Source: http://www.finchhaven.com/TSCOG/SCO_Novell_side-by-side.html
Timestamp: 2018-12-12 05:52:50
Document Index: 533734713

Matched Legal Cases: ['§ 1391', '§ 1', '§ 1', '§ 1', '§ 1', '§ 4', '§ 4', '§ 4', '§ 4', '§ 1', '§ 2201', '§ 1', '§ 2201', '§ 4', '§ 4', '§ 1', '§ 2001']

SCO-Novell, side-by-side
Novell 78 ->
SCO v. Novell, side-by-side
The following, from Groklaw, is important enough that I think we need to have copies of it here-and-there to study, for those who may not frequent Groklaw.
Groklaw's bruzie had the brainstorm of making a comparative chart of SCO's Amended Complaint [PDF] and Novell's Answer and Counterclaims, so that we can figure out what is denied, admitted, etc. because of having them side by side. Thank you for thinking of it. This case, SCO v. Novell, turns out to be such an important aspect of the SCO saga that it seems very worthwhile to focus on it with care.
Novell's Answer
I. NATURE OF THIS ACTION ANSWER
1 Through an Asset Purchase Agreement dated September 19, 1995, as amended wherein Novell received 6.1 million shares of SCO common stock, valued at the time at over $100 million in consideration, SCO, through its predecessor in interest, acquired from Novell all right, title, and interest in and to the UNIX and UnixWare business, operating system, source code, and all copyrights related thereto, as well as all claims arising after the closing date against any parties relating to any right, property, or asset included in the business. Novell admits that it entered into an Asset Purchase Agreement with SCO's alleged predecessor in interest dated September 19, 1995. Each and every other allegation in paragraph 1 is denied.
2 In attachment E of Novell's Disclosure Schedule to the Asset Purchase Agreement, Novell provided a list of approximately 106 copyright registrations (encompassing 8 pages) covering products relating to the business transferred to SCO. Novell admits that Attachment E to the Asset Purchase Agreement provided a list of approximately 106 copyright registrations. Novell denies that Attachment E, alone or in connection with the Asset Purchase Agreement, transferred any UNIX or UnixWare copyrights to SCO. Each and every other allegation in paragraph 2 is denied.
3 In the course of exercising its rights with respect to UNIX and UnixWare, SCO has filed for copyright protection with the United States Copyright Office. Novell admits that SCO has registered a claim to UNIX and UnixWare copyrights with the United States Copyright Office. Each and every other allegation in paragraph 3 is denied.
4 In an effort to interfere with SCO's exercise of its rights with respect to the UNIX and UnixWare technologies, Novell has, in disregard of its obligations under the Asset Purchase Agreement, and subsequent to the Asset Purchase Agreement, filed for copyright protection in the same UNIX technology covered by SCO's copyrights. Novell admits that Novell has registered its claim to UNIX and UnixWare copyrights with the United States Copyright Office. Each and every other allegation in paragraph 4 is denied.
5 Recently, Novell has repeatedly claimed publicly in press releases and otherwise that it, and not SCO, owns the UNIX and UnixWare copyrights. Novell admits that it has, in good faith, publicly stated its belief that it owns UNIX and UnixWare copyrights. Each and every other allegation in paragraph 5 is denied.
6 Novell has made such statements with the intent to cause customers and potential customers of SCO to not do business with SCO and to slander and impugn the ownership rights of SCO in UNIX and UnixWare, and to attempt, in bad faith, to block SCO's ability to enforce its copyrights therein. Denied.
7 Novell's false and misleading representations that it owns the UNIX and UnixWare copyrights has directly caused and is continuing to cause SCO to incur significant irreparable harm to its valuable UNIX and UnixWare copyrights, to its business, and its reputation and has caused several third parties to refuse to enter into license agreements with SCO relating to SCO's UNIX and UnixWare business. Denied.
Through this action against Novell, SCO seeks the following:
a) a preliminary and permanent injunction: (i) requiring Novell to assign to SCO all copyrights Novell has improperly registered in UNIX and UnixWare following Novell's transfer of all right, title, and interest in and to the UNIX and UnixWare business, operating system, source code, and all copyrights related thereto to SCO pursuant to the Asset Purchase Agreement; (ii) preventing Novell from representing in any forum that it has any ownership interest whatsoever in the Unix and UnixWare copyrights; and (iii) requiring Novell to retract or withdraw all representations it has made regarding its purported ownership of the UNIX and UnixWare copyrights; and
b) actual, special, and punitive damages in an amount to be proven at trial based on Novell's slander of SCO's title and interest in the Unix and UnixWare copyrights.
