SCO vs. Novell: The Last Word Has Yet To Be Said

If you care about open source software [OSS] market trends and investment issues related to OSS for the IT industry’s largest companies, the OSS blogosphere is telling you that you should be excited about a Utah Federal District Court ruling on August 10. The judge ruled against SCO (SCOX) and in favor of Novell (NOVL) on a number of claims in a five-year-old court case over who owns 35-year-old UNIX copyrights related to a 12-year-old asset sale. But IBM (IBM), Microsoft (MSFT) and any company that runs Linux is also involved.

Remember, this ruling came down in Utah, where Novell was formed (although it is now based in Cambridge, Massachusetts), where SCO is located (although it was formed in Santa Cruz, California) and where the court still distributes forms in WordPerfect. Also remember today’s SCO is not the 1995 SCO, and today’s Novell is not the 1995 Novell (but that would take too long to explain). These factoids could all become relevant in any appeal process.

My first thought in reading Friday’s court opinion is that if I am ever charged with murder I will try to retain the lawyers that Novell used in 1995 in its dealings with SCO, when Novell was selling SCO its UNIX business. SCO says it thought it “bought the business” with all the normal-people, non-lawyer implications of those words. According to the judge, it looks like the only thing Novell sold to SCO in 1995 was some rights to trademarks Novell had already basically given to X/Open and the right to keep developing something descended from AT&T (T) UNIX System V.

The change from Novell selling SCO what SCO thought it had bought to Novell selling SCO a few useless trademarks all happened as the pens were being pulled out of the vest pocket protectors over a few days in mid September 1995. Were SCO’s lawyers and executives in 1995 this bad, or is there more we are not hearing?

Every debatable dispute in the ruling is decided in Novell’s favor by the judge. He never answers the mystery: What was the purpose of the amendment in 1996 to the Novell-SCO agreement in respect to copyrights if not to straighten out the copyright issue caused by the X/Open-related wording in the original? Even Novell at one point in June 2003 seemed to agree that that amendment meant SCO owned the UNIX copyrights according to the judge. And on the top of page 72 of the 102-page ruling, it even looks like the judge invited SCO to start the whole thing over again on different grounds.

So I don’t get all the blogosphere excitement. According to the OSS blogosphere, a new day has dawned, Linux is liberated, Microsoft is toast, and so forth (the usual litany). But this is going to be appealed for years. And I didn’t see anything that decided whether IBM or anyone else put any UNIX IP in Linux.

If the ruling survives the inevitable appeals, the blogosphere believes (and Novell has said) that Novell will do the right thing and indemnify IBM and the OSS community from further action. But why should Novell? If IBM and the OSS community did what SCO says it did vis-a-vis Unix IP, Novell shareholders should demand the same compensation SCO’s shareholders did.

As for Microsoft, all parties agreed that this had nothing to do with patents.

So come see me in five years and tell me how it all turns out. It is very likely that this is not the last word.

Comments

[hapmoorii:]

You wrote something so odd that it compelled me to register. I'm not going to take time reading over a bunch of documents I read a couple of years ago to respond to this article in the depth of detail it deserves because I have no time for it. What I will say is based on all of the contracts I read, I felt like SCO's case against IBM was completely without merit, and Novell's case against SCO was borderline.

With respect to IBM, you have to realize that what SCO was attempting to say was that SCO licensed Unix to IBM, IBM added stuff like JFS (a file system of their own making, not part of anything provided by SCO), IBM then open-sourced JFS and implemented it in Linux, and consequently, SCO's IP is in Linux. The problem with that is that JFS was never part of what SCO gave IBM. Now, could SCO have done a viral license ala GPL? I guess they could have, but they didn't. None of the AT&T agreements nor the SCO extensions signed by IBM granted SCO anything with regard to code produced by IBM.

Let's take it a step further. If you read the IBM/AT&T agreements/letters, you will see that IBM retains rights to its programmer's brains. Yeah, programming contracts are this stupid. What that meant is that just because a programmer worked on Unix code and remembered it, doesn't mean that AT&T somehow owned everything that programmer did in the future. In fact, I forget the exact wording, but I remember it being as if the guy could reproduce it almost verbatim from memory if he wanted. That's as long as it was from memory and not a copy/paste or transcription operation. So, if (big if) an IBM AIX programmer shifted over to work on Linux, as long as he/she was not actively looking at Unix code, it didn't matter. He could put whatever he wanted into Linux.

Now, on Novell and SCO. My memory is failing me somewhat, but I remember the SCO agreement as mainly giving SCO the right to operate the licensing business on behalf of Novell. I don't recall reading anything that sold the business to SCO. It was more like hiring an outside firm to handle contracts and invoicing or something like that. I'm sure it also included the Unix license they needed to continue their own brand of Unix.

Anyway, I may be a bit off because I considered all of this case closed a long time ago. From what I do remember, it just doesn't sound like very in-depth research was done for this article. It seems more like taking McBride's words at face value which has been proven time and again to be a naive path.

2007 Aug 16 02:35 PM

[Dennis Byron:]

Thanks for registering, hapmoori.

You don't say what it is that you found odd however? Therefore I am not sure if you are objecting to the judge's opinion (see link in article) or mine. I assume it is the judge's opinion you are arguing with because my only opinion above is that Novell had good lawyers and that Novell shareholders have a stake in this (this is an investment research site after all). There is nothing in my opinion based on anything by McBride, only by the Utah Federal District Court Judge, cited by page and paragraph where required.

Is it possible that somewhere in the past you read the 1995 Novell-SCO agreement but not the Ammendments that came out in 1995 and 1996???

Also according to the judge's ruling in August 2007, it is the non-compete clause and not the asset purchase list that gave SCO grounds to sue Novell. That they didn't is just a continuation of the bad legal advice they have been getting all along.

Either way, like they say, it ain't over til it's over.

Thanks again

Dennis

2007 Aug 17 08:16 AM