SCO Grp v. Novell Inc

Filing 292

Defendant's MEMORANDUM in Opposition re 258 MOTION for Summary Judgment (Partial) on SCO's First, Second and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim MOTION for Summary Judgment (Partial) on SCO's First, Second and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim [REDACTED] filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit A-Response to SCO's Statement of Facts# 2 Exhibit B# 3 Exhibit C)(Sneddon, Heather)

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Case 2:04-cv-00139-DAK-BCW SCO Grp v. Novell Inc Document 292 Filed 05/14/2007 Page 1 of 65 Doc. 29 MORRISON & FOERSTER LLP Michael A. Jacobs (pro hac vice) Kenneth W. Brakebill (pro hac vice) Grant L. Kim (pro hac vice) 425 Market Street San Francisco, CA 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522 ANDERSON & KARRENBERG Thomas R. Karrenberg, #3726 John P. Mullen, #4097 Heather M. Sneddon, #9520 700 Chase Tower 50 West Broadway Salt Lake City, UT 84101 Telephone: (801) 534-1700 Facsimile: (801) 364-7697 Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc. IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION THE SCO GROUP, INC., a Delaware corporation, Plaintiff and CounterclaimDefendant, v s. NOVELL, INC., a Delaware corporation, Defendant and CounterclaimPlaintiff. MEMORANDUM IN SUPPORT OF NOVELL'S OPPOSITION TO SCO'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON SCO'S FIRST, SECOND, AND FIFTH CAUSES OF ACTION AND FOR SUMMARY JUDGMENT ON NOVELL'S FIRST COUNTERCLAIM (COPYRIGHT OWNERSHIP) [REDACTED pursuant to the August 2, 2006 Stipulated Protective Order] Case No. 2:04CV00139 Judge Dale A. Kimball Dockets.Justia.com Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 2 of 65 TABLE OF CONTENTS TABLE OF AUTHORITIES ...........................................................................................................v I. II. III. STATEMENT OF ISSUES .................................................................................................1 INTRODUCTION ...............................................................................................................2 STATEMENT OF FACTS ..................................................................................................5 A. Santa Cruz's Conduct Following the Execution of the APA and Amendment No. 2 Demonstrates Its Understanding that No Copyrights Were Transferred. .................................................................................6 1. 2. 3. In 2001, Santa Cruz and SCO Acknowledged a Problem with the "Chain of Title from Novell." ........................................................6 In Earl y 2003, SCO Repeatedly Requested that Novell Transfer the UNIX Copyrights to SCO. ......................................................9 After the Execution of the APA, Santa Cruz and SCO Distributed Copies of UNIX Code Bearing Joint SCONovell Copyright Notices. .........................................................................11 B. Novell's Conduct After Signing the APA Is Consistent with Its Understanding that the APA Did Not Transfer the UNIX Copyrights. .............................................................................................................12 1. 2. Novell Took No Action to Send Santa Cruz the Physical Copyright Registrations. ............................................................................12 Novell Had No Knowledge that SCO Licenses Contained Any Incorrect Representations and Warranties that SCO Owned UNIX Copyrights. .........................................................................13 The Technology License Agreement Is Consistent With the Fact that the APA Did Not Transfer the Copyrights. ...........................14 3. C. SCO's "Testimonial Evidence" Does Not Demonstrate an Intent to Transfer Copyrights. ..........................................................................................16 1. None of SCO's Witnesses Was Involved in the Negotiation or Drafting the Intellectual Property Provisions of the APA. ..............................................................................16 ii Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 3 of 65 2. Those Directly Involved in the Drafting of the APA's Intellectual Property Provisions Confirm that Novell Deliberately Excluded Copyrights From the Transfer of Assets. ........................................................................................................25 D. Amendment No. 2 Did Not Transfer the Copyrights Either. .................................27 1. 2. Amendment No. 2 Was Not Intended to Transfer All Copyrights Pertaining to UNIX to Santa Cruz. .........................................27 SCO's Only Evidence Concerning the Intent of Amendment No. 2 Comes From Witnesses Who Had No Involvement in or Memory of Drafting or Negotiating that Amendment. ...............................................................................................29 SCO Has Presented No Evidence that An y Copyrights Were "Required for" the Operation of the UNIX-Related Business Contemplated by the APA. .........................................................30 Novell's Statements Concerning Amendment No. 2 Are Entirely Consistent With Its Understanding that the Amendment Did Not Transfer Copyrights. ...............................................33 3. 4. IV. ARGUMENT .....................................................................................................................34 A. The Plain Language of the APA Excluded Copyrights from the Assets to Be Transferred by Novell to Santa Cruz. ...............................................34 1. 2. Schedule 1.1(b) Expressly Excluded "All Copyrights" From the Transfer of Assets. ......................................................................34 SCO Cannot Use Extrinsic Evidence About the Supposed Intent of the Parties to Rewrite the Plain Language of the APA............................................................................................................36 B. In Any Event, Extrinsic Evidence Would Simply Reinforce the Conclusion that the APA Intentionally Excluded Copyrights. ..............................38 1. 2. The Drafters of the APA's Intellectual Propert y Provisions Agree that the Exclusion of Copyrights Was Deliberate. ..........................38 SCO Presents No Evidence to the Contrary from Anyone Involved in the Negotiation of the Intellectual Property Provisions of the APA. ..............................................................................40 C. Amendment No. 2 Did Not Transfer the UNIX and UnixWare Copyrights to Santa Cruz. ......................................................................................42 iii Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 4 of 65 1. Amendment No. 2 Is Not a Signed Instrument of Conveyance, and Hence Cannot Transfer Copyright Ownership Under the Copyright Act. ........................................................43 In Any Event, Amendment No. 2 Was Never Intended to Transfer All Copyrights Pertaining to UNIX and UnixWare. ..................................................................................................44 No Copyrights Are "Required" for Santa Cruz to Run the UNIX-Related Business Contemplated by the APA. ................................46 2. 3. D. Subsequent Conduct by the Parties Confirms that All Parties Understood Neither the APA Nor Amendment No. 2 Transferred the Copyrights. .......................................................................................................48 1. 2. Santa Cruz's and SCO's Actions Indicate a Recognition that No Transfer of Copyrights Occurred. .................................................48 Novell's Conduct Was Consistent with Its Understanding that It Still Owned the Copyrights. ............................................................52 V. CONCLUSION ..................................................................................................................56 iv Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 5 of 65 TABLE OF AUTHORITIES Cases Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435 (9th Cir. 1994) ..................................... 