Novell denies that SCO is entitled to any relief under its Amended Complaint, and in each and every allegation in paragraph 8 is therefore denied.
9 II. PARTIES JURISDICTION AND VENUE
Plaintiff SCO is a Delaware corporation with its principal place of business in Utah County, State of Utah. Admitted.
10 Defendant Novell is a Delaware corporation with its executive offices and headquarters in Waltham, Massachusetts that does business in the State of Utah. Admitted.
11 This Court has found that it has subject matter jurisdiction over this matter pursuant to 28 U.S.C. Section 1331 and Section 1338(a). Admitted.
12 This Court has personal jurisdiction over Novell because Novell transacts substantial business in the State of Utah. Admitted.
13 Venue is proper in this Court pursuant to 28 U.S.C. section 1391(b). Admitted.
14 III. FACTUAL BACKGROUND
I. All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and copies of UNIX and UnixWare (including revisions and updates in process), and all technical, design, development, installation, operation and maintenance information concerning UNIX and UnixWare, including source code, source documentation, source listings and annotations, appropriate engineering notebooks, test data and test results, as well as all reference materials and support materials normally distributed by [Novell] to end-users and potential end-users in connection with the distribution of UNIX and UnixWare...
Novell admits that Schedule 1.1(a) to the Asset Purchase Agreement contains substantially the text quoted by the Amended Complaint. (SCO's Amended Complaint contains a typographical error, however: the first sentence of the quoted text actually reads "all versions of UNIX and UnixWare and all copies of UNIX and UnixWare.) Novell denies that this text acted to transfer UNIX or UnixWare copyrights to SCO. Each and every other allegation in paragraph 14 is denied.
15 In Amendment No. 2 to the Asset Purchase Agreement, Novell and SCO made clear that SCO owned all "copyrights and trademarks owned by Novell as of the date of the [Asset Purchase Agreement] required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies," and that Novell would no longer be liable should any third party bring a claim against SCO "pertaining to said copyrights and trademarks" Denied.
16 Software technology is valuable only insofar as the intellectual property contained therein is protected from unlawful misappropriation. Copyrights provide critical protection against misappropriation established by the United States Congress under the Copyright Act. SCO requires the full copyright protection it purchased from Novell to enforce its rights in UNIX and UnixWare source code and related technology, against infringing parties. Denied.
17 Based on the clear and unambiguous terms of the Asset Purchase Agreement and Amendment No. 2 thereto, SCO is the sole and exclusive owner of all copyrights related to the UNIX and UnixWare source code and all documentation and peripheral code and systems related thereto. Denied.
18 Novell, with full knowledge of SCO's exclusive ownership of the copyrights related to UNIX and UnixWare, has embarked on a malicious campaign to damage SCO's ability to protect its valuable copyrights in UNIX and UnixWare. In particular, Novell has wrongfully asserted ownership over UNIX and UnixWare technologies by filing for copyright protection in its own name, and has made numerous false and misleading public representations disparaging SCO's ownership of the UNIX and UnixWare copyrights and claiming that it, and not SCO, owns the UNIX and UnixWare copyrights. Denied.
19 Novell's false oaths and misleading public representations and wrongful assertion of ownership rights in UNIX and/or UnixWare include, but are not limited to, the following: Novell denies that it has made any false oath, misleading public representation, or wrongful assertion of ownership rights, and on that basis denies each and every allegation in paragraph 19, except as set forth below:
a) Despite the clear language of the Asset Purchase Agreement and Amendment No. 2 thereto, on May 28, 2003, Novell's Chairman, President, and CEO Jack Messman ("Messman") based at Novell's headquarters in Waltham, Massachusetts, publicly claimed that Novell did not transfer the UNIX and UnixWare copyrights to SCO and that "SCO is not the owner of the UNIX copyrights." Messman's statement was published in several newspapers and other publications, and was timed by Messman to be released on the eve of the release of SCO's quarterly statements. Novell admits that on May 28, 2003 Jack Messman sent a letter to Darl McBride of SCO in order to assert Novell's claim to the UNIX and UnixWare copyrights and to protect Novell's interests and the interests of its customers. This letter contained the following text:
[We] demand that SCO retract its false and unsupported assertions of ownership in UNIX patents and copyrights or provide us with conclusive information regarding SCO' s ownership claims.
