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Novell seeks $19.9M in Unix license fees The battle between Novell Inc. and the bankrupt SCO Group over Unix copyrights remains a heated one, even if Novell's damage claims have shrunk.
Instead of the $40 million Novell initially claimed it was owed, the software company is now seeking nearly half that amount in a four-day federal bench trial that began Tuesday in U.S. District Court in Salt Lake City to resolve what remains of a four-year legal battle over intellectual property rights to Unix. The trial, which was supposed to have started in September 2007, was stayed after SCO filed for Chapter 11 bankruptcy protection. Novell wants to recover around $19.9 million in restitution for what it calls "unjust enrichment" by SCO after it allegedly retained royalty payments on Unix licenses collected from Microsoft Corp., Sun Microsystems and 12 other Linux customers including Questar Corp. Novell argues SCO had no authority to collect those fees because it made those license agreements without getting Novell's approval, and allegedly refused to account for those licenses. The four-day trial will determine whether SCO had the authority to collect those license fees, and what portion of the fees should be returned to Novell. SCO argues it doesn't owe any license fees because it owned the rights to license Unix after Novell sold the Unix business to SCO's predecessor, The Santa Cruz Operation, in 1995. SCO launched its SCOsource program in 2003 as part of an effort to obtain license fees from Linux users of Unix software code -- an effort that has angered many in the Linux community who see it as SCO's attempts to misappropriate the contributions of the open-source movement. SCO attorney Ted Norman argued during Tuesday's trial that Sun, which had developed its own version of Unix called Solaris, was interested in licensing Unix source code to operate its Intel-based PC-type system. "That's what led to the SCOsource licensing agreement which gave them rights to license the Unix source code and sublicense that source code to their customers. Sun wanted to open-source Unix," Norman said. But Michael Jacobs, Novell's attorney, disputed SCO's claims. "Novell is concerned because Sun has confirmed it is planning to open-source Solaris, which is in turn based on Novell's SVRX Unix intellectual property," he said. SCO disagreed. "Beginning in the fall of 2002, through several discussions, Novell knew that SCO was planning to enter into agreements to license the rights to use existing Unix technology (including System V) in Linux; and until litigation had arisen, Novell never asked or suggested to SCO that it was obligated to seek Novell's approval for such contracts or that SCO did not have the right to enter into such agreements or that SCO would have to remit any and all revenue to Novell -- as it now claims. Novell was emphatic with SCO that Novell had 'no interest' in participating in the (SCOsource) program," SCO said in court documents filed Tuesday. Attorneys for SCO declined to comment on how the outcome of the four-day trial will affect a rescue bid proposed by Stephen Norris Capital Partners and a group of Middle Eastern investors. The New York private equity firm had initially offered a $100 million cash infusion to fund SCO's comeback but has since changed its mind. Instead of lending the company $95 million to fund its ongoing litigation with Novell, IBM and others, buying $2 million in SCO stock and paying down $3 million of SCO's prepetition debt, Stephen Norris now wants to buy SCO's assets as part of the new deal. Renegotiations between SCO and Stephen Norris began after the New York private equity firm completed its due diligence investigation of SCO's finances, legal proceedings and operations. The offer from Stephen Norris came just as the company is struggling to keep its software business going amid declining Unix revenues, recent layoffs and efforts to fend off Novell's attempts to recover the licensing fees. For the past five years, SCO waged a legal battle against IBM, Novell and other advocates of the freely distributed Linux operating system, claiming that it owned the copyrights to Unix. SCO also claimed IBM violated the confidentiality of its copyrights when it took code from Unix and put it into the freely distributed Linux operating system. SCO was dealt a massive legal setback after federal judge Dale Kimball last August found that Novell, not SCO, owns the intellectual property rights to the Unix code. That ruling, which SCO intends to appeal once the four-day trial is over, undermined SCO's claims that IBM stole code from Unix and put it into Linux, as well as SCO's attempts to force hundreds of Linux users to pay licensing fees. |