46 Bank of the West v. Resolution Trust Corp., No. C 95-4708 FMS, 1997 U.S. Dist. LEXIS 1581 (N.D. Cal. Feb. 13, 1997).......................................................................................................... 36 EPA Real Estate P'ship v. Kang, 12 Cal. App. 4th 171 (1992) .................................................... 38 Gerdlund v. Electronic Dispensers Int'l, 190 Cal. App. 3d 263 (1987) ................................. 37, 38 GM Corp. v. Superior Court, 12 Cal. App. 4th 435 (1993) .......................................................... 45 Kingsrow Enterprises, Inc. v. Metromedia, Inc., 397 F. Supp. 879 (S.D.N.Y. 1975) .................. 53 Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355 (9th Cir. 1994) .......................................................... 43 La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195 (10th Cir. 2005) ......... 53 Lyrick Studios, Inc. v. Big Idea Prods., Inc., 420 F.3d 388 (5th Cir. 2005) ................................. 44 Pamiloff v. Giant Records, Inc., 794 F. Supp. 933 (N.D. Cal. 1992) ........................................... 44 Relational Design & Tech., Inc. v. Brock, No. 91-2452-EEO, 1993 WL 191323, at *6 (D. Kan. May 25, 1993) ........................................................................................................................... 35 S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989) ......................................................... 35 Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992) .................................. 35 Shugrue v. Continental Airlines, 977 F. Supp. 280 (S.D.N.Y. 1997) ........................................... 35 Statutes 17 U.S.C. 204(a) .................................................................................................................... 3, 43 17 U.S.C. 401(b)(3) ................................................................................................................... 52 17 U.S.C. 406(a) ........................................................................................................................ 52 v Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 6 of 65 Other Authorities Berne Convention for the Protection of Literary and Artistic Works, Article 15, 1.................. 52 Treatises 2-7 Nimmer on Copyright 7.12[C][1] ........................................................................................ 52 vi Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 7 of 65 I. STATEMENT OF ISSUES SCO has moved for complete summary judgment on Novell's First Counterclaim for slander of title on the basis that SCO purportedly owns the copyrights at issue. In addition, SCO has moved for partial summary judgment on its slander of title (Claim I), breach of contract (Claim II), and unfair competition (Claim V) claims on the issue of whether SCO owns the copyrights at issue.1 SCO's motion mirrors Novell's motion for summary judgment on SCO's slander of title (Claim I) and specific performance (Claim III) claims. Novell has moved for summary judgment on those claims on the ground that the plain language of the relevant contracts demonstrates that Novell, not SCO, owns the copyrights at issue. (Memorandum in Support of Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance, filed April 20, 2007, PACER No. 286 ("Novell's Ownership MSJ No. 1").)2 SCO's motion presents two principal issues: 1. Is SCO entitled to summary judgment that the 1995 Asset Purchase Agreement between Novell and Santa Cruz ("APA") transferred the UNIX and Unix Ware copyrights to Santa Cruz despite the APA's express exclusion of "all copyrights" from the assets to be transferred? SCO's motion is a limited one. SCO has moved for partial summary judgment on Claims I, II, and V on the issue of copyright ownership only, and has not presented any argument or evidence concerning other elements of those claims. In addition, SCO has not moved for summary judgment on its claim for specific performance (Claim III). Novell has filed a separate motion for summary judgment on the copyright ownership portions of SCO's claims for breach of contract (Claim II) and unfair competition (Claim V) on the grounds that (1) SCO's allegations do not state a valid claim, even if assumed to be true; and (2) SCO cannot establish that Novell's assertion that SCO does not own the copyrights is false, which is a required element of SCO's claims. (See Memorandum in Support of Novell's Motion for Summary Judgment on the Copyright Ownership Portions of SCO's Second Claim for Breach of Contract and Fifth Claim for Unfair Competition, filed April 20, 2007, PACER No. 272 ("Novell's Ownership MSJ No. 2").) 2 1 1 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 8 of 65 2. Is SCO entitled to summary judgment that Amendment No. 2 to the APA effectuated a transfer of the UNIX and UnixWare copyrights to Santa Cruz? Novell submits that both questions should be answered in the negative, for the reasons stated in Novell's Ownership MSJ No. 1 and for the additional reasons stated in this memorandum. Novell agrees that the question of copyright ownership is appropriate for summary judgment, but such judgment should be entered in Novell's favor, not SCO's. II. INTRODUCTION The APA expressly excludes "all copyrights" from the transfer of assets. Throughout this litigation, SCO has vacillated between arguing that the transfer of copyrights was effectuated by the APA and contending that such transfer was effectuated instead by Amendment No. 2. In this most recent motion, SCO appears to adopt an amalgamated approach, suggesting that the "all copyrights" exclusion "does not exist for purposes of construing the APA," because the APA was modified thirteen months later by Amendment No. 2. (SCO's Ownership MSJ 4/9/2007, PACER No. 259, at 2.) Yet the original APA is indisputably relevant because the "Bill of Sale" on which SCO relies as evidence of the alleged transfer was based on the APA, and not on Amendment No. 2 (which was not even executed until ten months later). In any event, it does not matter which position SCO takes because neither the APA nor Amendment No. 2 transferred copyright ownership from Novell to Santa Cruz. The APA, signed by Novell and Santa Cruz on September 19, 1995, explicitly excluded "all copyrights" from the assets that Novell transferred to Santa Cruz. SCO submits extrinsic evidence that purportedly demonstrates that "all copyrights" did not mean "all copyrights" but only "some copyrights." That evidence is inadmissible under the parol evidence rule, as it seeks not to explain the meaning of the term "all copyrights" but rather to demonstrate a contradiction 2 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 9 of 65 between the plain language of the agreement and its supposed intent. SCO's evidence should be ignored and this Court should find, as a matter of law, that the APA did not transfer copyrights. Because the plain language of the APA is clear, consideration of SCO's extrinsic evidence is both unnecessary and improper. However, even if this evidence were considered, it would not change the conclusion that the copyrights were not transferred. Novell has submitted documents and testimony from the specific individuals that drafted the "all copyrights" exclusion, who have all attested that the exclusion was deliberately inserted to protect Novell's ongoing interests in the UNIX business. SCO, in contrast, has submitted no admissible evidence from a single person involved in drafting the "all copyrights" exclusion, relying instead on testimony from persons who were not involved in drafting that exclusion and who did not participate in negotiations concerning the transfer of copyrights. These individuals have no personal knowledge of the intent of the "all copyrights" exclusion. Amendment No. 2 did not transfer copyright ownership either. To transfer copyright ownership, the Copyright Act requires a signed "written instrument of conveyance" that makes evident precisely what rights are being transferred. 