On January 13, 2004, Novell made a copy of this letter available on its website at http://www.novell.com/licensing/indemnity/legal.html. Novell is without further knowledge as to details of other publication and therefore denies each and every allegation related thereto. Each and every other allegation in paragraph 19(a) is denied.
b) In a letter dated June 6, 2003, directed from SCO to Novell, SCO brought to Novell's attention Amendment 2 to the Asset Purchase Agreement that clearly evidences that the UNIX copyrights were in fact transferred from Novell to SCO. Novell admits that on June 6, 2003, SCO sent Novell a letter pertaining to Amendment 2 and the Asset Purchase Agreement. Each and every other allegation in paragraph 19(b) is denied.
c) Following Novell's receipt of SCO's June 6, 2003, letter, Novell issued a press release dated that same date which recanted Messman's prior statement claiming Novell owned UNIX copyrights stating "[t]he amendment [to the Asset Purchase Agreement] appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996." Novell admits that on June 6, 2003, it issued a press release containing the following text:
d) In a letter of the same day, June 6, 2003, directed to SCO, Joseph Lasala, Novell's General Counsel based at Novell's headquarters in Waltham, Massachusetts, continued to call SCO's claims "absurd" and "unsubstantiated." Responding to a threat by SCO to sue Novell for federal securities fraud conveyed in SCO's June 6, 2003 letter, Novell admits that Joseph LaSala sent a letter to Darl McBride on June 6, 2003, containing the following text:
Your letter contains absurd and unfounded accusations against Novell and others, coupled with a veiled threat to publicly state those allegations in a SCO press call to be held today at 11 :00 am EST. Novell continues to demand that SCO cease and desist its practice of making unsubstantiated allegations, including the allegations contained in your letter of June 6, 2003.
e) In a letter to SCO on June 26, 2003, Joseph Lasala, Novell acknowledged that Amendment No. 2 "appears to support a claim" by SCO to "some copyrights", but at the same time, Novell called SCO's claims of ownership of UNIX and UnixWare "simply wrong" and declared "that we do not agree with SCO's public statements in this matter." Responding to a subsequent press release issued by SCO, Novell admits that Joseph LaSala sent a letter to Darl McBride on June 26, 2003, containing the following text:
f) In a letter from Joseph Lasala, dated August 4, 2003, Novell responded to SCO's registration of UNIX System V copyrights with the United States Copyright Office, and explicitly "dispute[d] SCO's claim to ownership of the copyrights." SCO subsequently registered claims to the UNIX and UnixWare copyrights with the United States Copyright Office. Responding to that registration, Novell admits that Joseph LaSala sent a letter to Darl McBride on August 4, 2003, containing the following text:
We dispute SCO's claim to ownership of these copyrights. The Asset Purchase Agreement, in Schedule 1.1 (b), contains a general exclusion of copyrights from the assets transferred to Santa Cruz Operation. Amendment No. 2 provides an exception to that exclusion, but only for "copyrights.. .required for [Santa Cruz Operation] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies."
g) Despite Amendment 2 of the Asset Purchase Agreement that clearly established SCO's ownership of the copyrights, Novell continued with its unfounded and malicious campaign to slander SCO's ownership of the copyrights. In fact, Novell, again falsely asserted ownership of UNIX copyrights by submitting twelve certifications beginning on September 22, 2003 through October 14, 2003, to the United States Copyright Office. In these certifications, Novell publicly claimed to be the copyright owner of several versions of UNIX, including the following:
(1) UNIX System V/386 Release 4 Version 3; (2) UNIX System V/386 Release 4 2; (3) UNIX System V/386 Release 4 Version 4; (4) UNIX System V/386 Release 3 2; (5) UNIX System V/386 Release 3 0; (6) UNIX System V/386 Release 4 0; (7) UNIX System V/386 Release 4 1ES; (8) UNIX System V Release 3 2/386; (9) UNIX System V Release 3/386; (10) UNIX System V Release 4 2MP; (11) UNIX System V Release 2; and (12) UNIX System V Release 4 1ES/386. Novell published its false certifications to the world by placing them online at its website.
Responding to SCO's copyright registrations, Novell admits that it has registered its claim to the UNIX and UnixWare copyrights enumerated in paragraph 19(g). Each and every other allegation in paragraph 19(g) is denied.
h) Also on October 10, 2003, Novell publicly filed under oath with the United States Copyright Office four different iterations of a "Declaration Regarding Ownership" of UNIX copyrights TXU-510-028, TXU-511-236, TXU-516-704, TXU-516- 705. In each of these sworn documents, Novell declared "that it retains all or substantially all of the ownership of the copyrights in UNIX, including the U.S. Copyright Registration referenced above." Admitted.
i) In a press release dated December 22, 2003, Novell, despite its June 2003 statement that SCO owns the copyrights, Novell stated that "it owns the copyrights in UNIX, and has applied for and received copyright registrations pertaining to UNIX consistent with that position." In response to a public claim by SCO that Novell had conceded the superiority of SCO's claim to the UNIX and UnixWare copyrights, Novell admits it issued a press release on December 22, 2003, containing the following text:
j) In a press release dated January 13, 2004, Novell again knowingly and wrongfully made the false claim that "it retained ownership of [UNIX] copyrights." On January 13, 2004 Novell announced a Linux Indemnification Program. In connection with this offer, Novell issued a press release clarifying its beliefs as to its legal rights concerning the UNIX and UnixWare copyrights. The press release contained the following:
20 Novell's false oaths and wrongful claims of copyrights and ownership of UNIX and UnixWare are in bad faith and constitute a knowing and intentional disregard for the truth. Denied.
