Copyright Law

10th Cir. Nixes Novell Win in Unix Case, Puts $1B IBM Copyright Claim on Track for Trial

A trial judge’s grant of summary judgment for defendant Novell in a key portion of a dispute over the ownership of the Unix code was overturned yesterday by a federal appeals court, putting it and a related $1 billion copyright dispute between the plaintiff and IBM back on track for trial.

The plaintiff, SCO Group, filed for bankruptcy after losing the 2007 ruling in the District of Utah. Hence, although the company’s CEO says the Denver-based 10th U.S. Circuit Court of Appeals ruling increases SCO’s value and gives it more reason to keep fighting in the six-year-old copyright infringement case against Novell and IBM, a bankruptcy court judge in Delaware will have a say in how the ongoing litigation is conducted, reports the Salt Lake Tribune.

“Precisely what will happen next 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 says in a written statement.

The federal district court judge who granted the summary judgment recused himself from the ongoing case yesterday. Two other judges will now hear the ongoing case, one focusing on the Novell portion and the other focusing on the IBM portion.

Although the dispute about ownership of the Unix code is between Novell and SCO, the outcome could potentially concern some 1,500 other companies that use Linux, which SCO claims is an illegal derivative of Unix, explains Computerworld.

Cherry-picking among potential defendants that use Linux, SCO sued IBM for $1 billion in damages, contending that the company had contributed Unix code to Linux, the magazine explains. That case, too, is now expected to continue toward trial.

The article doesn’t include any comment from IBM.

Whether Novell or SCO owns the Unix code is not an appropriate issue for summary judgment, because there is clearly a dispute of material fact that must be resolved at trial, the appellate court explains in a 55-page opinion (PDF) authored by Judge Michael McConnell.

A multibillion-dollar business transaction involving ambiguous contractual language and “dramatically different explanations” by the parties is “particularly ill-suited to summary judgment,” he writes.

Even though Novell offered powerful arguments, and there may be good reason to discount SCO’s extrinsic evidence, he continues, “when conflicting evidence is presented such that the ambiguities in an contract could legitimately be resolved in favor of either party, it is for the ultimate finder of fact—not the court on summary judgment—to interpret the contract.”

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