17 U.S.C. 204(a). Amendment No. 2 does not meet that standard. It did not purport to "transfer" any copyrights. Nor did it identify with any specificity the copyrights, if any, to be transferred. Accordingly, the Court need not consider extrinsic evidence concerning the intent of Amendment No. 2, because Amendment No. 2 did not transfer the copyrights as a matter of law, regardless of what may or may not have been intended. Even if this court were to consider extrinsic evidence of intent, the undisputed evidence establishes that Amendment No. 2 was not intended to transfer the copyrights. Novell expressly rejected Santa Cruz's proposed version of Amendment No. 2 that would have transferred all 3 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 10 of 65 copyrights pertaining to UNIX and UnixWare to Santa Cruz. Instead, Novell stated that it would agree only to a more limited amendment that exempted from the "all copyrights" exclusion those copyrights "required for" Santa Cruz to run the UNIX-related business contemplated by the APA. Novell understood that amendment as affirming Santa Cruz's license under the APA to use the UNIX and UnixWare copyrighted works. SCO has submitted no admissible evidence to the contrary. SCO relies on various witnesses who opine on the supposed meaning of Amendment No. 2, but none of those witnesses was involved in negotiating or drafting that amendment. Moreover, SCO has not submitted any evidence that outright ownership of any copyrights was "required" for Santa Cruz to run the UNIX-related business contemplated by the APA, when Santa Cruz already had a license under the APA to use the copyrighted works as needed to run that business. SCO has asserted that the parties' conduct after the APA was signed shows that the copyrights were transferred to Santa Cruz. Once again, this extrinsic evidence is inadmissible. But if the Court were to examine additional evidence, it would simpl y confirm that Santa Cruz and SCO understood that no transfer of copyrights occurred. In distributing software in the late 1990s, Santa Cruz repeatedly used copyright notices indicating Novell's continued ownership of UNIX and UnixWare code. Moreover, in 2001, in an agreement assigning various UNIX intellectual property rights to SCO, Santa Cruz expressly acknowledged a problem with the "chain of title from Novell" and discussed obtaining a "global IP assignment" from Novell. Obviously, no such assignment would be necessary if the APA and Amendment No. 2 had transferred the copyrights to Santa Cruz. Then, in late 2002 and early 2003, SCO repeatedly contacted Novell to request to amend the APA to transfer SCO the copyrights, recognizing that 4 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 11 of 65 no such transfer had occurred under the APA and Amendment No. 2. SCO's actions speak louder than its words: SCO was well aware that no transfer of copyrights had occurred. Because neither the APA nor Amendment No. 2 transferred the copyrights to Santa Cruz, Novell, not SCO, owns the copyrights at issue. Accordingly, summary judgment should enter in favor of Novell. Moreover, SCO's motion should be denied, as Novell (at the very least) has shown a disputed issue of material fact as to SCO's purported ownership of the copyrights. III. STATEMENT OF FACTS Novell incorporates by reference its statement of undisputed facts in support of its motion for summary judgment ("Novell's Ownership MSJ No. 1 Facts"), as well as the evidence submitted in support of that motion.3 Key points established in Novell's statement of undisputed facts include: The APA expressly excluded "all copyrights" from the assets to be transferred (Novell's Ownership MSJ No. 1 Facts, 14); The Bill of Sale conveyed the assets described in the APA, as amended by Amendment No. 1 (Id., 25-27); and Amendment No. 2 did not "transfer" any assets on its own and did not retroactively amend the Bill of Sale to convey assets described in Amendment No. 2 (Id., 28-30). Novell's statement of facts in support of its summary judgment motion can be found at pages 3-16 of the Memorandum in Support of Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance, filed on April 20, 2007, PACER No. 286. In support of that motion, Novell relied upon the Declarations of Allison Amadia (PACER No. 278), David Bradford (PACER No. 279), James R. Tolonen (PACER No. 280), Tor Braham (PACER No. 281), and Ken Brakebill (PACER No. 284), all filed on April 20, 2007, and the exhibits attached to those declarations. 3 5 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 12 of 65 In response to the arguments and evidence in SCO's motion, Novell also notes the following additional facts.4 Because the plain language of the APA and Amendment No. 2 did not effectuate a transfer of copyrights, the Court need not consider the evidence related to these additional facts to decide SCO's motion for summary judgment or Novell's related motion. However, even if this evidence were considered, it simply reinforces the conclusion that that no transfer of copyrights occurred. A. Santa Cruz's Conduct Following the Execution of the APA and Amendment No. 2 Demonstrates Its Understanding that No Copyrights Were Transferred. 1. 1. In 2001, Santa Cruz and SCO Acknowledged a Problem with the "Chain of Title from Novell." In an agreement dated May 7, 2001 ("Assignment Agreement"), Santa Cruz assigned various items of intellectual property to SCO, which was then named Caldera. (Supplemental Declaration of Ken Brakebill in Opposition to SCO's Motion for Summary Judgment, filed herewith ("Supp. Brakebill Decl."), Ex. 1.) That Assignment Agreement purported to transfer various UNIX and UnixWare copyrights. (Supp. Brakebill Decl., Ex. 1, at Schedule C, WSGR 4450.) 2. In the Assignment Agreement, Santa Cruz made various representations and warranties concerning the intellectual property rights being purportedly being transferred, but inserted a notable caveat regarding its "chain of title" from Novell: Assignor has no knowledge of any fact that would prevent Assignee's registration of any Rights related or appurtenant to the Inventions and Works or recording the transfer or Rights hereunder Novell also responds to each of SCO's numbered "Statement of Facts" in its Response to SCO's Statement of Facts, attached as Exhibit A to this memorandum. In addition, Novell will separately file Evidentiary Objections to SCO's Summary Judgment Exhibits. 4 6 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 13 of 65 (except that Assignor may not be able to establish a chain of title from Novell Inc. but shall diligently endeavor to do so as soon as possible). (Id. at 8(v), WSGR 4431 (emphasis added).) 3. Santa Cruz deliberately inserted the "chain of title" caveat as a result of its negotiations with Caldera. In the Assignment Agreement, Caldera was represented by Brobeck Phleger & Harrison, and Santa Cruz was represented by Wilson Sonsini Goodrich & Rosati. (Supp. Brakebill Decl., Ex. 2, Danaher Dep. 13:16-14:3; Supp. Brakebill Decl., Ex. 3.)5 On April 26, 2001, Caldera's attorneys e-mailed a draft of the Assignment Agreement to Santa Cruz's attorneys. That initial draft provided an unlimited representation and warranty from Santa Cruz: "Assignor has no knowledge of any fact that would prevent Assignee's registration of any Rights related or appurtenant to the Inventions and Works." (Supp. Brakebill Decl., Ex. 5, at 8(v).) In the cover e-mail transmitting the draft, Caldera's attorney proposed that Santa Cruz's assignment of intellectual property obtained from Novell would require the inclusion in the Assignment Agreement of "a single exhibit taken from the Novell/SCO Asset Purchase Agreement." (Id. at 1.) 