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SCO Opposes Novell Motion to Set Aside Judgment
Wednesday, January 06 2010 @ 03:35 AM EST

SCO, "by and through the Chapter 11 Trustee in Bankruptcy, Edward N. Cahn", has filed its opposition to Novell's Motion to Set Aside Judgment. This is the motion that will be argued on February 4. SCO argues that if Novell wanted to argue this, they should have appealed it, and that's a strong argument:
Novell could have filed a protective cross-appeal and argued that, if Novell were to lose on appeal, it would be entitled to certain relief. It did not.
And that's true. It could have done that. Maybe if SCO hadn't misappropriated money it should have paid Novell years ago, Novell might have. Whether it slams the door, I don't know.

We also get a glimpse of the position Cahn has taken on the slander of title claims, and why they imagine they have a shot at resurrecting all that. I'll also show you why I don't think they do.

Here's the filing, first:

01/05/2010 - 612 - MEMORANDUM in Opposition re 608 MOTION to Set Aside Judgment filed by Plaintiff SCO Group. (Attachments: # 1 Appendix of Unpublished Cases)(Normand, Edward) (Entered: 01/05/2010)

Here's their argument regarding slander of title:
In early 2003, without having made any such assertion in the years since the execution of the APA, and in the face of its own and SCO's longstanding conduct and public representations to the contrary, Novell publicly claimed for the first time that it had never transferred the UNIX copyrights under the APA, and therefore SCO did not own them. Shortly after Novell made its public announcement that it owned the UNIX copyrights, SCO presented Novell with a clarifying amendment to the APA indicating that Novell had not, in fact, retained the UNIX copyrights. Novell immediately issue a press release admitting that the amendment appeared to confirm that Novell had transferred copyrights to SCO. Novell later changed its position once again and claimed that the amendment accomplished no such result.

This led SCO, in early 2004, to sue Novell for (among other claims) slander of title.

That misrepresents the facts, in my view. Even if new SCO management are new to all this, Boies Schiller is not. How can they bring this hash back up again with the same refried leftovers? I can't fathom what they are thinking.

If you recall, Judge Kimball's August 2007 ruling pointed out that Novell had on at least three occasions over the years been asked by Santa Cruz and SCO to turn over the copyrights, and this is *after* the APA in 1995, and on all three occasions, it said no:

Even though SCO argues that Novell did not publicly claim ownership in the copyrights until it was presented with an opportunity to garner financial and strategic benefit in the market, there is no evidence that Novell's public statements were based on anything but its good faith interpretation of the contracts. The evidence in this case demonstrates that on several occasions, between the time the APA was signed and Novell made its public statements, Novell privately refused to transfer the copyrights to Santa Cruz and SCO. Santa Cruz attempted to gain the copyrights under Amendment No. 2 to the APA, Santa Cruz attempted to get a chain of title from Novell when it sold its assets to Caldera, and McBride repeatedly attempted to get Novell to transfer the copyrights when SCO began its SCOsource initiative. Whether or not SCO acquired those copyrights under the APA, it was aware that the parties disagreed about the ownership of the copyrights.
Does new SCO management know that? If not, they ought to. And if they do know it, how can they write a sentence that begins "In early 2003, without having made any such assertion in the years since the execution of the APA..."? It's, in my view, unconscionable. I'm afraid we are back to the early SCO nonsense arguments, and we'll have to return to all that and listen to it once again, in new mouths. The very thought of that makes me want to take a nap. Or fly to Rio. But I made a commitment, and I'll soldier on. But I do sincerely wonder, how do these folks sleep at night?

And since I am soldiering on, I'll present for you some resources to help you understand what is going on and what Kimball was referencing:

  • David Bradford's Declaration in which he tells about the Novell board meeting where it was decided not to give Santa Cruz the copyrights, because they didn't have the full amount of money to pay for them, and attached is his memo to the board and the board minutes.
  • Tor Braham's Declaration plus exhibits to make your eyes pop out, in which he explains another reason why Novell wanted to keep the copyrights. It was afraid Santa Cruz might go bankrupt. Which, if you accept SCO Group's story that it is Santa Cruz, which I don't, it eventually did.
  • Allison Amadia's Declaration. She negotiated Amendment 2 on behalf of Novell back in 1996. I described it this way the first time around:
    She tells an interesting tale.

    It seems that in 1996, Sabbath called her, and he told her that the APA, which she hadn't been involved in drafting, excluded the copyrights to UNIX and UnixWare and he claimed it shouldn't have. He wanted Novell to amend the APA to give the copyrights over to SCO. So she looked into what the intent had been.

    First, she read the contract, and sure enough. There she saw the copyrights were excluded. Next she contacted the guy who actually drafted the APA, then at the law firm of Wilson, Sonsini, Tor Braham, who confirmed that the copyrights were excluded and has also provided a helpful a declaration[PDF], with many exhibits. So by then she had confirmed that the copyrights were excluded from the APA by intent.

    Later, Sabbath sent her a draft of an Amendment 2. She copied that first draft into another document and saved it, and amazingly enough she is able to offer it now as Exhibit 1 all these years later. Man. Talk about digital preservation.

    Anyway, the language Sabbath wanted was quite broad, and it would have had the result of accomplishing what he originally asked for, by excluding copyrights from the APA's "Excluded Assets" list.

    She rejected that language, telling Sabbath that Novell wasn't going to transfer them. It was willing, though to confirm that SCO had a license to them.

    She retained all the drafts of the amendment, by the way, so it's not even he said, she said. And the amendment was to be effective on October 16, 1996, not retroactive to the APA's signing in 1995, something she says Sabbath never even thought to ask for.
  • all Novell's motions for summary judgment on slander of title plus Memorandum in support of its Motion for Summary Judgment on SCO's First Claim for Slander of Title as text, which ties all the above declarations together. All the exhibits are there too.

Incidentally, in helping write up descriptions of what is in all the exhibits from the Comes v. Microsoft antitrust litigation, to make them searchable by keywords, I came across one exhibit, number 502 [PDF], a confidential Microsoft financial report from 1991-92 which shows why Novell might have been worried about Santa Cruz going bankrupt. If you go to our Comes Exhibits by Numbers page, still being worked on, you'll find it, but here's the meat of what is in there, and recall that back then Microsoft was an investor in the company:

Finance and Administration Report, marked Microsoft Confidential, for FY91. On page 40 of the PDF, it lists under "Other Assets" Financial Assets (in millions) as of June 30, 1991: "Santa Cruz Operation - $19.9", unchanged from the year before. "Financial assets represent our minority investments in companies with strategic technology together with any non-performing securities that have been removed from the Treasury portfolio." On page 41, it breaks it down. Net revenues had climbed from $97.5 to $131.4, a 35% change; cost of revenue was up 37%, however, and Operating expenses were up 33%, so the net loss climbed from $4.5 to $6.1. "SCO's book value at June 30, 1991, unaudited, is $12.2 million, of which Microsoft's 18.1% share is $2.2 million. The cost of Microsoft's investment was $19.9 million, so cost in excess of our prorata share of book value is approximately $17.7 million. SCO had disappointing results for the quarter ended June 30, 1991. Net revenues were $32.2 million down from the previous quarter's net revenues of $33.6 million and below SCO's forecast of $36.2 million. The net loss for the quarter was $4.2 million, almost twice that for the previous quarter ($2.2 million). SCO's European business was especially slow, down 14% quarter to quarter. The company attributes this to increased competition, particularly from the IBM RISC system RS 6000. During the quarter, SCO entered into agreements with Compaq and DEC that provide funding for ACE software development in exchange for future product discounts. The agreements are for approximately $1 million each, are due on signing and are nonrefundable. SCO records revenue from these agreements as they incur the related engineering expense.

