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SCO bats .500 in Novell, IBM rulings

Despite splitting a pair of rulings in Federal court, SCO's outlook took a …

Federal Judge Dale Kimball, who is presiding over SCO's lawsuits against IBM and Novell, has handed down rulings on how the two cases are to proceed. In the high-profile lawsuit against IBM, SCO succeeded in having the trial date delayed to November 1, 2005 from the original April 2005 date, which is actually six weeks more than they had asked for. However, the discovery has process has been compressed, with deadlines moved up by three months ("expert" discovery will end on April 22, 2005 instead of SCO's proposed July 15 date). In another ruling, Judge Kimball denied SCO's Motion to Bifurcate, deciding that the patent claims and counterclaims will be litigated together. From Groklaw's transcription of the ruling:

SCO seeks bifurcation of three patent counterclaims asserted by IBM. SCO essentially claims that the patent counterclaims are unrelated to the primary claims and counterclaims asserted in this case and that litigating the patent counterclaims together with the primary claims would cause prejudice to SCO, would virtually double the amount of discovery to be completed, and would render the current deadlines impossible to meet.

IBM contends that there is no reason to decide the issue at the present time. IBM argues that only after the completion of discovery and the filing of motions will the court be in a position to meaningfully determine whether to bifurcate the patent counterclaims. Additionally, IBM asserts that there is no reason that the parties cannot complete discovery under the current Scheduling Order.

The court declines to bifurcate the patent counterclaims at this time. As discussed below, the court will amend the Scheduling Order to provide additional time to conduct discovery related to all the claims and counterclaims in this action.

On the SCO vs. Novell front, while Judge Kimball denied Novell's motion to dismiss the case altogether, he also decided against moving the case out of the Federal courts into state jurisdiction. SCO had tried to get the case remanded to state court, framing it as a mere dispute over contract terms rather than over copyright ownership. For its part, Novell has argued that it never transferred the copyright for Unix to SCO in the first place. In his decision, the judge made crystal clear his feelings about SCO's claims, siding with Novell's interpretation:

"The Amendment also contains no transfer language in the form of 'seller hereby conveys to buyer.' Given the similarly ambiguous language in the APA with respect to the transfer of assets -- seller 'will' sell, convey, assign, and buyer 'will' purchase and acquire -- it is questionable on the face of the documents whether there was any intention to transfer the copyrights as of the date the amendment was executed."

If the case moves forward, SCO will now have to prove that despite the lack of "transfer language" in the contract, they actually own the copyrights that they are now wielding over AutoZone and DaimlerChrysler in the suits they filed. Good luck with that.

Despite ostensibly winning two of the four rulings, SCO's prospects are looking worse. While the IBM trial has been pushed back, SCO will have to navigate until then with little licensing revenues and only US$61 million in the bank. As we reported yesterday, SCO is losing money at an alarming rate. Despite that, SCO CEO Darl McBride is confident that they have the bankroll to see the cases through. They had better, as IBM has demonstrated zero intention of backing down or settling. The Novell ruling is also a major blow for SCO, as a Federal Court has now cast a long shadow over their claims that they even own the copyright to Unix. Without a valid transfer of copyright ownership from Novell to SCO, there is no basis for their other copyright-infringement lawsuits. As Groklaw notes, this is the kind of ruling that generally gets the plaintiff inquiring about the possibility of a settlement out of fear that the judge is getting ready to bust out the whuppin' stick.

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