4. Four days later, on April 30, 2001, an in-house attorney at Santa Cruz responded with a redlined draft of the Assignment Agreement incorporating revisions and comments from Santa Cruz and its outside counsel, Wilson Sonsini. Among other things, the redlined draft 5 Different lawyers from Wilson Sonsini had previously represented Novell in its 1995 deal with Santa Cruz. To avoid any conflict of interest, an ethical wall was erected that prevented the Wilson Sonsini lawyers on the Santa Cruz-Caldera deal from consulting the Wilson Sonsini lawyers who had worked on the 1995 Novell-Santa Cruz deal. (Supp. Brakebill Decl. Ex. 4; Supp. Brakebill Decl. Ex. 2, Danaher Dep. 29:13-30:3.) In its opinion letter for the Santa Cruz-Caldera deal, Wilson Sonsini made clear that its work was based entirely on Santa Cruz's representations, not on any pre-existing knowledge from the Novell-Santa Cruz deal. (Supp. Brakebill Decl. Ex. 3.) 7 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 14 of 65 added an exception to Santa Cruz's representation and warranty, inserting the underlined text into Paragraph 8(v): "Except for the inability to obtain third party acknowledgements to establish a chain of title, Assignor has no knowledge of any fact that would prevent Assignee's registration of any Rights related or appurtenant to the Inventions and Works." (Supp. Brakebill Decl., Ex. 6, at 8(v).) 5. On May 3, 2001, four days before the execution of the Assignment Agreement, Caldera's outside counsel at Brobeck circulated a "final" draft of the agreement, stating in her cover e-mail: SCO will sign the approximately 55 individual trademark assignments for recordation purposes next week, along with trying to get Novell to sign a global IP assignment, for chain of title purposes. I understand that time is very short now, but this must happen as soon as possible after closing so we do not lose track of this. (Supp. Brakebill Decl., Ex. 7, at 1 (emphasis added).) 6. In the redlined draft attached to the May 3, 2001 e-mail, Caldera's attorneys deleted Santa Cruz's insertion of the qualifying phrase "[e]xcept for the inability to obtain third party acknowledgements to establish a chain of title." Instead, the draft inserted a new qualifying phrase at the end of Paragraph 8(v) to limit chain of title questions to those involving Novell. The redlined version thus read: Except for the potential inability to obtain third party acknowledgements to establish a chain of title, Assignor has no knowledge of any fact that would prevent Assignee's registration of any Rights related or appurtenant to the Inventions and Works or recording the transfer or Rights hereunder, (except that Assignor may not be able to establish a chain of title from Novell Inc. but shall diligently endeavor to do so as soon as possible). (Id. at 8(v) (emphasis added).) That became the final language in the executed Assignment Agreement. (Supp. Brakebill Decl., Ex. 1, at 8(v), WSGR 4431.) 8 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 15 of 65 2. 7. In Early 2003, SCO Repeatedly Requested that Novell Transfer the UNIX Copyrights to SCO. Beginning in late 2002, Darl McBride, SCO's CEO, contacted Novell repeatedly to seek copies of records concerning SCO's intellectual property rights to UNIX. McBride stated that he wanted this information to support possible efforts by SCO to assert claims against end users of Linux. (Declaration of Greg Jones, Supp. Brakebill Decl., Ex. 8, at 13; Supp. Brakebill Decl., Ex. 9, at 1; Supp. Brakebill Decl., Ex. 10.) 8. On January 4, 2003, McBride received an e-mail from Michael Anderer, a consultant for SCO retained to examine its intellectual propert y. Anderer stated that * * REDACTED * * noted that Anderer * * REDACTED * * * * REDACTED * * (Supp. Brakebill Decl., Ex. 11, Anderer Dep. 9:2-17, 88:17-90:24; Supp. Brakebill Decl., Ex. 12 at SCO 1272179.) 9. On February 25, 2003, McBride called a Novell employee in business Anderer development, David Wright, and said, "SCO needs the copyrights." Wright passed McBride's request to Novell's in-house legal department. McBride's request was memorialized in an e-mail written that day by a Novell in-house attorney, Greg Jones. (Supp. Brakebill Decl., Ex. 13, at 1.) McBride does not dispute that he made that statement in his phone call to Wright. (Supp. Brakebill Decl., Ex. 14, McBride Dep. 99:10-100:1.) 10. In early 2003, McBride and Chris Sontag of SCO contacted Greg Jones at Novell several times to request transfer of the UNIX copyrights. (Supp. Brakebill Decl., Ex. 8, at 13; Supp. Brakebill Decl., Ex. 15, Jones Dep. 181:2-182:22.) McBride stated that "the asset purchase agreement excluded copyrights from being transferred" and that this was a "clerical 9 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 16 of 65 error." (Id. at 181:2-182:22.) Sontag then requested that Jones sign a letter purportedl y attempting to "clarify" that the APA did not transfer copyrights. (Supp. Brakebill Decl., Ex. 16 at Ex. 2.) 11. On February 4, 2003, McBride contacted Christopher Stone, vice chairman of Novell, and stated that he wanted Novell to "amend" the APA to give SCO "the copyrights to UNIX." (Supp. Brakebill Decl., Ex. 17 at NOV 39458; Supp. Brakebill Decl., Ex. 18, Stone Dep. 108:22-109:10.). 12. Again, in March 2003, McBride called Stone to ask him if Novell would "amend" or "change" the APA so SCO "could have the copyrights." (Supp. Brakebill Decl., Ex. 18, Stone Dep. 248:10-249:16.) 13. Ralph Yarro, chairman of SCO, requested an in-person meeting with Stone. In that meeting, on May 14, 2003, Yarro told Stone that he "would like for Novell to make changes to the agreement to give them [i.e., SCO] the copyrights." Stone refused. ( Id. at 135:23-136:5, 137:20-24, 140:3-19.) In June 2003, Stone made notes memorializing that conversation. (Id. at 174:5-9; Supp. Brakebill Decl., Ex. 17 at NOV 39460-61.) 14. On May 19, 2003, McBride called Stone and Joe LaSala, Novell's general counsel, and again requested that Novell convey the copyrights to SCO. Specifically, McBride said, "We only need you to amend the contract so that we can have the copyrights." (Supp. Brakebill Decl., Ex. 19, LaSala Dep. 172:14-173:4, 176:12-177:12, 227:6-14; Supp. Brakebill Decl., Ex. 18, Stone Dep. 249:17-250:12.) Stone made notes in June 2003 memorializing that conversation. (Id. at 174:5-9; Supp. Brakebill Decl., Ex. 17, at NOV 39460.) 10 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 17 of 65 3. After the Execution of the APA, Santa Cruz and SCO Distributed Copies of UNIX Code Bearing Joint SCO-Novell Copyright Notices. 15. SCO contends that Novell failed to object to Santa Cruz's distribution of UnixWare software containing copyright notices in Santa Cruz's name. In fact, the copyright notices distributed by Santa Cruz indicated Novell's continued ownership of the original UNIX and UnixWare code and SCO's ownership only of modifications to that code. SCO submitted in support of its summary judgment motion copies of the labels on two UnixWare CDs released by Santa Cruz. (Declaration of Edward Normand, filed 4/9/07, PACER No. 260 ("Normand Decl."), Exs. 27-28.)6 16. The CDs were labeled "SCO UnixWare Release 2.1," "SCO UnixWare Release 2.1.3 Installation CD," and "SCO UnixWare Release 2.1.3 Supplemental CD." (Declaration of James McKenna in Support of Novell's Opposition, filed herewith ("McKenna Decl.") 4.) On the CDs labeled "SCO UnixWare Release 2.1" and "SCO UnixWare Release 2.1.3 Installation CD," the main installation directories contained, with slight variations, the following copyright notices: (c) Copyright 1996 The Santa Cruz Operation, Inc. All rights reserved. Copyright 1984-1995 Novell, Inc. All Rights Reserved. (McKenna Decl., 5.) 17. On the CDs labeled "SCO UnixWare Release 2.1" and "SCO UnixWare Release 2.1.3 Installation CD," the documentation directories contained the following copyright notices: At Novell's repeated requests following SCO's April 9, 2003 summary judgment motion, SCO provided Novell with copies of the underlying CDs; onl y the labels of those CDs were referenced and submitted in SCO's motion. (Supp. Brakebill Decl., Exs. 20 and 21.) 