"SCO's large quarterly loss will affect their financing alternatives. They have had plans to obtain equity financing from select companies involved with ACE. In now appears SCO will need to obtain equity financing from a larger list of companies at a lower valuation. SCO financed its current quarter's loss by reducing receivables and stretching payables (including amounts due Microsoft) as well as from the ACE software agreements. WIth its tight cash flow, profitability in the next quarter will be important for its banking relationship.

"During the quarter, SCO reorganized its operations on a geographical and product-line business units basis, to pattern its operations after Microsoft's. Together with the reorganization, SCO is attempting to reduce operating expenses. Operating expenses increased at a lower rate during the quarter and SCO expects expenses to decline further. SCO's headcount declined slightly from 1,363 at March 31, 1991 to 1,330 at June 30, 1991.

See why Novell might have been worried? And what do you think of SCO's description of Santa Cruz's fabulous business in its Complaint in the IBM litigation? Doesn't match, does it? Well, truth from SCO, truth, the whole truth, and nothing but the truth? Since when?

And here it is as text:

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

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

Devan V. Padmanabhan (admitted pro hac vice)
DORSEY & WHITNEY LLP
[address]
[phone]
[fax]

David Boies (admitted pro hac vice)
Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
BOIES SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Stuart Singer (admitted pro hac vice)
BOIES SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Attorneys for Plaintiff, The SCO Group, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC., by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,

Plaintiff/Counterclaim-Defendant,

vs.

NOVELL, INC., a Delaware corporation,

Defendant/Counterclaim-Plaintiff.

SCO'S MEMORANDUM IN
OPPOSITION TO NOVELL'S RULE
60(b) MOTION FOR RELIEF FROM
FINAL JUDGMENT

Civil No. 2:04 CV-00139

Judge Ted Stewart

(1)

TABLE OF CONTENTS

TABLE OF AUTHORITIES III
PRELIMINARY STATEMENT 1
BACKGROUND 2
  A. The Parties' Respective Claims 2
  B. This Court's Rulings and Findings 3
  C. The Tenth Circuit's Opinion and Mandate 5
ARGUMENT 7
I. THE MANDATE RULE BARS NOVELL'S MOTION 7
II. NOVELL'S MOTION FAILS UNDER RULE 60(b) 9
  A. Rule 60(b) Does Not Trump the Mandate Rule 9
  B. Novell's Motion Does Not Fall Within Rule 60(b)(5) 10
CONCLUSION 14

ii (2)

TABLE OF AUTHORITIES

Cases
Ackerman v. United States,
340 U.S. 193 (1950)
2, 10
Bethea v. Levi Strauss & Co.,
916 F.2d 453 (8th Cir. 1990)
7
Cashner v. Freedom Stores, Inc.,
98 F.3d 572 (10th Cir. 1996)
10, 11
Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am.,
962 F.2d 1528 (10th Cir. 1992)
7, 9
Coltec Indus., Inc. v. Hobgood,
280 F.3d 262 (3d Cir. 2002)
10
Cruikshank & Co. v. Dutchess Shipping Co.,
112 F.R.D. 4 (S.D.N.Y. 1986)
10
Doe v. Chao,
511 F.3d 461 (4th Cir. 2007)
7
FDIC v. United Pac. Ins. Co.,
152 F.3d 1266 (10th Cir. 1998)
8, 11
Fox v. Mazda Corp. of Am.,
868 F.2d 1190 (10th Cir. 1989)
7
Huffman v. Saul Holdings, Ltd. P'ship,
262 F.3d 1128 (10th Cir. 2001)
9
In re Pettle,
410 F.3d 189 (5th Cir. 2005)
10
Lubben v. Selective Serv. Sys. Local Bd. No. 27,
453 F.2d 645 (1st Cir. 1972)
9, 11
MaCarthur v. San Juan County,
391 F. Supp. 2d 895 (D. Utah 2005)
7

iii (3)

Massengale v. Oklahoma Bd. of Examiners in Optometry,
30 F.3d 1325 (10th Cir. 1994)
11
Pierce v. Cook & Co.,
518 F.2d 720 (10th Cir. 1975)
10
Procter & Gamble Co. v. Haugen,
506 F. Supp. 2d 883 (D. Utah 2007)
7
Ray v. Simmons,
No. 03-3006-WEB, 2005 WL 2807362 (D. Kan. Oct. 26, 2005)
8
SCO Group, Inc. v. Novell, Inc.,
No. 08-4217, 2009 WL 2581735 (10th Cir. Aug. 24, 2009)
6
Steinert v. The Winn Group, Inc.,
No. 98-2564-CM, 2006 WL 3028249 (D. Kan. Oct. 11, 2006)
9
United States v. Husband,
312 F.3d 247 (7th Cir. 2002)
7
United States v. Webb,
98 F.3d 585 (10th Cir. 1996)
7, 8
Ute Indian Tribe v. State of Utah,
114 F.3d 1513 (10th Cir. 1997)
10
Van Skiver v. United States,
952 F.2d 1241 (10th Cir. 1991)
11
Volvo Trademark Holding Aktiebolaget v. Clark Mach. Co.,
510 F.3d 474 (4th Cir. 2007)
7
Wadley v. Equifax Info. Servs., LLC,
296 Fed. Appx. 366 (4th Cir. 2008)
10
Werner v. Carbo,
731 F.2d 204 (4th Cir. 1984)
10
Statutes and Rules
18B Federal Practice & Procedure § 4478.3 (2009) 7

iv (4)

Plaintiff, The SCO Group, Inc. ("SCO"), by and through the Chapter 11 Trustee in Bankruptcy, Edward N. Cahn, respectfully submits this Memorandum in Opposition to the Motion of Defendant, Novell, Inc. ("Novell"), pursuant to Rule 60(b) for Relief from Final Judgment.

PRELIMINARY STATEMENT

Novell asks this Court to disregard the clear mandate from the Tenth Circuit, to forgive Novell's failure to raise its argument previously, to apply Rule 60(b)(5) in an unprecedented fashion, and to take all of those steps without any compelling justification. In addition to these threshold problems, Novell's motion fails on its "merits," where Novell's motion is an inaccurate assessment of this Court's prior decision. These constitute three independent grounds for denial of Novell's motion.

First, the mandate rule bars the motion. Novell's failure even to acknowledge the rule is telling. The mandate rule prevents a party from having the district court consider an argument that the party could have made on the prior appeal. That is exactly what has happened here. SCO appealed from not only this Court's (Kimball, J.) entry of summary judgment against SCO in August 2007, but also the Court's findings from the parties' 2008 bench trial. Novell could have filed a protective cross-appeal and argued that, if Novell were to lose on appeal, it would be entitled to certain relief. It did not. The argument it makes now is the exact same one it chose not to make then, and Novell offers no justification for the Court to disregard that deliberate strategy. Under these circumstances, the mandate rule precludes this Court from considering the argument.

Second, independent of the specific application of the mandate rule, Rule 60(b)(5) does not serve as a basis for relieving a party from the consequences of its own strategic

(4)

decision in deciding not to pursue a cross-appeal. The Rule 60 movant cannot be relieved of its deliberate choice not to pursue an issue on appeal merely because hindsight seems to indicate to him that his decision not to appeal was wrong. In this specific context the Supreme Court has long held: "There must be an end to litigation someday, and free, calculated, deliberate choices are not to be relieved from." Ackerman v. United States, 340 U.S. 193, 211-12 (1950).

