SCO Grp v. Novell Inc

Filing 346

REPLY to Response to Motion 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 filed by Plaintiff SCO Group. (Normand, Edward)

SCO Grp v. Novell Inc

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Brent O. Hatch (5715) Mark F. James (5295) HATCH, JAMES & DODGE, PC 10 West Broadway, Suite 400 Salt Lake City, Utah 84101 Telephone: [phone] Facsimile: [phone] David Boies (admitted pro hac vice) Robert Silver (admitted pro hac vice) Edward Normand (admitted pro hac vice) BOIES, SCHILLER & FLEXNER LLP 333 Main Street Armonk, New York 10504 Telephone: [phone] Facsimile: [phone] Devan V. Padmanabhan (admitted pro hac vice) DORSEY & WHITNEY LLP 50 South Sixth Street, Suite 1500 Minneapolis, Minnesota 55402 Telephone: [phone] Facsimile: [phone] Attorneys for Plaintiff, The SCO Group, Inc.

Stephen N. Zack (admitted pro hac vice) BOIES, SCHILLER & FLEXNER LLP Bank of America Tower ­ Suite 2800 100 Southeast Second Street Miami, Florida 33131 Telephone: [phone] Facsimile: [phone] Stuart Singer (admitted pro hac vice) BOIES, SCHILLER & FLEXNER LLP 401 East Las Olas Blvd. Suite 1200 Fort Lauderdale, FL 33301 Telephone: [phone] Facsimile: [phone]

_______________________________________________________________________________ IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC., a Delaware corporation, Plaintiff/Counterclaim-Defendant, vs. NOVELL, INC., a Delaware corporation, Defendant/Counterclaim-Plaintiff.

SCO'S REPLY MEMORANDUM IN FURTHER SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT ON ITS FIRST, SECOND, AND FIFTH CAUSES OF ACTION AND FOR SUMMARY JUDGMENT ON NOVELL'S FIRST COUNTERCLAIM Civil No.: 2:04CV00139 Judge Dale A. Kimball Magistrate Brooke C. Wells

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TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... 1 PRELIMINARY STATEMENT .................................................................................................... 2 ARGUMENT.................................................................................................................................. 3 I. THE PLAIN LANGUAGE OF THE AMENDED APA TRANSFERRED THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ........................................ 3 A. The Plain Language of the Amended APA Includes the UNIX and UnixWare Copyrights Among the Included Assets................................................ 3 The TLA Confirms That Novell Transferred the Copyrights to Santa Cruz on the Closing Date........................................................................................ 6 Amendment No. 2 Clarified the Excluded Assets Schedule................................... 7

B.

C. II.

OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ....................... 12 A. SCO's Prior Conduct. ........................................................................................... 13 1. 2. Novell's Evidence Creates No Material Factual Issues............................ 13 The Parties' Conduct Following the APA and Amendment No. 2 with Respect to Microsoft Confirms Transfer of the Copyrights. ............ 18

B. C.

Novell's Conduct After the APA Confirms Transfer of the Copyrights. ............. 20 Novell's New Declarations Create No Material Factual Issues............................ 22 1. The Testimony of Attorneys David Bradford and Tor Braham Regarding the Original APA Is Beside the Point...................................... 23 The Testimony of David Bradford Regarding His Supposed Intent Does Not Bear Scrutiny.................................................................. 23

2.

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3.

The New Testimony Regarding the Purported Reasons Behind Novell's Supposed Intent Does Not Bear Scrutiny................................... 24 Mr. Braham's Testimony That Novell Clearly Communicated to Santa Cruz Novell's Alleged Intent To Exclude the Copyrights Does Not Bear Scrutiny. ........................................................................... 29 The Testimony of Allison Amadia Regarding Her and Mr. Sabbath's Supposed Intent and Understanding Does Not Bear Scrutiny. .................................................................................................... 34

4.

5.

D.

The Testimony SCO Has Presented Is Admissible and Directly Relevant. ......... 36 1. 2. The Testimony Regarding the APA.......................................................... 36 The Testimony Regarding Amendment No. 2.......................................... 41

E.

Novell's "Implied License" Argument Highlights More Evidence Confirming the Transfer of the Copyrights and Creates No Material Factual Issues. ....................................................................................................... 43

CONCLUSION............................................................................................................................. 48

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TABLE OF AUTHORITIES Cases City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal. App. 4th 445 (1998) ............................................................................................. 39 La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195 (10th Cir. 2005). ....................................................................................... 19 Marin County v. Assessment Appeals Bd. Marin County, 64 Cal. App. 3d 319 (1976) .............................................................................................. 39 Morey v. Vannucci, 64 Cal. App. 4th 904 (1998) ............................................................................................. 39 S. Pac. Transp. Co. v. Santa Fe Pac. Pipelines, Inc., 74 Cal. App. 4th 1232 (1999) ........................................................................................... 40 S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989) ............................................................................................ 3 Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992) ............................................................................................ 46 Sy First Family Ltd. P'ship v. Cheung 70 Cal App. 4th 1334 (1999) ............................................................................................ 39 Other Authorities Cal. Civ. Code § 1636................................................................................................................... 39 Cal. Civ. Code § 1653................................................................................................................... 39

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Plaintiff, The SCO Group, Inc. ("SCO"), respectfully submits this Reply Memorandum in Further Support of Its Motion for Partial Summary Judgment on Its First, Second, and Fifth Causes of Action and for Summary Judgment on Novell's First Counterclaim. PRELIMINARY STATEMENT The plain language of the Asset Purchase Agreement ("APA") as amended establishes that Novell, Inc. transferred to The Santa Cruz Operation, Inc. ("Santa Cruz") the copyrights in the UNIX and UnixWare products and documentation in 1995. In contending otherwise, Novell improperly relies on language in the APA that a subsequent amendment, Amendment No. 2, excised from the Agreement. In addressing Amendment No. 2, moreover, Novell avoids the plain language of the document and the rules of construction by which it and the APA operated to transfer the foregoing copyrights. The requirements of Section 204 of the Copyright Act are easily met, because the APA as amended clearly conveys the copyrights as part of "all right, title and interest . . . without limitation" in the UNIX and UnixWare products, enumerated in the APA's Assets Schedule. Novell wrongly seeks to interpret the APA without regard to Amendment No. 2. Construed together, as they must be, the documents unambiguously convey the copyrights. The extrinsic evidence confirming the foregoing establishes that the senior business executives and lead negotiators from both Novell and Santa Cruz intended the copyrights to be transferred. Novell submits declarations from lawyers charged with implementing the business deal, not changing it, and insofar as their work introduced confusion into the Excluded Assets Schedule of the APA, the parties removed that confusion in Amendment No. 2. The

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explanations for that amendment that Novell now offers are ones to which the language of the amendment are not reasonably susceptible, and therefore must be rejected and fail to create any material factual issues. ARGUMENT I. THE PLAIN LANGUAGE OF THE AMENDED APA TRANSFERRED THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ. SCO demonstrated in its opening memorandum (at 20-25) that the amended APA transferred the copyrights in the UNIX and UnixWare products and documentation to Santa Cruz. Novell's primary argument in response (at 34-42) is that the Court should analyze the APA without regard to Amendment No. 2. The Court should not read the APA as though the parties had not signed and adopted an amendment as they did. The only reasonable reading of the documents is that Novell transferred the copyrights to Santa Cruz.1 A. The Plain Language of the Amended APA Includes the UNIX and UnixWare Copyrights Among the Included Assets.