6 11 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 18 of 65 Copyright (c) 1994-1995 Novell, Inc. All rights reserved. (c) Copyright 1996 The Santa Cruz Operation, Inc. All rights reserved. (McKenna Decl., 6.) 18. On the CD labeled "SCO UnixWare Release 2.1.3 Supplemental CD," the following text appeared: COPYRIGHT=Copyright 1996-1998 The Santa Cruz Operation, Inc. All Rights Reserved. COPYRIGHT=Copyright 1984-1995 Novell, Inc. All Rights Reserved. (McKenna Decl., 8.) B. Novell's Conduct After Signing the APA Is Consistent with Its Understanding that the APA Did Not Transfer the UNIX Copyrights. 1. 19. Novell Took No Action to Send Santa Cruz the Physical Copyright Registrations. In SCO's Statement of Facts, SCO states that Santa Cruz "obtained physical possession of the UNIX copyright registrations from Novell," impl ying that Novell affirmatively took action to send the registrations to SCO. (SCO Statement of Facts, 22.) In fact, Novell did no such thing. Burt Levine was an in-house attorney who worked in the UNIX unit in New Jersey. Levine stayed in that unit in New Jersey as the business was sold from AT&T to UNIX System Laboratories to Novell to Santa Cruz. (Normand Decl., Ex. 33, 2-6.) Levine testified that the UNIX unit and its business files, including the copyright registrations, remained in New Jersey throughout the changes in ownership of the business. (Supp. Brakebill Decl., Ex. 22, Levine Dep. 19:10-20:23.) As a result of the APA, the UNIX facility in New Jersey became part of Santa Cruz. The UNIX business files in New Jersey, including copyright registrations, continued to be kept in the same place. Accordingly, Santa Cruz obtained physical possession of 12 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 19 of 65 those registrations. (Id. 24:16-25:8.) Chris Sontag, testifying as SCO's representative under Fed. R. Civ. P. 30(b)(6), confirmed Levine's account. (Supp. Brakebill Decl., Ex. 23, Sontag 30(b)(6) Dep. 5:10-13, 137:13-139:14.) Greg Jones, a Novell 30(b)(6) deponent questioned by SCO on the issue, also confirmed that Novell had no record of ever having moved the UNIX copyright registrations out of New Jersey or having taken action to send them to Santa Cruz after the execution of the APA. (Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 177:13-179:5.) 2. Novell Had No Knowledge that SCO Licenses Contained Any Incorrect Representations and Warranties that SCO Owned UNIX Copyrights. 20. SCO's Statement of Facts refers to three licenses executed after the APA between SCO and third-part y vendors. SCO contends that those licenses represent and warrant that SCO owns the UNIX copyrights and that Novell failed to object to SCO's entering into such licenses. (SCO Statement of Facts, 24.) 21. SCO has presented no evidence that Novell knew of those supposed agreements and thus had an opportunity to object. SCO's Director of Software Licensing, Bill Broderick, has attested that "[t]he terms and conditions of each UNIX licensee's use of the licensed UNIX software product were confidential." (Normand Decl., Ex. 33, at 23.) 22. SCO has submitted no evidence that any of the three license agreements were shown to Novell for approval, as required by the APA for certain UNIX and UnixWare licenses. The first license agreement, with Integration Design, does not appear to involve UNIX or UnixWare, so it would not need to be submitted to Novell for approval. (Normand Decl., Ex. 30, at SCO 1041490). SCO has itself asserted that the remaining two licenses, with Lucent Technologies and Samsung Electronics, did not need to be shown to Novell for approval. (Supp. 13 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 20 of 65 Brakebill Decl., Ex. 25, SCO's Responses and Objections to Novell's Second and Third Sets of Interrogatories, Response No. 7 and Ex. A, pages 3-4.)7 23. In any event, none of the three licenses contains any representation or warranty of SCO's copyright ownership. The first license concerns products having nothing to do with UNIX or UnixWare, such as Netscape Navigator. (Normand Decl., Ex. 30 at SCO 1041490). The second license states only that "[a]s between SCO and LICENSEE," ownership of the licensed product "shall remain" with SCO. (Normand Decl., Ex. 31 2.4.) The third license states only that SCO is not aware of any copyrights that are infringed through the use or copying of the licensed product and that SCO indemnifies the licensee against copyright infringement claims. (Normand Decl., Ex. 32 7.02.) 3. 24. The Technology License Agreement Is Consistent With the Fact that the APA Did Not Transfer the Copyrights. SCO's Statement of Facts notes that, upon closing of the deal, Santa Cruz and Novell entered into a Technology License Agreement ("TLA") whereunder Novell retained a license to any UNIX and UnixWare technology transferred under the APA. (SCO's Statement of Facts 6.) SCO argues that Novell would not have needed such a license if Novell did not transfer copyrights to Santa Cruz under the APA. During discovery in this litigation, Novell asked SCO to "identify" all "royalties" from "licensees of UNIX and/or UnixWare, for which SCO contends that it is entitled to retain 100% [of the income on the license] and is not required to pass through to Novell" for approval. (Supp. Brakebill Decl., Ex. 26, Novell's Second Set of Interrogatories, Interrogatory No. 7.) In response, SCO asserted that it had the right to retain 100% of royalties on the Lucent and Samsung licenses and was not required to show those licenses to Novell for approval. (Supp. Brakebill Decl., Ex. 25, SCO's Responses and Objections to Novell's Second and Third Sets of Interrogatories, Response No. 7 and Ex. A, pages 3-4.) 7 14 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 21 of 65 25. In fact, Novell requested that license because, although Novell would retain its copyright in the original UNIX and UnixWare code, Novell would not have a right to use other intellectual property (such as any software know how) transferred in the APA and would not have a copyright to future enhancements that it anticipated Santa Cruz would be making to the SVRX and UnixWare code. (Declaration of Tor Braham in Support of Novell's Ownership MSJ No. 1, PACER No. 281 ("Braham Decl.") 21-23, Ex. 11 at NOV 39972-39973.) 26. The TLA provided that Novell "retains" a license to the "Licensed Technology," which was defined in the APA as: (i) (ii) all of the technology included in the Assets and all derivatives of such technology included in the Assets, including the "Eiger" product release . . . . (Normand Decl., Ex. 1, Section II.A.) 27. The "Licensed Technology" in the TLA was intended to cover Santa Cruz improvements to the code, i.e., the derivative works that Santa Cruz was to develop. (Braham Decl., 23.) 28. The "Licensed Technology" in the TLA was also intended to cover other technical information and intellectual property in UNIX and UnixWare, including any protectible trade secrets, software know-how, methods, and concepts and documentation. Unlike copyrights, those items were not excluded from the assets transferred to Santa Cruz, so Novell needed a license to use them. (Braham Decl., 23.) 29. Duff Thompson, who was a Novell executive at the time and is now chair of SCO's litigation committee, confirmed that the "technology" licensed in TLA is "a broader category than copyrights" and "could include everything from patents, processes, customer lists that are proprietary." (Supp. Brakebill Decl., Ex. 27, Thompson Dep. 147:9-148:25.) 15 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 22 of 65 C. SCO's "Testimonial Evidence" Does Not Demonstrate an Intent to Transfer Copyrights. 