Third, Novell's motion fails on its "merits," because the Court's prior summary judgment ruling was not a necessary element of its subsequent findings at trial. SCO is obligated to remit to Novell a percentage of royalties paid to SCO under "SVRX Licenses," under the APA by which Novell sold the UNIX business to SCO's predecessor, the Santa Cruz Organization. The premise of Novell's motion is that in its findings from the bench trial, this Court decided that SCO was entitled to keep monies from certain licenses only because SCO did not own the UNIX copyrights when it executed those licenses, and thus by definition could not have executed an "SVRX License." Yet the Court said much more. The Court's findings reflect the independent grounds that (1) the contracts were not licenses at all, and (2) if the contracts were licenses, they were UnixWare licenses, or else SVRX licenses incidental to UnixWare licenses, and SCO has no obligation to remit to Novell any royalties from them.

BACKGROUND

A. The Parties' Respective Claims

In September 1995, The Santa Cruz Operation, Inc. (SCO's predecessor-in- interest) and Novell entered into the APA. As a result of that transaction, SCO owns the UNIX and UnixWare technology and licensing businesses. SCO contends that in

2 (6)

connection with its ownership of the technology, it also acquired and owns the UNIX and UnixWare copyrights underlying the UNIX technology and licensing business.

In early 2003, without having made any such assertion in the years since the execution of the APA, and in the face of its own and SCO's longstanding conduct and public representations to the contrary, Novell publicly claimed for the first time that it had never transferred the UNIX copyrights under the APA, and therefore SCO did not own them. Shortly after Novell made its public announcement that it owned the UNIX copyrights, SCO presented Novell with a clarifying amendment to the APA indicating that Novell had not, in fact, retained the UNIX copyrights. Novell immediately issue a press release admitting that the amendment appeared to confirm that Novell had transferred copyrights to SCO. Novell later changed its position once again and claimed that the amendment accomplished no such result.

This led SCO, in early 2004, to sue Novell for (among other claims) slander of title. Novell counterclaimed, alleging that (among other things) SCO was obligated to remit to Novell 95% of any "royalties" that SCO received under "SVRX Licenses," a term used, but not defined, in the APA. Novell alleged that the agreements that SCO had entered into with Sun Microsystems, Inc. ("Sun"), Microsoft Corporation ("Microsoft"), and several agreements under the "SCOsource" licensing program (the "SCOsource Agreements") constituted, in whole or in part, "SVRX Licenses."

B. This Court's Rulings and Findings

In August 2007, this Court (Kimball, J.) granted Novell's motion for summary judgment against SCO on SCO's claim for slander of title and also entered a partial summary judgment on liability on certain of Novell's counterclaims, holding that Novell

3 (7)

was entitled to additional royalty amounts for agreements entered by SCO after 1995 that constituted "SVRX licenses." SCO filed a bankruptcy petition in Delaware under Chapter 11 in September 2007. The Bankruptcy Court lifted the automatic stay in bankruptcy so that Judge Kimball could conduct a non-jury trial to determine the royalties to which Novell was entitled.

In April and May 2008, the parties proceeded to a bench trial on Novell's claim for recovery of the alleged "SVRX Royalties" under the Sun, Microsoft and SCOsource Agreements. Although Novell had originally sought over $30 million, the Court awarded Novell approximately $2.5 million, plus interest.

The Court decided that SCO was not obligated to remit to Novell any monies received under the SCOsource Agreements. The Court reasoned that under those agreements SCO licensed only the rights to use copyrights that SCO owned at the time, and since (under the Court's August 2007 order) SCO did not own the UNIX copyrights, it could not have licensed the right to use them to the SCOsource licensees. In addition, the Court concluded that the SCOsource Agreements were not "SVRX Licenses" in either substance or form, but rather were UnixWare licenses for which SCO did not owe Novell any royalties.

Addressing the fact that the Agreements contained SCO's releases of rights, the Court explained:

Although Novell asserts that these provisions should be viewed as a license because a license insulates a party from liability, the release terms of the SCOsource Agreements, including Section 2 of the Microsoft Agreement and Section 12 of the 2003 Sun Agreement, are not licenses to product. Unlike the licenses to product included under the APA, these releases are not royalty-bearing SVRX Licenses.

4 (8)

(Findings of Fact, Conclusions of Law, and Order (July 16, 2008), at 29.) Considering SCO's licensing practices over the years, moreover, the Court then further reasoned:

SCO's July 2003 press release regarding SCOsource agreements states SCOsource agreements are UnixWare licenses and the hold harmless clauses are incidental to a UnixWare license. In the SCOsource program, the pricing of a SCOsource license was set as the same as SCO's pricing for a UnixWare binary license. This pricing is consistent with SCO's use of the "one line of code rule" and practice of not charging additional amounts for the prior products listed in a license for the latest release. It also demonstrates that SCO believed that the SCOsource license had a value equivalent to a binary license to its most recent release of UnixWare.
(Id. at 30.) In referring to Section 2 of the Microsoft Agreement, the Court then cross- referenced its earlier discussion of the SCOsource Agreements, where the "release does not specify any technology," and further reasoned that the SVRX license in Section 4 of the Agreement was incidental to a UnixWare license, and on that basis lacked any independent value. (Id. at 31-33.)

The Court decided, however, that SCO was obligated to remit a portion of the money received under the Sun Agreement attributable to the part of the agreement that revised or relaxed a confidentiality clause in a prior royalty buy-out with Sun, from 1994. The Court calculated that this amount was $2.5 million.

C. The Tenth Circuit's Opinion and Mandate

After this Court entered final judgment, based upon its August 2007 order on summary judgment and its findings from the 2008 bench trial, SCO appealed. SCO argued to the Tenth Circuit that the Court erred in entering summary judgment against SCO with respect to the ownership of copyrights and Novell's actions to prevent SCO

5 (9)

from enforcing contract rights. SCO further argued that the Court erred in finding at the bench trial that Novell was entitled to any money from the Sun Agreement.

Novell did not file a cross-appeal. Novell thus did not argue that this Court erred, in any respect, in finding that Novell was not entitled to any money under the SCOsource Agreements or under any part of the Microsoft Agreement. Specifically, Novell did not argue conditionally that if the Tenth Circuit were to reverse this Court's entry of summary judgment against Novell, it should vacate and remand the determination that Novell was not entitled to any portion of the revenue from the SCOsource Agreements or Microsoft Agreement.

On August 24, 2009, the Tenth Circuit reversed this Court's entry of summary judgment against SCO relating to the ownership of copyrights and to the waiver of SCO's contract claims. The Court of Appeals, rejected SCO's arguments and affirmed the finding at trial that Novell is entitled to approximately $2.5 million from the Sun Agreement. SCO Group, Inc. v. Novell, Inc., No. 08-4217, 2009 WL 2581735 (10th Cir. Aug. 24, 2009). On September 8, 2009, Novell filed a motion for rehearing and rehearing en banc. In its petition, Novell again did not argue that the Tenth Circuit's reversal of this Court's entry of summary judgment would have any bearing on this Court's findings at trial. On October 20, 2009, the Tenth Circuit denied the petition. On October 27, 2009, Novell moved to stay the mandate pending its petition for writ of certiorari to the United States Supreme Court. On October 28, 2009, the Tenth Circuit denied the motion, the day after it was filed. On October 29, 2009, the Tenth Circuit issued its Mandate.

6 (10)

ARGUMENT

I. THE MANDATE RULE BARS NOVELL'S MOTION

The mandate rule governs the scope of the district court's authority on remand. Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 962 F.2d 1528, 1534 (10th Cir. 1992); Fox v. Mazda Corp. of Am., 868 F.2d 1190, 1194-95 (10th Cir. 1989); Procter & Gamble Co. v. Haugen, 506 F. Supp. 2d 883, 886-87 (D. Utah 2007); MaCarthur v. San Juan County, 391 F. Supp. 2d 895, 920 n.35 (D. Utah 2005).