Novell has relied on Item V.A of the Excluded Assets Schedule in the original APA, but that Item no longer exists. Amendment No. 2 revised Item V.A "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 UNIX and UnixWare technologies. However, in no
On April 20, 2007, Novell filed a motion for summary judgment pertaining to these same issues. SCO demonstrated in its Memorandum in Opposition dated May 18, 2007, that both the plain language of the documents and the extrinsic evidence defeat Novell's Motion. SCO incorporates by reference its arguments therein and in several instances cites that memorandum herein. SCO cites herein to "Ex. __" where the exhibit was attached to the 4/9/07 Declaration of Edward Normand in support of SCO's opening memorandum and to "5/29/07 Suppl. Normand Decl. Ex. __" where the exhibit is attached to the Supplemental Declaration of Edward Normand in support of this reply memorandum.
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event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks. (Ex. 5 ¶ A (emphasis added).) Paragraph A of Amendment No. 2 thus replaces the original Item V.A with an exception to the excluded assets. The APA and Amendment No. 2 are read together. (See Part I.B, below.) The exception to the excluded assets confirms the assets the parties intended to transfer, and the language of the Assets Schedule of the APA is of primary relevance in assessing what the parties intended to transfer. The APA provided for the transfer of the UNIX and UnixWare copyrights where it provided for the transfer of all of Novell's "right, title, and interest in and to" the UNIX and UnixWare source code and products; and "All rights and ownership of UNIX and UnixWare," including "without limitation" the source code, source code products, binary products, and products in development. (Ex. 1.) Under the case law, cited in SCO's opening memorandum (at 20-21), each of these provisions provides for the transfer of the copyrights.2 Under Section 1.1(a) of the APA, Novell and Santa Cruz agreed that on the Closing Date Novell would "sell, convey, transfer, assign and deliver" and Santa Cruz would "purchase and acquire" at minimum "all right, title and interest in and to the assets and properties" identified in Schedule 1.1(a) of the APA. (Id.) In turn, Schedule 1.1(a) identifies seven categories of "assets and properties" transferred to Santa Cruz, including:

Novell (at 35) seeks to distinguish those cases with reference to the language of the Excluded Assets Schedule of the unamended APA, but as noted that language no longer exists. The exception to the exclusion set forth in Amendment No. 2 confirms the relevance of the precedent cited in SCO's opening memorandum. In asserting that S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989), supports its position because "a copyright owner should not be presumed to have transferred outright ownership of the copyrights when it grants a license," Novell begs the question. The plain language of the amended APA establishes the transfer of copyrights to Santa Cruz, rather than the terms of any undefined "license." (See Part II.E, below.)

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All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and all copies of UNIX and UnixWare (including revisions and updates in process) and all appropriate technical, design, development, installation, operations and maintenance information concerning UNIX and UnixWare, including source code," source code products, binary products releases, and products under development . . . including, without limitation: (Id. (emphasis added).) The APA thus provides for the transfer ­ without limitation ­ of all right, title, and interest in the UNIX and UnixWare source code and products, and all rights and ownership of UNIX and UnixWare, including a non-exhaustive list of assets and properties. In providing for the transfer of all rights, Section 1(a) and Item I include the copyrights. There can be no question that the transfer of the copyrights took place. Section 1.1(a) of the APA defines the assets and properties to be transferred on the Closing Date as the "Assets." (Ex. 1.) On the Closing Date, Novell and Santa Cruz executed the Bill of Sale, which provides: In accordance with [Section] 1.1(a) of the Agreement, Seller, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby transfer, convey, sell, assign and deliver to Buyer, without recourse, representation or warranty except as otherwise expressly provided in the Agreement, all of the Assets. (Ex. 3 (emphasis added).) The Bill of Sale thus effectuated the transfer, conveyance, sale, assignment, and delivery to Santa Cruz of "all of the Assets." (Id.) As the Assets included "all rights and ownership" of UNIX and UnixWare "without limitation," which clearly includes the copyrights, the Bill of Sale transferred the copyrights to Santa Cruz on the Closing Date.

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B.

The TLA Confirms That Novell Transferred the Copyrights to Santa Cruz on the Closing Date.

Under California law, the APA and TLA must be read together. (SCO's Memorandum in Opposition to Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance (May 18, 2007), at 39-41.) Section 1.6 of the APA provided for a license back to Novell of the same UNIX and UnixWare technology transferred to Santa Cruz under the APA (the "Licensed Technology"). On the Closing Date, Santa Cruz granted that license to Novell in the Technology License Agreement ("TLA"), subject to strict restrictions, specifying that "Ownership of the Licensed Technology shall reside in SCO." (Id.) Section 1.6 and the TLA as drafted would be senseless had Novell retained ownership of the copyrights. Novell would not have needed a license to the Licensed Technology, let alone agreed to a license subject to strict restrictions, and ownership of the Licensed Technology would have resided in Novell, not Santa Cruz. Simply put, Novell would have licensed the technology to Santa Cruz, not the other away around. As Novell's General Counsel conceded, "it would be reasonable for someone to read the technology license agreement as inconsistent with a reading of the APA that the UNIX copyrights were retained by Novell." (5/29/07 Suppl. Normand Decl. Ex. 27 at 95.) Novell nonetheless argues (at 54-55) that the TLA was necessary for Novell to be able to use the "trade secrets, software know-how, methods, and concepts and documentation" that were transferred under the APA, but nothing Novell points to shows that this, rather than copyrightprotected source code, was even contemplated as pertinent. The "Licensed Technology" to which Novell obtained a license-back under the TLA included (among other things) "all of the technology" included in the "UNIX Source Code Products," the "Binary Product Releases," the 6

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"Products Under Development," and the "Other Technology" listed in the Assets Schedule of the APA, as well as in "All copies of UNIX and UnixWare, wherever located, owned by Seller." (Ex. 1 § 1.6; Schedule 1.1(a) §§ I, IV.) Novell's alleged retention of the UNIX and UnixWare copyrights would have reserved for Novell the right to make copies of all the source code, and thus to use at least the vast majority of "the technology" in those products and copies. If the license-back in the TLA had the scope that Novell now claims, the parties would have specified that Novell retained the right to use the "trade secrets, software know-how, methods, and concepts and documentation" in UNIX and UnixWare. It is not reasonable to interpret the license-back set out in the TLA to be surpassingly overbroad and redundant of Novell's alleged rights, as Novell's interpretation makes it. C. Amendment No. 2 Clarified the Excluded Assets Schedule.

