Novell's motion on SCO denied

A federal judge late Wednesday denied Novell Inc.'s motion to dismiss a "slander of title" case filed by Lindon-based SCO Group.

Instead, U.S. District Judge Dale Kimball gave SCO 30 days to amend its complaint to plead special damages it has suffered and dismissed SCO's motion to move the case back to state court, where the suit originally was filed.

Massachusetts-based Novell and SCO have been fighting over ownership of copyrights to the Unix computer operating system and UnixWare. In question is whether an amended 1995 asset purchase agreement between the companies conveyed from Novell to SCO copyrights to Unix and UnixWare.

SCO sued Novell, which has major operations in Utah, for title slander in January, claiming that Novell has hurt SCO business by, in part, making false and misleading claims that it owns the Unix and UnixWare copyrights.

The 1995 agreement contains ambiguities, but "the court cannot conclude at this point in the litigation that those ambiguities warrant a dismissal of the claim," Kimball ruled.

"The parties each have their own divergent interpretations of the agreements at issue in this case. However, the court agrees with SCO and concludes that all of these arguments as to the parties' understandings and interpretations of the agreements would more properly be before the court on motions for summary judgment or trial. Drawing all inferences in favor of SCO as this court must do on a motion to dismiss, this court cannot conclude that SCO can present no set of facts that would prove its claim," he wrote in his ruling.

Novell's push to dismiss was seen by experts as critical, because a dismissal could cripple SCO's multibillion-dollar lawsuit against International Business Machines Corp. SCO has accused IBM of violating a license agreement between the companies by placing Unix source code into Linux, a freely distributed operating system that is enhanced by contributions from developers worldwide. Novell and IBM are among companies that have begun developing products using Linux.

Without Unix ownership, SCO has no case against Novell or IBM, experts have said.

Novell had argued that SCO had pleaded only general damages rather than the special damages needed in a title slander claim. SCO had contended that the ownership question was keeping companies from obtaining Unix licenses from SCO and was keeping investors away. SCO has offered companies licenses to use its Unix intellectual property in Linux computer operating system distributions.

"Although a specific amount of damages is not necessary, and a specific identification of customers may be impossible, SCO has not given Novell or this court any information as to the scope of customer confusion, its lost businesses, or made any allegation that there, in fact, has been a realized pecuniary loss as a result of Novell's statements," Kimball wrote.

On the jurisdictional question, SCO had contended that the case does not allege federal questions or seek a federal remedy. Novell claimed the complaint about copyright ownership transfer makes it a federal matter.

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