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13 March 2010, 15:42

SCO vs. Linux: From the Court of Appeals to the Supreme Court

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The trial between the SCO Group and Novell over the question of whether or not the copyrights to Unix were sold together with the Unix distribution rights has taken another turn. As many SCO witnesses gave evidence quoted from memory during the oral hearing at the Court of Appeals, Novell filed a petition with the Supreme Court. Novell has asked the Supreme Court to clarify whether a copyright is inherently included in a transfer of software distribution rights or whether a distribution contract leaves it up to the buyer to determine which of the copyrights that aren't explicitly mentioned are transferred.

Novell filed its Petition for Writ of Certiorari (the higher court can request records of a trial which is in progress) about the copyrights question against the background that, in the oral hearing at the Court of Appeals in Salt Lake City, SCO lawyers are presenting many witnesses who give hearsay accounts of the contract arrangements between SCO and Novell. These witnesses are of the opinion that the copyright to Unix was transferred to SCO along with the contracts that allowed SCO to distribute and further develop Unix.

On the fourth day of trial, this position became particularly evident in a video testimony given by Doug Michels, who was vice president of SCO when the contracts with Novell were signed. Michels said that, in his opinion, there is no doubt that software copyrights are sold together with the software and don't have to be mentioned specifically in a contract. According to Michels, copyrights belong to software development "like breathing oxygen". "Well, I meant that the only way that I know of, and anyone on my team knew of to buy a software business is to buy the copyrights, and there's no way we would have ever done a deal to buy a software business where we didn't get the copyrights and all the other intellectual property." However, when asked about the contracts, the SCO founder had to admit that he never looked into the contract details, and that he had no knowledge of any additional contractual agreements. These additional "Asset Purchase Agreements" hold the restrictions cited by Novell.

Michels' statement may cause astonishment given that the executive and his father Larry founded the original Santa Cruz Operation to develop the Xenix derivative of Unix produced by Microsoft. While SCO sold Xenix, the copyright remained with Microsoft.

The testimonies of Michels and others were mainly opposed by the statement, also in video form, by Novell CEO Jack Messman. Messman described the transfer of the development of Unix to SCO against the background of the market situation at the time. SCO was given everything it needed to release a unified Unix which was able to compete with Microsoft Windows NT, explained Messman. The copyrights were not part of the agreement because they weren't essential to the software development, said the executive. This is the reason why Novell has filed a petition with the Supreme Court for a leading decision about the copyright question.

It is uncertain whether Novell will be successful with its motion to involve the Supreme Court in the current trial in order to clarify a question of principle about software contracts. According to US law, the Supreme Court can reject the petition without providing any reasons. In his testimony, Messman also denied having made a statement that caused damage to the SCO Group. According to the executive, the Linux Indemnification Program to protect Linux users against potential royalty claims for Linux installations by SCO was only put into place by Novell to reassure its own customers. In addition to the debated copyrights, the Court of Appeals is also investigating allegations made by the SCO Group that Novell's Linux Indemnification Program spoiled SCO's business. SCO intends to hold Novell liable for loss of revenue, claiming that many companies refused to purchase a SCO antidote licence. The vendor estimates that the damage incurred is at least $25 million.

The Salt Lake City appeal trial is heard by a jury and will go into a scheduled recess this weekend. In the past few days, the judge has repeatedly cautioned jury members not to discuss the case, be it in person or online via Twitter, Facebook or LinkedIn, in chat rooms or via BlackBerry Mail. Members of the jury are also required to ignore media reports about the trial. At the beginning of the trial, Judge Stewart only explained to the jury that the case was about an "open source program called Unix", but this statement was protested by both parties.

(Detlef Borchers)

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