21 Novell's wrongful claims of copyrights and ownership in UNIX and UnixWare have caused, and continue to cause, irreparable harm to SCO, in the following particulars:
b) Potential customers of have informed SCO that they will not enter into agreements to license SCO's UNIX technologies at this time because of the cloud surrounding SCO's ownership of UNIX created by Novell's false public representations that it and not SCO owns UNIX.
c) SCO's efforts to protect its ownership of UNIX and UnixWare, and copyrights therein, are subject to a false cloud of ownership created by Novell. At the present time SCO is pursuing claims against third parties for infringement of SCO's intellectual property and contractual claims against third parties for infringement of SCO's intellectual property and contractual rights in UNIX. Defendants in those cases have relied on Novell's claims of ownership in UNIX as a defense to SCO's claims, thereby hindering SCO's ability to protect its copyrights and causing SCO to incur significant additional attorneys' fees and costs litigating in other forums issues resulting from the cloud Novell has placed on SCO's title to UNIX and UnixWare.
Novell denies that it has made any wrongful claims of copyrights and ownership in UNIX and UnixWare and that SCO is entitled to any relief under its Amended Complaint, and each and every allegation in paragraph 21 is therefore denied.
22 IV. CLAIM FOR RELIEF
SCO realleges and incorporates all prior paragraphs by this reference as if fully set forth herein. Novell incorporates by reference the answers contained in paragraphs 1 - 21 as if they were set forth here in full.
23 SCO is the sole and exclusive owner of all copyrights related to UNIX and UnixWare source code and all documentation and peripheral code and systems related thereto. Denied.
24 Novell has slandered SCO's title and rights to its UNIX and UnixWare copyrights and damaged SCO's business reputation and relationships with potential customers by making false oaths of ownership to public officials, and by repeatedly representing both to the public in general and directly to several of SCO's customers and potential customers that Novell, and not SCO, owns UNIX and the UNIX and UnixWare copyrights. Denied.
25 Novell's representations regarding its purported ownership of UNIX and UnixWare are patently false, and Novell made such representations intentionally, maliciously, and with the utter disregard for the truthfulness thereof. Denied.
26 As a consequence of Novell's conduct as alleged herein, SCO has incurred actual and special damages in an amount to be proven with at trial. Denied.
27 SCO has also incurred significant attorneys' fees and costs in its attempt to remove the cloud Novell has placed on SCO's title to UNIX and UnixWare, including but not limited to attorneys' fees incurred in researching and reviewing Novell's improper copyright registrations, attempting to mitigate damages by correcting and responding to Novell's false representations made to third parties, and in prosecuting this and other actions to protect SCO's title to UNIX and UnixWare. Denied.
28 Novell's conduct as alleged herein was intentionally and maliciously designed to destroy SCO's valuable rights to the UNIX and UnixWare copyrights and further destroy SCO's business livelihood. As such, this Court should impose an award of punitive damages against Novell in an amount to be proven at trial. Denied.
29 AFFIRMATIVE DEFENSES
Novell also hereby asserts the following separate defenses to the Amended Complaint, and each of its purported causes of action, without assuming any burden of proof on such defenses that would otherwise rest with SCO:
30 FIRST AFFIRMATIVE DEFENSE (Privilege)
The Amended Complaint, and each of its purported causes of action, is barred due to absolute and conditional privileges enjoyed by Novell.
31 SECOND AFFIRMATIVE DEFENSE (Estoppel)
The Amended Complaint, and each of its purported causes of action, is barred, in whole or in part, by the equitable doctrine of estoppel.
32 THIRD AFFIRMATIVE DEFENSE (Unclean Hands)
The Amended Complaint, and each of its purported causes of action, is barred, in whole or in part, by the doctrine of unclean hands.
33 FOURTH AFFIRMATIVE DEFENSE (Laches)
The Amended Complaint, and each of its purported causes of action, is barred, in whole or in part, by the doctrine of laches.
