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SCO Goes Down in Flames: Novell owns Unix

The day Linux fans have been waiting for since SCO attacked Linux on May 12, 2003 has finally arrived. U.S. District Court Judge Dale Kimball has ruled that Novell, not SCO, owns Unix’s IP (intellectual property) rights. This, in turn, means the end of SCO’s cases against IBM.

In his 102-page decision, Kimball went on to rule that “SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent” [story], Thus, not only does Novell own Unix, SCO’s cases against IBM have essentially been destroyed.

Putting salt into SCO’s wounds, Kimball also ruled that while “The court … is precluded from granting a constructive trust with respect to the payments SCO received under the 2003 Sun and Microsoft Agreements [story] because there is a question of fact as to the appropriate amount of SVRX Royalties SCO owes to Novell based on the portion of SVRX products contained in each agreement.” In short, SCO owes Novell at least some of the funds it received from its Microsoft and Sun Unix licensing deals, which it used to fuel its anti-Linux lawsuits.

In the end, what did SCO in was not its ever more shaky IP claims against Linux, but the contract that gave SCO the right to sell and market Unix, but not its IP rights. Since February of 2004, Novell had been insisting that in the original APA (Asset Purchase Agreement) and Amendment No.2 to the APA, it never sold Unix’s IP to SCO.

SCO was never able to mount a convincing case that it, rather than Novell, owned Unix’s IP. Minutes from a 1995 meeting of Novell’s board of directors clearly state, for example, that Novell was to retain its Unix copyrights when it sold the operating system to Santa Cruz Operation. Caldera subsequently bought Santa Cruz Operation’s Unix division and then, in late August, 2002, changed its name to The SCO Group Inc.

Novell has also claimed that in late 2002, SCO CEO Darl McBride had tried to get Novell to amend the APA to give SCO Unix’s copyrights. Thus, this proved, according to Novell’s lawyers’ logic, that SCO already knew that it didn’t own Unix’s IP.

SCO’s counter-arguments amounted to: “Why would we buy an operating system without its copyright?” It’s a good question. The answer was that Novell simply never wanted to sell Unix’s IP. In addition, Santa Cruz Operation didn’t have the funds to buy Unix’s IP in 1995, and they were unable to convince Novell to sell them outright in 1996.

So it was that Judge Kimball concluded “that Novell is the owner of the UNIX and UnixWare copyrights.” As for the IBM cases, “The only reasonable interpretation of the term ‘SVRX License’ in the APA is all licenses related to the SVRX products listed in Item VI of Schedule 1.1(a) to the APA. Therefore, Novell is entitled … at its sole discretion, to direct SCO to waive its claims against IBM and Sequent, and SCO is obligated to recognize Novell’s waiver of SCO’s claims against IBM and Sequent.”

While an appeal is technically possible, it appears that little benefit could come from such an approach. If this decision stands, there’s little left but loose threads to any of SCO’s Linux cases.

Pamela Jones, editor of Groklaw, the news site that has covered the SCO case like paint, doubtlessly spoke for many Linux users when she told Linux-Watch, “The entire Linux community can now breathe normally again. Me too. And it feels fine.”

A version of this story first appeared in Linux-Watch.