Opinion ID: 182459
Heading Depth: 3
Heading Rank: 1

Heading: The UNIX Businesses and Trademarks

Text: UNIX is a computer source code developed by American Telephone & Telegraph (“AT&T”) in 1969. AT&T began using the trademark “UNIX” to 1 The Santa Cruz Operation, Inc., was the predecessor-in-interest to the SCO Group, with respect to whom this appeal is currently stayed due to ongoing bankruptcy proceedings. We refer to both companies as “SCO” herein. 2 identify operating systems based on this source code in 1972. In 1986, it filed two UNIX trademark registrations with the U.S. Patent and Trademark Office (“PTO”). In 1990, AT&T assigned the UNIX mark and registrations to its subsidiary, UNIX Systems Laboratories (“USL”). USL’s UNIX business had two facets: (1) a source-code business, for which USL owned UNIX source code, developed operating systems based on that source code -- most notably UNIX System V -- and licensed the UNIX trademark for products created from UNIX source code; and (2) a product business, in which USL -- along with Novell, its joint-venture partner -- sold a UNIX-based operating system called UNIXWARE.2 In 1994, USL merged into Novell. As part of the merger, Novell acquired the UNIX trademark. Novell’s post-merger UNIX operations were similar to those of USL: Novell maintained both the source-code business -- under which it owned the UNIX System V source code and the UNIX trademark, and licensed them to third parties -- and the UNIXWARE product business. The Term Sheet. Shortly before the completion of this merger, Novell and several other companies selling UNIX-based operating systems agreed that it was in the computer industry’s best interest to transfer Novell’s UNIX-licensing 2 We refer to the trademark associated with the source-code business as “the UNIX trademark,” and the trademark associated with the product business as “the UNIXWARE trademark.” 3 business to an independent non-profit organization, which would then be responsible for licensing the UNIX trademark to third parties. The companies also agreed that this organization would license the UNIX mark not based on products’ use of UNIX source code -- this had been the standard in the past -- but instead based on products’ conformity to certain compatibility specifications. The independent organization selected to do this specification-based licensing was X/Open, an international technology consortium based in the United Kingdom. In October 1993, the companies signed a non-binding agreement, entitled “Term Sheet,” declaring that Novell would begin licensing the UNIX mark exclusively through X/Open, and would assign ownership of the mark to X/Open within three years. The Licensing Agreement. On 10 May 1994, Novell and X/Open implemented the Term Sheet’s first step by executing a Licensing Agreement in which Novell granted X/Open an “exclusive, perpetual, irrevocable license to use, and sub-license to third parties the use of,” the UNIX trademark. In addition, this agreement obligated X/Open to grant sub-licenses to products that conformed to certain specifications, thus creating the specification-based licensing business contemplated in the Term Sheet. Novell also authorized X/Open to publish the acknowledgment that “UNIX 4 is a registered trade mark licensed exclusively by X/Open,” and committed to assigning the UNIX trademark to X/Open in three years (unless the parties later agreed to a different time). While this agreement gave X/Open responsibility for the portion of Novell’s source-code business related to the licensing of UNIX, Novell retained ownership of the System V source code and trademark. Novell also kept the rights to issue maintenance releases and to receive royalties for products licensed prior to the agreement. The Licensing Agreement did not implicate Novell’s UNIXWARE business. The Asset Purchase Agreement. A little over one year later, Novell reached an agreement to sell certain assets, including much of the remainder of its UNIX business, to SCO. Schedule 1.1(a) of the Asset Purchase Agreement (“APA”), which listed the assets being transferred to SCO, transferred “[a]ll rights and ownership of UNIX and UNIXWARE,” including -- “without limitation” -- the “[t]rademarks UNIX and UNIXWARE as and to the extent held by [Novell] (excluding any compensation [Novell] receives with respect of the license granted to X/Open regarding the UNIX trademark).” Schedule 1.1(b) listed assets specifically excluded from the transfer, among them “[a]ll copyrights and trademarks, except for the trademarks UNIX and UNIXWARE.” In other words, Schedule 1.1(b) confirmed that the UNIX and UNIXWARE trademarks were to be 5 transferred to SCO -- but, as indicated in Schedule 1.1(a), only “as and to the extent held by” Novell. The Confirmation Agreement. In September 1996, Novell, X/Open, and SCO jointly executed a tripartite Confirmation Agreement that clarified the fate of the UNIX trademark. This agreement “provide[d] for the acceleration of the vesting of title in X/Open to the UNIX trademark, and the assignment to SCO of Novell’s rights under the [Licensing] Agreement.” To accomplish this, the Confirmation Agreement tasked Novell -- “the owner of legal title to the UNIX trademark” -- with formally transferring title to the UNIX trademark to X/Open “as soon as possible.” The agreement further provided that “such assignment by Novell shall not be considered a breach of Novell’s obligations [to SCO] under the APA,” and that the APA was “subject to rights and obligations established in” the Licensing Agreement. A month after executing the Confirmation Agreement, Novell and SCO amended the APA, revising Schedule 1.1(b) -- the list of assets excluded from the transfer -- to exclude “[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [APA] required for SCO to exercise its rights with respect to the acquisition of UNIX and UNIXWARE technologies.” This amendment reinforced the Confirmation Agreement in making 6 clear that Novell would not transfer to SCO any trademark that SCO did not “require[]” with respect to the assets it was acquiring from Novell. The Deed of Assignment. In November 1998 Novell finalized its compliance with the earlier agreements by assigning ownership of the UNIX mark to X/Open. Under this Deed of Assignment, Novell assigned “all property, right, title and interest in the [UNIX] trademarks with the business and goodwill attached to the said trademarks.” X/Open recorded the assignment with the PTO in June 1999.