Contract arguments reanimate SCO dispute

In the latest step in a legal battle over Unix copyrights, Novell has filed a countersuit against the SCO Group, charging it with twice breaking a contract.

The software company also accused SCO with slander of title for claiming ownership of the Unix copyrights in the countersuit, filed on Friday in US district court in Utah. That's the same charge SCO levelled against Novell in its own 2004 suit.

Novell, which sells a version of the Linux operating system, also denied numerous SCO charges in the filing.

"SCO made its public statements claiming ownership of the Unix copyrights... with knowledge that title to these copyrights remains with Novell," Novell said in its filing. "SCO made such statements with the intent to cause customers and potential customers of Novell not to do business with Novell [and] to slander and impugn the ownership rights of Novell in Unix and UnixWare."

The months-old legal dispute is a key foundation to two SCO court cases concerning Unix and Linux, directed against IBM and car parts retailer AutoZone. If Novell can show it owns the Unix copyright, both those cases are seriously compromised.

SCO said its lawyers are reviewing Novell's filing and that counterclaims aren't unexpected in such cases. It did not comment further.

Suit laid out
In Friday's suit, Novell argues that SCO broke the terms of a 1995 contract called the Asset Purchase Agreement, in which Novell transferred some Unix assets to the Santa Cruz Operation. That company in 2000 sold its Unix assets to SCO, which was named Caldera Systems at the time.

SCO has said that a 1996 amendment to the agreement shows that Unix copyrights were transferred as part of the assets. Novell flatly denies the claims. "Neither [the amendment] nor the Asset Purchase Agreement were intended to, nor do they actually, transfer ownership of the Unix or UnixWare copyrights owned by Novell... Title to the Unix copyrights... remains with Novell," according to the Friday court filing.

SCO's first contract violation lies in its failure to comply with requirements to supply Novell with information about licensing activities regarding versions of Unix System V, Novell argues. Specifically, Novell says the company should provide details of Unix licensing deals in 2003 with Microsoft and Sun that brought SCO millons of dollars.

The second violation arises from a provision in the Asset Purchase Agreement that calls on SCO to give Novell 95 percent of any licence revenue from Unix System V, Novell says. That money includes revenue received from Microsoft and Sun, Novell asserts.

"Under the Asset Purchase Agreement, SCO had no authority to enter into the Sun and Microsoft [Unix] licences," Novell said.

Novell is asking the Utah court to compel SCO to provide the contracts with Sun and Microsoft and to put revenue from those deals in a trust so that Novell can get it before SCO spends it.

SCO has had difficulties of late. In a 2002 memo that came to light in July, a SCO engineer said he had not found a "smoking gun" that showed evidence of Linux copyright infringement. In June, the company reported the latest in a series of difficult financial quarters, as its Unix product sales continued to decline. And in February, a judge criticised SCO's inability to produce evidence to support its legal claims.

Things haven't all gone Novell's way, either. In June it lost a bid to have SCO's case dismissed.