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SCO Gets Its Hall Pass to Appeal

If SCO loses the appeal, it'll probably be turning its assets over to Novell

SCO filed a notice of appeal with the United States Court of Appeals for the 10th Circuit in Denver Tuesday.

Yes, miracle of miracles it finally got a final judgment out of Utah District Court Judge Dale Kimball.

That's the hall pass it needs to challenge his devastating summary judgment of August 10, 2007, in which he basically decided that Novell owns Unix - having supposedly only licensed it to SCO in 1995 - and that Novell was perfectly within its rights to order SCO to drop its claims against IBM and Sequent for allegedly poaching Unix code and sticking it in Linux.

SCO of course contends that Kimball utterly ignored the basic rules of civil procedure in issuing that summary judgment against it - and truth to tell Judge Kimball has an impressive string of overturned summary judgments to his name.

A summary judgment's not supposed to weight evidence, champion one side's interpretation of facts over the other's, or decide that one set of witnesses is more credible than another.

As any first-year law student ought to know, when there are two sides to a story, as in SCO v Novell, a judge isn't supposed to pick one and issue a summary judgment.

That's the business of juries.

And that's especially true when a case is governed by California law, which bends over backwards to give the plaintiff - in this case SCO - the edge in extrinsic evidence and especially when all of Novell's old management - who did the original deal - testified for SCO.

But Judge Kimball denied SCO a jury.

He preferred the testimony of a couple of old Novell lawyers from back when Unix supposedly transferred from Novell to the Santa Cruz Operation about what the Santa Cruz Operation, SCO's predecessor company, and Novell's intentions were rather than what the guys in charge said.

The lawyers claimed SCO only licensed Unix, a word that appears nowhere in the 1995 transfer documents - or anywhere in fact before 2004 when SCO sued Novell for claiming to own Unix.

Novell's old management - who testified they never heard of any license - thought they sold all of Unix to SCO - old Unix, new Unix, UnixWare, all versions, all releases - and wrote letters to Novell's customers in 1996 saying exactly that.

So, if the 10th Circuit overturns the SCO summary judgment, SCO's slander-of-title/breech-of-contract/copyright infringement case against Novell will go to a jury back in Utah and, if SCO wins there - and moot courts suggest it will - well, then, the question of whether Linux stole Unix code will again be troubling Linux users, particularly IBM's Linux users.

If SCO loses the appeal, it'll probably be turning its assets over to Novell.

Now, to get the final judgment out of Kimball, SCO had to do some horse trading with Novell, which was doing what it could to delay SCO's drive to Denver according to what SCO says in other court filings.

For instance, it had to agree to forsake forever some of its breach of contract, copyright infringement and unfair competition claims against Novell and it had to agree to put $625,486.90 into a constructive trust.

The claims SCO is giving up relate to post-1995 Unix code, which only represents a small part of SCO's case against Novell, but - since it was obviously important to Novell - it also suggests there's probably some real stinker in there that SCO never found. If such a thing exists and SCO ever does find it, well, only Novell is safe.

And since SCO is still protected by the cloak of the bankruptcy court in Delaware where it sought sanctuary from Judge Kimball - and the chance that Novell would be empowered to seize all of its assets - it doesn't have to immediately write Novell a check for the $2,547,817 plus interest that Judge Kimball decided this July (and probably rightly too) that SCO owes Novell for some rights it sold Sun back in 2003.

The interest, Judge Kimball now says, works out to $918,122 in "pre-judgment interest through August 29, 2008, plus $489 per diem thereafter until the date of this judgment," which would be November 20.

Sun's lawyers may be interested in the Novell-written final judgment that Judge Kimball signed.

Looks like Novell put one over on the old boy, who was evidently asleep on the bench.

Judge Kimball now says that "SCO was not authorized...to amend, in the 2003 Sun agreement, Sun's 1994 SVRX buyout agreement with Novell, and SCO needed to obtain Novell's approval before entering into the amendment."

In English that means (or might mean given this confusing string of judicial fiats) that, contrary to what Judge Kimball decided in July - and despite a warning brief filed by SCO - he has now signed a piece of paper saying that SCO's whole deal with Sun wasn't legit.

In July he said only part of the SCO-Sun deal, which brought SCO a total of $9,143,451, exceeded its rights.

Heck, that's why he awarded Novell only $2.5 million from that deal that Sun negotiated with SCO, then the recognized owner of Unix, to get the confidentially provisions governing its 1994 Unix buy-out agreements with Novell lifted so it could open source Solaris.

Novell has reportedly been looking for some leverage against OpenSolaris, which competes with Linux - and in which Novell has a serious vested interest - and may have just gotten it - if the decision ultimately stands.

Judge Kimball's apparently wavering position on Sun - he left untouched his ruling that Novell isn't entitled to any of the revenue that SCO got from licensing UnixWare and incidental SVRX code to Sun - looks like another head scratcher for the appeals court to sort out.

