It's Final: SCO Loses, Novell Wins

Nov 21, 2008

After five years of litigation between SCO and Novell, the final judgment from the U.S. District Court in Utah is that the rights to Unix belong to Novell. SCO, which is already financially stressed, owes Novell around 2.5 million dollars.

On November 20, the Utah court dismissed a long list of SCO's claims that included breach of contract, copyright infringement and unfair competition. SCO, originally Santa Cruz Operation but also known as Caldera, began litigation in the spring of 2003 with a billion dollar lawsuit against IBM and other worldwide entities. Its claims on UNIX and part of Linux were already made as far back as 1996, when Novell was selling UNIX licenses to SCO. Novell reacted with a countersuit in the summer of 2005 to resolve the ownership rights. The Utah court already decided against SCO in August 2007 as to code ownership, a clear round one loss. Shortly thereafter, SCO filed for bankruptcy and was dropped from the NASDAQ stock exchange. In July 2008, the court ordered them to pay Novell 2.5 million dollars in licensing fees. The two parties then settled on $625,486 to come out of an SCO trust.

As if the court case and bankruptcy proceedings weren't enough, SCO faces still further challenges. To possible license infractions against additional entities the Court added, "Novell is entitled to direct SCO to waive claims against IBM, Sequent, and other SVRX licensees; Novell is entitled to waive such claims on SCO’s behalf; and SCO is obligated to recognize such a waiver." Shortly before the court ruling, SCO tried to extract certain parts of the testimony to use in an appeal, but the ruling went against them: "The remaining portions of SCO’s claims for Breach of Contract (Count II), Copyright Infringement (Count IV), and Unfair Competition (Count V) are voluntarily dismissed with prejudice, without the possibility of renewal following appeal."

SCO can appeal and Novell is certainly prepared for it. But the current ruling is a definite triumph for Novell in all its details. Unlike SCO, Novell can even act on claims in a retrial that Novell voluntarily dropped. Certainly some of the trial observers on Groklaw would wish it: "Novell might want to appeal the judgment from July that SCO had the right to enter into the Microsoft and SCOsource end user licenses. I know I would like them to." As to further comments about Novell: "...who'd blame them for wanting to forget they ever met anybody called SCO?"

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