34 FIFTH AFFIRMATIVE DEFENSE (Comparative Fault)
To the extent that SCO did sustain any damages, which Novell denies, such damages were caused, in whole or in part, by the comparative fault of SCO and/or third parties, which thus bars SCO's recovery for said damages or diminishes such recovery by the amount of fault attributable to SCO and/or those third parties.
35 SIXTH AFFIRMATIVE DEFENSE (Failure to Mitigate)
To the extent that SCO did sustain any damages, which Novell denies, such damages were caused, in whole or in part, by SCO's failure to mitigate any damages it may have suffered, which failure to mitigate bars and/or diminishes SCO's right to any relief against Novell.
36 SEVENTH AFFIRMATIVE DEFENSE (No Causation)
To the extent SCO has suffered any injury or damage, which Novell denies, such injury or damage was not proximately caused by any conduct or inaction of Novell, or was not foreseeable, or both.
37 EIGHTH AFFIRMATIVE DEFENSE (U.S. Const. Amend. I)
The Amended Complaint, and each of the purported causes of action, is barred, in whole or in part, by the First Amendment to the United States Constitution.
WHEREFORE, Plaintiff SCO prays this Court grant relief against Defendant Novell in favor of SCO as follows:
For actual and special damages in an amount to be proven at trial for Novell's slander of SCO's title to the UNIX and UnixWare copyrights;
2. For punitive damages in an amount to be proven at trial for Novell's malicious and wilful conduct as alleged herein.
3. For a preliminary and permanent injunction (a) requiring Novell to assign to SCO any and all copyrights Novell improperly registered in UNIX and UnixWare following the Asset Purchase Agreement; (b) preventing Novell from representing in any forum that it has any ownership interest whatsoever in the UNIX and UnixWare copyrights; and (c) requiring Novell to retract or withdraw all representations it has made regarding its purported ownership of the UNIX and UnixWare copyrights.
4. For attorneys' fees, costs, pre- and post-judgment interest, and all other legal and equitable relief deemed just and proper by this Court. WHEREFORE, Novell prays for judgment as follows:
39. That the Court enter judgment in favor of Novell and against SCO, dismissing with prejudice the Amended Complaint and each of its causes of action;
40. That the Court award Novell its reasonable expenses and costs incurred, including without limitation attorneys' fees, in defending against the Amended Complaint; and
41. That the Court grant Novell such other and further relief to which Novell may be entitled as a matter of law or which the Court deems just and proper.[ed: see also final section, below 1]
Here are Novell's counterclaims:
1. Counterclaim-plaintiff Novell, Inc. ("Novell") is a Delaware corporation that was incorporated in 1983. Its headquarters and principal executive offices are located in Waltham, Massachusetts. Novell's principal product development facility is located in Provo, Utah. Novell also has offices in numerous cities worldwide.
2. Counterclaim-defendant The SCO Group, Inc. ("SCO) is a Delaware corporation with its principal place of business in Utah County, State of Utah.
5. Venue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391(b), 1391(c) and 1400(a), in that SCO resides or may be found in this district and is subject to personal jurisdiction in this district. FACTS
12. On September 19, 1995, Novell and Santa Cruz executed an Asset Purchase Agreement ("MA"). The APA provided each party with certain rights and obligations.
13. The parties entered into two Amendments to the APA. On December 6, 1995, Novell and Santa Cruz executed "Amendment No. 1 ." Novell and Santa Cruz subsequently executed "Amendment No. 2" on. October 16, 1996.
14. Under the APA and its Amendments, and subject to various conditions and exclusions set forth therein, Santa Cruz obtained a variety of assets, including assignment of tens of thousands of contracts and licenses, various trademarks, source code and binaries to UNIX and UnixWare products, and physical assets such as furniture and personal computers. The obtained assets also included the right for Santa Cruz to develop a "Merged Product."
15. Santa Cruz did not have the financial capacity to pay the purchase price contemplated by Novell for these acquired assets and rights. In order to bridge the price gap and consummate the transaction, Novell and Santa Cruz agreed that Novell would receive Santa Cruz stock and retain certain rights as protection. For example (and as discussed further below), Novell retained the right to receive royalty payments under SVRX licenses, prior approval rights relating to new SVRX licenses and amended SVRX licenses, the right to direct Santa Cruz to take certain actions relating to SVRX licenses and the right to conduct audits of the SVRX license program. Santa Cruz assumed several related obligations.
17. Novell retained certain assets under the APA. Schedule 1.1 (b), which lists "Excluded Assets" under the agreement, specifies that Novell retained "all copyrights and trademarks, except for the trademarks UNIX and UnixWare," "all patents," and "all right, title and interest to the SVRX Royalties, less the 5% fee for administering the collection thereof."