1. None of SCO's Witnesses Was Involved in the Negotiation or Drafting the Intellectual Property Provisions of the APA. 30. The general thrust of the Novell-Santa Cruz transaction changed radically over the course of negotiations. At the outset, Novell had hoped for an all cash deal to sell the UNIX assets outright. (Declaration of David Bradford in Support of Novell's Ownership MSJ No. 1, PACER No. 279 ("Bradford Decl.") 7.) As explained in more detail in Novell's Ownership MSJ No. 1, the transaction became significantly more complex when it became evident that Santa Cruz lacked the resources for such a purchase. (See Novell's Ownership MSJ No. 1 Facts 5-10.) In the end, Novell negotiated for specific contractual provisions to allow it to retain various rights and interests in UNIX. (Bradford Decl., 7; Braham Decl., 7-11.) 31. The contractual terms of the APA were negotiated over a period of approximately two weeks in September 1995. That negotiation was "almost exclusively" between the parties' lawyers, including both in-house and outside counsel. (Supp. Brakebill Decl., Ex. 28, Alter Dep. 8:14-22; Braham Decl., 24.) 32. SCO's motion does not rely on any testimony from any individuals involved in drafting the intellectual property provisions of the APA. For Novell, those individuals were Tor Braham, Aaron Alter, and Shannon Whisenant of Wilson Sonsini Goodrich & Rosati. (Braham Decl., 5; Supp. Brakebill Decl., Ex. 28, Alter Dep. 8:2-9:15) For Santa Cruz, Jeff Higgins of Brobeck Phleger & Harrison was the recipient of drafts of Schedules 1.1(a) and 1.1(b), listing intellectual property to be included and excluded from the transfer of assets, which were sent to Santa Cruz by Novell. (Supp. Brakebill Decl., Exs. 29.) Braham, Alter, Whisenant, and Higgins were all on the "Project Sleigh Ride Working Party List," which listed persons to whom drafts of 16 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 23 of 65 the APA were circulated. (Supp. Brakebill Decl., Ex. 30; Supp. Brakebill Decl., Ex. 31, Chatlos Dep. 101:10-12.) a. 33. Robert Frankenberg SCO relies on the testimony of Robert Frankenberg, Novell's former CEO. In fact, Frankenberg testified that he did not draft provisions of the APA, but instead entrusted others with drafting a document that protected Novell's ongoing interest in UNIX: Q. And as a result, you tasked your negotiating team with making sure that the detailed draft of the Asset Purchase Agreement winded its way between the goal of selling the UNIX business to SCO but retaining the rights necessary for Novell to protect its interest in the ongoing UNIX revenue stream and the capitalization of that revenue stream? A. Yes. (Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 64:14-21 (emphasis added).) 34. Frankenberg testified that he "directed the negotiating team to make sure that [Novell's] rights to enter into buyouts after the acquisition closed were preserved." (Id. at 63:119.) Frankenberg recalled "discussing" with the negotiation team the fact that "retaining the UNIX copyrights would facilitate Novell's exercise of rights with respect to capitalizing the SVRX revenue stream." (Id. at 65:21-66:7.) 35. Frankenberg signed the APA "on basis of the recommendation of his team" and "did not review every item." (Id. at 68:12-17.) 36. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, confirms that Frankenberg "was not involved in the negotiation or drafting of the contract language of the APA." (Braham Decl., 24(f).) 17 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 24 of 65 b. 37. Ty Mattingly SCO relies on the testimony of Ty Mattingl y, Novell's former Vice President for Strategic Relations. In fact, Mattingly testified that his role "related only to the high level business strategy" and that he was "not involved in the details of the legal document." (Supp. Brakebill Decl., Ex. 33, Mattingly Dep. 66:11-19.) 38. Mattingly was involved only "very superficially" in the "last two or three weeks before the contract was executed," which was "when the back and forth concerning the legal provisions was taking place." (Id. at 68:22-69:22.) He was "not involved in crafting or wordsmithing the contractual provisions." (Id. 86:3-6.) 39. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, confirms that Mattingly "was not involved in negotiating or drafting the APA contract language." (Braham Decl., 24(b).) c. 40. Duff Thompson SCO relies on the testimony of Duff Thompson, a former Novell executive who now chairs SCO's litigation committee. In fact, Thompson was not involved in the drafting of the relevant APA provisions either. Q. By the time of the asset purchase agreement you are no longer in a legal function? A. No. That's correct. Q. And so this -- and so in the -- when you were involved in the asset purchase agreement negotiations, who were you relying on for the detailed drafting of the agreement? A. Our counsel, Wilson Sonsini. Q. Tor Braham in particular? 18 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 25 of 65 A. Tor and his team . . . . [H]e had people within his firm who were specialists in these items that were probabl y doing the bulk of the actual drafting. (Supp. Brakebill Decl., Ex. 27, Thompson Dep. 30:22-31:12) 41. Tor Braham confirms that Thompson "was not involved in negotiating or drafting the APA contract language." (Braham Decl., 24(a).) 42. Thompson did not recall "any specific discussions around copyrights" or any "discussion with SCO about the excluded asset schedule" during negotiation of the deal. (Supp. Brakebill Decl., Ex. 27, Thompson Dep. 86:1-20.) 43. Ty Mattingly testified that Thompson was "not really involved in the details of the Novell, Santa Cruz transaction." (Supp. Brakebill Decl., Ex. 33, Mattingly Dep. 70:17-71:1.) Thompson was "checked out" during the drafting of the agreement and was "not in the office that often." (Id. 71:2-72:19.) d. 44. Ed Chatlos SCO relies on the testimony of Ed Chatlos, a former Novell employee. But Chatlos did not draft the intellectual property provisions at issue. Chatlos admitted that * * REDACTED * * (Supp. Brakebill Decl., Ex. 34, Chatlos IBM Dep. 82:11-83:5.) 45. Chatlos testified that he was not involved in any negotiations concerning either including or excluding copyrights from the transaction. (Supp. Brakebill Decl., Ex. 31, Chatlos Dep. 124:5-14.) 46. Tor Braham confirms that Chatlos "did not draft the APA" and that Chatlos was not "the Novell business person directing the drafting of the contract." Braham "reported to and 19 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 26 of 65 received instructions from David Bradford [Novell's general counsel], not from Mr. Chatlos." (Braham Decl., 24(c).) e. 47. Burt Levine SCO relies on the testimony of Burt Levine, a former Novell in-house attorney. Levine testified that he "may have" worked on some "early drafts" the APA but does not remember which specific provisions, if any. (Supp. Brakebill Decl., Ex. 35, Levine IBM Dep. 179:3-8, 180:2-12.) He testified that he has no "understanding as to specifically what intellectual property, if any, was or wasn't transferred" under the APA. (Id. 180:21-181:13.) 48. Levine testified that during APA negotiations, he had reviewed and marked up drafts of Schedules 1.1(a) and (b) of the APA, which listed Included and Excluded Assets. He revised the list of included assets, but did not add copyrights. He left the exclusion of "all copyrights" intact while making other revisions to intellectual propert y provision of the Excluded Assets schedule. He then faxed his markup to Wilson Sonsini. (Supp. Brakebill Decl., Ex. 22, Levine Dep. 71:19-77:18; Supp. Brakebill Decl., Ex. 36.) 49. Wilson Sonsini then passed on Levine's comments to Santa Cruz's outside counsel, Brobeck. (Supp. Brakebill Decl., Ex. 29; Supp. Brakebill Decl., Ex. 22, Levine Dep. 80:19-81:12.) 50. However, Levine recalled nothing further about his review and markup of Schedules 1.1(a) and (b). (Id. at 71:13-18; 72:14-18.) 51. Tor Braham received Levine's comments on Schedules 1.1(a) and (b), but does not recall Levine ever participating in APA negotiations with Santa Cruz. (Braham Decl., 24(g).). 20 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 27 of 65 f. 52. Bill Broderick SCO relies on the testimony of Bill Broderick, SCO's Director of Software Licensing. (Normand Decl., Ex. 15 2.) Broderick "did not" have "any involvement at all in negotiating the APA." (Supp. Brakebill Decl., Ex. 37, Broderick Dep. 158:5-7.) 