Amendment No. 2 clarified that the copyrights at issue were not Excluded Assets. Paragraph A states that the Excluded Assets do not include (confirming that the transferred assets do include) the copyrights "required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." (Ex. 5 ¶ A.) The UNIX and UnixWare copyrights are so required. The APA and TLA make no reference to any "license" for Santa Cruz in this regard. (See Part II.E, below.) SCO's rights with respect to its acquisition of UNIX and UnixWare technologies include: · The rights to develop, license, and support UNIX and UnixWare products to evolve the Business. (SCO's Memorandum in Opposition to Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance (May 18, 2007), Statement of Facts ¶¶ 1-2.) The owner of the UNIX

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and UnixWare copyrights has such rights. Those copyrights were required for Santa Cruz to exercise its rights to run the Business. · All rights and ownership in the enumerated UNIX and UnixWare source code and products. (Id. ¶¶ 3-5.) Only the owner of the UNIX and UnixWare copyrights has the authority to exercise such unlimited rights. Those copyrights thus were required for Santa Cruz to exercise its other, unlimited rights in the source code and products. · Claims arising after the Closing Date against any parties relating to any right, property, or asset included in the Business. (Id. ¶ 5.) Without the copyrights, Santa Cruz could not have pursued such claims for the unauthorized use and distribution of its UNIX and UnixWare code and products. · All rights pertaining to UNIX and UnixWare under any assignable contract or license. (Id.) Because without the copyrights Santa Cruz would have been powerless to enforce covenants and conditions in such contracts or licenses, the copyrights were required for Santa Cruz to exercise those rights. The copyrights at issue thus were required for Santa Cruz to exercise these and other rights it obtained with its acquisition of the UNIX and UnixWare technologies. Novell nevertheless argues (at 43-44) that Amendment No. 2 fails to satisfy Rule 204 of the Copyright Act because the amendment itself "contains no language `transferring' or `assigning' the copyrights, and because "the parties did not execute a Bill of Sale or other written instrument of transfer in connection with Amendment No. 2."3 Novell thus asks the Court to

Novell further argues (at 44-48) that the extrinsic evidence regarding Amendment No. 2 does not support SCO. SCO refutes that argument (and its asserted relevance to the grounds for SCO's Motion) in Part II.C, below.

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read Amendment No. 2 without regard to the contract that it amends. Amendment No. 2 revises the Excluded Assets Schedule of the APA, and thus operated as a clarification of what the parties intended under the APA ­ where the Excluded Assets Schedule is found. The APA contains language transferring the Assets, and the Bill of Sale makes reference to the Assets so transferred pursuant to the APA. Novell's counter (at 44) that "Amendment No. 2 did not purport to retroactively amend the Bill of Sale to transfer additional assets" presupposes a linguistic standard that neither any precedent nor rule of contract interpretation requires SCO to meet. By excising language from the Excluded Assets Schedule of the APA, Paragraph A of Amendment No. 2 makes clear that the language to which the Bill of Sale relates is the new language in Paragraph A. The amendment is no less a clarification just because the parties made the clarification "as of" a particular date. Put another way, because Paragraph A revises the Excluded Assets Schedule of the APA, the only reasonable reading of the document is that it constitutes a clarification of the parties' intent as to the assets transferred under the APA. The Bill of Sale, in turn, implements the parties' intent with respect to Assets transferred. Novell's initial interpretation of Amendment No. 2 is telling. On June 6, 2003, after Novell received a signed copy of the amendment, Novell took account of the entire language of the amendment and concluded, as it said in its press release that day, that the amendment "appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996." (Ex. 38; 5/29/07 Suppl. Normand Decl. Ex. 24 at 34-40, 173-74.) Novell admitted in its Rule 30(b)(6) deposition that it had in mind the first sentence of Paragraph A, concluding "that a reader of this language, you know ­ you know, might be able to conclude that

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SCO's claim of ownership did transfer, that SCO's claim of ownership was supported by this language." (5/29/07 Suppl. Normand Decl. Ex. 24 at 39.) Similarly, the testimony of Novell's former and current in-house counsel underscores Novell's inability even to settle on what Amendment No. 2 means if it does not clarify the transfer of the copyrights under the APA. Current Novell General Counsel Joseph LaSala testified that if Santa Cruz requested the transfer of certain copyrights under Amendment No. 2 and Novell simply disagreed, then "I guess there would not have been a transfer of the copyrights." (5/29/07 Suppl. Normand Decl. Ex. 27 at 40.) Novell in-house counsel Greg Jones, in contrast, testified that if SCO could "objectively demonstrate as a matter of law that this is required for my business," then Santa Cruz is "going to get it." (5/29/07 Suppl. Normand Decl. Ex. 20 at 142-43.) In her declaration that Novell submits, Ms. Amadia made no effort to describe how the purported process would work. The current interpretation Novell gives to Paragraph A of Amendment No. 2 is unreasonable for other reasons. The premise of Novell's argument is that the copyrights and trademarks excluded from the Excluded Assets Schedule of the APA is potentially a null set ­ that perhaps no such copyrights and trademarks are "necessary" for SCO to have. In addition to the fact that Novell thus interprets Paragraph A to have a meaning that no other provision of the Assets or Excluded Assets Schedule has, Novell's reading ignores the second sentence of Paragraph A, which states: However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.

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(Ex. 5.) In conjunction with the sentence preceding it, the plain text reflects that as the owner of the copyrights and trademarks, SCO may face claims brought by third parties pertaining to the copyrights and trademarks. In further arguing (at 43) that "Amendment No. 2 lacks sufficient specificity," Novell again assumes that the amendment and the contract it amends are not to be read together. The Assets Schedule of the APA details the UNIX and UnixWare products transferred, referring to: · "UNIX Source Code Products" (referring to product schedules and including UnixWare 2.0 and prior products, UNIX SVR4.1 ES and prior products, UNIX SVR4.0MP and prior products, and Ancillary SVRx Products). "Binary Product Releases" (including UnixWare 2.01 Product Family, UnixWare 2.0.x update releases, UnixWare 1.1 Product Family, and UnixWare 1.1.x update releases). "Products Under Development" (including UnixWare 2.1 (Eiger), UnixWare 2.1 Oracle Parallel Server, UnixWare 2.03, UnixWare 2.0.x/2.1 Enhanced Mode Merge, and UnixWare 2 Internet Server). "Other Technology" (including a variety of UnixWare-related technology, such as test suites and test specifications). "All copies of UNIX and UnixWare, wherever located, owned by Seller."

·

·

·

·

(Ex. 1, Schedule 1.1(a) §§ I, IV.) The APA gives Santa Cruz "all rights of ownership" in such products. (Ex. 1, Schedule 1.1(a) § I.) Amendment No. 2 refers to the copyrights in the foregoing, specific products and the copyrights in the manuals and reference documentation necessary to distribute and install such products. As shown in SCO's opening memorandum (at 20-21), the foregoing level of specificity is more than sufficient to satisfy Rule 204.