18. Novell also retained rights to supervise Santa Cruz's administration of SVRX licenses. Novell retained the "sole discretion" to direct Santa Cruz to amend, supplement, modify, waive or assign any rights under or to the SVRX licenses; if Santa Cruz fails to take any such action, the APA specifically granted Novell the right to take these actions on behalf of Santa Cruz. Novell retained the right to veto Santa Cruz's attempts to amend SVRX licenses, subject to two exceptions, as noted below. Novell also retained the right to veto Santa Cruz's' attempts to enter into new SVRX licenses, subject to one exception, as noted below.
21. The APA transferred certain assets from Novell to Santa Cruz. However, as specified by Section V.A of Schedule 1.1 (b) to the APA, certain assets were excluded from the transfer. Among the "Excluded Assets" from the APA asset transfer were "[a]ll copyrights and trademarks, except for the trademarks UNIX and UnixWare."
23. Novell and Santa Cruz later executed Amendment No. 2 to the APA. Amendment No, 2 modifies Section V.A of Schedule 1.1 (b) to provide that Excluded Assets include:
35. On or about the time of Mr. McBride's arrival at Caldera, Caldera began to pursue a new business strategy for the company, launching a rebranding effort of its products and services as well as its corporate image.
a. On March 7, 2003, SCO stated in a press release, "In 1995, SCO purchased the rights and ownership of UNIX and UnixWare that had been originally owned by AT&T. This included source code, source documentation, software development contracts, licenses and other intellectual property that pertained to UNIX-related business. . . . 'SCO is in the enviable position of owning the UNIX operating. system,' said Darl McBride, president and CEO, SCO."
c. On June 6, 2003, SCO stated in a press release, "[SCO], the owner of the UNIX© operating system, today confirmed its previously stated ownership of UNIX copyrights. As SCO has consistently maintained, all rights to the UNIX and Unix-Ware technology, including the copyrights, were transferred to SCO as part of the Asset Purchase Agreement between Novell and SCO dated September 19, 1995. Any question of whether the UNIX copyrights were transferred to SCO under the Asset Purchase Agreement was clarified in Amendment No. 2 to the Asset Purchase Agreement dated October 16, 1996.
'This amendment simply confirms SCO's long stated position that it owns all copyrights associated with the UNIX and UnixWare businesses,' said Chris Sontag, senior vice president and general manager, SCOsource intellectual property division, SCO.
'SCO is the owner of the UNIX operating system, as well as all of the UNIX contracts, claims and copyrights necessary to conduct that business,' said Sontag. 'None of the litigation we are currently involved with asserts claims based on copyrights. Because others have called into question SCO's ownership of the UNIX and UnixWare copyrights, we are satisfied that we have now proven without a doubt that SCO owns those copyrights. "'
d. During at least June and July, 2003, SCO wrongfully registered copyrights in UNIX and UnixWare releases owned by Novell. These registrations related to UNIX System V release 3.0, UNIX System V release 3.1, UNIX System V release 3.2, UNIX System V release 3.21386, UNIX System V release 4.0, UNIX System V release 4.1, UNIX System V release 4.lES, UNIX System V release 4.2, UNIX System V release 4.2MP, and UnixWare 7.1.3.
We acquired our rights to the UNIX source code and derivative works and other intellectual property rights when we purchased substantially all of the assets and operations of the server and professional services groups of The Santa Cruz Operation, Inc., in May 2001. The Santa Cruz Operation (now known as Tarantella, Inc.) had previously acquired such UNIX source code and other intellectual property rights from Novell in September 1995, which were initially developed by AT&T Bell Labs. Through this process, we acquired all UNIX source code, source code license agreements with thousands of UNIX vendors, all UNIX copyrights, all claims for violation of the above mentioned UNIX licenses and copyrights and other claims, and the control over UNIX derivative works . . . ."
43. Novell has not acquiesced to SCO's claims, as recited in SCO's own Amended Complaint. (Amended Complaint ¶ 19(d)-(e).) To the contrary, Novell was vigorously contesting those claims in private correspondence with SCO at the very same time SCO was publicly claiming otherwise. For example:
47. Under the SCOsource licensing program, SCO seeks to enter into license agreements with UNIX vendors and offers Intellectual Property Licenses to Linux end users ("Intellectual Property Licenses"). The purported purpose of these licenses is to allow UNIX vendors to use SCO's UNIX intellectual property and to permit Linux end users to "properly compensate us for our UNIX intellectual property as currently found in Linux." One term of SCO's Intellectual Property Licenses for Linux is that licensees "will be held harmless against past and future copyright violations based on their use of SCO's intellectual property . . . in Linux distributions . . . ."
