SCO, Novell wrangle in court

Published: Wednesday, Jan. 24 2007 12:06 a.m. MST

The SCO Group's court activities turned to Novell Inc. on Tuesday, with SCO saying Novell is not entitled to any revenues SCO received from 2003 license agreements with Sun Microsystems and Microsoft.

In a hearing before U.S. District Judge Dale Kimball, Novell contended it is due the money — reports peg it at nearly $26 million — based on the language in a 1995 asset purchase agreement in which Novell turned over to SCO's predecessor company the ownership of the Unix System V operating system and UnixWare.

Novell attorney Michael Jacobs said the agreement refers to all royalty fees, all Unix System V licenses and all contracts. "All does mean all," he said, adding that SCO got those Unix license revenues from Sun and Microsoft without Novell's authority.

Jacobs said SCO had a fiduciary relationship with Novell, with the scope of its duty defined in the 1995 contract. "It's our property they are holding in trust for us," is how Jacobs described SCO's fiduciary role.

But a lawyer for Lindon-based SCO, which is already years into legal squabbles with International Business Machines Corp., contended that Novell now is asking that the 1995 contract be interpreted opposite from the way some key people involved in the agreement intended.

Attorney Stuart Singer said SCO has declarations from nine people, including some from Novell at the time. He said the intent of the 1995 agreement was that Novell would get 95 percent of royalties only from existing Unix System V licenses and that the agreement contains nothing about future System V licenses.

And the meaning of the word "all," he said, was altered through an agreement amendment.

"They (Novell) do not have a right to revenue from the Sun and Microsoft agreements," Singer said.

Jacobs said the contract spells out the terms of the agreement, regardless of the agreement-makers' intent.

"SCO would have us ignore what the lawyers did. ... We have to look at what the contract says, not what the (businesspeople) might have thought were the essence of the deal," he said.

Kimball took the matter under advisement.

SCO's dispute with Novell focuses on which company owns the Unix copyrights and has a huge bearing on SCO's suit with IBM. SCO contends that IBM violated a contract by putting Unix source code into Linux, a free "open source" operating system.

Kimball has pushed back the trial in the IBM case until the Novell case is resolved.


E-mail: bwallace@desnews.com

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