Legal News

The Roller SCOaster Continues: Fight With Novell Heads to Trial

By Ashby Jones

When theme-park owners finally run out of comic book-influenced movies after which to name their new roller coasters, perhaps they can find inspiration from a Lindon, Utah-based computer company called SCO Group.

After all, over the years, the company has been through more ups and downs than the holder of a week-long pass to Six Flags. (We can even suggest a name: The Roller SCOaster!).

In any event, the company got a big boost on Monday when the Tenth Circuit ruled that the company has a right to a jury trial on its claim that it owns the Unix operating system. The ruling reversed a lower-court judge who, in 2007, had granted summary judgment against SCO, in favor of defendant Novell Inc. Click here for the story from Wired, here for the story from Information Week; here for the Tenth Circuit opinion, authored by judge Michael McConnell, soon to leave the bench for Stanford Law School.

The backstory: In 1995, SCO Group (then known as Santa Cruz Operation) bought the Unix operating system from Novell for $149 million. But which company owned the copyrights wasn't clear, and years of litigation ensued. In 2007, a federal judge in Utah, Dale Kimball, ruled that SCO was not the owner of the copyrights. SCO filed for bankruptcy not long after the ruling.

According to Wired, Monday's ruling could revive SCO's separate high-stakes lawsuit against IBM. SCO has sought more than $1 billion from IBM on allegations it used SCO-copyrighted Unix code in its Linux-based systems. The case was shelved, however, after the Utah federal judge said SCO group didn't own the copyrights at issue.

Still, the copyright fight with Novell is far from being settled. The Tenth Circuit simply held that issues of fact still existed, and that the lower court judge was premature in granting summary judgment for Novell.

"We take no position on which party ultimately owns the Unix copyrights or which copyrights were required for Santa Cruz to exercise its rights under the agreement," the court wrote. "Such matters are for the finder of fact on remand."

“Today is not the end of the war, but it certainly is a key battle that we’ve won,” SCO Group CEO Darl McBride told the Salt Lake Tribune. “Now it’s time to move on to the next series of battles with our victory in hand.”

But SCO is currently wrestling with larger troubles. Just last week, a federal judge in Wilmington, DE, ousted the management of the SCO Group from control of the company’s bankruptcy, saying SCO has been “waiting for ‘the dough’” from a losing battle with Novell Inc. for too long. The judge, Kevin Gross, ordered a Chapter 11 trustee to look over the company. Click here for the WSJ story on that.

And that wrinkle is what Novell emphasized in its post-ruling statement, according to Information Week. “Precisely what will happen next in the lawsuit remains to be seen, especially in light of the pending SCO bankruptcy and the recent court decision to appoint a Chapter 11 Trustee to take over the business affairs of the company.”

Leading the fight for SCO: Stuart Singer of Boies Schiller. Repping Novell: Michael Jacobs and others at Morrison & Foerster.

Full post as published by Law Blog - WSJ.com on August 25, 2009 (boomark / email).