57. Shortly after the inception of its letter writing campaign, SCO brought suit against Autozone and Daimler Chrysler, both Linux end users. In these lawsuits, SCO has made substantially the same allegations as set forth in its letters. In the Autozone lawsuit, SCO has alleged that [Autozone] uses one or more versions of the Linux operating system that infringe on SCO's exclusive rights in its proprietary UNIX System V operating system technology." In the Daimler-Chrysler lawsuit, SCO has alleged that Daimler-Chrysler's use of the Linux operating system violates the UNIX license between Daimler-Chrysler and SCO.
65. On July 11, 2003 Novell notified SCO that it intended to conduct an audit beginning on August 18, 2003 covering the period beginning January 1, 1998 through June 30.
d.Any SVRX to UnixWare Conversions. Novell specifically requested that SCO (I) identify and provide documentation for any allegedly valid conversions and (2) "explain in detail" how the alleged conversion
69. On February 5, 2004, SCO conveyed its refusal to provide at least the information identified in subparagraphs a, b and c of Paragraph 67, above.
70. On March 1, 2004, Novell again contacted SCO for the above categories of information: "In order to complete our audit, we need the Sun, Microsoft and any other Intellectual Property Licenses for Linux. Stated more categorically, we need all agreements in which SCO purported to grant rights with respect to Unix System V." Novell noted that SCO's Intellectual Property Licenses for Linux appeared to be SVRX Licenses since they purported to grant rights relating to UNIX System V or Unix-Ware.
74. Sections 1.2(b) and 4.16(a) of the APA obligate SCO to remit 100% of "all royalties, fees and other amounts due under all SVRX Licenses" to Novell. "SVRX Licenses" are in turn defined to include "[a]ll contracts relating to" the various UNIX System releases and auxiliary products enumerated at Schedule 1.1(a)(VI) and Attachment A to Amendment No. 1. Under the APA, Novell has "all right, title and interest to the SVRX Royalties, less the 5% fee for administering the collection thereof."
77. On information and belief, these new agreements are "contracts relating to" the various UNIX System releases and auxiliary products enumerated at Schedule 1.1 (a)(VI) and
80. On information and belief, SCO's Intellectual Property Licenses are "contracts relating to" the various UNIX System releases and auxiliary products enumerated at Schedule 1.1 (a)(VI) and Attachment A to Amendment No. 1. The Intellectual Property Licenses are therefore SVRX Licenses under the APA. SCO has not remitted any royalties from these SVRX Licenses.
81. Among other changes to the APA, Amendment No. 1 added 9 1.2(e), which provides that SCO has a right to retain all "source code right to use fees attributable to new SVRX Licenses approved by [Novell] pursuant to Section 4.16(b)."
82. SCO has neither sought nor obtained Novell's approval to enter into any new SVRX license. Therefore, none of SCO's new SVRX Licenses fall within 9 1.2(e)'s exception to SCO's general duty to remit 100% of SVRX royalties to Novell
89. SCO refuses to acknowledge Novell's right to take such actions on SCO's behalf.
90. Under Section 4.16(b) of the APA, SCO shall not amend or modify any SVRX license "without the prior written consent of [Novell] ." As modified by Amendment 1, Section 4.16(b) of the APA provides further that:
91. On information and belief, SCO has entered into new SVRX Licenses with Sun, Microsoft and others (through, for example, SCO's Intellectual Property Licenses with Linux end users or UNIX vendors), or otherwise amended the Sun and Microsoft SVRX licenses.
101. Under the APA, SCO was obligated to provide all this information to Novell. SCO substantially and materially breached §§ 1.2(b) and 1.2(f) of the APA by refusing to do so.
102. On information and belief, SCO's breaches of §§ 1.2(b) and 1.2(f) of the APA have caused Novell damage in an amount to be later proven. In addition, these breaches have
106. On information and belief, SCO's breaches of §§ 1.2(b) & 4.16(a) of the APA have caused Novell damage in an amount to be later proven. These breaches have caused Novell special damages, including, inter alia, the costs associated with attempting to ascertain from SCO the royalty amounts due to Novell, and with prosecuting this action.
107. The legal remedies available to Novell for future failures by SCO to comply with its royalty obligations under §§ 1.2(b) & 4.16(a) of the APA may be inadequate. Therefore,
109. This constructive trust should be imposed for the additional reason that SCO is quickly dissipating its assets. On information and belief, SCO's revenues are declining, its operational losses are increasing and its cash is dwindling quickly. SCO expects to have only $11 million in cash remaining for its business operations as of October 31, 2005, just a fraction of the revenue it purportedly generated as a result of its new SVRX Licenses with Sun and Microsoft.