The rule prevents a party from having the district court consider an argument that the party could have made on appeal. United States v. Webb, 98 F.3d 585, 589 (10th Cir. 1996); accord Doe v. Chao, 511 F.3d 461, 465 (4th Cir. 2007) (holding that under the mandate rule, "any issue that could have been but was not raised on appeal is waived and thus not remanded" (quotations and citation omitted)); Volvo Trademark Holding Aktiebolaget v. Clark Mach. Co., 510 F.3d 474, 481 (4th Cir. 2007) (same); United States v. Husband, 312 F.3d 247, 250-51 (7th Cir. 2002) (same); 18B Federal Practice & Procedure § 4478.3 (2d ed. 2009) (under the mandate rule the district court is not permitted "to reconsider its own rulings made before appeal and not raised on appeal").

The rule thus specifically applies where an appellee has failed to file a protective cross-appeal — including an appeal whose merits would be relevant only if the appellant were to prevail. Webb, 98 F.3d at 589; accord Bethea v. Levi Strauss & Co., 916 F.2d 453, 456 (8th Cir. 1990). The mandate rule is rooted in considerations of efficiency, finality, and the hierarchy of appellate court-trial court relations. Fox, 868 F.2d at 1194; see also Doe, 511 F.3d at 465.

7 (11)

The mandate rule bars Novell's motion. The final judgment that SCO appealed to the Tenth Circuit included not only this Court's (Kimball, J.) entry of summary judgment against SCO in August 2007, but also the Court's findings from the parties' 2008 bench trial. Novell could have filed a protective cross-appeal and argued that, if SCO were to prevail on its appeal from the August 2007 order, then Novell would be entitled to certain relief — namely, reversal of the Court's resolution of Novell's alleged entitlement to royalties from the SCOsource and Microsoft Agreements. For whatever reasons, Novell chose not to file any such cross-appeal.

Novell's motion falls directly within the mandate rule. This is not a situation in which new facts have unfolded such that the party seeking to avoid the mandate rule may credibly contend that it could not have made its argument in the appellate court. Cf. FDIC v. United Pac. Ins. Co., 152 F.3d 1266, 1273 (10th Cir. 1998) (applying Rule 60(b) and considering facts that could not have been raised on appeal and an argument that "was precluded from consideration at trial by the district court's pre-trial order"). The argument that Novell now makes is the exact same one it could have made to the Tenth Circuit, but simply chose not to make. See, e.g., Webb, 98 F.3d at 589 (where government appealed to challenge downward-departure sentence and defendant failed to cross-appeal, defendant failed to preserve challenge to the conviction in any court); Ray v. Simmons, No. 03-3006-WEB, 2005 WL 2807362, at *2 (D. Kan. Oct. 26, 2005) (holding that mandate rule precludes Rule 60(b) motion on grounds of new legal authority where the "new" case was decided two months before the Tenth Circuit's resolution of the movant's appeal).

8 (12)

Novell also does not satisfy any exception to the mandate rule. The rare "exceptional circumstances" in which a district court may "deviate from the mandate" have been described as dramatic changes in legal authority, significant new evidence that was not previously obtainable, or blatant error in the prior decision that would result in "serious injustice." Huffman v. Saul Holdings Ltd. P'ship, 262 F.3d 1128, 1133 (10th Cir. 2001). No such circumstance exists here. There has been no change in legal authority, no new evidence that was previously unobtainable, no error in the prior decision. See, e.g., Steinert v. The Winn Group, Inc., No. 98-2564-CM, 2006 WL 3028249, at *2 (D. Kan. Oct. 11, 2006) (finding that no exception to the mandate rule applied where plaintiff's counsel had recently discovered discrepancies in calculating fee award that counsel simply failed previously to identify).

II. NOVELL'S MOTION FAILS UNDER RULE 60(B)

A. Rule 60(b) Does Not Trump the Mandate Rule.

With respect to the form of motion Novell has brought, neither this Court nor the Tenth Circuit has ever applied Rule 60(b)(5) to create any exception to the mandate rule. Rule 60(b) does not trump the mandate rule, but rather is subject to it. See Colo. Interstate Gas, 962 F.2d at 1534 (holding that as a "corollary" to the mandate rule, "we are convinced that Rule 60(b)(6) cannot be properly used to alter the substantive content of a judgment once it has been affirmed on appeal except in extraordinary situations"); Lubben v. Selective Serv. Sys. Local Bd. No. 27, 453 F.2d 645, 650 (1st Cir. 1972) (Rule 60(b)(5) does not apply where the moving party could have argued the merits of the issue in the prior appeal).

9 (13)

In addition, independent of the operation of the mandate rule, the well-established law across jurisdictions holds that a party may not invoke Rule 60(b) to try to remedy a "considered choice not to appeal." Ackerman v. United States, 340 U.S. 193, 211 (1950). The Rule 60 movant "cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong." Id. "There must be an end to litigation someday, and free, calculated, deliberate choices are not to be relieved from." Id. at 211-12; accord Cashner v. Freedom Stores, Inc., 98 F.3d 572, 579-80 (10th Cir. 1996); see also Wadley v. Equifax Info. Servs., LLC, 296 Fed. Appx. 366, 368 (4th Cir. 2008) (per curiam) (same); Coltec Indus., Inc. v. Hobgood, 280 F.3d 262, 274-75 (3d Cir. 2002) (same); In re Pettle, 410 F.3d 189, 192-93 (5th Cir. 2005) (same).1

B. Novell's Motion Does Not Fall Within Rule 60(b)(5).

Rule 60(b)(5) permits the Court to relieve a party from a final judgment "based on an earlier judgment that has been reversed or vacated." "Rule 60(b) relief is only

10 (14)

appropriate under extraordinary circumstances." Massengale v. Okla. Bd. of Examiners in Optometry, 30 F.3d 1325, 1330 (10th Cir. 1994).2 The prior judgment on which the final judgment is based "must be a necessary element of the decision." Lubben, 453 F.2d at 650. Novell cites no on-point case, nor is SCO aware of any, applying Rule 60(b)(5) in these circumstances.

C. The District Court's Prior Decision Rests on Grounds Independent
From Those Novell Relies Upon as Having Been Vacated.

The premise of Novell's motion is that the sole ground for this Court's determination that no royalty was due Novell on the Microsoft Agreement and the SCOsource Agreements was the Court's prior summary judgment decision that Novell, not SCO, owned the UNIX copyrights and thus these agreements could not "license" intellectual property SCO did not own. This fundamental premise is wrong. The Court's prior summary judgment decision was not a "necessary element" of its findings at trial. Instead, the Court's decision rested on three additional independent bases: (1) these Agreements in releasing claims were different from licenses of a product — the only type of agreement from which Novell was entitled to any royalties; (2) to the extent they were to be considered a license at all, they were licenses of UnixWare, a product which SCO

11 (15)

was entitled to license and to keep 100% of the proceeds; and (3) to the extent they were considered SVRX licenses, they were incidental to UnixWare licenses, and thus they had no independent value, and therefore SCO was not obligated to pay royalties to Novell from them.