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II.

OVERWHELMING EXTRINSIC EVIDENCE CONFIRMS THE TRANSFER OF THE UNIX AND UNIXWARE COPYRIGHTS TO SANTA CRUZ. SCO bases its instant Motion on the plain language of the amended APA, but also

illustrated in its opening memorandum (at 27-30) that overwhelming extrinsic evidence confirms that Novell intended to transfer and Santa Cruz intended to obtain the UNIX and UnixWare copyrights at the closing in 1995. Novell's primary argument in response (at 36-38) is that SCO cannot rely on confirmatory extrinsic evidence to "rewrite the APA," but in making the argument Novell wrongly tries to isolate the APA from its amendments.4 Novell's reliance (at 37) on certain deposition testimony in advancing its primary argument confirms the foregoing error. In their cited testimony, for example, both Santa Cruz founder Doug Michels and Santa Cruz General Counsel Steve Sabbath testified in response to questions regarding the unamended Excluded Assets Schedule in the unamended APA. In response to even such artificial questions, both witnesses made clear that it was in the context of the other provisions of the unamended APA that the exclusion of copyrights "makes no sense," as Mr. Michels testified, and is "a little bit nonsensical," as Mr. Sabbath testified. Such testimony confirms the point that even taken in isolation, the purported exclusion of the copyrights in the APA cannot reasonably be reconciled with the remainder of the Agreement.5

As Novell in effect concedes (at 38 n.14), SCO's extrinsic evidence consistent with the language of the amended APA is relevant and admissible.
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4

Novell also cites (at 37) the testimony of Allison Amadia for the proposition that Mr. Sabbath allegedly said in 1996 that "he believed `the Original APA explicitly excluded copyrights to UNIX and UnixWare as assets being sold by Novell to Santa Cruz and that it shouldn't have.'" Mr. Sabbath's testimony contradicts this assertion. (See Part II.C.5, below.) In addition, the statement attributed to Mr. Sabbath reflects nothing more than his view that any UNIX or UnixWare copyright exclusion in the unamended APA was a mistake. Novell's arguments on these fronts are far removed from the plain language of the amended APA that is the basis for SCO's Motion and fail to create any material factual disputes.

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A.

SCO's Prior Conduct.

Novell argues (at 48-52) that certain conduct on the part of Santa Cruz and SCO "confirms their understanding that no copyrights were transferred." The evidence Novell cites does not support that assertion and fails to create any fact issue on the plain meaning of the APA and Amendment No. 2 with respect to the transfer of the copyrights. 1. Novell's Evidence Creates No Material Factual Issues.

Chain of Title. On August 1, 2000, Santa Cruz entered into the Assignment and Plan of Reorganization ("APR") whereby Santa Cruz agreed to transfer to Caldera International "all rights and ownership of UNIX and UnixWare," including "all intellectual property rights appurtenant" to UNIX and UnixWare. (5/29/07 Suppl. Normand Decl. Ex. 15.) On May 7, 2001, through the Intellectual Property ("IP") Assignment, Santa Cruz in fact assigned, transferred, and conveyed those rights, including "all copyrights," to Caldera International (now SCO). (5/29/07 Suppl. Normand Decl. Ex. 16.) The IP Assignment defines the "Invention and Works" as those listed in Schedules A-C. (Id. Recitals.) In the IP Assignment, Santa Cruz transferred all copyrights the SVRX and UnixWare "Source Code Products" and "prior products," as well as the UnixWare "Binary Products" and "Products Under Development." (Id. Schedule C.) In Section 8 of the IP Assignment, entitled "Representations and Warranties," Santa Cruz warranted that it had the full power and authority necessary to do so. (Id. § 8(i).) Section 8(v) of the IP Assignment further warrants that "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 of Rights hereunder (except that Assignor may

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not be able to establish a chain of title from Novell Inc. but shall diligently endeavor to do so as soon as possible)." (Id. § 8(v).) The law firm of Brobeck Phleger & Harrison ("Brobeck"), which represented Santa Cruz in the APA transaction, represented Caldera International in the APR transaction and IP Assignment; the law firm of Wilson Sonsini represented Santa Cruz in the transaction. (5/29/07 Suppl. Normand Decl. Ex. 17 ¶ 7.) Troy Keller, one of the Brobeck attorneys who represented Caldera in the acquisition from Santa Cruz, states: After review of the APA and Amendment No. 2 thereto, the transaction team, including the Brobeck lawyers, lawyers from Parsons, Behle & Latimer ("PB&L"), which also represented the Caldera entities, in house counsel for the Caldera entities, and in house counsel for Santa Cruz, and Wilson Sonsini discussed and concluded that Santa Cruz had acquired the ownership of the UNIX and UnixWare copyrights (including those that came to be listed on Schedule C to the May 2001 IP Assignment) from Novell under the APA in 1995, as amended, and that Santa Cruz consequently had the ownership, right and authority to transfer the ownership of those copyrights as part of the Intellectual Property Assignment in 2001. (Id. ¶ 6.) Mr. Keller also states: In Section 8(v) of the Intellectual Property Assignment, Santa Cruz also represented that it had no knowledge of any fact that would prevent Caldera International from registering the rights it acquired under the Intellectual Property Assignment. During the due diligence process, a question arose regarding the copyright registrations and the location of the registration certificates and whether certain UNIX copyrights had been previously registered in the name of The Santa Cruz Operation, Inc. The parenthetical language in Section 8 (v) relates only to the question about the location and transfer of the copyright registrations. That language does not relate to, and was not intended to relate to Santa Cruz's ownership of the copyrights, Novell's sale of the UNIX and UnixWare copyrights to Santa Cruz or Santa Cruz's power, authority, and right to transfer those copyrights to Caldera International.

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(Id. ¶ 10.) The evidence thus establishes that the "chain of title" reference in the Santa CruzCaldera transaction is consistent with the conclusion ­ one that counsel to that transaction reached themselves ­ that Santa Cruz had acquired the copyrights from Novell. Indeed, in its Rule 30(b)(6) deposition, Wilson Sonsini admitted that it knows of no representation or warranty or statement in the APR that the firm believes is inaccurate, and would be "surprised if anybody felt that the reps and warranties and disclosure schedule were inaccurate." (5/29/07 Suppl. Normand Decl. Ex. 4 at 41-42.) Similarly, it was consistent with Wilson Sonsini's recollection that "among the contributed assets that would be transferred to Caldera were the ­ all of the intellectual property rights appurtenant to UNIX, UnixWare, and OpenServer." (Id. at 46-48.) The firm has no reason to think any of those terms of the deal are inaccurate. (Id. at 57-58.) The firm "would have expected them to be highly accurate." (Id. at 81.)6 Novell-SCO Communications. Novell has to acknowledge (at 50) that in early 2003, SCO sent a letter to Novell seeking only to "clarify" the APA on the issue of the transfer of copyrights. (5/29/07 Suppl. Normand Decl. Ex. 22.) The testimony of SCO representatives Darl McBride and Ralph Yarro is consistent with the text of the letter. In his declaration dated November 10, 2006, Mr. McBride states: I understand that in his declaration, Mr. Jones states that I repeatedly contacted Novell, requested that Novell transfer the UNIX copyrights to SCO, and asked Novell to amend the
Novell cites (at 49) the hearsay statement in an e-mail sent by Caldera's counsel that Santa Cruz was "trying to get Novell to sign a global IP assignment, for chain of title purposes," and argues that the allusion must mean that there had been no transfer of copyrights between Novell and Santa Cruz. Novell is wrong. Read in light of the language that the parties (and their attorneys) agreed to for purposes of the relevant contract, the attribution in the e-mail (if even accurate) means that Santa Cruz sought "acknowledgement" from Novell of the prior transfer.
6

