First week of SCO-Novell trial focused on contract language

Novell says its 1995 contract to sell Unix operating system did not include selling copyrights.

By Tom Harvey
The Salt Lake Tribune

March 12, 2010

The SCO Group ended the first week of trial in its lawsuit against Novell Inc. on Friday right where it started: with former Novell officials bolstering SCO's case for owning the copyrights to the Unix computer operating system.

Testimony by The SCO Group's witnesses and cross examination by Novell's attorneys have brought out the competing approaches to the case. It turns on the "ambiguous" language of a 1995 contract in which Novell sold the Unix computer operating system to a California company. That company then sold it to The SCO Group.

The trial involves the 2004 lawsuit SCO filed after Novell said it owned the copyrights. That was important because SCO had sued IBM the year before, and it could not hope to win if its ownership of the computer code was in doubt. SCO claims that IBM and Novell have collaborated to press Novell's claim to ownership as a strategic business decision. Both were getting heavily into Linux, a rival operating system into which SCO says IBM had improperly placed Unix code.

The opening for Novell's claim is the language of the 1995 sales contract between Novell and the Santa Cruz Operation. At one point the text says that "copyrights" were not sold.

But SCO has brought to the stand -- or played videotaped testimony from -- a number of former officials from Novell and Santa Cruz. They say the intention of the deal was to sell the copyrights -- and that it makes no sense without them.

That point was bolstered again on Friday. William Broderick, the former contracts manager for Novell and Santa Cruz who now works for SCO, said without the copyrights, "that would have destroyed our business."

But SCO has further argued that even if that language is ambiguous, it was quickly repealed by an amendment to the contract called an Asset Purchase Agreement.

Broderick, describing himself as a "contracts guy," erupted when Novell attorney Eric Acker pressed him on what the original sales agreement actually says.

"It makes no sense to use that language," Broderick said. "It does not exist in the APA. It was replaced by Amendment No. 2."

That type of questioning also brought a sharp reaction from another SCO witness, Ty Mattingly, who was on the Novell team that negotiated the Santa Cruz deal.

"You can't take a rifle shot of a thing and badger me with it," he told attorney Sterling Brennan.

That line of questioning has been one of Novell's main areas of attack against SCO's evidence during the week.

Novell's questioning in cross examinations of witnesses has focused on the intent of the contract based on the original language, over why the board of directors appeared to hold back the copyrights, and whether the lawyers who drafted the language had been trusted to reflect the deal's intent.

Novell attorneys also have pointed out that at least three of the former Novell officials have a financial stake in SCO, suggesting that tainted their testimony.

Novell is scheduled to begin presenting its case next week.