U.S. Tenth Circuit Confirms Novell’s Ownership of Copyrights in Early UNIX Operating System Versions

In an unpublished decision, the U.S. Court of Appeals for the Tenth Circuit affirmed a trial court’s judgment that Novell, Inc. owns the copyrights in early versions of the UNIX computer operating system. The SCO Group, Inc. v. Novell, Inc., No. 10-4122 (10th Cir. Aug. 30, 2011) (unpublished).

The Tenth Circuit’s decision is the latest in a long-running dispute between Novell and The SCO Group, Inc., whose predecessor purchased certain UNIX-related assets from Novell in 1995. As amended after the transaction, the Asset Purchase Agreement (“APA”) between Novell and SCO excluded from the transfer “[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies.” SCO argued that because it acquired a substantial portion of the UNIX business, ownership of the copyrights was necessary for SCO to exercise its rights with regard to the business. Novell, on the other hand, argued that the business acquired by SCO consisted merely of (1) the right to create its own product based on UNIX (which it was then free to copyright and protect) and (2) the power to act as Novell’s agent in licensing and marketing (with certain restrictions) established UNIX technologies. Because SCO acquired such a limited interest, Novell contended, it was unnecessary for SCO to acquire ownership of the copyrights in order to operate that business.

Reviewing the language of the APA in light of the proof presented at trial, the Tenth Circuit concluded that “[t]here was ample evidence to support Novell’s contention that the copyrights were not transferred in the sale and not necessary to the operation of the business transferred.”

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