Court Revives UNIX Copyright Dispute

(CN) - The 10th Circuit resurrected a long-running copyright dispute over UNIX source code and UnixWare, largely reversing a federal judge's ruling for Novell and against SCO Group.

Novell and SCO disagreed about what rights had been transferred to SCO's predecessor, Santa Cruz, in 1995, when Novell sold its UNIX business.

UNIX is a computer operating system developed in the late 1960s by AT&T. AT&T also developed UNIX System V, or SVRX, for licensing UNIX source code to major computer manufacturers such as IBM, Sun and Hewlett-Packard.

When Novell sold UNIX, Santa Cruz was either unable or unwilling to buy the whole business, so Novell kept 95 percent interest in SVRX license royalties.

"The parties differ markedly in their characterization of the rights transferred to Santa Cruz and the value of the deal," explained Judge McConnell, writing for the Denver-based appellate panel.

SCO claimed Santa Cruz bought the bulk of the business, including UNIX copyrights, for $250 million. Novell, on the other hand, said it received only about $50 million in stock and a promised share of UnixWare royalties. More importantly, Novell insisted that it had kept the UNIX copyrights and had given Santa Cruz only an implied license to use them.

SCO backed up its arguments with testimony from Novell management, who said they meant to sell SCO the entire UNIX business. Novell relied on the language of the contract, which doesn't outline such a wholesale transfer of rights, according to Novell.

When SCO sued IBM in March 2003 for allegedly violating its UNIX copyrights, Novell stepped in to stop SCO from terminating IBM's SVRX licenses and publicly declared itself the owner of UNIX copyrights.

The companies accused each other of title slander and breach of contract.

A federal judge in Utah ruled for Novell on the copyright issue, and awarded it more than $2.5 million in SVRX license royalties that SCO received from Sun and Microsoft in 2003.

The 10th Circuit said summary judgment wasn't warranted in a case about a "complicated, multimillion-dollar business transaction involving ambiguous language about which the parties offer dramatically different explanations."

Copyright ownership is up to a jury to decide, Judge McConnell wrote.

The court said the same for Novell's asserted right to block SCO from ending its licensing agreements with IBM. McConnell said the evidence isn't "so one-sided" that the issue shouldn't go to trial.

However, the court upheld the $2.5 million judgment for Novell, saying the amended contract barred SCO from entering into new SVRX licenses.

The appellate panel reversed the lower court on all but the SCO-Sun judgment and remanded.

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