112. Under § 4.16(b) of the APA, Novell has the right, at its sole discretion, to direct SCO to waive any rights under any SVRX Licenses. In the event that SCO fails to take any such
action at Novell's direction, § 4.16(b) gives Novell the right to take any action on SCO's own behalf. SCO refused to perform its corresponding duties under 54.16(b) and substantially and materially breached § 4.16(b) by:
a. Purporting to enter into new SVRX licenses without Novell's prior approval, including agreements with Sun, Microsoft and other licensees of SCO's Intellectual Property Licenses, without demonstrating that a limited exception to the prohibition against new licenses by SCO was applicable; and
b. Under § 4.16(b) of the APA, SCO is obligated to seek Novell's prior approval to enter into new SVRX licenses or amendments to SVRX licenses, unless SCO can demonstrate to Novell that an exception to the prohibitions against new licenses and amendments by SCO is applicable.
119. The APA granted Novell broad audit rights to verify SCO's compliance with the APA, as well as rights to approve (subject to limited exception) new SVRX licenses and amendments to SVRX licenses. The APA also granted Novell the right to direct SCO to amend, supplement, modify or waive any rights under any SVRX license, and to act on SCO's behalf if SCO fails to take such direction.
120. Under the APA, SCO was obligated to administer the SVRX License Program, subject to the additional duties provided in §§ 1.2(b), 1.2(f) and 4.16. SCO failed to abide by these obligations under the APA and therefore substantially and materially breached the APA's covenant of good faith and fair dealing.
121. Novell seeks a declaration pursuant to 28 U.S.C. § 2201 that SCO is obligated under the APA to:
b. Seek Novell's prior approval before entering into new SVRX licenses or amendments to SVRX licenses, or otherwise demonstrate to Novell that an exception to the prohibition against new licenses or amendments by SCO is applicable;
129. Under section 1.2(b) of the APA, Novell was entitled to "periodic audits" of SCO concerning "all royalties and payments due to [Novell] . . . ." Under section 4.16(a), SCO was required to "diligently seek to collect all [SVRX] royalties . . . and [to] investigate and perform appropriate auditing and enforcement under [the SVRX] licenses." SCO was also required to provide regular audit reports to Novell regarding the SVRX royalties and the other royalties under section 1.2(f) of the APA.
130. Under the APA, the amounts due Novell were determined and verified on the basis of the audits required under the APA. The right to an accounting of the royalties and payments due to Novell under the SVRX licenses and other provisions of the APA was inherent in the APA.
132. Between the time the APA was concluded and the present, there have been hundreds of customers responsible for making royalty payments to SCO under the SVRX Licenses or under other agreements relating to royalty bearing products. SCO was obligated under the APA to receive and administer these royalty payments and share them with Novell.
135. On information and belief, SCO has received royalties under the SVRX licenses which it consummated with Sun and Microsoft, as well as from Linux end users under SCO's Intellectual Property Licenses. SCO has not passed on to Novell the required 100% of the royalties it has received under these licenses. This failure to pay royalties also constitutes a substantial and material breach of the APA.
138. Novell therefore seeks an accounting for monies owed to Novell under the APA.
1PRAYER FOR RELIEF
140. For punitive damages in an amount to be proven at trial for SCO's malicious and willful conduct in slandering Novell's title to the UNIX Copyrights as alleged herein;
143. For specific performance of future compliance with SCO's audit obligations under §§ 1.2(b) and 1.2(f) of the APA;
145. For an order imposing a constructive trust on the revenues remitted to SCO under new or amended SVRX Licenses;
146. For an order attaching SCO's assets pending adjudication of Novell's contract claims;
147. For declaratory relief pursuant to 28 U.S.C. § 2201 establishing Novell's rights and SCO's obligations under § 4.16(b), as well as SCO's authority to undertake certain actions under § 4.16(b);
148. For preliminary and permanent injunctive relief enforcing Novell's contractual rights under the APA, including injunctive relief barring SCO from taking actions inconsistent with or in violation of §§ 1.2(b), 1.2(f), 4.16(a) and 4.16(b);
149. For declaratory relief pursuant to 28 U.S.C. § 2001 establishing Novell's rights and SCO's obligations under the covenant of good faith and fair dealing in the APA;
150. For an order of restitution of all monies constituting SCO's unjust enrichment;
151. For an accounting of the royalties remitted to SCO under the SVRX licenses and the monies owing to Novell under the APA;
153. For Novell's reasonable expenses and costs incurred, including without limitation attorneys' fees, in defending against the Amended Complaint; and
154. For such other and further relief as the Court deems just and proper.
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