Addressing the fact that the Agreements contained SCO's releases of rights, the Court explained:

Although Novell asserts that these provisions should be viewed as a license because a license insulates a party from liability, the release terms of the SCOsource Agreements, including Section 2 of the Microsoft Agreement and Section 12 of the 2003 Sun Agreement, are not licenses to product. Unlike the licenses to product included under the APA, these releases are not royalty-bearing SVRX Licenses.
(Findings of Fact, Conclusions of Law, and Order (July 16, 2008) at 29.) The Court noted: "Novell acknowledges that it is not entitled to royalties from any UnixWare licenses." (Id. at 9.) Considering SCO's licensing practices over the years, moreover, the Court then further reasoned:
SCO's July 2003 press release regarding SCOsource agreements states SCOsource agreements are UnixWare licenses and the hold harmless clauses are incidental to a UnixWare license. In the SCOsource program, the pricing of a SCOsource license was set as the same as SCO's pricing for a UnixWare binary license. This pricing is consistent with SCO's use of the "one line of code rule" and practice of not charging additional amounts for the prior products listed in a license for the latest release. It also demonstrates that SCO believed that the SCOsource license had a value equivalent to a binary license to its most recent release of UnixWare.
(Id. at 30.) In referring to Section 2 of the Microsoft Agreement, the Court then cross- referenced its earlier discussion of the SCOsource Agreements, where the "release does

12 (16)

not specify any technology," and further reasoned that the SVRX license in Section 4 of the Agreement was incidental to a UnixWare license. (Id. at 31-33.)

With respect to the question of SVRX licenses incidental to UnixWare licenses, SCO argued at trial that such incidental SVRX licenses had no independent value beyond the UnixWare portion of the license. The Court concluded that where SVRX products were licensed with UnixWare, "it did not change the price paid for the most recent version of UnixWare." (Id. at 33.) The Court further concluded that the SVRX products licensed with UnixWare lacked independent value, where (1) "there was not a market for a license to prior SVRX products because those prior products no longer utilized the most current hardware," and (2) SCO "did not market or sell any prior SVRX product in a stand alone license." (Id.) Closing the loop, the Court expressly found that "the term incidental as used in the APA is referring to the practice of Novell and SCO to list prior products in licenses for the newest release and charge only for the license to the newest release." (Id.) Summarizing its foregoing analyses of the Microsoft Agreement, the Court concluded: "Accordingly, the court concludes that Novell is not entitled to any of the revenue SCO received under the 2003 Microsoft Agreement." (Id. at 34.)

These grounds constitute independent and adequate support for the Court's determination at trial that the Microsoft Agreement and SCOSource Agreements were not SVRX Licenses to which Novell was entitled to any royalty. Even if the court had not entered a summary judgment in favor of Novell on the copyright ownership question, it articulated the grounds for reaching the same decision on the Microsoft and SCOsource licenses. If Novell wished to challenge this decision, it was required to have filed an appeal or cross-appeal. It did not.

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CONCLUSION

SCO, by and through the Chapter 11 Trustee, respectfully submits, for the reasons set forth above, that the Court should deny Novell's Rule 60(b) motion.

DATED this 5th day of January, 2010.

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

BOIES, SCHILLER & FLEXNER LLP
David Boies
Robert Silver
Stuart H. Singer
Edward Normand

DORSEY & WHITNEY LLP
Devan V. Padmanabhan

By: /s/ Edward Normand

14 (18)

CERTIFICATE OF SERVICE

I, Edward Normand, hereby certify that on this 5th day of January, 2010, a true and correct copy of the foregoing SCO'S MEMORANDUM IN OPPOSITION TO NOVELL'S RULE 60(b) MOTION FOR RELIEF FROM FINAL JUDGMENT was filed with the court and served via electronic mail to the following recipients:

Thomas R. Karrenberg
Heather M. Sneddon
ANDERSON & KARRENBERG
[address]

Michael A. Jacobs
George C. Harris
David E. Melaugh
MORRISON & FOERSTER
[address]

Counsel for Defendant and Counterclaim-Plaintiff Novell, Inc.

/s/ Edward Normand
Edward Normand
Boies, Schiller & Flexner LLP
[address]
[phone]
[fax]
[email]

15 (19)

1 Novell cites Pierce v. Cook & Co., 518 F.2d 720, 722 (10th Cir. 1975), for the general proposition that Rule 60(b) gives the Court equitable power to serve justice. The court in Pierce acknowledged an extraordinary circumstance where a subsequent change in state law arose out of the very accident in which plaintiffs had been involved, but the Tenth Circuit has emphasized that Pierce was an "extraordinary case" based on an "unusual combination of events," and has reaffirmed the general rule that a change in the law or in the judicial view of an established rule of law is not such an extraordinary circumstance justifying relief. Ute Indian Tribe v. State of Utah, 114 F.3d 1513, 1522 (10th Cir. 1997). In addition, as shown above, the mandate rule applies.

Novell also cites in this context the Fourth Circuit's decision in Werner v. Carbo, 731 F.2d 204 (4th Cir. 1984), in which the court decided to excuse the moving party's inadvertent failure to name both the doctor and his professional corporation in their prior appeal papers. The case has nothing to say about a decision not to advance arguments on appeal or cross-appeal. The courts have distinguished Werner on that precise basis. See, e.g., Cruikshank & Co. v. Dutchess Shipping Co., 112 F.R.D. 4, 7 (S.D.N.Y. 1986) (holding that the defendants "made a considered decision not to appeal. This is unquestionably a very different situation than the narrow exception of Werner.").
2 On the question of extraordinary circumstances, Novell cites Van Skiver v. United States, 952 F.2d 1241 (10th Cir. 1991), but in that case, as in Cashner, the Tenth Circuit held that Rule 60(b) is not available to allow a party to argue an issue that it previously had the opportunity to argue, whether it made the argument or not. Id. at 1243.

Novell also cites FDIC, 152 F.3d 1266, in which the Tenth Circuit found that reliance on Rule 60(b) in the face of the mandate rule was appropriate based on "facts arising after the trial," such that the motions "did not raise an issue which was resolved on appeal, either expressly or impliedly." Id. at 1273. Here, in contrast, and in keeping with all of the law cited herein concerning the consequences of a party's failure to raise on appeal an argument it could have raised, Novell raises an issue — the consequences of a reversal of the conclusion that SCO did not own the UNIX copyrights — available at the time of appeal, and thus resolved on appeal.

  


SCO Opposes Novell Motion to Set Aside Judgment | 147 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Thread
Authored by: bugstomper on Wednesday, January 06 2010 @ 03:45 AM EST
Please summarize the error->correction or s/error/correction/ in the Title
line

[ Reply to This | # ]

News Picks Thread
Authored by: bugstomper on Wednesday, January 06 2010 @ 03:49 AM EST
Please include the headline of the News Picks article you are writing about in
the Title to make it easy to scan the
threads. Use HTML clickies for convenient
clickability.

[ Reply to This | # ]

Off Topic threads
Authored by: bugstomper on Wednesday, January 06 2010 @ 03:51 AM EST
Please stay off topic and highly clickable

[ Reply to This | # ]

an easy one
Authored by: Anonymous on Wednesday, January 06 2010 @ 04:15 AM EST
>>> How can they bring this hash back up again with the same refried
leftovers? <<<

Ah, an easy one. It's because Bonnie Fatell is doing nothing but her homework
and still she is not a techie and still she cannot grasp the GPL (like 99% of
other lawyers).

[ Reply to This | # ]

What came first, the hen or the golden egg thief?
Authored by: IMANAL_TOO on Wednesday, January 06 2010 @ 04:25 AM EST
"Even if new SCO management are new to all this, Boies Schiller is
not."

That raises a point I'm not sure I have seen. Were Boies Schiller contacted by
Caldera/SCO before Darl McBride was employed as CEO? Or did McBride contact
them?

I think it may be relevant in determining their position here. Has anyone seen
anything relevant on this matter?



---
______
IMANAL


.

