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SCO allowed to delay IBM trial

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Stephen Shankland and Dawn Kawamoto CNET News

Published: 14 Jun 2004 08:45 BST

The SCO Group won two and lost two in its Unix-related lawsuits against IBM and Novell, with a federal judge issuing rulings that, among other things, granted SCO's request to delay the IBM trial.

SCO's case against IBM, which alleges that Big Blue violated its Unix contract with SCO by moving proprietary software to Linux, had been set for April 2005, but Judge Dale Kimball of US District Court in Utah pushed the five-week trial back to 1 November, 2005, according to court documents filed on Thursday.

SCO's assertions that Linux is tainted with proprietary Unix intellectual property sent tremors through a computing industry that has eagerly embraced the open-source operating system. But the case began nearly a year and a half ago -- almost an eternity in the fast-paced technology world -- and SCO's foes have been impatient to see what SCO claims the infringements are.

IBM's countersuit includes three claims that SCO violated IBM patents, which SCO had sought to split into a separate case. Kimball denied that request.

In a separate ruling in the Novell case on Wednesday, Kimball denied SCO's request to move the case to state court. Novell, an earlier owner of Unix, argues it never transferred the operating system's copyrights, and SCO sued to try to establish its ownership.

In SCO's favour, Kimball also denied Novell's motion to have the case thrown out based on its interpretation of contracts governing the sale. However, for SCO to meet the requirements of its "slander of title" charge, the judge said SCO had to amend its claim by 9 July with specific claims of financial damage stemming from Novell's actions.

The latest movements may be welcome by eager observers of the case. SCO's claims, often made in interviews and news conferences, have inflamed Linux advocates, who have responded in kind with investigations into the history and source code of Linux and Unix.

Despite SCO's request that the IBM case be delayed, the clock is ticking. SCO had a $15m net loss for its most recent quarter, $4.4m of which was from its SCOsource lawsuits and largely unsuccessful efforts to get Linux users to buy SCO intellectual property licenses to avoid legal actions.

Chief executive Darl McBride said on Thursday that SCO's $61.3m in cash and marketable securities is enough to see the cases through.

Kimball changed the IBM case schedule because of the new counterclaims IBM added to the case after the initial schedule was made and because the judge declined to separate those counterclaims, he said.

SCO also sued AutoZone and DaimlerChrysler for their Unix and Linux dealings, while Linux seller Red Hat sued SCO to try to disprove accusations that Linux code is tainted with copyrighted Unix code, which the SCO Group claims to own.

An 'ambiguous' contract
Kimball indicated there's room for interpretation in whether a 1995 Asset Purchase Agreement and 1996 amendment really did transfer copyrights -- as SCO argues and Novell disputes -- when Novell sold at least some elements of its Unix business to SCO's predecessor, the Santa Cruz Operation.

The APA specifically excluded all copyrights from transfer, but the amendment then added into the transfer "the copyrights and trademarks owned by Novell...required for (the Santa Cruz Operation) to exercise its rights with respect to the acquisition of Unix and UnixWare technologies."

These documents are "ambiguous," Kimball said, and not enough to convince him immediately that the copyrights had been transferred.

"It is questionable on the face of the documents whether there was any intention to transfer the copyrights as of the date the agreement was executed," Kimball said. "The amendment contains no transfer language in the form of 'seller hereby conveys to buyer'... Moreover, the use of the term 'required' in (the amendment) without any list or accompanying list or definition of which copyrights would be required for SCO to exercise its rights in the technology is troublesome, given the number of copyrighted works involved in the transaction."