The SCO Group is getting its day in court, again, after a federal appeals court ruled Monday that the Lindon company has a right to a jury trial to determine ownership of the copyrights to the Unix operating system.
The 10th Circuit Court of Appeals ruling overturned a pivotal August 2007 decision by U.S. District Judge Dale Kimball, who ruled that Novell Inc., not SCO, owned the Unix copyright. Kimball's ruling dealt a crushing blow to SCO's longstanding legal battle with Novell, IBM and other advocates of the freely-distributed Linux operating system, forcing the company into bankruptcy a month later.
But in Monday's ruling, a three-judge panel of the appeals court said Kimball was premature in dismissing SCO's claims before they could go to trial. Still, SCO's copyright battle with Novell is far from being settled.
"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," Circuit Judge Michael McConnell wrote in Monday's ruling. "Such matters are for the finder of fact on remand."
Nonetheless, the appeals panel upheld a portion of Kimball's ruling that awarded $2.5 million plus interest to Novell for royalty payments on Unix licenses collected by SCO from Sun Microsystems.
"We just want a jury trial. We're not asking the appeals court to rule on the merits. This ruling is important to get our claims back on track," said Darl McBride, SCO's chief executive.
For SCO, the priority now is to get its Unix business including OpenServer, Unixware, as well as the SCO mobile server platform, along with a majority of the company's 60-plus employees, sold to UnXis. UnXis is an entity led by Gulf Cap Partners, a business and real estate investment company created by Stephen Norris, a high profile New York private equity investor, and MerchantBridge, another investor.
"For the business to move forward, it needs to be separate and apart from the litigation. The sale will help raise money to pay off Novell's judgment and provide SCO with enough to fund its litigation," McBride said. "Over the past two years, our biggest cost has been our bankruptcy legal costs. Our objective is to get out of bankruptcy quicker, and allow both business plans to move ahead."
That, ultimately, will depend on the new Chapter 11 bankruptcy trustee, Edward B. Cahn, whose appointment was confirmed on Tuesday by the bankruptcy court.
U.S. Bankruptcy Judge Kevin Gross earlier this month declined to convert SCO's Chapter 11 bankruptcy to Chapter 7 liquidation, nor did he approve the $6 million takeover of SCO's Unix business by Gulf Cap, but instead ordered the Chapter 11 trustee to look over the company.
McBride said he plans to remain as chief executive of the SCO Group, along with Ryan Tibbitts, its general counsel and a handful of employees, to continue to manage its litigation with Novell, IBM, AutoZone and others, as well as run its mobile collaborations applications and products.
"We just want our day in court with a jury for our peers. It's been a long two years fighting through the appeals process, but in the end, this ruling reaffirms our faith in the legal system. We believe in the end, we will get our justice due to us," McBride said.
Novell said in an e-mailed statement that it "intends to vigorously defend the case and the interests of its Linux customers and the greater open source community."
"We are pleased that the decision affirmed the district court's monetary award of approximately $3 million from SCO to Novell. On other issues such as ownership of the Unix copyrights, on which SCO's claims against Novell, IBM, and Linux users depend, the court remanded the case for trial," Novell said.
IBM representatives didn't return calls for comment.
"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," Novell said.
Now it will be up to an independent outsider to decide whether to push forward with the litigation, and whether to sell SCO's business operations. SCO has been operating in Chapter 11 bankruptcy for nearly two years while locked in court battles with Novell and others involving the Unix computer operating system.
Novell claims it retained the copyright when it sold Unix licensing and development rights to SCO in 1995. The two have differing stories on whether that sale included the ownership of the copyright to the code.
SCO sought more than $1 billion from IBM in 2003 on allegations it used SCO-copyrighted Unix code in its Linux-based systems, which SCO blamed for declining sales of its Unix system. SCO then filed a slander-of-title lawsuit against Novell in 2004, claiming the company hurt SCO's business by publicly denying it sold the Unix copyrights when SCO took over the business of servicing Unix technology in 1995.
SCO's legal campaign along with its threats to file lawsuits against thousands of Linux corporate users and licensees aroused the ire of advocates of the freely distributed Linux operating system.
Meanwhile, Kimball recused himself Monday from presiding over the jury trial. He is replaced by District Judges Tena Campbell, who was assigned the IBM case, and Ted Stewart, who was assigned the Novell case.
Posted in Local on Wednesday, August 26, 2009 12:00 am Updated: 12:01 pm.
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