 'centre of the Earth' is irony.

[ Reply to This | # ]

Annotating SCO's Appellate Reply Brief
Authored by: Anonymous on Monday, November 22 2010 @ 01:28 PM EST
You could always do this in Wiki style. Just log IP addresses,
changes, and any login, and that will allow the work to be
completed more collaboratively, and allow exposing SCOnies
(ahem) if they try to mess things up.

[ Reply to This | # ]

When Novell bought USL
Authored by: Anonymous on Monday, November 22 2010 @ 01:39 PM EST

When Novell bought USL it already owned a significant share in the company. What
it paid to AT&T was for that share, a part of it.

[ Reply to This | # ]

Footnote 4
Authored by: Anonymous on Tuesday, November 23 2010 @ 06:18 PM EST
Footnote 4 starts with the apparently undisputedness of SCOs right to grant
source licenses of UNIXWare, even though some of that source is from SVRX. Then
after the citations, footnote 4 claims that SCO would need the copyright
ownership to do so.

The latter is obviously not true, sublicensing is a completely ordinary business
practice consistent with the APA, the prior rulings and the business practice of
both SCO and other SVRX licensees.

The standard SVRX licenses are quite explicit about this practice. It is also
common in non-GPL FOSS.

[ Reply to This | # ]

C Covenant of good faith and fair dealing
Authored by: Anonymous on Tuesday, November 23 2010 @ 06:43 PM EST
1. SCO did not present this issue at trial and should thus not be allowed to
rely on it for this appeal.

2. Novell's claim is not that they can wave anything for any reason, but that
they can do so when (in Novell's reasonable opinion), SCO breaches the implied
covenant of good faith and fair dealing by interfering with a pre-APA SVRX
license aggreement.

3. tSCOg's lawsuit against IBM and its threatening letters to both Novell itself
and many SVRX licensees other than IBM regarding Linux were precisely such a
breach of the implied covenant of good faith and fair dealing interfering with
almost all the SVRX license aggreements.

4. Thus it was fair and reasonable for Novell to exercise its right under the
APA to direct SCO to waive, and directly so waive, the allegations and lawsuits
made by tSCOg's new management under Darl McBride.

[ Reply to This | # ]

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )