SCO Grp v. Novell Inc

Filing 597

MANDATE of USCA as to 567 Notice of Appeal(08-4217), filed by SCO Group According to the USCA the judgment of the USDC for the Dist of UT is AFFIRMED IN PART AND REVERSED IN PART. Judgment included with mandate: Yes. Case Reopened. Case is REMANDED for trial. (Attachments: # 1 Judgment, # 2 Mandate Cover Letter)(jmr)

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SCO Grp v. Novell Inc Case: 08-4217 Document: 01018260169 FILED Date Filed: U n i t e d States Court 1 Appeals 08/24/2009 Page: of T e n t h Circuit Doc. 597 A u g u s t 24, 2009 PUBLISH U N I T E D STATES COURT OF APPEALS T E N T H CIRCUIT E l i s a b e t h A. Shumaker C l e r k of Court T H E SCO GROUP, INC., Plaintiff-Appellant, v. N O V E L L , INC., Defendant-Appellee. N o . 08-4217 A P P E A L FROM THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF UTAH ( D . C . NO. 2:04-CV-00139-DAK) S t u a r t Singer, Boies, Schiller & Flexner LLP, Fort Lauderdale, Florida (David B o i e s , Robert Silver, and Edward Normand, Boies Schiller & Flexner LLP, A r mo n k , New York; Brent O. Hatch, Mark F. James, Hatch, James & Dodge, PC, S a l t Lake City, Utah; Devan V. Padmanabhan, Dorsey & Whitney LLP, M i n n e a p o l i s , Minnesota with him on the briefs) for Plaintiff-Appellant. M i c h a e l Jacobs, Morrison & Foerster LLP, San Francisco, California (George C. H a r r i s , Grant L. Kim, David E. Melaugh, Morrison & Foerster LLP, San F r a n c i s c o , California; Thomas R. Karrenberg, Heather M. Sneddon, Anderson & K a r r e n b e r g , Salt Lake City, Utah with him on the briefs) for Defendant-Appellee. B e f o r e LUCERO, BALDOCK and McCONNELL, Circuit Judges. M c C O N N E L L , Circuit Judge. Dockets.Justia.com Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 2 T h i s case primarily involves a dispute between SCO and Novell regarding t h e scope of intellectual property in certain UNIX and UnixWare technology and o t h e r rights retained by Novell following the sale of part of its UNIX business to S a n t a Cruz, a predecessor corporate entity to SCO, in the mid-1990s. Following c o mp e t i n g motions for summary judgment, the district court issued a detailed o p i n i o n granting summary judgment to Novell on many of the key issues. We a f f i r m the judgment of the district court in part, reverse in part, and remand for t r i a l on the remaining issues. I. Background W e begin by laying out some of the basic facts underlying Novell's transfer o f certain UNIX-related assets to Santa Cruz, as well as the background to the i n s t a n t litigation. Other facts will be discussed as the issues require. 1 A . The UNIX Business and the Sale to Santa Cruz U N I X is a computer operating system originally developed in the late 1 9 6 0 s at AT&T. By the 1980s, AT&T had developed UNIX System V ("SVRX"); i t built a substantial business by licensing UNIX source code to a number of ma j o r computer manufacturers, including IBM, Sun, and Hewlett-Packard. These ma n u f a c t u r e r s , in turn, would use the SVRX source code to develop their own i n d i v i d u a l i z e d UNIX-derived "flavors" for use on their computer systems. 1 The motion of Wayne R. Gray, for leave to file a brief as amicus curiae, is -2- denied. Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 3 L i c e n s e e s could modify the source code and create derivative products mostly for i n t e r n a l use, but agreed to keep the UNIX source code confidential. In 1993, Novell paid over $300 million to purchase UNIX System L a b o r a t o r i e s , the AT&T spin-off that owned the UNIX copyrights and licenses. Only two years later, however, Novell decided to sell its UNIX business. Although Novell may have initially intended "to sell the complete UNIX b u s i n e s s , " both parties agree that Santa Cruz was either unwilling or unable to c o mmi t sufficient financial resources to purchase the entire UNIX business o u t r i g h t . App'x 8610; Aplt. Br. 8; Aple. Br. 5. The deal was therefore s t r u c t u r e d so that Novell would retain a 95% interest in SVRX license royalties, w h i c h had totaled $50 million in 1995. The transfer of Unix-related rights occurred pursuant to three documents: a n asset purchase agreement ("APA") executed on September 19, 1995; " A me n d me n t No. 1" signed by the parties at the actual closing on December 6, 1 9 9 5 ; and "Amendment No. 2" on October 16, 1996. The APA provided that: " B u y e r will purchase and acquire from Seller on the Closing Date . . . all of Seller's right, title, and interest in and to the assets and p r o p e r t i e s of Seller relating to the Business (collectively the " A s s e t s " ) identified on Schedule 1.1(a). Notwithstanding the f o r e g o i n g , the Assets to be so purchased shall not include those a s s e t s (the "Excluded Assets") set forth on Schedule 1.1(b). S c h e d u l e 1.1(a) included within the list of "Assets" transferred, "[a]ll rights and o w n e r s h i p of UNIX and UnixWare." App'x 313. Section V of the Asset -3- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 4 S c h e d u l e , entitled "Intellectual property" provided that Santa Cruz would obtain " [ t ]r a d e ma r k s UNIX and UnixWare as and to the extent held by Seller" but did n o t explicitly mention copyrights. App'x 315. In contrast, Schedule 1.1(b), the l i s t of assets excluded from the deal, did expressly speak to copyrights. Section V -- " I n t e l l e c t u a l Property"--explained that "All copyrights and trademarks, e x c e p t for the trademarks UNIX and UnixWare," as well as "[a]ll [p]atents," were e x c l u d e d from the deal. App'x 318 (emphasis added). L e s s than a year after the deal closed, the parties agreed to Amendment No. 2 , which amended the APA's treatment of copyrights. Amendment No. 2 p r o v i d e d that: W i t h respect to Schedule 1.1(b) of the Agreement, titled `Excluded A s s e t s ' , Section V, Subsection A shall be revised to read: A l l copyrights and trademarks, except for the copyrights and t r a d e ma r k s owned by Novell as of the date of the Agreement required f o r SCO to exercise its rights with respect to the acquisition of UNIX a n d UnixWare technologies. However, in no event shall Novell be l i a b l e to SCO for any claim brought by any third party pertaining to s a i d copyrights and trademarks. A p p ' x 374. The APA separately purported to give Novell certain residual control over " S V R X Licenses." Section 4.16(b) of the agreement provided that: B u y e r shall not, and shall not have the authority to, amend, modify o r waive any right under or assign any SVRX License without the p r i o r written consent of Seller. In addition, at Seller's sole discretion a n d direction, Buyer shall amend, supplement, modify or waive any -4- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 5 r i g h t s under, or shall assign any rights to, any SVRX License to the e x t e n t so directed in any manner or respect by Seller. The parties differ markedly in their characterization of the rights t r a n s f e r r e d to Santa Cruz and the value of the deal. According to SCO, Santa C r u z purchased the bulk of the business, including the core UNIX copyrights, for $ 2 5 0 million, but Novell retained a 95% interest in royalties as a "financing d e v i c e . " According to Novell, SCO's $250 million figure improperly inflates the v a l u e of the deal, by accounting not only for the value of assets actually t r a n s f e r r e d by SCO to Novell, but including the share of the SVRX royalty stream r e t a i n e d by Novell. See Aple. Br. 5 n1. Novell calculates that it received only a b o u t $50 million in stock, as well as a promised share of the "UnixWare" r e v e n u e stream exceeding certain targets. Novell contends that it retained o w n e r s h i p of the UNIX copyrights, extending only an implied license to Santa C r u z to use the copyrights, for instance, to develop and distribute an improved v e r s i o n of Novell's "UnixWare" product. In support of its understanding of the transaction, SCO relies heavily on e x t r i n s i c evidence of the parties' intent at the time of the APA--including t e s t i mo n y from Novell's leadership at the time--suggesting that the parties' intent w a s to transfer the copyrights. For instance, Robert Frankenberg, then President a n d CEO of Novell, testified that it was his "initial intent," his "intent at the time w h e n the APA was signed," and his "intent when that transaction closed" that -5- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 6 " N o v e l l would transfer the copyrights to UNIX and UnixWare technology to S a n t a Cruz" and that "that intent never changed." App'x 8563. Similarly, Ed C h a t l o s , a Senior Director for UNIX Strategic Partnerships and Business D e v e l o p me n t within Novell's Strategic Relations and Mergers and Acquisitions o r g a n i z a t i o n , submitted an affidavit affirming SCO's version of the facts. See A p p ' x 865960: I n or about June 1995, I became the lead negotiator for Novell in the n e g o t i a t i o n s with SCO and headed the day-to-day responsibility for t h e potential deal. . . . During these negotiations, I met regularly with S C O representatives. . . . Early in our discussions, it became a p p a r e n t that SCO could not pay the full purchase price as c o n t e mp l a t e d by Novell. To bridge the price gap, it was ultimately a g r e e d that Novell would retain certain binary royalty payments u n d e r UNIX licenses. It was my understanding and intent, on behalf o f Novell--that the complete UNIX business would be transferred to SCO. N o v e l l , in contrast, defends its interpretation of the transaction largely by p o i n t i n g to the language of the contract itself, and by arguing that the witnesses p u t forward by SCO to offer extrinsic evidence of the parties' intent lacked any f a mi l i a r i t y with the actual drafting of the APA's language or Amendment No. 2. See Aple. Br. 610. At oral argument, Novell suggested that whatever the intent o f the business negotiators involved in the deal, it was superseded by the work of t h o s e lawyers who ultimately negotiated the language of the contract that governs t h e transaction. -6- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 7 B . Proceedings Below I n May 2001, Santa Cruz sold its UNIX business to Caldera, the immediate p r e d e c e s s o r to SCO. Santa Cruz purported to transfer its interest in the UNIX and U n i x W a r e copyrights to Caldera / SCO. In 2002 and 2003, tensions increased b e t w e e n Novell and SCO. SCO asserted that users of Linux, an alternative to U N I X , might be infringing on SCO's UNIX-related intellectual property rights. See App'x 7178. It purported to offer Linux users the opportunity to purchase an i n t e l l e c t u a l property license in order to continue using Linux without infringing a n y of SCO's copyrights. See id.; Aple. Br. 13. In March 2003, SCO brought c o n t r a c t and copyright claims against IBM on the basis of SCO's alleged i n t e l l e c t u a l property rights in UNIX. Novell then directed SCO "to waive any p u r p o r t e d right SCO may claim to terminate [certain of] IBM's SVRX Licenses," o n the basis of its aforementioned waiver rights, set out in Section 4.16 of the A P A . After SCO refused, Novell ultimately claimed publicly that it--rather than S C O -- ma i n t a i n e d ownership over the UNIX copyrights. App'x 5875. S C O filed a slander of title action against Novell. Novell asserted c o u n t e r c l a i ms for slander of title, breach of contract, and unjust enrichment. Both p a r t i e s then proceeded to amend their pleadings to add additional claims and c o u n t e r c l a i ms . After the parties filed dueling motions for summary judgment, the U n i t e d States District Court for the District of Utah issued a detailed me mo r a n d u m decision and order on August 10, 2007. -7- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 8 T h e district court first concluded that Novell is the owner of the UNIX and U n i x W a r e copyrights. It reviewed the APA and Amendment No. 2 separately and s e q u e n t i a l l y . See Dist. Ct. Op. 4546. The court found that the plain language of t h e APA indicated that the UNIX copyrights were not transferred to Santa Cruz. See Dist. Ct. Op. 52. The court also determined that Amendment No. 2 did not t r a n s f e r ownership of the copyrights. See id. at 59. It reasoned that "[u]nlike the A P A , Amendment No. 2 was not accompanied by a separate `Bill of Sale' t r a n s f e r r i n g any assets." Id. In addition, it found persuasive that Amendment No. 2 amended only the list of excluded assets from the transaction (Schedule 1.1(b)), b u t did not alter the language of the list of included assets (Schedule 1.1(a)). Finally, the court determined that Amendment No. 2 did not sufficiently identify w h i c h copyrights were to change hands, and therefore failed to satisfy the r e q u i r e me n t s necessary to transfer ownership of a copyright under Section 204(a) o f the Copyright Act, 17 U.S.C. 204(a). Having found that SCO's assertions of copyright ownership were false, the c o u r t granted summary judgment to Novell on SCO's claims alleging slander of t i t l e and seeking specific performance of Novell's alleged duty to transfer o w n e r s h i p of the UNIX and UnixWare copyrights to SCO. See Dist. Ct. Op. 62. The court also rejected SCO's claims against Novell for unfair competition under U t a h common law or statutory law, or for breach of the implied covenant of good f a i t h under California law. See id. at 63. -8- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 9 N e x t , the court reviewed the parties' competing cross motions regarding w h e t h e r the APA authorized Novell to direct SCO to waive its claims against I B M and Sequent (which had been acquired by IBM in 1999) for alleged breach o f their SVRX license agreements. The parties disputed both whether the IBM a n d Sequent Sublicensing Agreements were "SVRX Licenses" within the meaning o f the APA, as well as the scope of provisions in the APA purportedly authorizing N o v e l l to take action on SCO's behalf after SCO refused to waive the claims. See i d . at 76. Although the district court agreed with SCO that "there appears to be s o me ambiguity in the APA's attempt to define SVRX Licenses," id. at 78, it u l t i ma t e l y found "no support in the language and structure of the APA for SCO's i n t e r p r e t a t i o n of SVRX License[s]." Id. at 86. It therefore concluded that " S V R X Licenses" referred to the "entire set of agreements relating to the l i c e n s i n g of SVRX code." Id. As a result, the court found that Novell "was and i s entitled, at its sole discretion, to direct SCO to waive its purported claims a g a i n s t IBM and Sequent, and [that] SCO is obligated to recognize Novell's w a i v e r . " Id. at 88. Having determined that SCO gave Novell the right to waive S C O ' s claims by virtue of "an explicit grant of contractual authority," the court a l s o concluded that California law precluded the application of the covenant of g o o d faith and fair dealing. Id. at 87. F i n a l l y , the court addressed Novell's entitlement to royalties from certain l i c e n s i n g agreements entered into between SCO and Sun and Microsoft in 2003. -9- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 10 T h e court found that SCO's duty to turn over revenue from SVRX licenses was n o t limited only to licenses existing at the time of the APA. See id. at 93. It also c o n c l u d e d that the Sun agreement represented an unauthorized amendment to an S V R X License, in violation of Section 4.16(b) of the APA. As a result, it c o n c l u d e d that "SCO breached its fiduciary duties to Novell by failing to account f o r and remit the appropriate SVRX Royalty payments to Novell for the SVRX p o r t i o n s of the 2003 Sun and Microsoft Agreements." Id. at 96. After a later b e n c h trial on the value of payments due to Novell, the district court awarded N o v e l l judgment in the amount of $2,547,817. Findings of Fact, July 16, 2008 at 42.2 On appeal, SCO challenges various aspects of the decision below. It argues t h a t the district court erred by concluding, as a matter of law, that (1) Santa Cruz d i d not obtain the UNIX and UnixWare copyrights from Novell, but instead a c q u i r e d only an implied license; (2) SCO was not now entitled to specific p e r f o r ma n c e -- t h e transfer of any copyrights not transferred by the APA; (3) N o v e l l has the right under the APA to force SCO to waive legal claims against I B M for its alleged breach of software and sublicensing agreements; (4) Novell d i d not have to comply with the implied covenant of good faith and fair dealing in T h e district court also issued a number of rulings regarding specific a r g u me n t s made in support of both parties' claims and counterclaims. To the e x t e n t that those rulings do not directly affect the substance of this appeal, we do n o t address them. -10- 2 Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 11 e x e r c i s i n g any waiver rights; (5) Novell retained an interest in royalties from S C O ' s 2003 agreement with Sun Microsystems and other post-APA contracts r e l a t e d to SVRX technology. We address each argument in turn. I I . The Ownership of UNIX and UnixWare Copyrights We begin by reviewing the district court's decision to grant summary j u d g me n t to Novell with regard to SCO's claims of ownership in the UNIX and U n i x W a r e copyrights. Summary judgment is appropriate only "if the pleadings, d e p o s i t i o n s , answers to interrogatories, and admissions on file, together with the a f f i d a v i t s , if any, show that there is no genuine issue as to any material fact and t h a t the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 5 6 ( c ) . "When applying this standard, we view the evidence and draw reasonable i n f e r e n c e s therefrom in the light most favorable to the nonmoving party." D a v i d s o n v. America Online, Inc., 337 F.3d 1179, 1182 (10th Cir. 2003) (citation o mi t t e d ) . We review the district court's grant of summary judgment de novo. Id. S C O argues that the district court erred by interpreting the APA and A me n d me n t No. 2 as separate and independent. It further contends that the text o f the APA and Amendment No. 2 is at least ambiguous concerning whether the p a r t i e s intended to transfer ownership of the copyrights, making it appropriate to c o n s i d e r extrinsic evidence. SCO asserts that a thorough review of extrinsic e v i d e n c e makes summary judgment inappropriate on whether the copyrights were t r a n s f e r r e d by the transaction. Finally, SCO argues that the language in the APA -11- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 12 a n d Amendment No. 2 was sufficient to meet the requirements to transfer o w n e r s h i p of a copyright under the Section 204(a) of the Copyright Act. Novell, in contrast, argues that we ought to consider the APA and A me n d me n t No. 2 separately. It asserts that the plain language of the APA itself u n a mb i g u o u s l y did not transfer copyright ownership, making consideration of p a r o l evidence inappropriate. As for Amendment No. 2, Novell contends that no a d mi s s i b l e extrinsic evidence shows that it was intended to transfer copyright o w n e r s h i p . Additionally, Novell claims that "SCO presented no evidence that c o p y r i g h t ownership was required to exercise its APA rights." Aple. Br. 33 ( e mp h a s i s added). Because Amendment No. 2 revised the excluded assets s c h e d u l e so as to allow only for transfer of those "copyrights . . . owned by N o v e l l as of the date of the Agreement required for SCO to exercise its rights w i t h respect to the acquisition of UNIX and UnixWare technologies," Novell a r g u e s that SCO has failed to demonstrate that any copyrights were transferred. Finally, Novell argues that any purported transfer of copyrights did not meet the r e q u i r e me n t s for transfer of ownership under the Copyright Act. W e will proceed in three steps, asking first, whether the APA and A me n d me n t No. 2 should be considered separately or together; second, whether t h e APA and Amendment No. 2 satisfy any requirements imposed by the C o p y r i g h t Act in order to effect a transfer of copyright ownership; and third, -12- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 13 w h e t h e r the district court erred by concluding, as a matter of law, that the t r a n s a c t i o n ' s language and any admissible extrinsic evidence could not support t h e conclusion that Novell and Santa Cruz intended the copyrights to transfer. A. Should We Consider APA and Amendment No. 2 Separately or Together? T h e parties initially contest whether Amendment No. 2 should be read s e p a r a t e l y from the APA or together with it, as a successive writing elucidating t h e parties' intent in the original document. As we explain below, our disposition o n this point is important primarily because it operates to fix the scope of e x t r i n s i c evidence admissible to clarify the contract. California law "generally prohibits the introduction of any extrinsic e v i d e n c e to vary or contradict the terms of an integrated written instrument." Gerdlund v. Elec. Dispensers Int'l, 190 Cal. App. 3d 263, 270 (Cal. Ct. App. 1 9 8 7 ) . California's parol evidence rule provides that "[t]erms set forth in a w r i t i n g intended by the parties as a final expression of their agreement . . . may n o t be contradicted by evidence of any prior agreement or of a contemporaneous o r a l agreement." Cal. Code Civ. Proc. 1856(a). Such a writing "may not be c o n t r a d i c t e d by even the most persuasive evidence of collateral agreements. Such e v i d e n c e is legally irrelevant." EPA Real Estate P'ship v. Kang, 12 Cal. App. 4th 1 7 1 , 175 (Cal. Ct. App. 1992); see also Gerdlund, 190 Cal. App. 3d at 270 (Cal. C t . App. 1987) (although all parties testified that they shared same intent as to e mp l o y me n t agreement, evidence was not admissible to prove meaning of -13- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 14 c o n t r a c t where plain language of contract could not support that interpretation). The rule "is based upon the premise that the written instrument is the agreement o f the parties." Id. (citing Tahoe Nat'l Bank v. Phillips, 480 P.2d 320, 4 Cal.3d 1 1 , 2223 (Cal. 1971)). On the other hand, "[e]ven if a contract appears unambiguous on its face, C a l i f o r n i a law permits the use of extrinsic evidence to expose "a latent ambiguity . . . which reveals more than one possible meaning to which the language of the c o n t r a c t is yet reasonably susceptible." Dore v. Arnold Worldwide, Inc., 139 P.3d 5 6 , 60 (Cal. 2006) (emphasis added). "The test of admissibility of extrinsic e v i d e n c e to explain the meaning of a written instrument is not whether it appears t o the court to be plain and unambiguous on its face, but whether the offered e v i d e n c e is relevant to prove a meaning to which the language of the instrument is r e a s o n a b l y susceptible." Id. (quoting Pacific Gas & E. Co. v. G.W. Thomas D r a y a g e & Rigging Co., 442 P.2d 641, 644 (Cal. 1968)). Thus, California law d o e s not permit the use of extrinsic evidence to establish an ambiguity in the p a r t i e s ' intent independent from the terms of the contract; instead, it can only be u s e d to expose or resolve a latent ambiguity in the language of the agreement itself. I f we were to interpret the contract based initially only on the APA i t s e l f -- w i t h o u t regard to Amendment No. 2--we agree that its language u n a mb i g u o u s l y excludes the transfer of copyrights. Although SCO argues that -14- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 15 t h e asset schedule approves of the transfer of "[a]ll rights and ownership of UNIX a n d UnixWare" to SCO, this ignores that the APA explicitly provides that " N o t w i t h s t a n d i n g [those assets listed on the Asset Schedule], the Assets to be so p u r c h a s e d shall not include those assets (the "Excluded Assets") set forth on S c h e d u l e 1.1(b)." App'x 26465. Schedule 1.1(b), in turn, explains s t r a i g h t f o r w a r d l y that "all copyrights" were excluded from the transaction. App'x 3 1 8 . None of SCO's extrinsic evidence explains how the actual language of the A P A is "reasonably susceptible" to its interpretation of the transaction--namely, t h a t all relevant copyrights were transferred (or in other words, the exact opposite o f what the APA's language suggests). See Dist. Ct. Op. 4651 (explaining why t h e language of the APA itself cannot bear the interpretation that copyrights t r a n s f e r r e d to SCO). Novell argues, therefore, that we ought not consider any of S C O ' s extrinsic evidence bearing on the development of the APA itself, and limit a n y inquiry beyond the text of the agreement to the course of the parties' n e g o t i a t i o n s over Amendment No. 2. But if we understand Amendment No. 2 to clarify the parties' original i n t e n t as to the transfer of copyrights, SCO's extrinsic evidence concerning the b u s i n e s s negotiations may be relevant to resolving ambiguity concerning the c o n t e n t of that original intent. Indeed, SCO argues that Amendment No. 2 was d e s i g n e d to bring the language of the transaction in line with the parties' original i n t e n t to transfer the copyrights. See Aplt. R. Br. 10 ("Amendment No. 2 -15- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 16 c l a r i f i e d the APA to confirm that the copyrights had been transferred t h e r e u n d e r . " ) Of course, Novell disputes this characterization of Amendment No. 2 . But unlike the language of the APA itself, the contractual language of A me n d me n t No. 2 concerning the transfer of copyrights is ambiguous. Amendment No. 2 revises the excluded asset schedule to limit those copyrights e x c l u d e d from the transaction to "[a]ll copyrights and trademarks, except for the c o p y r i g h t s and trademarks owned by Novell as of the date of the Agreement r e q u i r e d for SCO to exercise its rights with respect to the acquisition of UNIX a n d UnixWare technologies." App'x 374 (emphasis added). Because what c o p y r i g h t s are "required" for SCO to exercise its rights under the agreement is not c l e a r on its face, California law allows courts to consider extrinsic evidence to r e s o l v e the ambiguity. See ASP Properties Group v. Fard, Inc., 133 Cal. Rptr. 3d 3 4 3 , 349 (Cal. Ct. App. 2005). Thus, to the extent that it is proper for us to read A me n d me n t No. 2 as clarifying the APA, SCO's extrinsic evidence of the b u s i n e s s negotiators' intent concerning the transaction ought to be admissible. H a v i n g closely considered the parties' arguments, as well as the district c o u r t ' s reasoning, we find that Amendment No. 2 must be considered together w i t h the APA as a unified document. Under California law, "[s]everal contracts r e l a t i n g to the same matters, between the same parties, and made as parts of s u b s t a n t i a l l y one transaction, are to be taken together." Cal. Civ. Code 1642. "[M]ultiple writings must be considered together when part of the same contract." -16- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 17 N i s h Noroian Farms v. Agric. Labor Relations Bd., 35 Cal. 3d 726, 735 (Cal. 1 9 8 4 ) . Even if we considered the language of the APA and Amendment No. 2 to b e mutually antagonistic, California law still dictates that we construe them t o g e t h e r , following Amendment No. 2 wherever its language contradicts the APA. Where "two contracts are made at different times, [but where] the later is not i n t e n d e d to entirely supersede the first, but only modif[y] it in certain p a r t i c u l a r s [ , ] [t]he two are to be construed as parts of one contract, the later s u p e r s e d i n g the earlier one wherever it is inconsistent therewith." Hawes v. Lux, 2 9 4 P. 1080, 1081 (Cal. Dist. Ct. App. 1931); accord San Diego Const. Co. v. M a n n i x , 166 P. 325, 326 (Cal. 1917). In so doing, we note that SCO paid no additional consideration for Novell's a g r e e me n t to Amendment No. 2. That makes sense if Amendment No. 2 was a c l a r i f i c a t i o n of the agreement, to bring the language of the APA into line with the p a r t i e s ' intent. If Amendment No. 2 were a change in the agreement (and a c o mme r c i a l l y significant one, at that), it is hard to see why Novell would have a g r e e d to it without compensation. T h e r e f o r e , we construe the contract and Amendment No. 2 together for the p u r p o s e of assessing any ambiguities in the contract. This means that extrinsic e v i d e n c e regarding the parties' intent is relevant to our interpretation of the c o mb i n e d instrument. B . Does the Amended APA Satisfy the Requirements of the Copyright Act? -17- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 18 W e next consider whether the amended APA constituted a writing s u f f i c i e n t to transfer copyrights under federal law. Under the Copyright Act, "[a] t r a n s f e r of copyright ownership, other than by operation of law, is not valid u n l e s s an instrument of conveyance, or a note or memorandum of the transfer, is i n writing and signed by the owner of the rights conveyed or such owner's duly a u t h o r i z e d agent." 17 U.S.C. 204(a). Section 204 is intended "to protect c o p y r i g h t holders from persons mistakenly or fraudulently claiming oral licenses [ o r transfers]." Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27, 3 6 (2d Cir. 1982). As a result, Section 204 "enhances predictability and certainty o f ownership--`Congress's paramount goal' when it revised the [Copyright] Act i n 1976." Konigsberg Intern. Inc. v. Rice, 16 F.3d 355, 357 (9th Cir. 1994) ( q u o t i n g Community for Creative Non-Violence v. Reid, 490 U.S. 730, 749 ( 1 9 8 9 ) ) . Novell argues that the Copyright Act imposes not only the requirement t h a t a copyright transfer be in writing, but also that it state with sufficient clarity t h e copyrights to be transferred. See Aple. Br. 2526; 34. Novell contends that A me n d me n t No. 2 fails this test because its language is ambiguous. Since it is n o t clearly apparent which copyrights are "required for Novell to exercise its r i g h t s with respect to the acquisition of UNIX and UnixWare technologies," N o v e l l asserts that Amendment No. 2 was not a valid "instrument of conveyance." As an initial matter, we note that the language of 17 U.S.C. 204(a) does n o t readily lend itself to the construction Novell seeks to give it. Section 204(a), -18- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 19 b y its terms, imposes only the requirement that a copyright transfer be in writing a n d signed by the parties from whom the copyright is transferred; it does not on i t s face impose any heightened burden of clarity or particularity. Likewise, N o v e l l points to nothing in the legislative history of Section 204 which suggests t h a t Congress envisioned it to invalidate copyright transfer agreements carrying ma t e r i a l language subject to multiple reasonable interpretations. Nonetheless, s o me courts have understood Section 204(a) to impose requirements similar to t h a t necessary to satisfy the statute of frauds. They have found that a writing is i n s u f f i c i e n t to transfer copyrights unless (1) it reasonably identifies the subject ma t t e r of the agreement, (2) is sufficient to indicate that the parties have come to a n agreement, and (3) states with reasonable certainty the essential terms of the a g r e e me n t . Pamfiloff v. Giant Records, Inc., 794 F. Supp 933, 936 (N.D. Cal. 1 9 9 2 ) (citing Restatement (2d) of Contracts 131 (1981)). N o v e l l argues that Section 204's writing requirement would disserve the g o a l s of "predictability and certainty of copyright ownership" if parties could f u l f i l l it without making clear what copyrights they intend to transfer. But it is h a r d l y clear that imposing strict requirements of clarity in order to effect a c o p y r i g h t transfer will always aid "predictability and certainty of copyright o w n e r s h i p . " "[A]mbiguities in copyright grants are anything but rare in the j u r i s p r u d e n c e . " 3 Melville B. Nimmer and David Nimmer, Nimmer on Copyright 10.08 (2009). "The written memorialization of [an] agreement [transferring -19- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 20 c o p y r i g h t s ] inevitably fails to mandate only one pellucid interpretation." Id. If e v e r y copyright transaction were vulnerable to challenge whenever a party is able t o point out some ambiguity within the governing agreement, parties might be f o r c e d to engage in costly, protracted litigation to determine whether the transfer i s valid, putting into doubt the proper holder of the copyright. I n the absence of any support from the language or legislative history, we a r e unwilling to read into Section 204 such an onerous restraint on the alienability o f copyrights. As the Second Circuit has commented, "[t]he need for i n t e r p r e t a t i o n of a contract does not necessarily mean that there is a bona fide i s s u e as to whether the contract is a writing for purposes of section 204(a). In mo s t cases, there will be no doubt that the contract is a section 204(a) writing, a n d the only substantial issue will be contract interpretation." Jasper v. Bovina M u s i c , 314 F.3d 42, 47 (2d Cir. 2002). In copyright as elsewhere, "[t]he making o f a contract depends not on the agreement of two minds in one intention, but on t h e agreement of two sets of external signs--not on the parties having meant the s a me thing but on their having said the same thing." Nimmer on Copyright, 1 0 . 0 8 (quoting Tingley Sys. v. Healthlink, Inc., 509 F. Supp.2d 1209, 1216 (M.D. F l a . 2007)). Where ambiguity persists in the language of a parties' shared a g r e e me n t concerning a copyright transfer, the transfer is not invalidated; instead, w e look to parol evidence to construe the terms of the agreement. See Nimmer on C o p y r i g h t , 10.08. -20- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 21 W e think that Section 204's writing requirement is best understood as a me a n s of ensuring that parties intend to transfer copyrights themselves, as o p p o s e d to other categories of rights. See, e.g., Papa's-June Music, Inc. v. M c L e a n , 921 F. Supp. 1154, 115859 (S.D.N.Y. 1996) (although a writing need n o t explicitly mention "copyright" or "exclusive rights" to satisfy 204(a), the b e t t e r practice is that it should). But when it is clear that the parties contemplated t h a t copyrights transfer, we do not think that a linguistic ambiguity concerning w h i c h particular copyrights transferred creates an insuperable barrier invalidating t h e transaction. Thus, the majority of cases that Novell draws our attention to, in w h i c h alleged copyright transfers are found not to satisfy Section 204, involve t r a n s a c t i o n s where it is not clear whether the parties intended that copyrights w o u l d transfer at all--not disputes over which specific copyrights were within the s c o p e of an intended transfer. See, e.g., Radio Television Espanola S.A. v. New W o r l d Entertainment, Ltd., 183 F.3d 922, 92728 (9th Cir. 1995) (finding faxes r e f e r r i n g to ongoing negotiations insufficient to confirm a finalized deal to t r a n s f e r copyrights); Playboy Enterprises, Inc. v. Dumas, 53 F.3d 549, 564 (2d C i r . 1995) (finding check legend allegedly purporting to recognize past " a s s i g n me n t . . . of all rights, title and interest" insufficient to transfer c o p y r i g h t s ) ; Konigsberg Intern. Inc., 16 F.3d at 357 (letter written three and a h a l f years after oral agreement did not constitute a writing sufficient to confirm p a r t i e s ' intent to transfer copyrights in earlier agreement). -21- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 22 N o t w i t h s t a n d i n g the above, the district court found Amendment No. 2 i n s u f f i c i e n t to convey Novell's copyrights under Section 204 for several a d d i t i o n a l reasons. It first determined that Amendment No. 2 "[did] not include a n y provision that purports to transfer ownership of copyrights." because it did n o t profess to "amend Schedule 1.1(a)," the Asset Schedule, and because " [ u ]n l i k e the APA, Amendment No. 2 was not accompanied by a separate `Bill of S a l e ' transferring any assets." Dist. Ct. Op. 59. We are not persuaded that either p r e v e n t s our recognition of a copyright transfer. A l t h o u g h Amendment No. 2 did not purport to amend Schedule 1.1(a), this d o e s not mean that the balance of assets transferred to Santa Cruz remained u n c h a n g e d . The transaction was structured such that Santa Cruz would acquire " a l l of Seller's right, title and interest in and to the assets . . . identified on S c h e d u l e 1.1(a)," but that "the Assets to be so purchased not include those assets ( t h e `Excluded Assets') set forth on Schedule 1.1(b)." App'x 26465. Schedule 1 . 1 ( a ) , in turn, provided that Santa Cruz would receive "[a]ll rights and o w n e r s h i p of UNIX and UnixWare . . . including all source code," a broad set of a s s e t s limited only by Schedule 1.1(b). As a result, any change to the set of E x c l u d e d Assets in Schedule 1.1(b) necessarily implicated those copyrights a c t u a l l y transferred under Schedule 1.1(a). O f course, it is not always the case that the absence of certain or all c o p y r i g h t s from an "excluded asset" schedule will suffice to indicate the inclusion -22- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 23 o f copyrights in the transaction. But a written asset transfer agreement may s a t i s f y Section 204(a) even when it "does not mention the word `copyright'" i t s e l f . Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir. 1 9 9 2 ) . And when a party acquires "[a]ll rights and ownership" in a set of items, a s was the case here, courts have generally found such language sufficient to s a t i s f y Section 204(a) in the absence of language excepting copyrights or other s p e c i a l circumstances. See ITOFCA, Inc. v. MegaTrans Logistics, Inc., 322 F.3d 9 2 8 , 931 (7th Cir. 2003) (written intent to transfer "all assets" can indicate intent t o transfer copyrights); Chugrue v. Continental Airlines, Inc., 977 F. Supp. 280, 2 8 4 8 5 (S.D.N.Y. 1997) (written agreement to transfer "all right, title and i n t e r e s t " in software indicated intent to transfer copyrights); Relational Design & T e c h n o l o g y , Inc. v. Brock, No. 91-2452-EEO, 1993 WL 191323 at *6 (D. Kan. M a y 25, 1993) (transfer of "all rights" in software program included copyright). But see Playboy Enters. v. Dumas, 53 F.3d 549, 564 (2d Cir. 1995) (check legend i n d i c a t i n g that payment was for past transfer of "all right, title and interest" was i n s u f f i c i e n t , by itself, to indicate a copyright transfer under Section 204). Of c o u r s e , under the language of the original agreement, copyrights were expressly e x c l u d e d from the assets transferred. But here, where a written agreement to the c o n t r a c t excised certain copyrights from that exclusion, we think the Copyright A c t ' s writing requirement is satisfied. -23- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 24 W e also do not see why the absence of a Bill of Sale is fatal to an alleged t r a n s f e r under the Copyright Act. Section 204 makes clear that the writing r e q u i r e me n t can be satisfied not only by "an instrument of conveyance" but also b y "a note or memorandum of the transfer." 17 U.S.C. 204(a). Amendment No. 2 was a writing signed by both parties evincing a clear intent to revise or clarify t h e formal schedule of copyrights transferred by Novell to Santa Cruz. The C o p y r i g h t Act did not require more. For similar reasons, we reject the s i g n i f i c a n c e that the district court attributed to the fact that Amendment No. 2 r e v i s e d the APA "[a]s of the 16th day of October, 1996" as opposed to the date of t h e Bill of Sale. App'x 374. The Copyright Act does not require its writing r e q u i r e me n t be fulfilled concurrently with the production of a Bill of Sale. 3 Cf. E d e n Toys, Inc., 697 F.2d at 36 ("the `note or memorandum of the transfer' need n o t be made at the time when the license is initiated; the requirement is satisfied W e think the parties' dispute over whether Amendment No. 2 retroactively c h a n g e d the APA or affected a clarification as of October 16, 1996 is ultimately mu c h ado about nothing. None of the claims in this litigation depend on the me a n i n g of the APA during the time period prior to Amendment No. 2. Moreover, while both parties attribute different meanings to the APA and A me n d me n t No. 2, neither party argues that Amendment No. 2 was meant to s u b s t a n t i v e l y change the intent of the APA; both SCO and Novell agree that it me r e l y clarified or affirmed the original intent of the transaction. Compare Aplt. R . Br. 10 ("Amendment No. 2 clarified the APA to confirm that the copyrights h a d been transferred thereunder.") with Aple. Br. 40 (Amendment No. 2 merely " a f f i r m[ e d ] that Santa Cruz had a license under the original APA to use Novell's U N I X and UnixWare copyrighted works in its business") (emphasis added). -24- 3 Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 25 b y the copyright owner's later execution of a writing which confirms the a g r e e me n t " ) . We therefore conclude that the APA, as revised by Amendment No. 2, s a t i s f i e d the Copyright Act's writing requirement. C. Is Summary Judgment Appropriate on the Ownership of the Copyrights? W e come finally to the question of whether the district court was correct to e n t e r summary judgment on the issue of whether Novell or SCO owns the UNIX a n d UnixWare copyrights under the APA as revised by Amendment No. 2. In c o n t r a c t actions, the interpretation of a written agreement is a question of fact. See Gomez v. American Elec. Power Service Corp., 726 F.2d 649, 651 (10th Cir. 1 9 8 4 ) . When a contract is ambiguous, and parties present conflicting evidence r e g a r d i n g their intent at the time of the agreement, a genuine issue of material f a c t exists which cannot be determined summarily by the court. Id. Of course, t h e party opposing summary judgment "must do more than simply show that there i s some metaphysical doubt as to the material facts." Matsushita Elec. Industrial C o . v. Zenith Radio Corp., 475 U.S. 574, 58687 (1986). But so long as s u f f i c i e n t evidence could lead a rational trier of fact to resolve the dispute in f a v o r of either party, granting either party's dueling motions for summary j u d g me n t would be inappropriate. See Anderson v. Liberty Lobby, 477 U.S. 242, 2 4 8 (1986). -25- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 26 T h i s case, involving a complicated, multi-million dollar business t r a n s a c t i o n involving ambiguous language about which the parties offer d r a ma t i c a l l y different explanations, is particularly ill-suited to summary j u d g me n t . We recognize that Novell has powerful arguments to support its v e r s i o n of the transaction, and that, as the district court suggested, there may be r e a s o n s to discount the credibility, relevance, or persuasiveness of the extrinsic e v i d e n c e that SCO presents. Moreover, we appreciate the difficulties that follow w h e n the resolution of ambiguous language in a ten-year-old contract is left to t r i a l . At trial in a case like this, the intention of the parties often "must be d i v i n e d from self-serving testimony offered by partisan witnesses whose r e c o l l e c t i o n is hazy from passage of time and colored by their conflicting i n t e r e s t s . " Trident Center v. Connecticut General Life Ins. Co., 847 F.2d 564, 5 6 9 (9th Cir. 1988). Even though the parties may have shared a common u n d e r s t a n d i n g of a transaction at the time of the deal, now that "circumstances h a v e changed and new financial incentives have arisen, one side may wish it had a different agreement." Nimmer on Copyright, 10.08. Nevertheless, when c o n f l i c t i n g evidence is presented such that the ambiguities in a contract could l e g i t i ma t e l y be resolved in favor of either party, it is for the ultimate finder of f a c t -- n o t the court on summary judgment--to interpret the contract. As we now e x p l a i n , Novell's arguments do not convince us that the admissible evidence -26- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 27 c o n c e r n i n g the ambiguous contract language concerning contract ownership is so o n e - s i d e d as to warrant summary judgment. N o v e l l contends that SCO has failed to establish a disputed issue of ma t e r i a l fact as to copyright ownership for several reasons. It first claims that S C O has failed to present any evidence to support that the APA, as revised by A me n d me n t No. 2, clarified the agreement to indicate that SCO received o w n e r s h i p of some or all UNIX and UnixWare copyrights as a result of the t r a n s a c t i o n . In the alternative, it argues that SCO has failed to present any e v i d e n c e to suggest that ownership of UNIX and UnixWare copyrights was " r e q u i r e d " for Santa Cruz to exercise its rights under the APA. I n support of its initial argument, Novell argues that it has introduced u n d i s p u t e d evidence that (1) Santa Cruz admitted that the initial APA excluded c o p y r i g h t s from the asset sale and that (2) Novell expressly rejected Santa Cruz's p r o p o s a l to use Amendment No. 2 to transfer copyrights to Santa Cruz. See Aple. B r . 3942. As to the first point, Santa Cruz's admission that the initial APA e x c l u d e d copyrights is not inconsistent with SCO's position that this exclusion w a s a mistake and failed to reflect the parties' intent. Novell itself admits that t h e negotiations that led to the language of Amendment No. 2 concerning c o p y r i g h t s began when Santa Cruz's attorney contacted Novell, informing them t h a t "the Original APA explicitly excluded copyrights to UNIX and UnixWare as -27- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 28 a s s e t s being sold by Novell to Santa Cruz and that it shouldn't have." App'x 6063. As to the second point, Novell directs us to various pieces of evidence s u p p o r t i n g its claim that Amendment No. 2 was not intended to affirm that o w n e r s h i p of copyrights had transferred to Santa Cruz, but only "to affirm that S a n t a Cruz had a license under the Original APA to use Novell's UNIX and U n i x W a r e copyrighted works in its business." App'x 6064. Novell primarily r e l i e s on evidence of the negotiations over Amendment No. 2. Santa Cruz i n i t i a l l y proposed a draft of Amendment No. 2 that would have revised the I n t e l l e c t u a l Property section of the Excluded Assets Schedule to read: A l l copyrights and trademarks, except for the copyrights and t r a d e ma r k s owned by Novell as of the date of this Amendment No. 2, w h i c h pertain to the UNIX and UnixWare technologies and which S C O has acquired hereunder. However, in no event shall Novell be l i a b l e to SCO for any claim brought by any third party pertaining to s a i d copyrights and trademarks. A p p ' x 6670. Novell rejected this language, and the final language of A me n d me n t No. 2 instead reformed the Excluded Assets Schedule to read: All copyrights and trademarks, except for the copyrights owned by N o v e l l as of the date of the Agreement required for SCO to exercise i t s rights with respect to the acquisition of UNIX and UnixWare t e c h n o l o g i e s . However, in no event shall Novell be liable to SCO for a n y claim brought by any third party pertaining to said copyrights a n d trademarks. A p p ' x 374. The revised language contains two relevant changes. Instead of e x c e p t i n g from the Excluded Assets Schedule "the copyrights . . . which pertain -28- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 29 t o UNIX and UnixWare technologies" the final language refers to "the copyrights . . . required for SCO to exercise its rights with respect to the acquisition of U N I X and UnixWare technologies." In addition, instead of referring to "the c o p y r i g h t s . . . owned by Novell as of the date of this Amendment No. 2 . . . and w h i c h SCO has acquired hereunder," the final language refers to "the copyrights . . . owned by Novell as of the date of the Agreement." N o v e l l contends that because it did not accept Santa Cruz's initial proposal, t h e r e is no basis for construing Amendment No. 2 as SCO would--an affirmation o f the transfer of all UNIX and UnixWare copyrights. See Apple Computer v. M i c r o s o f t Corp., 35 F.3d 1435, 144041 (no basis for construing agreement in l i n e with draft proposal rejected by one of the parties). It insists that the language r e f l e c t s its explanation of Amendment No. 2 as a mere affirmation of Santa C r u z ' s implied license to use the copyrights. SCO, in contrast, claims that the f i n a l language of Amendment No. 2 only represented "a different way" of saying w h a t its initial draft proposed--a clarification that the parties' had intended for o w n e r s h i p of the UNIX copyrights to transfer. Aplt. Br. 4445. As an initial matter, we are skeptical of Novell's interpretation of the A me n d me n t . Whatever the Amendment means, it refers to the ownership of c o p y r i g h t s , not to licenses. A rational trier of fact could surely find that A me n d me n t No. 2 clarified the APA so as to indicate that at least some c o p y r i g h t s transferred to SCO. It is true that the final language of Amendment -29- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 30 N o . 2, by referring to "required copyrights" rather than "copyrights that pertain t o " UNIX, is narrower than that initially proposed by Santa Cruz. But is it p l a u s i b l e to think that Santa Cruz would have found the final language equally s u f f i c i e n t for its purposes, given its insistence that all the UNIX copyrights were r e q u i r e d for it to exercise its rights under the deal. See, e.g., Testimony of Steve S a b b a t h , Santa Cruz Attorney, App'x 10722 ("all of the [UNIX and UnixWare] c o p y r i g h t s " were "required" for SCO to exercise its rights with respect to the a c q u i s i t i o n of UNIX and UnixWare technologies.) Alternatively, the final l a n g u a g e of Amendment No. 2 may have represented a compromise whereby N o v e l l agreed to confirm that Santa Cruz obtained ownership only of those c o p y r i g h t s "necessary" for Santa Cruz to run its business. Our conclusion that a rational trier of fact could find that Amendment No. 2 c l a r i f i e d the APA to affirm that the parties intended to transfer certain UNIX and U n i x W a r e copyrights to Novell is bolstered by SCO's extrinsic evidence of the t r a n s a c t i o n . SCO presents testimony from a variety of witnesses involved in the b u s i n e s s negotiations on both sides of the deal, which generally supports its v e r s i o n of the transaction. See, e.g., Aplt. Br. 1315. It is true, as Novell points o u t , that many of these witnesses were involved in the business negotiations, as o p p o s e d to the actual drafting of the contract. But because we cannot exclude the p o s s i b i l i t y that Amendment No. 2 was designed to restore the language of the t r a n s a c t i o n to the parties' actual intent during the business negotiations over the -30- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 31 d e a l , such testimony is not irrelevant. Cf. California Pac. Title Co., Sacramento D i v i s i o n v. Moore, 40 Cal. Rptr. 2d 61, 63 (Cal. Dist. Ct. App. 1964) ("A conflict i n the evidence does not preclude a court from finding that the two parties had a c o mmo n intent which was incorrectly reduced to writing."). Moreover, SCO's e x t r i n s i c evidence extends not only to the business negotiations preceding the c o n t r a c t , but also to the parties' understanding of the contractual language itself. For instance, Novell points out that the Board resolution approving the t r a n s a c t i o n on its side of the deal stated that "Novell will retain all of its patents, c o p y r i g h t s and trademarks." App'x 5192. But SCO notes that Mr. Frankenberg, t h e n Novell's CEO, testified that he understood the Board resolution's reference t o Novell's retention of copyrights to refer to Netware copyrights, as opposed to t h e core UNIX intellectual property. Aplt. R. Br. 14. Finally, SCO presents evidence of the parties' course of performance f o l l o w i n g the transaction. Under California law, "course of performance" e v i d e n c e may be used to interpret an ambiguous contractual provision. Cal. Code C i v . Proc. 1856. See also Universal Sales Corp. v. Cal. Press Mfg. Co., 128 P . 2 d 665, 762 (Cal. 1942) ("[P]ractical construction placed by the parties upon t h e instrument is the best evidence of their intention"). SCO points to a variety of s t e p s taken by the parties following the signing of the APA and Amendment No. 2 t h a t it claims supports its interpretation of the contract. These include Novell's mo d i f i c a t i o n of copyright notices on certain UnixWare source code, see App'x -31- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 32 1 0 3 0 3 1 3 , certain statements related to the transfer of intellectual property within t r a n s i t i o n documents following the deal, see, e.g., App'x 13362, and the p u b l i c a t i o n of a press release in 1995 stating that "SCO will acquire Novell's U n i x W a r e business and UNIX intellectual property." 4 App'x 5626. Of course, s u c h documents are not dispositive of the companies' intent at the time of the t r a n s a c t i o n . But they illustrate the difficulties with granting summary judgment here. N o v e l l finally argues that SCO has failed to show what UNIX copyrights a r e "required" for Santa Cruz to exercise its rights under the APA. The parties e a c h argue for plausible, but diametrically opposed, interpretations of the word " r e q u i r e d . " SCO argues that the bulk of the UNIX and UnixWare copyrights are " r e q u i r e d " in order for it to exercise its rights. For instance, the APA transferred t o Santa Cruz "all of [Novell's] claims arising after the Closing Date against any p a r t i e s relating to any right, property or asset included in the Business." App'x 3 1 3 . SCO argues that it could not defend any of its intellectual property against s o f t w a r e piracy or other business harm without ownership of the copyrights. Indeed, a key reason why this litigation is so important to SCO is that it has A l t h o u g h SCO claims that this was a "joint press release," it provides no e v i d e n c e to support this assertion. The district court reasonably cast doubt on w h e t h e r the press release cited to in the record is, in fact, a joint press release. In a n y case, it at least provides a contemporaneous view of Santa Cruz's view of the transaction. -32- 4 Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 33 c l a i me d that other companies, including IBM, are infringing on the proprietary t e c h n o l o g y that it supposedly received through its transaction with Novell. N o v e l l , in contrast, asserts that the class of "required" copyrights c o n s t i t u t e s a null set. See Aple. Br. 40, 41 n.8 (arguing that Amendment No. 2 w a s not intended to transfer any copyright ownership, but merely to affirm its l i c e n s e to use certain copyrights). The district court agreed, noting amongst other t h i n g s that "Santa Cruz had been able to pursue its UNIX business from D e c e mb e r 6, 1995 until October 16, 1996 [the date of Amendment No. 2] without a n y problems due to its [alleged] lack of ownership of the copyrights." Dist. Ct. O p . 61. But the fact that SCO did not need to assert ownership of the UNIX c o p y r i g h t s publicly following the closing of the transaction does not indicate that t h e UNIX copyrights are unnecessary to SCO's full exercise of its rights under t h e agreement. Indeed, it would seem that neither party asserted public ownership o f the copyrights until the events leading to the instant litigation, almost a decade a f t e r the closing of the transaction. See, e.g., Aple. Br. 32 (noting that Novell and S C O did not file their competing copyright registrations until after this dispute a r o s e in 2003). W e need not determine at the summary judgment stage which copyrights w e r e "required." If the evidence presented on a dispositive issue is subject to c o n f l i c t i n g , reasonable interpretations, summary judgment is improper. Archuleta v . Wal-Mart Stores, Inc., 543 F.3d 1226, 1234 (10th Cir. 2008). Although the -33- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 34 d i s t r i c t court found that "there is . . . significant evidence that Santa Cruz did not ` r e q u i r e ' the UNIX and UnixWare copyrights," we think SCO has presented s u f f i c i e n t evidence to create a triable fact as to whether at least some UNIX c o p y r i g h t s were required for it to exercise its rights under the agreement. Although the district court acknowledged that "SCO has submitted testimony f r o m witnesses stating generally that the copyrights were necessary to running a s o f t w a r e business," it found that "none of those witnesses give specific examples o f how a lack of copyright ownership impeded Santa Cruz's ability to exercise its r i g h t s under the APA." Dist. Ct. Op. 61. But the documents detailing the actions o f the transition team at least create ambiguity over whether the transfer of c o p y r i g h t s was required to support SCO's rights under the APA. See, e.g., App'x 1 3 3 6 2 ("All of the technology and intellectual assets covered by the work o u t l i n e d in this document will be transitioned to SCO after December 1, 1995"). And we think it a commonsense proposition that intellectual property at least may b e required to protect the underlying assets in SCO software business should, for i n s t a n c e , a UNIX licensee have attempted to resell technology licensed from SCO.5 F o r this reason, we fail to see why SCO's argument that copyright o w n e r s h i p would be necessary to bring "claims" under the agreement is " c i r c u l a r , " as Novell argues. Aple. Br. 47. SCO indisputably acquired certain a s s e t s under the APA. SCO's claim, as we understand it, is that copyrights are n e c e s s a r y to protect the value of the assets themselves, and are therefore n e c e s s a r y to prosecute seller's claims "relating to any . . . asset" included in the (continued...) -345 Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 35 B e c a u s e we conclude summary judgment is inappropriate on the question of w h i c h party owns the UNIX and UnixWare copyrights, we must likewise reverse t h e district court's determination that "Novell is entitled to summary judgment [ o n SCO's claim] seeking an order directing Novell to specifically perform its a l l e g e d obligations under the APA by executing all documents needed to transfer o w n e r s h i p of the UNIX and UnixWare copyrights to SCO." Dist. Ct. Op. 62. We t a k e no position on which party ultimately owns the UNIX copyrights or which c o p y r i g h t s were "required" for Santa Cruz to exercise its rights under the a g r e e me n t . Such matters are for the finder of fact on remand. I I I . Novell's Waiver Rights under Section 4.16(b) of the APA T h e other chief dispute between the parties concerns the extent of Novell's r i g h t s under the APA to waive or modify rights under SVRX Licenses. Section 4 . 1 6 ( a ) of the APA provides that "Following the Closing, Buyer shall administer t h e collection of all royalties, fees and other amounts due under all SVRX L i c e n s e s (as listed in detail under item VI of Schedule 1.1(a) hereof an referred to h e r e i n as "SVRX Royalties")." Section 4.16(b) preserved to Novell certain w a i v e r rights with regard to SVRX Licenses. It states that: B u y e r shall not, and shall not have the authority to, amend, modify or w a i v e any right under or assign any SVRX License without the prior (...continued) B u s i n e s s . Novell has not explained, for instance, what recourse SCO had under N o v e l l ' s theory of the transaction if a third party had copied and attempted to r e s e l l the core UNIX assets Santa Cruz received in the deal. -35- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 36 w r i t t e n consent of Seller. In addition, at Seller's sole discretion and d i r e c t i o n , Buyer shall amend, supplement, modify or waive any rights u n d e r , or shall assign any rights to, any SVRX License to the extent so d i r e c t e d in any manner or respect by Seller. A p p ' x 287. In 2003, after SCO had claimed that IBM and Sequent had violated c e r t a i n software and sublicensing agreements, Novell directed SCO "to waive any p u r p o r t e d right SCO may claim to terminate IBM's SVRX Licenses . . . ." Aple. B r . 19. The scope of Novell's waiver rights turns on the meaning of the term " S V R X License." T h e APA provides some assistance in interpreting the meaning of an " S V R X License." Section 4.16(a) of the APA indicates that SVRX Licenses are " l i s t e d in detail under item VI of Schedule 1.1(a) hereof." Item VI of Schedule 1 . 1 ( a ) states that among the assets transferred to SCO under the APA are "[a]ll c o n t r a c t s relating to the SVRX Licenses listed below." As the district court r e c o g n i z e d , however, the list provided in Item VI is not "a list of license a g r e e me n t s , " but instead "a list of SVRX software releases," or products. Dist. C t . Op. 77. T h e parties principally contest whether Novell's waiver rights extend to all t h r e e types of agreements bearing upon the licensing of SVRX t e c h n o l o g y -- s o f t w a r e agreements, sublicensing agreements, and product s u p p l e me n t agreements (or Product Schedule Licenses)--or just to product s u p p l e me n t agreements. Aple. Br. 17; Aplt. Br. 19. Software agreements specify -36- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 37 a licensee's rights to modify and prepare derivative works based on source code a n d binary code. See Dist. Ct. Op. 82; Aple. Br. 16. Sublicensing agreements set o u t the general conditions governing the licensee's use of the product and grant c e r t a i n rights to distribute binary code. See Dist. Ct. Op. 82; Aplt. Br. 18. According to SCO, both of these agreements required licensees to keep UNIX s o u r c e code and derivatives confidential. See Aplt. Br. 18. Product supplement a g r e e me n t s , in contrast, actually identify the product the licensee has a right to u s e , the CPUs on which it has that right, and the fees that the licensor has a right t o receive in exchange. These agreements authorize licensees to sell a UNIXd e r i v a t i v e product in exchange for remitting certain royalties to the current owner o f the UNIX business. As SCO points out, each licensee executed a single u mb r e l l a Software and Sublicensing agreement with AT&T (or later Novell), w h i c h purported to govern any product added to the relationship by a product s u p p l e me n t agreement. When a licensee secured a license to use a SVRX p r o d u c t , it would execute a product supplement agreement, and the software p r o d u c t would "become subject to" the previously executed umbrella agreements. See, e.g., App'x 1471. N o v e l l contends that the APA's reference to any SVRX license "plainly me a n s that the term `SVRX Licenses' under the APA includes all contracts r e l a t i n g to the UNIX System V Releases listed in Item VI." Dist. Ct. Op. 77 ( e mp h a s i s added). SCO argues that the term SVRX Licenses is ambiguous on its -37- Case: 08-4217 Document: 01018260169 Date Filed: 08/24/2009 Page: 38 f a c e , but suggests that it refers only to product supplement agreements related to t h e products listed in Item VI. The distri

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