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agreement to transfer the copyrights to SCO. I disagree with Mr. Jones' account of the events. At no point did I or anyone on SCO's behalf request that Novell transfer UNIX copyrights to SCO. Nor did I ask Novell to amend the APA to give SCO the copyrights. (Ex. 37 ¶ 16.) Mr. Yarro's sworn testimony also belies Novell's version of events. In his declaration dated May 17, 2007, he states (among other things): I never told Mr. Stone (contrary to what I understand Mr. Stone claims) that I "would like for Novell to make changes to the agreements to give them the copyrights" or any words to that effect. It was not my view at the time of my conversations with Mr. Stone that SCO needed in any way for Novell to transfer the copyrights at issue. Instead, it was my understanding as Chairman of the Board that The SCO Group had acquired all of the Unix copyrights when it purchased to two Unix divisions from The Santa Cruz Operation, Inc. in 2001. (5/29/07 Suppl. Normand Decl. Ex. 18 ¶ 3.) Indeed, Novell's current account of its conversations with SCO bears little resemblance to the testimony of its lead witness on the subject. Novell Associate General Counsel Greg Jones ­ the point person for the company in its discussions with SCO in late 2002 and early 2003 ­ admitted at deposition that SCO's request had been for "documents" or "due diligence" that would clarify what SCO considered to be "a clerical error" in the Excluded Assets Schedule of the APA. (5/29/07 Suppl. Normand Decl. Ex. 26 at 182-83.) Mr. Jones admitted that he understood that SCO believed that the clerical error could not be "what was intended" by the APA. (Id.) Mr. Jones acknowledged that SCO requested documents that would clarify the APA "so that, you know, the intent of the parties to the APA would be clearly reflected" in the agreement. (Id. at 184.) That is, SCO never even told Mr. Jones that it believed that the APA had not transferred, or intended to transfer, the copyrights, let alone asked Mr. Jones for a

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transfer. (Id.) In addition, although he participated in multiple conversations with SCO over a period of several months, Mr. Jones never asserted Novell's purported ownership of the copyrights in response to SCO's requests. (Id. at 202-04) Mr. Jones testified that he told SCO that its request for documents would not help Novell's financial interests or relationships with customers, but he did not recall offering any other reason for denying the request. (Id. at 204.) Novell has relied on the declaration Mr. Jones submitted "On Behalf of Novell, Inc." making statements "based on Novell's knowledge and understanding of the matters described" therein. (5/29/07 Suppl. Normand Decl. Ex. 25 ¶ 3.) That declaration offers a different account of his conversations with SCO. In contrast to his testimony based on his "personal knowledge," Mr. Jones declares that SCO asked Novell to transfer the copyrights. (Id. ¶ 14.) But his deposition makes clear he has no personal knowledge of any such request. Instead, as he admitted in his deposition, the allegation that SCO made that request is the result of conversations among Novell's lawyers. (5/29/07 Suppl. Normand Decl. Ex. 26 at 175.) Even without considering the vast extrinsic evidence of the parties' course of conduct during the seven years that predated the SCO-Novell conversations at issue, a juxtaposition of Mr. Jones's declaration, which is "based on Novell's knowledge and understanding," and his testimony relied upon by Novell is thus inadmissible. The foregoing record thus defeats Novell's assertion that SCO ever requested in 2002 or 2003 that Novell "transfer" the copyrights at issue, and in addition none of Novell's arguments on this point creates any genuine dispute of any material fact.

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Copyright Notices in UnixWare. Novell argues (at 51-52) with respect to the UnixWare software that the "copyright notices used by Santa Cruz on its new releases indicate that Santa Cruz understood that Novell continued to own the copyright to the original code." In fact the undisputed evidence shows that Novell understood SCO to own the UNIX copyrights following the APA. (SCO's Memorandum in Opposition to Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance (May 18, 2007), at 69-71.) In addition, the October 1995 document titled "SCO/Novell Documentation Transition Issues (10/16/95)" addressed the issue of copyright notices for "online and printed books" relating to UnixWare. The document specified with reference to "Online Books": "Only the notice that appears when each book is opened will be changed. SCO will replace Novell as the Copyright owner." (5/29/07 Suppl. Normand Decl. Ex. 2 at SCO1605019 (emphasis added).) The document specified with reference to "Copyright Notice" for "Disclaimer Page ­ Printed Books": "Shelly [Laschkewitsch, of Novell] requested that date format be of the form `19921996' and that SCO be shown as the copyright owner for those years." (Id.) SCO did in fact replace Novell as the copyright owner in the UnixWare online books as early as January 1996. (5/29/07 Suppl. Normand Decl. Ex. 3 ¶¶ 2-5.) 2. The Parties' Conduct Following the APA and Amendment No. 2 with Respect to Microsoft Confirms Transfer of the Copyrights.

Pursuant to the APA, Novell held a seat on the Santa Cruz Board of Directors until 1999, when it divested its equity position in Santa Cruz. Novell's representative attended meetings and reported back to the company regarding developments at Santa Cruz. (Exs. 1, 11.) In its Form 10-K filing for the fiscal year ending September 30, 1996, Santa Cruz stated: "In December 18

