Court decides: Unix belongs to Novell, not to SCO

Aug 13, 2007

In the court case concerning Unix rights, it looks very much as if SCO has just lost the decisive round: in the considered opinion of Utah District Court, Novell is the owner of the code. The court refutes SCO's claims of ownership.

Santa Cruz Operation, SCO's, battle for Unix has kept the courts busy since spring 2003, and caused quite a stir with a billion dollar lawsuit against IBM and various other companies. SCO based its legal claim to Unix and some Linux components on a contract that dates back to 1996, in which Novell sold Unix licenses to SCO. In the summer of 2005 Novell responded with a countersuit to clarify who really is the owner. SCO immediately hit back with another law suit accusing Novell of slander and seeking preliminary and permanent injunctive relief, as well as damages. If the court's decision holds, SCO looks likely to lose more lawsuits in the near future.

The decisive passage in Judge Kimball's decision stated: "the court concludes that Novell is the owner of the UNIX and UnixWare copyrights. Therefore, SCO's First Claim for Relief for slander of title and Third Claim for Relief for specific performance are dismissed…". The memorandum explicitly dismisses all of SCO's claims to ownership as detailed in the individual items of the lawsuit. The district court issued a 102 page decision and supports Novell's opinion to a large extent. According to Novell the agreement concerning the purchase of Unix by SCO did not convey the associated copyrights to SCO. The judge pointed out that Novell had the right to "to direct SCO to waive its claims against IBM and Sequent." SCO would be forced to comply with Novell's directions the memorandum continued.

After all this, the fight is not quite over: Novell's claim on slander is still unsettled. The court also stated that "SCO is obligated under the APA to account for and pass through to Novell the appropriate portion relating to the license of SVRX products", which means that SCO will very likely be asked to settle outstanding payments. The court points out one lawsuit that SCO might continue to pursue: Novell's purchase and sales of the competitive Linux operating system, Suse, might be construed unfair competition.

For observers on the Groklaw website, the Judge Kimball's decision is no surprise. His response to SCO's delaying tactics was reluctant, and Kimball refused to allow evidence that arrived too late.

SCO's financial position was taut prior to the lawsuits. In the meantime there was a threat of the company being thrown off the stock exchange. As the lawsuits will not mean additional license revenue for SCO, and that Novell has multiple million dollar claims against SCO, this may mean financial disaster for SCO.

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