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October 16, 1996
Authored by: Ian Al on Wednesday, January 06 2010 @ 04:33 AM EST
She retained all the drafts of the amendment, by the way, so it's not even he said, she said. And the amendment was to be effective on October 16, 1996, not retroactive to the APA's signing in 1995, something she says Sabbath never even thought to ask for.
That is clearly wrong as the appeal court went back to the time of the APA effective date in the SCO time machine and showed how Amendment 2 convoluted time such as to change the intent of the people who knew of the APA negotiations except for the lawyers who didn't change their mind except that we don't know what was on the mind of the Santa Cruz lawyers because they didn't tell us.

On rereading that last paragraph I can see how it might lack clarity. I'd better make sure I don't click the Submit button before I re-edit th... Oh, DRAT!

---
Regards
Ian Al

Happy new year, miserable old lies.

[ Reply to This | # ]

SCO Opposes Novell Motion to Set Aside Judgment
Authored by: Ian Al on Wednesday, January 06 2010 @ 04:58 AM EST
I'm replying to this article in several comments because my sig is particularly relevant.
In addition, the Court concluded that the SCOsource Agreements were not "SVRX Licenses" in either substance or form, but rather were UnixWare licenses for which SCO did not owe Novell any royalties.
No the court did not. What the court said is that if folk were stupid enough to buy a promise not to sue without any rights to SVRX or Unixware use then more fool them. Caveat emptor.

The court did say that the Microsoft contract was clearly a Unixware contract because it included the licences for Unixware. This is quite reasonable since Microsoft has a clear need to use SVRX code optimised for the X86 processor as it is a core part of their business. The product they chose to licence was UnixWare. (Have I got that quite right?)

It looks from what PJ says that the equitable review of that part of the decision will fail on technical grounds. What I am not sure of is the following,

The Rule 60 movant cannot be relieved of its deliberate choice not to pursue an issue on appeal
Novell clearly missed a trick in not presenting the appropriate motion at the appropriate time, but is there something with the court that shows this to be 'deliberate'? Perhaps this is a case where a good lawyer 'knew, or should have known,' what to do for the best.

---
Regards
Ian Al

Happy new year, miserable old lies.

[ Reply to This | # ]

SCO Wreck II: The Wrath of Cahn
Authored by: Anonymous on Wednesday, January 06 2010 @ 05:01 AM EST
It sheds quite some interesting light on the personal qualities of Mr Cahn that
he is still touring with this circus. It seems that the paycheque is good enough
to run this sequel to "SCO: The Cross-Motion Picture".

In a stunning similarity to some well-known Sco-Fi movie series, "SCO: The
Cross-Motion Picture" had received lackluster critical and commercial
responses. Thus, series creator Boies&Schiller has been forced out of the
sequel's production. Seems that it even did not require 12 days to write the
script to "SCO Wreck II: The Wrath of Cahn".

The production will deploy various cost-cutting techniques to keep within
budget, including utilizing miniatures from past projects and re-using motion
footage from the previous "SCO: The Cross-Motion Picture".

Now that Cowboy Spook has officially died in SCO Wreck II, will McBride begin a
story arc which will ensure its ... sorry: his, return in SCO Wreck IV: The Ride
Home?

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SCO Opposes Novell Motion to Set Aside Judgment
Authored by: Yossarian on Wednesday, January 06 2010 @ 06:22 AM EST
"That misrepresents the facts, in my view. Even if new SCO management are
new to all this, Boies Schiller is not. How can they bring this hash back up
again with the same refried leftovers? I can't fathom what they are thinking.
"

I can.
Boies Schiller knows pretty well that the facts are not on his
side. His best bet is to argue zillion things, put a big smoke
screen, and wait for Novell to make mistakes. There is always
a chance that somebody in Novell's team will not be as good as
PJ and will not file the best response.

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Maybe we should email a copy to the Trustee and Ms. Fattell?
Authored by: The Mad Hatter r on Wednesday, January 06 2010 @ 06:29 AM EST

Now I don't know what the rules are, but if someone inside TSCOG is lying to the
lawyers and the trustee, they need to know it. Of course they probably wouldn't
believe that a copy of document 502 that was emailed to them was accurate. I
know that if someone emailed me something like that, I'd be skeptical.


---
Wayne

http://crankyoldnutcase.blogspot.com/

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Mandate Rule
Authored by: Steve Martin on Wednesday, January 06 2010 @ 07:19 AM EST

The SCO Group cites to the "mandate rule" to support its contention that Novell's motion must be denied. I did some digging, here's what I was able to come up with.

The mandate rule basically says that the lower court must adhere to the orders and findings of the higher court in issues on which the higher court has ruled. In other words, if the appellate court overrules a finding of a district court and sends the case back down for further proceedings, it must proceed as the mandate has directed, and cannot disregard the mandate. This makes sense in its framework, else the whole idea of an appeal would be meaningless.

In the appeal to the Tenth Circuit, The SCO Group appealed five issues:

(1) SCO's predecessor-in-interest, The Santa Cruz Operation, Inc. ("Santa Cruz"), purchased the UNIX operating system business from Novell under an Asset Purchase Agreement ("APA"). Did the district court err in concluding, as a matter of law, that Santa Cruz did not obtain the copyrights to the UNIX and UnixWare source code under the APA, but only an implied license?

(2) Did the district court err in concluding, as a matter of law, that if the APA did not itself transfer the copyrights, then SCO is not entitled to specific performance, requiring the transfer of the copyrights now?

(3) Did the district court err in concluding, as a matter of law, that Novell has the right under the APA to force SCO to waive legal claims against IBM for its breach of Software and Sublicensing Agreements that Novell had sold to Santa Cruz under the APA?

(4) Did the district court err in concluding that if Novell has the right under the APA to waive SCO's rights against IBM, then Novell did not have to comply with the implied covenant of good faith and fair dealing in exercising that right?

(5) Did the district court err in concluding, as a matter of law, that Novell retained an interest in royalties from SCO's 2003 agreement with Sun Microsystems ("Sun") and other post-APA contracts related to SVRX technology?
While these issues do not explicitly mention the Microsoft agreement, as they did the Sun agreement, one might be able to make a case that the inclusion of "other post-APA contracts" might include the Microsoft deal.

Looking at the Tenth Circuit's discussion and ruling on this issue, we find that their ruling does not even mention the Microsoft licenses or any other post-APA deals. The Court only discussed and ruled on the Sun agreement, and they affirmed the District Court in that issue. Nor is Novell asking the District Court to set aside the ruling on the Sun agreement. Here's what they requested:

Specifically, Novell asks the Court to set aside the portion of the Final Judgment determining that Novell was not entitled to royalties from the 2003 Microsoft Agreement and the Other SCOsource Licenses entered into by The SCO Group, Inc. because those licenses did not constitute a license of the copyrights of the UNIX System V operating system ("SVRX License").

The basis for that portion of the Final Judgment was the District Court's earlier summary judgment ruling that the UNIX copyrights were owned by Novell, not SCO. Based on that ruling, the District Court found that the portion of the Microsoft Agreement and the Other SCOsource Licenses that purported to release SCO's claims for infringement of UNIX System V copyrights could not constitute an SVRX License because SCO did not own those copyrights and hence had no rights to release.

The Court's ruling in the trial of these issues did indeed mention the ownership of SVRX rights as a basis for part of the ruling:

As discussed above in connection with the Other SCOsource Licenses, the court determines that the release of claims and license in Section 2 of the Microsoft Agreement was not an SVRX License that generated SVRX Royalties. The release in Section 2 does not specify any technology and the license in Section 2 refers only to SCO Intellectual Property. Therefore, as discussed above, the court concludes that this provision did not waive claims or grant a license to SVRX because SCO could not release or waive Novell's claims or rights in the SVRX copyrights.
So if the finding that Novell owns the copyrights is no longer the law of the case, then this finding must also be re-evaluated.

