Novell to present case in trial against SCO Group

Company will have to refute claims about ownership of Unix codes.

By Tom Harvey
The Salt Lake Tribune

March 18, 2018

Now it's Novell Inc.'s turn.

After listening to witness after witness for The SCO Group, a federal court jury may begin hearing testimony as early as today from witnesses for Novell. They will address which company owns the copyrights to the Unix operating system.

Because the jury may side with SCO on that question, Novell's task also is to try to limit the damages it could potentially pay for interfering with SCO's ownership rights. Lindon-based SCO is trying to convince the jury that interference cost it tens of millions of dollars.

The case is being followed intensely in some financial circles because of the recent offer by Elliott Associates to buy Novell in a $2 billion deal. But potentially a jury verdict in favor of SCO also could restart its program to offer licenses to commercial users of the rival Linux computer operating system that the SCO says makes use of Unix's copyrighted code.

Novell plans to counter SCO's claims that are at the heart of its 6-year-old lawsuit with testimony from attorneys and others who will say that Novell retained the copyrights to Unix when it sold some rights to the system in 1995.

Novell bought Unix two years earlier for $300 million. It was part of its abortive effort to compete in scale with giant Microsoft. But then it reversed course and decided to sell the system to the Santa Cruz Operation. That firm later sold it to a Utah company, Caldera, which changed its name to The SCO Group.

Santa Cruz could not pay cash for Unix. So part of the deal was that Novell retained a lucrative stream of royalties from pre-1995 versions of Unix, as well as receiving stock in Santa Cruz. In order to protect its royalties even if Santa Cruz went broke, Novell's attorney says the company retained the copyrights as part of the deal.

To assert its claim, Novell will call to the stand several attorneys who were involved in drafting the agreement. That testimony could counter testimony from former Novell and Santa Cruz officials who have testified the copyrights were included in the sale, and the deal made no sense without them.

The ex-officials from SCO and Santa Cruz "were so high level they did not become intertwined in the details of the deal," attorney Sterling Brennan said in his opening argument.

Novell plans to call David Bradford, Novell's former in-house attorney and board secretary, to the witness stand to testify about the drafting of the sale agreement and the board's vote to approve it.

"The Asset Purchase Agreement means what it says: copyrights were not included as an asset," Bradford said in a declaration filed earlier in the lawsuit. "Copyrights were specifically excluded from the asset transfer."

That statement is at odds with the testimony of Robert Frankenberg, the Novell CEO in 1995, who said his orders to the team of negotiators were to sell the entire business, including the copyrights.

Novell also plans to call as a witness Tor Braham, an outside attorney who helped negotiate and draft the agreement.

Part of the back-and-forth of the trial has been over who the lead negotiators were for each side. That could show who might have the clearest understanding of the intent of the contract language that is fuzzy at critical parts. SCO has portrayed the former officials of Novell and Santa Cruz as the lead negotiators who gave details of the agreement to attorneys to draft the legal language.

Braham, however, has asserted that he was the primary negotiator for Novell in the deal and that he was told by Bradford to withhold the copyrights.

A part of the original sales contract is ambiguous and can be read to say copyrights to Unix were not part of the sale. SCO has pointed to an amendment later added to the contract that appears to clear up the confusion and give the copyrights to SCO.

Coyright 2018