[Editor's note: This article may seem similar to the previous article,
however we believe it adds further clarification to the SCO/Novell
There is a new front in the SCO wars, or more accurately a newly revealed
front. The new player, stage front and center, is Novell. Some of SCO's
otherwise puzzling decisions in the last nine months have become more
comprehensible, now that Novell's behind-the-scenes role has come to light.
It turns out that Novell strongly challenged SCO each step of the
way, based on contractual rights Novell says it retained in its 1995
deal with the Santa Cruz Organization (now Tarantella), which
subsequently sold certain Unix assets to Caldera, which is now the SCO
Group. SCO denies Novell retained those rights. Nevertheless, its
decision not to go forward with mailing invoices in the fall and not to
sue SGI, or file copyright infringement claims against IBM may be at
least in part influenced by Novell's claims.
Some now expect legal action between the two companies, if only
because Novell's asserted rights could pull the rug out from under
SCO's law suit against IBM and prevent any copyright infringement
action against Linux end users, if Novell's rights prove solid.
Everything came to light this week when Novell announced it had
completed its SuSE acquisition and said
that it will offer enterprise SuSE customers indemnification, covering
legal fees and damage awards up to $1.5 million or 125% of a customer's
contract with Novell. It also put up on its web site
its increasingly cold correspondence with SCO, going back to May of 2003,
when SCO sent it a Letter
to Linux Customers. There is a connection between the correspondence
and the indemnification. The foundation of Novell's confidence in offering
indemnification is found in the legal analysis it sets forth in the
Jack Messman, CEO of Novell, says
the company is in a unique position and is able to indemnify customers
because it retained the copyright to Unix in that 1995 deal and also has a
contractual right to license Unix to its customers. In October, when SCO
said it was about to send invoices to Linux users, Novell reminded
them of the "Technology
License Agreement", which it says gives Novell the license to not only
use the "licensed technology" but also to "authorize its customers to use,
reproduce and modify" it and to sublicense and distribute same "in source
and binary form". Further, Novell points to a section II.B., where
restrictions on Novell cease to exist in the event of a change of control
of SCO, which Novell says the agreements define as such an event as Santa
Cruz selling the assets it got from Novell to Caldera.
If you were wondering why SCO didn't sue SGI, an October
7 letter and another letter,
dated October 10, shed some light. Novell first directed SCO "to waive
any purported right SCO may claim to terminate SGI's SVRX license" and to
"waive any purported right SCO may claim to require SGI to treat SGI Code
itself as subject to the confidentiality obligations or use restrictions
of SGI's SVRX license", saying that Section 2.01 of the license
specifically states that 'ATT-IS claims no ownership interest in any
portion of such a modification or derivative work that is not part of a
SOFTWARE PRODUCT.'" SCO failed to waive as directed, so on October 10,
all SCO's purported rights to terminate SGI's license.
Novell flexed its muscles, based on its interpretation of the 1995
Purchase Agreement, the Technology
License Agreement, and Amendment
2, to the APA. On that basis, Novell in its June
9, 2003 letter says SCO has no right to unilaterally terminate IBM's
SVRX Licenses and that it is inappropriate for SCO to make such threats.
Amendment No. X granted IBM the "irrevocable, fully paid-up, perpetual
rights". It eventually waived
SCO's "termination" of IBM's license.
Additionally, as the annoyance level rose on both sides, each
claiming the other was harming its business, hints of legal action
began to appear. Aspects to their contract that Novell had apparently
let slide for years, such as their right to audit SCO's collection of
royalties for Novell, are now scrupulously being required by Novell.
They began an audit
of SCO in August, something that had not happened since 1998, for example.
Novell also demanded
SCO supply copies of the source and binary code for all versions of UNIX
and UnixWare under SCO's control.
More significantly, Novell demanded
copies of the Microsoft and Sun licenses with SCO and asked SCO to
explain why SCO thinks the Asset Purchase Agreement allows them to do
this. Novell demanded it cease "all such negotiations and other
communications with licensees concerning any such transaction without
Novell's prior written consent and continued participation". After they
address any "violation of the Asset Purchase Agreement", there will be the
matter of "royalties and other amounts owed to Novell based on the
above-mentioned license agreements" to discuss. Insofar as the demand is
to licensees of SVRX, SCO has, it believes, no right to proceed without
Novell's approval, reminding SCO of Novell's 95% interest in revenues from
preexisting SVRX licenses.
In turn, SCO has put up some documents on its web site. In the
letter of June 11, SCO writes that it "acquired all of Novell's
right, title and interest: (a) to the AT&T Software and Sublicensing
Agreements, including the AT&T/IBM Software Agreement, and (b) to all
claims against any parties. SCO therefore acquired all right, title and
interest to enforce the Software and Sublicensing Agreements against
IBM, without answering to Novell."
Not so, Novell
replies. Novell retained certain rights "critical to protecting the
interests that Novell retained as part of the Asset Purchase Agreement
(including its interests in royalty payments and the contractual
commitments Novell made in return for royalty payments)." SCO acquired
certain assets from Novell but acquired those assets subject to certain
rights of Novell. "You can't have one without the other," Novell asserts.
"We don't agree with your interpretation of our contracts," SCO writes
back. It appears to them, it says, that Novell "is acting in concert
with IBM to destroy the value of SCO UNIX and UnixWare intellectual
property acquired from Novell in the Asset Purchase Agreement."
SCO's copyrights in Unix are now in dispute. Novell lists all of
its registered copyrights on its web site. What we now learn is that
they have been in dispute consistently from day one. In a letter
dated August 4, Novell writes to Darl McBride, SCO CEO, that according to
their agreements, copyrights were not to be transferred to Santa Cruz
Operation unless SCO could demonstrate that such a right was required.
They never did that and they don't need copyrights, Novell says, "in
order to exercise the limited rights granted SCO" and so unless or until
SCO demonstrates such a need, all copyrights remain with Novell. Of
course, SCO disagrees with Novell on this utterly.
on SCO's behalf "waives any purported right SCO may claim to require IBM
to treat IBM Code, that is code developed by IBM, or licensed by IBM from
a third party, which IBM incorporated in AIX but which itself does not
contain proprietary UNIX code supplied by AT&T under the license
agreements between AT&T and IBM, itself as subject to the confidentiality
obligations or use restrictions of the Agreements."
SCO's position regarding Novell's waivers on behalf of SGI and IBM? In
13 letter: "Novell is without authority to make such a waiver and thus
it is of no force and effect."
So now you know the rest of the
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