It generally takes 10-12 months to get a decision out of an appeals court counting from the time a notice of appeal is filed. SCO's concessions to Novell may have shaved six months off of the clock starting.

Novell, by the way, could also appeal.

Despite published obituaries to the contrary - and a lot of gleeful humming of "Ding, Dong, The Witch Is Dead" - SCO's legal bills for appeal are already paid and it claims it will have the money to pursue its case.

It currently has until the end of the year to file a reorganization plan with the bankruptcy court in Delaware.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025.

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Most Recent Comments
robert.jackson@nextgengaming.com 12/18/08 05:37:43 PM EST

"That's the business of juries"... No, it is not. Under Californian law, juries are specifically not allowed to decide on matters of law. You obviously feel somehow hurt that the judge disallowed a trial by jury. Let it go. The only thing being tried in this case is equitable relief, so no jury is required. There are numerous precedents to his effect (I am aware of three), but I imagine you would not understand them. You have no business being paid to write about matters you do not comprehend. To claim as you do that the judge has had a string of summary judgements overturned is simply libellous and salacious. He is a Master of the Bench (American Inn Court I) and has been selected in the past by appellate judges to author final decisions. You may know about technology Ms Gara, but when it comes to law you are cruel and vindictive, and you twist and distort claims that you do not understand. Please stop reporting on the SCO litigation in order to retain what shred of reputation you may still possess, as well as for the sake of common decency. If your financial position requires you to continue reporting on matters you do not grasp, then I beg that you at least stop saying that Linux users aren't "safe" - your ongoing threats on behalf of a bankrupt company make you look juvenile. I give you this personal assurance on behalf of the Linux community: We are not afraid.

goffster 11/28/08 05:23:32 PM EST

Uhh.. Do you know the definition of summary judgment?
It means, you establish certain facts that are incontrovertible, and then make any rulings based on that.
The trial will then proceed only on facts/opinions that are actually in question.

In the actual proceedings, it was found that SCO did not own the copyrights.

maureen ogara 11/28/08 01:10:32 PM EST

Dear agent59512866:

If you look up summary judgment in either Wikipedia or the Law Encyclopedia you will see that – and I am quoting the Law Encyclopedia here:

“Two criteria must be met before summary judgment may be properly granted: (1) there must be no genuine issues of material fact, and (2) the movant must be entitled to judgment as a matter of law. A genuine issue implies that certain facts are disputed. Usually a party opposing summary judgment must introduce evidence that contradicts the moving party’s version of the facts. Moreover, the facts in dispute must be central to the case; irrelevant or minor factual disputes will not defeat a motion for summary judgment. Finally, the law as applied to the undisputed facts of the case must mandate judgment for the moving party. Summary judgment does not mean that a judge decides which side would prevail at trial, nor does a judge determine the credibility of witnesses. Rather, it is used when no factual questions exist for a judge or jury to decide.”

Wikipedia is a bit more colorful.

It says “if one side on a summary judgment motion can produce the evidence of ‘a dozen bishops,’ and the other side only has the testimony of a known liar, then summary judgment is not appropriate. Deciding on the relative credibility of witnesses is a question for trial.”

Wikipedia also says:

“The court must consider all materials in the light most favorable to the party opposing the motion for summary judgment” and that “It is not uncommon for summary judgments of lower U.S. courts in complex cases to be overturned on appeal. A grant of summary judgment is reviewed ‘de novo’ (meaning, without deference to the views of the trial judge) both as to the determination that there is no remaining genuine issue of material fact and that the prevailing party was entitled to judgment as a matter of law.”

Thus the argument that Judge Kimball had no business issuing that summary judgment. – MOG

LordSodomizer 11/27/08 12:16:47 PM EST

Maureen O'Gara, why do you keep covering this case?
You haven't predicted or interpreted anything correctly yet. Give it up, SCO has lost, they cannot win, they do not have a case, they don't own Linux or anything of value at this point. Also, despite what the "About Maureen O'Gara" may state, you are not a respected technology reporter. Now, don't take my comments as an insult, it's about high time someone has told you the truth:
a) You are dead wrong on SCO, other people have been wrong on them and have admitted it, grow up.
b) You don't write very well, you come off as a condescending know-it-all.
c) If you come and stalk me, I'll call the police on you.

agent59512866 11/26/08 02:16:12 PM EST

Dear Ms. O'Gara

Any first year law student know that summary judgment is about the law, not the facts. Kimball determined that the contract was as plain as the sunglasses in your photo and thus he needed no help to interpret it. He went even further and said that the suggested witnesses contradicted the plain wording of the contract and so he wouldn't consider their testimony anyhow.

This is all so simple, I cannot figure out how you get it so wrong again and again.

bryhawks 11/26/08 12:14:11 AM EST

Wow, and I thought you found your rock and stayed under it, guess I was woefully wrong... You truly need to step away from the keyboard, buttons aren't toys.

I see that your legalese is as good as your technical skills.