This is only one portion of the District Court's ruling regarding the Microsoft Agreement, however. The rest determined that the other sections of the Microsoft Agreement licensed SVRX to Microsoft incidentally to licensing UnixWare, for which Novell does not receive the royalties per the APA. So it would seem that the above-mentioned Section 2 is the only section of the Microsoft Agreement in play here.

The SCO Group cites Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 962 F.2d 1528, 1534 (10th Cir. 1992) for the premise that "governs the scope of the district court's authority on remand". While this case does discuss the limitations on the District Court, it is distinguishable in that the Court in that case evaluated the District Court's actions under Rule 60(b)(6) (unusual circumstances) rather than 60(b)(5) (reversal of the basis of the ruling); in fact, the Colo. Interstate Court does not even mention 60(b)(5) in its ruling.

The SCO Group argues that Novell should have filed for a cross-appeal to ask for relief on the Microsoft Agreement in case the copyright ownership question was remanded. However, the issue of the Microsoft Agreement was not one of the issues being appealed, so I'm not sure if Novell was obligated to address that in the appellee's response. (IANAL.) But it seems clear-cut to me that Rule 60(b)(5) applies here, and that TSG's opposition to it is not on point.

I'm looking forward to how Novell answers this.

---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

  • Mandate Rule - Authored by: Anonymous on Wednesday, January 06 2010 @ 01:00 PM EST
  • Mandate Rule - Authored by: PolR on Wednesday, January 06 2010 @ 01:18 PM EST
    • Mandate Rule - Authored by: Anonymous on Wednesday, January 06 2010 @ 03:25 PM EST
SCO Opposes Novell Motion to Set Aside Judgment
Authored by: Anonymous on Wednesday, January 06 2010 @ 07:46 AM EST
In these cases we now witness a new generation of people
involved in the case, including judges, lawyers, management,
and followers. These new people have not had the benefit of
following the cases for many years and familiarizing
themselves with the facts and the arguments. Those in
management and their lawyers who were willing to bend the
truth initially to suit their purposes have not reformed and
are still willing to bend the truth to suit the same
purposes, this time to a newer audience. No opportunity is
wasted to educate the new judge to their version of reality.
There is a need to soldier on in this case to bring the old
messages to new people. The message is not new, but it needs
to be explained in a new context so that new people can
follow it.

[ Reply to This | # ]

What's with the references to "Kimball, J."?
Authored by: jbeadle on Wednesday, January 06 2010 @ 09:20 AM EST
I always thought it was Dale Kimball.

Good thing he's not still on the case, I'd guess (for Cahn's folks), but I wish
he hadn't recused himself...

Thanks,
-jb

[ Reply to This | # ]

"how can they write a sentence that begins"...
Authored by: Anonymous on Wednesday, January 06 2010 @ 10:59 AM EST
PJ answers her own question:
The very thought of that makes me want to take a nap. Or fly to Rio.
SCO is hoping that both she and Novell do just that. Apparently, SCO may have already achieved a minor victory in this regard. Thinking that the farce was at at end, Novell did not challenge Judge Kimball's erroneous misclassification of moneys collected from Microsoft and Sun.

It is a hollow victory to be sure, since SCO has already wasted almost all of the money that they stole from Novell. However, I think that they are hoping for a string of such minor slip ups. Then, they hope to use such a string to thread the head of a tiny needle to sew up Linux for themselves.

However, they are mistaken. There is no needle. It is really a pin. It has no whole in it to thread, because they have been distributing Linux themselves under the GPL for years, even while suing over it.

[ Reply to This | # ]

SCO, advised by BS&F, lies to the court again
Authored by: Anonymous on Wednesday, January 06 2010 @ 11:37 AM EST

That misrepresents the facts, in my view. Even if new SCO management are new to all this, Boies Schiller is not

Yawn. Nothing new to see here. Movie at 11.

[ Reply to This | # ]

What they are thinking
Authored by: Anonymous on Wednesday, January 06 2010 @ 11:41 AM EST

That misrepresents the facts, in my view. Even if new SCO management are new to all this, Boies Schiller is not. How can they bring this hash back up again with the same refried leftovers? I can't fathom what they are thinking.

They are thinking that if they throw enough obfuscation, misleading statements, and outright lies at the judge, he will get confused and make a ruling that has little to do with the facts of the case. Hey, it's worked before, and there's no penalty for trying!

[ Reply to This | # ]

Cahn has a duty to supervise Boies Schiller
Authored by: Anonymous on Wednesday, January 06 2010 @ 12:30 PM EST

Novell could have filed a protective cross-appeal and argued that, if Novell were to lose on appeal, it would be entitled to certain relief. It did not.

There are no more excuses for being new to the case. If SCO's new management can parse an argument this finely, they can understand everything else, including the GPL.

Please, PJ. If Cahn is delegating this so blindly, he is incompetent as a trustee. Or, I think, worse. If the trustee is merely a proxy for current management, what is the point in having a trustee?

I think all of us are now having problems understanding the role of a trustee.

[ Reply to This | # ]

But I do sincerely wonder, how do these folks sleep at night?
Authored by: J.F. on Wednesday, January 06 2010 @ 12:49 PM EST
On a big pile of money.

[ Reply to This | # ]

Question for the legal experts on protective cross appeals
Authored by: bugstomper on Wednesday, January 06 2010 @ 01:46 PM EST
PJ said that SCO's assertion that Novell should have filed a protective cross
appeal is a strong argument. I've done some Googling about what "protective
cross appeal" means and I have a question for those of you with some legal
expertise.

In order to appeal, don't you have to claim that the lower court made some
error? So if Novell is not asserting that the lower court made an error then how
can it be the subject of a protective cross appeal?

The examples I found while looking this up were of the nature: Party A wins a
case in spite of some error by the court such as poor jury instructions. Party B
appeals and the decision is reversed. Party A should have filed a protective
cross appeal about that error which the appeals court would have ignored as moot
if A won on appeal and would consider if B won. Party A doesn't get to bring up
the lower court's error when the case goes back to the lower court if they
didn't bring it up in a protective cross appeal.

The advice I saw about protective cross appeals talked about how it is a tricky
thing because it has the person who won in the lower court having to argue that
the court made a mistake. For example, it could come out in a case that was
decided on summary judgment that both parties sound like they are telling the
appeals court that they think that the lower court made errors therefore the
case should be remanded for jury trial.

But I don't see Novell asserting that the lower court made any errors, only that
the effect of the appeals court's decision is to also reverse the other
decision. Did I miss something here? Is this another use of a protective cross
appeal that wasn't mentioned in the articles I saw? If it is, how would Novell
have phrased the cross appeal if they don't have an error that they can claim
that the lower court made?

[ Reply to This | # ]

re: Comes #502 - Wouldn't this MS financial info also be available through the SEC ? (n/t)
Authored by: Anonymous on Wednesday, January 06 2010 @ 01:47 PM EST
?

[ Reply to This | # ]

SCO Opposes Novell Motion to Set Aside Judgment
Authored by: TemporalBeing on Wednesday, January 06 2010 @ 03:54 PM EST
Incidentally, in helping write up descriptions of what is in all the exhibits from the Comes v. Microsoft antitrust litigation, to make them searchable by keywords, I came across one exhibit, number 502 [PDF], a confidential Microsoft financial report from 1991-92 which shows why Novell might have been worried about Santa Cruz going bankrupt. If you go to our Comes Exhibits by Numbers page, still being worked on, you'll find it, but here's the meat of what is in there, and recall that back then Microsoft was an investor in the company...
Okay - so this involves oldSCO, and may be shows why what spun off as Tarantella sold the rest of the company to Caldera - they just couldn't make money as SCO.