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1995, the Company acquired contain assets related to the UNIX business including the core intellectual property from Novell." (5/29/07 Suppl. Normand Decl. Ex. 34 (emphasis added).) In 1996, Santa Cruz accused Microsoft of anticompetitive activities harmful to the UNIX business. In a letter dated September 19, 1996, Santa Cruz represented to the Justice Department that it had acquired the rights and ownership of the UNIX software from Novell, and that, as a result, "SCO now enjoys the right, as the owner of the UNIX program, to exploit the program without the necessity of a license from any other party." (5/29/07 Suppl. Normand Decl. Ex. 6 at 3.) On January 31, 1997, Santa Cruz reiterated and expanded upon those statements in a complaint filed with the European Union. (5/29/07 Suppl. Normand Decl. Ex. 7.) In that action, one of the firms that represented Santa Cruz was the Brobeck firm, which had represented Santa Cruz in connection with the APA. (See, e.g., id. at Recall 0001834.) Santa Cruz referred to itself as "the copyright owner of UNIX." (5/29/07 Suppl. Normand Decl. 7.) Ex. Santa Cruz's proceedings against Microsoft in the EU received wide publicity over the subsequent months. (See, e.g., 5/29/07 Suppl. Normand Decl. Exs. 8-10.) The provisions of the 1987 Microsoft Agreement that Santa Cruz alleged to be anticompetitive applied only to the owner of the UNIX copyrights. (5/29/07 Suppl. Normand Decl. Ex. 7.) Had Novell believed in 1996 and 1997 that it owned the copyrights, then Novell, not Santa Cruz, would have had the interest and standing to complain to the antitrust authorities. Indeed, in 1993, when Novell did own the copyrights, it complained internally about anticompetitive provisions of the 1987 Microsoft Agreement and contemplated bringing its own action. (5/29/07 Suppl. Normand Decl. Ex. 11.) There is no evidence that Novell was ever

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concerned about the 1987 Microsoft Agreement after the APA or ever purported to correct SCO's assertion of copyright ownership. B. Novell's Conduct After the APA Confirms Transfer of the Copyrights.

Novell disputes (at 52-56) the relevance and significance of its prior conduct cited in SCO's opening memorandum. Novell's arguments are unavailing. First, Novell mischaracterizes the law regarding physical possession of the UNIX copyright registrations. The precedent Novell cites does not support its assertion that such possession is "legally irrelevant." The registrations are prima facie evidence of the validity of the copyrights for purposes of enforcement in court. La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1202-03 (10th Cir. 2005). The fact that Novell made no effort whatsoever to retain such presumptive evidence in its favor for any potential infringement action is not only relevant, but quite telling. Novell permitted Santa Cruz to take physical possession and control of the copyright registrations when Santa Cruz moved into Novell's former office space. That fact undercuts Novell's assertion that it intended to retain the UNIX and UnixWare copyrights and instead give Santa Cruz only a license to use those copyrights. It would have been simple for Novell to request and take possession of the registrations; the fact that it did not compels the conclusion that Novell did not have the intent it now says it did. Second, the representations set forth in SCO's license agreements evidence SCO's belief that it owned the UNIX and UnixWare copyrights. In its "SCO UnixWare OEM Reseller Source for Support Agreement" with Lucent Technologies, Inc., for example, SCO specifies that "ownership of SCO UNIXWARE SOURCE PRODUCT(s) including all UPDATES and MODIFICATIONS made by LICENSEE (and any intellectual property rights embodied in any

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such software) is and shall remain in SCO." (Ex. 31 § 2.4.) SCO could not have made the foregoing statement unless it believed that it owned the intellectual property rights in the UnixWare source code, including the copyrights. Novell says it was not aware of such statements in SCO's licenses, but if Novell believed it owned the copyrights, it would have tried to take steps to monitor the terms of SCO's licenses for statements allegedly inconsistent with Novell's asserted rights. There is no evidence it did. Third, the press release referenced in SCO's opening memorandum also shows that the parties intended to transfer the copyrights under the APA. Novell says (at 55) that SCO presents no evidence that the press release was "joint," but Mr. Frankenberg, Novell's CEO at the time of the APA, recognized it as the "joint press release" contemplated by the APA and issued by the parties on September 20, 1995. (5/29/07 Suppl. Normand Decl. Ex. 28 at 22-23.) Novell admits that the language at the end of the press release describing Novell's business is "an element of what a joint press release would include." (5/29/07 Suppl. Normand Decl. Ex. 20 at 24-25.) Novell's insistence that it is irrelevant whether Mr. Frankenberg, on behalf of Novell, reviewed and approved the press release is not reasonable. (Id. at 20-21.) The press release states that under the APA, SCO will acquire Novell's "UNIX intellectual property." Novell now tries to weaken the statement in its brief, but Novell's corporate representative conceded at deposition that as to the statement in the press release, "it's not accurate. It's really inconsistent with what we just read out of the Asset Purchase Agreement." (Id. at 21.) Yet although the substance of the press release was reported in the Wall Street Journal (5/29/07 Jam Suppl. Normand es Decl. Ex. 29), Novell never objected to the release. The core intellectual property in UNIX is the copyrights. (See, e.g., 5/29/07 Normand

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Suppl. Decl. Ex. 19 at 137-38.) The press release thus reflects the parties' understanding that Santa Cruz acquired such copyrights under the APA. The conduct of Novell's CEO following the APA also is telling. Jim Sullivan was Vice President of North American Sales at Novell at the time of the APA. (5/29/07 Suppl. Normand Decl. Ex. 28 at 27-28.) Shortly after the APA transaction, Mr. Sullivan delivered UNIX source code to IBM. (Id. at 28.) When Mr. Frankenberg learned that Mr. Sullivan had done so, he became "very unhappy" because he believed that the source code "had been conveyed to Santa Cruz as part of the transaction that the Asset Purchase Agreement reflected" and, as a result, he "didn't think we had the right to deliver source code to IBM." (Id.) Mr. Frankenberg's reaction confirms Novell's belief at the time that it was no longer authorized to distribute the source code. If Novell retained the copyrights, there would have been no reason for Mr. Frankenberg to become upset with the delivery of the code to IBM. C. Novell's New Declarations Create No Material Factual Issues.

Novell argues (at 38-40) that in "a short two-week" period (actually ten days) the lawyers for Novell and Santa Cruz decided to exclude the UNIX and UnixWare copyrights from the transfer of assets, even though (as Novell now concedes) in the previous months of negotiations the principal negotiators and decision-makers from both sides, including the CEOs of each company, had agreed that in buying the UNIX business from Novell, Santa Cruz would be obtaining all right, title, and interest in the business, which included the copyrights. SCO's Motion is based on the plain language of the APA as amended. Nonetheless, the position Novell now takes is extraordinary. Novell claims that after the lead negotiators from each side had negotiated for months over this transaction and had agreed that Santa Cruz would

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acquire assets that included the copyrights, Novell's lawyers decided to effect a major change in the deal by inserting language into a draft schedule to the APA. Ultimately, the confusion so engendered was removed by Amendment No. 2, which renders Novell's declarations irrelevant and leaves no genuine disputes of material facts. 1. The Testimony of Attorneys David Bradford and Tor Braham Regarding the Original APA Is Beside the Point.

The testimony of Messrs. Bradford and Braham relates to the language in the Excluded Assets Schedule of the APA that the parties replaced via Amendment No. 2, and is thus irrelevant. (See Part I.A, above.7) Because the language relied upon by Messrs. Bradford and Braham was replaced, their testimony as to what they sought to accomplish by the supplanted language is of no import, and fails to create any genuine dispute of material fact. 2. The Testimony of David Bradford Regarding His Supposed Intent Does Not Bear Scrutiny.

