SCO sues Novell, claiming slander

By Brice Wallace, Deseret News

The feuding between two Utah County companies has blossomed into a lawsuit.

Lindon-based SCO Group Inc. on Tuesday led a slander suit against
Provo-based Novell Inc., saying Novell has hurt SCO business by, in
part, making false and misleading claims that it owns the copyrights to
the Unix computer operating system and UnixWare.

SCO, which has sued New York-based International Business Machines
Corp. about alleged illegal placement of Unix into the open-source
Linux operating system and threatened lawsuits against other
companies for the same thing, led the suit against Novell in state court
in Salt Lake City.

The suit seeks preliminary and permanent injunctions, plus damages to
be determined at trial.SCO claims Novell has improperly led copyright registrations for Unix
technology covered by SCO’s copyrights; falsely claimed publicly that it
owns Unix and UnixWare copyrights, which it says has harmed SCO’s
copyrights, its business and its reputation; made false statements
intended to cause customers and potential customers to not do
business with SCO; and tried to block SCO’s ability to enforce its

The injunction seeks to assign SCO the Novell-registered copyrights,
prevent Novell from claiming ownership interest in those copyrights
and require Novell to retract representations it has made about its
alleged ownership.

“SCO takes this action today given Novell’s recent and repeated
announcements regarding their claimed ownership of the Unix and
UnixWare copyrights,” SCO attorney Mark Heise said in a prepared
statement. “SCO has received many questions about Novell’s actions
from potential customers, investors and the press. Although SCO owns
the Unix and UnixWare copyrights, Novell’s efforts to claim ownership
of these copyrights has forced this action.”
Heise said a 1995 asset purchase agreement and amendment between
the companies makes SCO the copyright owner.
Novell spokesman Bruce Lowry said Tuesday afternoon he had not
seen the suit and that the company declines to comment on anylawsuits. “We will defend our interests,” he said. “We have made fairly
clear statements about the copyrights issue.”

On Dec. 22, Novell issued a statement saying, “Novell believes it owns
the copyrights in Unix and has applied for and received copyright
registrations pertaining to Unix consistent with that position.”
SCO said that day that it would challenge Novell’s ownership
assertions, after learning that Novell had registered several versions of
Unix with the federal copyright office.
Novell and SCO have been waging a war of words since last spring
about control over Unix. Novell bought Unix from AT&T Corp. in 1992,
and SCO has said it bought the rights to Unix in 1995 for $145 million
from Novell.Novell and IBM are among companies that have begun developing
products for use in Linux, a freely distributed operating system that is
enhanced by contributions from developers worldwide.
SCO has offered companies licenses to use its intellectual property in
Linux distributions.
“They have just had about enough of Novell these days,” said Brian
Skiba, an analyst with Deutsche Bank who rates SCO shares a “buy” and
doesn’t cover Novell. He said he doesn’t own shares of either company.
“A lot of people in the open source community have viewed Novell’s
statement as a rallying cry,” said lawyer Jeffrey Osterman of Weil,
Gotshal & Manges LLP. “This all came to a head sometime in the past
couple of weeks” with the postings on Novell’s Web site.
The battle between SCO and IBM was the topic of a meeting Tuesday at
the Free Software Foundation, said Osterman, vice chair of the open-
source subcommittee of the Intellectual Property Owner’s Association.
“Folks have said that if SCO does not own the copyrights, then SCO
can’t bring copyright claims and thus people don’t have to worry and
don’t have to take licenses,” he said. “That’s a problem for SCO. This
lawsuit is an attempt by SCO to de ect whatever effect the Novell
postings have had on SCO’s licensing program.”Novell stock rose 30 cents Tuesday to close at $12.41, its highest point
during the past year. The price has been as low as $2.14 during that
time. SCO stock rose 50 cents to close at $15.95. It has ranged from $1.09
to $22.29 during the past year.

Contributing: Bloomberg News