53. Broderick, who participated in the APA transition team, testified that he did not recall any specific discussion about the transfer of copyrights during APA transition meetings. (Id. 49:15-51:16.) 54. Tor Braham has never heard of Broderick and confirms that Broderick "was not involved in the APA negotiations or drafting." (Braham Decl., 24(d).). g. 55. Alok Mohan SCO relies on the testimony of Alok Mohan, Santa Cruz's former CEO. Mohan testified that he was involved in the negotiations "only at a high level." (Supp. Brakebill Decl., Ex. 38, Mohan Dep. 10:17-20.) Mohan "was not involved" in "specific drafting of the documents." (Id. 16:9-17:6) 56. Mohan testified that "the issue of copyrights in or out was not discussed with me." He testified, "[Novell] did not tell me that they'd kept it. They did not tell me they'd given it to us." (Id. 261:7-262:2.) 57. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, has never met Alok Mohan. (Braham Decl., 24(e).). 21 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 28 of 65 h. 58. Doug Michels SCO relies on the testimony of Doug Michels, Santa Cruz's founder. Michels was involved in only two or three meetings with Novell after the initial discussion about the deal. (Supp. Brakebill Decl., Ex. 39, Michels Dep. 11:18-12:1.) Michels did not "draft any language of the Asset Purchase Agreement" or "review drafts" of it and does not recall "even vaguely" any debates in which he participated regarding the drafting of the APA. (Id. at 12:14-13:7.) 59. Michels testified that he did not recall any discussion by anyone at either Novell or SCO regarding whether UNIX copyrights were being transferred as part of the APA. (Id. 50:20-52:5.) 60. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, was not aware of "any involvement" by Michels in the negotiation and drafting of APA contract language. (Braham Decl., 24(h).). i. 61. Jim Wilt SCO relies on the testimony of Jim Wilt, a business development executive at Santa Cruz during the negotiation of the APA. (Supp. Brakebill Decl., Ex. 40, Wilt Dep. 10:1711:2.) Wilt does not recall drafting "any of the language of the Asset Purchase Agreement" and believes that "the lawyers" did the drafting. (Id. 20:19-21:7.) 62. Ed Chatlos, on whose testimony SCO relies, testified that * * REDACTED * * (Supp. Brakebill Decl., Ex. 34, Chatlos IBM Dep. 184:12-185:7.) Wilt concurs that he was "less active at the end of the negotiations," when the APA was being drafted. (Supp. Brakebill Decl., Ex. 40, Wilt Dep. 20:12-15.) 22 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 29 of 65 63. Wilt testified that he did not recall anyone from Novell stating that copyrights were being transferred. (Id. 57:10-59:17.) 64. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, was not aware of "any involvement" by Wilt in the negotiation and drafting of APA contract language. (Braham Decl., 24(i).). j. 65. Kim Madsen SCO relies on the testimony of Kim Madsen, a Santa Cruz paralegal. (Supp. Brakebill Decl., Ex. 41, Madsen Dep. 6:24-7:2.) Madsen had no recollection of negotiating the relevant intellectual property provisions of the APA, though: Q. Was it your testimony earlier that you did not recall being involved in negotiating any specific provisions of the asset purchase agreement? A. I don't recall negotiating specific provisions. Q. As you sit here today do you recall negotiating any provisions relating to the UNIX copyrights in the asset purchase agreement. A. No. (Id. 58:7-15.) She did not recall providing feedback on "specific provisions" either. (Id. 39:1642:19.) 66. Madsen testified, "I don't recall any conversations with Novell pertaining to copyrights." (Id. 79:16-22.) She does not recall Santa Cruz ever asking for the copyrights. (Id. 79:24-80:5.) Rather, she testified that she and the Santa Cruz team were simply "assuming" the copyrights were transferring. (Id. 81:10-15.) 23 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 30 of 65 67. Tor Braham, the principal person responsible for drafting the APA and negotiating its contractual language on behalf of Novell, does not recall any specific interactions with Madsen regarding the APA contractual provisions at issue. (Braham Decl., 24(j).). k. 68. "Joint" press release SCO also relies on a supposedly "joint" press release stating that under the APA, "SCO will acquire Novell's UnixWare business and UNIX intellectual property." (SCO's Statement of Facts 9.) Novell's joint press releases with other companies typically contain both companies' logos and information. (Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 20:24-21:10.) The press release on which SCO relies does not contain Novell's logo, contact information, or company description, but contains information only for SCO. (Tolonen Decl., Ex. 8.) Greg Jones, a Novell 30(b)(6) deponent questioned by SCO about the press release, stated that he had no knowledge that such press release was ever approved by Novell. (Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 18:21-20:16.) 69. SCO has no evidence that this press release was in fact "joint." SCO relies on testimony from Alok Mohan, Santa Cruz's then-CEO, to argue that the press release upon which SCO relies was "joint." But Mohan testified that he had no knowledge of whether the press release was sent to Novell for approval. (Supp. Brakebill Decl., Ex. 39, Mohan Dep. 249:3251:11.) SCO also relies on Robert Frankenberg, Novell's then-CEO, who accepted SCO's counsel's description at deposition of the press release as "jointly approved." But Frankenberg never testified to any personal knowledge of the press release being approved by Novell. (Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 22:20-23:5.) 70. In fact, Novell did issue press releases about the APA. (Supp. Brakebill Decl., Ex. 24, Jones 30(b)(6) Dep. 22:10-12.) Both press releases, which were issued in September 24 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 31 of 65 1995 and December 1995, are publicly available on Novell's website and have been produced to SCO in this litigation. Neither makes any mention of any transfer of copyrights or other intellectual property. (Supp. Brakebill Decl., 46-47 and Exs. 43, 44.) 71. In any event, the press release relied upon by SCO provides little information in its reference to unspecified "intellectual property." The APA undisputedly did not transfer patents to Santa Cruz. Duff Thompson, a current member of SCO's Board and head of its litigation committee, admitted in the declaration submitted by SCO that patents were expressly excluded from the assets transferred to Santa Cruz. (Normand Decl., Ex. 10 9). Similarly, Burt Levine, a former paid SCO litigation consultant who was represented by SCO's counsel at his deposition, testified that Novell's UNIX patents were not transferred to Santa Cruz. (Declaration of Ken Brakebill in Support of Novell's Ownership MSJ No. 1, PACER No. 284 ("Brakebill Decl."), Ex. 25, Levine Dep. at 146:22 to 149:9, 185:9-23.) 72. Moreover, non-attorney employees at Novell in 1995 frequently referred to "intellectual property" in loose terms. * * REDACTED * * (Supp. Brakebill Decl., Ex. 45, Bouffard Dep. 11:612:22, 39:12-40:18, 125:18-127:6, 169:1-14.) 2. Those Directly Involved in the Drafting of the APA's Intellectual Property Provisions Confirm that Novell Deliberately Excluded Copyrights From the Transfer of Assets. 73. Tor Braham was the principal drafter of the APA. (Braham Decl., 5.) Braham and others on Novell's legal team have explained that Novell deliberately excluded copyrights from the transfer of assets to protect Novell's ongoing interests in the UNIX business. Among other things, Novell excluded copyrights from the transfer to protect its ability to "buy out" 25 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 32 of 65 SVRX licenses. Such "buyouts" occur when the licensee makes a substantial payment to obtain a "paid up" license on which no future royalty payments are due. (Novell's Ownership MSJ No. 1 Facts 5-14.) 74. Robert Frankenberg, Novell's then-CEO, testified that he "directed the negotiating team to make sure that [Novell's] rights to enter into buyouts after the acquisition closed were preserved." (Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 63:1-19.) Frankenberg recalled "discussing" with the negotiation team the fact that "retaining the UNIX copyrights would facilitate Novell's exercise of rights with respect to capitalizing the SVRX revenue stream." (Id. at 65:21-66:7.) Frankenberg testified that it was "possible" that the negotiation team excluded copyrights from the transfer of assets to "effectuate" his "direction to try to make sure that [Novell] could protect [its] right to do buyouts." (Id. at 85:8-15.) 75. That is precisely what happened, according to Novell's then-general counsel David Bradford. Bradford instructed Tor Braham to retain Novell's intellectual propert y in UNIX and UnixWare to protect Novell's SVRX revenue stream. (Bradford Decl., 6-9; Braham Decl., 14.) Among other things, Schedule 1.1(b) was revised to exclude "all copyrights" from the transfer of assets. (Braham Decl., 15.) That exclusion was reviewed and left intact by Novell representatives, including Tor Braham, David Bradford, Aaron Alter, and Burt Levine. (Id. 16; Supp. Brakebill Decl., Ex. 28, Alter Dep. 138:16-140:17.); Supp. Brakebill Decl., Ex. 29.). At least one draft of that exclusion was sent to Santa Cruz representatives before the execution of the APA. (Braham Decl. at 17; Supp. Brakebill Decl., Ex. 28, Alter Dep. 141:20-142:14; Supp. Brakebill Decl., Ex. 29.) 26 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 33 of 65 76. The day before the APA was signed, it was presented to Novell's Board of Directors for approval. Bradford reviewed the terms of the APA with the Board. The minutes from that board meeting state: RESOLVED: ... Pursuant to the Asset Purchase Agreement, . . . Novell will retain all of its patents, copyrights and trademarks (except for the trademarks UNIX and UnixWare) . . . . (Bradford Decl., 13, Ex. 1 at 2.) D. Amendment No. 2 Did Not Transfer the Copyrights Either. 1. 77. Amendment No. 2 Was Not Intended to Transfer All Copyrights Pertaining to UNIX to Santa Cruz. As explained in greater detail in Novell's Ownership MSJ No. 1, Novell and Santa Cruz executed Amendment No. 2 to the APA on October 16, 1996. (See Brakebill Decl., Ex. 28; Novell's Ownership MSJ No. 1 Facts 31-36.) Amendment No. 2 revised the definition of "Excluded Assets" in Section V.A of Schedule 1.1(b) to read as follows: All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of the UNIX and UnixWare technologies. (Id., Paragraph A.) 78. Amendment No. 2 was negotiated primarily through communications between two in-house lawyers, Allison Amadia of Novell and Steve Sabbath of Santa Cruz. (Novell's Ownership MSJ No. 1 Facts, 31-36; Declaration of Allison Amadia in Support of Novell's Ownership MSJ No. 1, PACER No. 278 ("Amadia Decl."), 4-6.) During the summer of 1996, Sabbath telephoned Amadia and stated that the original APA explicitly excluded copyrights to 27 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 34 of 65 UNIX and UnixWare and that he wanted to amend the original APA to give Santa Cruz those copyrights. (Id.) 79. Sabbath proposed to revise Section V of Schedule 1.1(b) to read as follows: All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of this Amendment No. 2, which pertain to the UNIX and UnixWare technologies and which SCO has acquired hereunder. . . (Amadia Decl., Ex. 1, Paragraph A.) Amadia rejected that draft, stating that Novell would not transfer ownership of any copyrights. (Id., 10.) 80. Ultimately the parties agreed on much narrower language that became Amendment No. 2. Amadia understood that the final version of Amendment No. 2 did not transfer ownership of any UNIX or UnixWare copyrights but instead merely affirmed Santa Cruz's license to use Novell's UNIX and UnixWare copyrighted works. (Id. at 14.) 81. Jim Tolonen, the Novell executive who signed Amendment No. 2, confirms that it was never Novell's intent to transfer copyrights by way of Amendment No. 2 (or the APA), and that he would not have signed Amendment No. 2 had he believed it would do so. (Declaration of James R. Tolonen in Support of Novell's Ownership MSJ No. 1, PACER No. 280 ("Tolonen Decl.") 13-16.) 82. SCO has not submitted any evidence from Sabbath concerning his negotiation or signing of Amendment No. 2 on Santa Cruz's behalf. At his recent deposition in this case, Sabbath testified that he did not recall "negotiating to any extent" "Paragraph A of Amendment No. 2," the portion that refers to copyrights. He did not recall "focusing on paragraph A to any extent." (Supp. Brakebill Decl., Ex. 46, Sabbath Dep. 33:11-20.) 28 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 35 of 65 2. SCO's Only Evidence Concerning the Intent of Amendment No. 2 Comes From Witnesses Who Had No Involvement in or Memory of Drafting or Negotiating that Amendment. 83. SCO relies on the testimony of Robert Frankenberg and Ed Chatlos regarding Amendment No. 2. However, both left Novell before Amendment No. 2 was negotiated, so they had no involvement with the amendment. (Supp. Brakebill Decl., Ex. 32, Frankenberg Dep. 86:12-16; Supp. Brakebill Decl., Ex. 31, Chatlos Dep. 41:13-19.) 84. SCO relies on the testimony of Ty Mattingl y, Burt Levine, Bill Broderick, Alok Mohan, Doug Michels, and Jim Wilt. However, all testified that they had no involvement with Amendment No. 2. (Supp. Brakebill Decl., Ex. 33, Mattingly Dep. 85:1-10; Supp. Brakebill Decl., Ex. 22, Levine Dep. 190:11-22; Supp. Brakebill Decl., Ex. 37, Broderick Dep. 144:12-16; Supp. Brakebill Decl., Ex. 38, Mohan Dep. 200:6-15; Supp. Brakebill Decl., Ex. 39, Michels Dep. 19:25-20:4.) 85. SCO relies on the testimony of Jim Wilt. But Wilt was not involved in drafting or negotiating Amendment No. 2. (Supp. Brakebill Decl., Ex. 40, Wilt Dep. 40:10-17.) Wilt did participate in some internal SCO discussions relating to Amendment No. 2 but had no memory of what was said. (Id. 41:14-25.) 86. SCO relies on the testimony of Duff Thompson. At the time Amendment No. 2 was being negotiated, Duff Thompson had left Novell and was serving as Novell's appointee to the Santa Cruz board. (Supp. Brakebill Decl., Ex. 27, Thompson Dep. 19:22-20:7.) Thompson "recused" himself from any discussion about Amendment No. 2 and "was not given any information by either party, by either side as to how it was being negotiated." (Id. 21:8-23:6.) 87. Kim Madsen has submitted a declaration on what she believes to be the intended meaning of Amendment No. 2. That declaration incorporates by reference an earlier declaration 29 Case 2:04-cv-00139-DAK-BCW Document 292 Filed 05/14/2007 Page 36 of 65 by Madsen in the SCO v. IBM case, in which she claims that her understanding of Amendment No. 2 is based on "negotiations and discussions leading up to the Amendment." (Supp. Brakebill Decl., Ex. 41, 16.) However, in her recent deposition, Madsen conceded, "I cannot recall any specific conversations regarding amendment 2." (Supp. Brakebill Decl., Ex. 42, Madsen Dep. 202:15-19.) 3. SCO Has Presented No Evidence that Any Copyrights Were "Required for" the Operation of the UNIX-Related Business Contemplated by the APA. 88. Although the APA did not expressly use the word "license," the APA had the legal effect of granting SCO a license to the copyrights insofar as necessary to exercise its rights under the APA. (Braham Decl., 20; see also Novell's Ownership MSJ No. 1 at 26-29.) Burt Levine testified that the APA "convey[ed] enough of a patent license under Novell's patents that would be necessary for SCO to conduct its business." (Brakebill Decl., Ex. 25, Levine Dep. at 185:17-23; see id. at 7-24, 148-49.) Similarly, Levine testified that if copyrights were n

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