Whereas Mr. Bradford now claims a clear recollection of the intent he possessed at the time and the directives he supposedly gave to Novell's outside counsel, contemporaneous documents that he authored evidence no such intent and he has previously made contradictory statements. (SCO's Memorandum in Opposition to Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance (May 18, 2007), at 66-67.) In addition, the memorandum that Mr. Bradford sent to Novell's Board outlining the transaction shortly before the APA was signed makes no mention of Novell retaining the copyrights, even though it does reference, with emphasis, the royalties that Novell

Ms. Amadia claims to have spoken with Mr. Braham in connection with her work on Amendment No. 2, but she attributes no statements to him, and Mr. Braham makes no such statement in his declaration.

7

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would be retaining. (Bradford Decl. Ex. 3.) If he had decided that Novell would retain the copyrights under the APA ­ a decision that both he and Mr. Braham characterize as an important decision for Novell for a variety of purported reasons ­ it is incongruous that he makes no mention of the copyrights in the memo. In addition, the testimony he offers does not create any genuine dispute of material fact, where the language to which he refers was removed from the APA by Amendment No. 2. 3. The New Testimony Regarding the Purported Reasons Behind Novell's Supposed Intent Does Not Bear Scrutiny.

In their declarations, Messrs. Bradford, Braham and Tolonen offer a menu of purported reasons for Novell's supposed intent to retain the UNIX and UnixWare copyrights. The asserted reasons the witnesses collectively identify are the following: · Such ownership meant that if Santa Cruz went bankrupt, the rights to the SVRX License revenue would follow the copyrights to Novell. All three witnesses assert this rationale. (Bradford Decl. ¶ 9; Braham Decl. ¶ 14; Tolonen Decl. ¶ 12(d).) Such ownership would aid in Novell's interest in the development of UNIX on 64-bit Intel processors. Mr. Braham and Mr. Tolonen assert this rationale; Mr. Bradford does not. (Braham Decl. ¶ 14; Tolonen Decl. ¶ 12(c).) Such ownership would aid in Novell's negotiation of buy-outs of SVRX Licenses. Mr. Braham asserts this rationale; Mr. Bradford and Mr. Tolonen do not. (Braham Decl. ¶ 14.) Such ownership was important to ensure that Novell could continue with its remaining business regardless of any continuing overlap between UNIX and Novell's other products. Mr. Tolonen asserts this rationale; Mr. Bradford and Mr. Braham do not. (Tolonen Decl. ¶ 12(b).) Such ownership reflected the fact that Santa Cruz had been unable to pay cash upfront for what Novell regarded as the full value of the assets. Mr. Tolonen appears to draw such a direct link between the amount of the purchase price and

·

·

·

·

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the retention of assets; Mr. Bradford and Mr. Braham do not. (Tolonen Decl. ¶¶ 5-6.8) None of the witnesses claims to have discussed any of the foregoing purported rationales with anyone from or representing Santa Cruz.9 In addition to such inconsistencies, the evidence does not bear out these purported mix of rationales, and in crucial respects the evidence is inconsistent with them. By way of example: First, none of the witnesses explains how or why the rights to the SVRX License revenue would allegedly "follow the copyrights" to Novell in the event of Santa Cruz's bankruptcy. Novell had no explanation for that purported rationale in its Rule 30(b)(6) deposition, and could offer no explanation for why such revenue would not "follow" the trade secrets, know-how or methods and concepts in UNIX and UnixWare that Novell concedes (at 55) it transferred under the APA. (5/29/07 Suppl. Normand Decl. Ex. 20 at 38.) The Wilson Sonsini law firm's own Rule 30(b)(6) representative in this case testified: Q. Was it the view of the Wilson Sonsini law firm that if Santa Cruz were to go bankrupt, that the rights to the revenue stream would follow the intellectual property that Novell had retained? A. I don't ­ I don't know what our view was at the time, but I certainly don't ­ I don't conceive now of the linkage of those two. Q. And why not?

In its Rule 30(b)(6) deposition, Novell also testified that Novell had retained the copyrights because Santa Cruz had been unable to pay cash up-front for what Novell regarded as the full value of the assets. (5/29/07 Suppl. Normand Decl. Ex. 20 at 236-38.) The Wilson Sonsini law firm acknowledged in its Rule 30(b)(6) deposition that apart from the language of the document, the firm knows of no other manner in which Novell conveyed to Santa Cruz Novell's alleged intent to retain the UNIX and UnixWare copyrights. (5/29/07 Suppl. Normand Decl. Ex. 5 at 565 7 .)
9

8

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A. Because I don't understand the theory that's underlying the question. (5/29/07 Suppl. Normand Decl. Ex. 5 at 39.) Mr. Braham explains at length that Novell proposed separate, specific language for the APA pertaining to Novell's "equitable interest" in the SVRX revenue so that "In case Santa Cruz declared bankruptcy, the SVRX Royalties would be protected from the bankruptcy estate and Novell would continue to receive them." (Braham Decl. ¶ 10.) Neither Mr. Braham nor any other Novell witness seeks to explain what the retention of copyrights could add to the foregoing provision on the issue of Novell's interest in retaining the SVRX Royalties in the event of a Santa Cruz bankruptcy.10 Second, the claim that Novell sought to reserve the right to develop UNIX (whether on 64-bit Intel processors or otherwise) is inconsistent with the overwhelming evidence that Novell intended to get out of the UNIX business. Novell CEO Robert Frankenberg decided in late 1994 or early 1995 to sell the UNIX and UnixWare business, in their entirety. (5/29/07 Suppl. Normand Decl. Ex. 28 at 9-11.) The instructions under which Novell executive Duff Thompson operated in negotiating the proposed deal with Santa Cruz were to "sell everything, from Bob Frankenberg to me, and sell UnixWare. So sell UNIX, sell UnixWare." (5/29/07 Suppl. Normand Decl. Ex. 30 at 24-25.) Mr. Thompson formed the Novell deal team and was personally involved in face-to-face negotiations with Santa Cruz officials Alok Mohan, Steve Sabbath, Jim Wilt, Geoff Seabrook, and Kim Madsen. (Ex. 10 ¶ 5.)

10

Mr. Tolonen also appears to assert that such ownership was allegedly important to insure Novell's entitlement to the SVRX License revenue even independent of any Santa Cruz bankruptcy. (Tolonen Decl. ¶ 12(a).) He offers no explanation for that purported rationale or what copyright ownership could add to the myriad provisions of the APA that, as Novell's own witnesses have testified, led Novell to believe that it had absolute rights to that revenue and to enforce its collection.

