| Another day, another knockout punch aims at SCO |
Dec. 05, 2006
Last week saw the end of most of The SCO Group's claims of IBM contributing Unix code to Linux. Now, Novell has filed a motion that undercuts all of SCO's contract claims against IBM, based on a "silver bullet" clause in the original sale of Unix to SCO.
In its latest legal move against SCO, Novell on Dec. 1 filed for partial summary judgment against SCO in its own case. In this motion, Novell is asking the U.S. District Court to rule that the Unix APA (Asset Purchase Agreement), which sold Unix from Novell to SCO, gave Novell the right to waive SCO's contract claims.
Novell had long claimed that it never sold Unix's IP (intellectual property) rights to SCO. This new motion, however, isn't connected with those claims.
In the APA, Novell has what Mark Radcliffe, co-chair of the Technology and Sourcing Practice Group at the law firm DLA Piper, called, when Novell first made these claims, a "silver bullet" provision under the APA to block SCO's actions under these licenses. "This provision permits Novell to amend, supplement, modify or waive provisions of the Unix licenses sold to SCO," Radcliffe said. "Novell also retained the unusual right to require SCO to follow its directions to amend, supplement, modify or waive these licenses and, if SCO does not comply, Novell can do so on SCO's behalf."
In the memo in support of the motion (PDF Link), Novell puts it bluntly: "Novell's motion presents a single issue: whether the express terms of a 1995 contract authorize Novell to direct SCO to waive its purported legal claims for alleged breaches of SVRX license agreements with IBM and with Sequent, and to take action on SCO's behalf when SCO refuses to so waive, where the plain language of the 1995 contract gives Novell 'at its sole discretion and direction' the right to take such action concerning 'any SVRX License.'"
While unusual, the APA appears to be quite clear on this point. According to Section 4.16 SVRX Licenses, sub-section b of the APA, SCO "shall not have the authority to, amend, modify or waive any right under or assign any SVRX License without the prior written consent of [Novell.]"
If the court agrees with Novell's logic, this would knock-out all of SCO's contract claims.
Of course, after Judge Dale Kimball affirmed Magistrate Judge Brooke Wells' June 28, 2006 Order, dismissing 188 of SCO's claimed 294 examples of IBM contributing Unix code to Linux, there wasn't much left to SCO's case even before Novell made its latest motion. Michael R. Graham, an IP attorney and partner with Marshall Gerstein & Borun LLP, a Chicago based IP-specialty firm, observed, "I've read the filings and it appears that Judge Kimball's decision affirming Magistrate Judge Wells' Order has effectively limited SCO's claims and the potential for monetary recovery. SCO's case may not be toast, but the toaster is definitely smoking.
On top of that, Graham said, "Observers of the oral hearing on IBM's motion to Confine SCO's Claims To, and Strike Allegations (of misuse of Unix materials) In Excess Of The Final Disclosures (i.e. the claims still allowed by Judge Kimball) have apparently reported that Magistrate Judge Wells ruled in favor of IBM's motion from the bench. If this is true, much of the expert testimony SCO seeks to use at trial would be extremely limited."
"Rather than be allowed to opine on the general similarities and claimed misuse of materials some of these experts asserted in their post-final disclosures statements as evidence supporting their conclusion that the particular lines of code SCO claims infringed its copyrights, these experts' testimony would be limited to that relating to the claims still at issue," added Graham. "Thus, in two days, SCO has had its claims dramatically limited and the scope of its evidence reduced." So, "although the case will still go before a jury, it appears that the allowed claims and potential recovery and remedies have been tremendously reduced."
Allonn Levy, litigation attorney with Hopkins & Carley in San Jose, Calif., agreed with Graham in large measure.
Levy said, "Although SCO has been steadily losing momentum almost from the outset of these proceedings, the Judge's ruling today signals an ominous vote of "no confidence" in SCO's case. While Federal Courts in general tend to be more strict in their application of pre-trial rulings, the judge's decision to dismiss nearly 200 of SCO's claims is dramatic by any standard."
"For some time now first IBM, then the open-source community, and finally the court, have pressed SCO to support its many claims with actual evidence. Yet, despite SCO's public posturing to the contrary, it has consistently failed to produce substantive evidence to the satisfaction of the court. Today that court sent SCO a dramatic message: 'enough is enough'," continued Levy.
"Of course," Levy concluded, "SCO will still be entitled to pursue its dramatically down-sized case against IBM. However, today's ruling would certainly seem to put SCO, who initiated the lawsuit, on the defensive."
-- Steven J. Vaughan-Nichols
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