However, remember newSCO is really Calera so it may have been a lot better with profitability until they tried the whole suite-your-own-customers-thing. Since the profitability statement is so late in time (e.g. 2003ish?) they would have to be referring to Calera/newSCO, no?

Though perhaps that is part of what has sunk Calera/newSCO - all the baggage from oldSCO.

It is interesting that they seem from 1991 to 2003 the workforce got cut down to 10% of its 1991 standing, and it's roughly dropped to 10% of that since 2003, no?

I could be misunderstanding something in all this chaos that is SCO; but perhaps that helps a little? Just want to make sure we don't start getting more confused between oldSCO vs. newSCO.

[ Reply to This | # ]

SCO's argument on the merits
Authored by: Anonymous on Wednesday, January 06 2010 @ 05:07 PM EST

SCO opposes Novell's motion in two ways: on procedural grounds, and on the merits. I have to admit that SCO's argument from the Mandate Rule looks decent and might be enough to defeat the motion. I'll reserve judgment on this until I see Novell's reply.

I'm a little more comfortable dealing with SCO's argument on the merits, which is bogus.

First, one must realize that in its Rule 60 motion [608], Novell isn't asking that all of Kimball's ruling [524] on conversion be set aside. The motion refers only to the provisions of the ruling that deal with the part of the Microsoft and SCOsource Linux agreements that purport to release the licensees from claims of infringement for what they were already doing or had done. Only the copyright holder has standing to sue for infringement, and therefore it alone can grant such a release, either directly or through an agent.

The key passage from SCO's brief follows (at 11):

The premise of Novell’s motion is that the sole ground for this Court’s determination that no royalty was due Novell on the Microsoft Agreement and the SCOsource Agreements was the Court’s prior summary judgment decision that Novell, not SCO, owned the UNIX copyrights and thus these agreements could not “license” intellectual property SCO did not own. This fundamental premise is wrong. The Court’s prior summary judgment decision was not a “necessary element” of its findings at trial. Instead, the Court’s decision rested on three additional independent bases: (1) these Agreements in releasing claims were different from licenses of a product – the only type of agreement from which Novell was entitled to any royalties; (2) to the extent they were to be considered a license at all, they were licenses of UnixWare, a product which SCO was entitled to license and to keep 100% of the proceeds; and (3) to the extent they were considered SVRX licenses, they were incidental to UnixWare licenses, and thus they had no independent value, and therefore SCO was not obligated to pay royalties to Novell from them.

Addressing the fact that the Agreements contained SCO’s releases of rights, the Court explained:

Although Novell asserts that these provisions should be viewed as a license because a license insulates a party from liability, the release terms of the SCOsource Agreements, including Section 2 of the Microsoft Agreement and Section 12 of the 2003 Sun Agreement, are not licenses to product. Unlike the licenses to product included under the APA, these releases are not royalty-bearing SVRX Licenses.

(Findings of Fact, Conclusions of Law, and Order (July 16, 2008) at 29.) The Court noted: “Novell acknowledges that it is not entitled to royalties from any UnixWare licenses.” (Id. at 9.) Considering SCO’s licensing practices over the years, moreover, the Court then further reasoned:

SCO’s July 2003 press release regarding SCOsource agreements states SCOsource agreements are UnixWare licenses and the hold harmless clauses are incidental to a UnixWare license. In the SCOsource program, the pricing of a SCOsource license was set as the same as SCO’s pricing for a UnixWare binary license. This pricing is consistent with SCO’s use of the “one line of code rule” and practice of not charging additional amounts for the prior products listed in a license for the latest release. It also demonstrates that SCO believed that the SCOsource license had a value equivalent to a binary license to its most recent release of UnixWare.

(Id. at 30.) In referring to Section 2 of the Microsoft Agreement, the Court then cross-referenced its earlier discussion of the SCOsource Agreements, where the “release does not specify any technology,” and further reasoned that the SVRX license in Section 4 of the Agreement was incidental to a UnixWare license. (Id. at 31-33.)

With respect to the question of SVRX licenses incidental to UnixWare licenses, SCO argued at trial that such incidental SVRX licenses had no independent value beyond the UnixWare portion of the license. The Court concluded that where SVRX products were licensed with UnixWare, “it did not change the price paid for the most recent version of UnixWare.” (Id. at 33.) The Court further concluded that the SVRX products licensed with UnixWare lacked independent value, where (1) “there was not a market for a license to prior SVRX products because those prior products no longer utilized the most current hardware,” and (2) SCO “did not market or sell any prior SVRX product in a stand alone license.” (Id.) Closing the loop, the Court expressly found that “the term incidental as used in the APA is referring to the practice of Novell and SCO to list prior products in licenses for the newest release and charge only for the license to the newest release.” (Id.) Summarizing its foregoing analyses of the Microsoft Agreement, the Court concluded: “Accordingly, the court concludes that Novell is not entitled to any of the revenue SCO received under the 2003 Microsoft Agreement.” (Id. at 34.)

These grounds constitute independent and adequate support for the Court’s determination at trial that the Microsoft Agreement and SCOSource Agreements were not SVRX Licenses to which Novell was entitled to any royalty. Even if the court had not entered a summary judgment in favor of Novell on the copyright ownership question, it articulated the grounds for reaching the same decision on the Microsoft and SCOsource licenses.

SCO wisely doesn't even try to challenge Novell's argument that, where Kimball relied on the proposition that SCO didn't own the SVRX copyrights, his conclusions of law have collapsed. Instead, SCO is saying that there are other, independent grounds on which those same conclusions rest. What are those grounds?

When Kimball analyzed the Microsoft and Sun agreements, he separated the parts that dealt with releasing claims from the rest and lumped them together with the end-user Linux "licenses." He wrote in docket 542 (at 28):

Separate from its licensing of products, SCO began entering into SCOsource licensing agreements that were unique in that they did not involve product. Instead, these license agreements were waivers and releases of conduct based on the buyer’s use of Linux. Provisions of the 2003 Sun and Microsoft Agreements are such SCOsource licenses. SCO also entered into twenty-two other SCOsource licenses.

(Emphasis added.) He goes on to conclude that these agreements, including the pertinent parts of the Microsoft and Sun agreements, were not SVRX licenses on which Novell was entitled to royalties because SCO didn't own SVRX and had no authority under the APA to act this way as Novell's agent. This is the same section of the ruling ("SCOsource Licensing Agreements") that SCO now quotes from above (at 29.) SCO pretends that he drew his conclusion because the claims releases were UnixWare licenses, but that's wrong.

The rest of SCO's argument is basically correct, but non-responsive. It concerns the other provisions of the Microsoft and Sun agreements that deal with the licensing of specific code that the licensees weren't already using, or were using under restrictions that the agreements purported to remove. Those provisions are not at issue in Novell's motion, so the only reason SCO could have for including this material is to confuse the issue.

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Flying to Rio, or taking a nap
Authored by: crs17 on Wednesday, January 06 2010 @ 09:24 PM EST
Here's a thought:

Rio's a long way, but Carneval parade season has started down in New Orleans (as
of yesterday). The flight from New York to NOLA is long enough to take a long
nap, and if you trim down that red dress and make it more revealing, it might be
a big hit down at the parades in New Orleans.

Go for moral bankruptcy instead of financial bankruptcy.

On second thought, there's already plenty of moral bankruptcy in the SCO saga.

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