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The claim that Novell sought to reserve the right to develop UNIX also is inconsistent with Novell's admission that "the entire intent" was for Novell to transfer the UNIX-related business to SCO. (5/29/07 Suppl. Normand Decl. Ex. 20 at 60.) Novell has presented no evidence that it made any subsequent effort to develop UNIX at all, nor does Novell offer any explanation for how it could have done so following the transfer of the entire business and its infrastructure to Santa Cruz. Nothing in the APA gives Novell that right, and it is clear from the APA and TLA that SCO owned "all rights" to the Licensed Technology and that Novell's right to use that technology was limited. Third, the claim that the retention of the copyrights would somehow aid in Novell's negotiation of buy-outs of SVRX Licenses is inconsistent with these same witnesses' testimony that Novell's view was that it had secured for itself an "unqualified" right of "control" that allowed Novell unilaterally to enter into such buy-outs pursuant to Section 4.16 of the APA. (Bradford Decl. ¶ 16; Braham Decl. ¶¶ 12-13.) Novell's Rule 30(b)(6) witness Greg Jones confirmed that Novell viewed its Section 4.16 rights as "absolute." (5/29/07 Suppl. Normand Decl. Ex. 20 at 68.11) Mr. Braham offers no explanation for what the retention of copyrights could add to Novell's allegedly unqualified and absolute rights under Section 4.16 of the APA with respect to buy-outs. Mr. Bradford discusses the scope of those Section 4.16 rights without any reference to how the retention of copyrights could augment then in any way. Indeed, when the issue of Novell's rights unilaterally to undertake such buy-outs became a point of dispute between Novell and Santa Cruz throughout most of 1996, shortly after the APA and when it was

11

To be clear, SCO disputes Novell's interpretation of the nature and scope of its rights under Section 4.16. The point is that where Novell purportedly believed that it had secured for itself such an "absolute" right, that belief contradicts a proposed rationale for the alleged need for retaining the copyrights.

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fresh on everyone's mind, there is no evidence that Novell ever even mentioned to Santa Cruz (or even internally) its purported retention of the UNIX and UnixWare copyrights. To the contrary, the Novell executive who initiated the Novell unilateral buy-outs in early 1996, Larry Bouffard, concedes that Novell's view at the time was that it was "on thin ice" in undertaking such conduct. (5/29/07 Suppl. Normand Decl. Ex. 21 at 67.) Novell admits that, apart from the negotiations of Amendment No. 2, the company knows of no other internal communications at Novell regarding the UNIX or UnixWare copyrights in 1996. (5/29/07 Suppl. Normand Decl. Ex. 20 at 198-99.) Fourth, the claim that the retention of the copyrights would somehow ensure that Novell could continue with its remaining business regarding any continuing overlap between UNIX and Novell's other products is inconsistent with the undisputed rationale and terms of the licenseback that Novell obtained in the APA and TLA. Under the APA and TLA, Novell secured for itself the right to use both the Licensed Technology (as defined in the APA) and the modifications that Santa Cruz developed based on that technology in Novell's own products, subject to the limitations set forth in the APA and TLA. Mr. Tolonen offers no explanation for what the retention of copyrights could add to the APA and TLA's resolution of the "continuing overlap between UNIX and Novell's other products." It would defeat the entire purpose of the APA and TLA on that front if Mr. Tolonen means to suggest that the retention of copyrights gave Novell any greater rights to use UNIX and UnixWare technology in Novell's own products than was set forth in the APA and TLA. His position is incredible on its face and inconsistent with the plain language of the agreements.

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Fifth, any claim that the retention of copyrights reflected the up-front money that Santa Cruz paid is inconsistent with the wealth of testimony from witnesses such as Duff Thompson and Ed Chatlos of Novell and Doug Michels and Jim Wilt of Santa Cruz that it was Novell's interest in the SVRX Royalties stream that "bridged the price gap" between what Santa Cruz could pay at that time and what Novell regarded the value of the UNIX and UnixWare assets to be. (See SCO's Memorandum in Opposition to Novell's Motion for Partial Summary Judgment on Its Fourth Counterclaim for Relief, and in Support of SCO's Cross Motion for Partial Summary Judgment (Jan. 17, 2007) ¶¶ 18-23.) Surely Novell does not mean to suggest that when its lawyers became involved in September 1995, they somehow changed the rationale for the SVRX Royalties in relation to the up-front purchase price. 4. Mr. Braham's Testimony That Novell Clearly Communicated to Santa Cruz Novell's Alleged Intent To Exclude the Copyrights Does Not Bear Scrutiny.

The linchpin of Mr. Braham's declaration (at paragraphs 14-17) is his testimony that the Wilson Sonsini law firm communicated Novell's intent to exclude the UNIX and UnixWare copyrights by amending asset schedules to the APA. Upon close review, however, the mark-ups are not clear at all and, if anything, support the testimony of Robert Frankenberg, Ty Mattingly and Ed Chatlos that the copyrights referenced in the Excluded Assets Schedule referred to NetWare and other products Novell retained, not UNIX. The mark-ups also have no bearing on the plain language of the APA as amended. Mr. Braham attaches to his declaration a draft of the APA dated September 8, 1995 (the "9/9/95 draft"), that includes a one-page sheet at the front of the draft titled "Schedule 1.1(a)." (Braham Decl. Ex. 6.) That page follows a page titled "Index of Schedules," listing "Schedule

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1.1(a) (`Assets'), "Schedule 1.1(b) (`Excluded Assets')," and "Schedule 1.1(c) (`Assumed Liabilities')." (Id.) Although the draft contains the foregoing Index, there is no Schedule 1.1(b) or Schedule 1.1(c) in the draft. The "Schedule 1.1(a)" sheet includes, as Mr. Braham acknowledges, entries for "all copyrights" and a laundry list of intellectual property and other rights (Id.) Mr. Braham then says that the Wilson Sonsini firm "drafted a new schedule of assets to be included in the asset transfer, as well as a schedule of assets to be excluded from the transfer." (Braham Decl. ¶ 15 & Ex. 7 thereto.) Mr. Braham then says of the revision of September 15, 1995 (the "9/15/95 draft"): Both schedules specifically addressed how intellectual property rights in UNIX and UnixWare would be treated in the deal. Patents and copyrights were not included as assets; instead patents and copyrights were specifically excluded. Only certain UNIX and UnixWare trademarks were identified as included assets. (Id.) Yet, Novell's own concessions belie Mr. Braham's testimony that the 9/15/95 draft "specifically addressed how intellectual property rights in UNIX and UnixWare would be treated in the deal." Those concessions underscore the ambiguity inherent in the revisions. The 9/15/95 draft eliminated Section I from the "Assets" identified in the 9/8/95 draft, left the paragraph identifying Santa Cruz's acquisition of "All rights and ownership of Unix and UnixWare," and added to the end of that paragraph the language "such assets to include without limitation the following." (Braham Decl. Ex. 7 (emphasis added).) The "without limitation" phrase was taken from the first paragraph of the 9/8/95 Assets Schedule, which paragraph (as also noted below) addressed "intellectual property." The 9/15/95 draft thus did not amend any preexisting Excluded Assets Schedule at all, but rather created one for the first time. In the two

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draft Excluded Assets Schedules included in Exhibi