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Arguments begin in SCO v. Novell over copyrights

SALT LAKE CITY — One company owns the copyrights to Unix, a computer operating system many businesses use. Another company claims to own the same copyrights. It will be up to a jury in the courtroom of U.S. District Judge Ted Stewart to decide which company gets them.

Opening statements Tuesday morning laid out the blueprint for the SCO Group v. Novell Inc. The trial, which is expected to last three weeks, also is likely to impact the future of related lawsuits, depending on its outcome.

Lindon-based SCO is claiming "slander of title," and its attorney, Stuart H. Singer, told the jury that Novell knowingly and falsely claimed ownership of the copyrights to Unix after it sold them to SCO.

"Novell believes that to this day it owns the Unix copyright," countered Novell attorney Sterling A. Brennan in his opening statement. "And it is entitled to claim its ownership and challenge SCO to show it owns the copyrights."

Stewart set the framework for the case with a set of uncontested facts, including that Unix was initially developed by AT&T's Bell Labs, which sold it to Novell in 1993 for more than $300 million.

The dispute arises from a 1995 transaction in which a predecessor company to SCO bought Unix — or portions of it, depending on what the jury decides — from Novell. Novell, which is based in Waltham, Mass., and has a large campus in Provo with about 1,000 employees, contends it did not sell the copyrights. SCO says it did and that an amendment both parties agreed to some months after the sale closed spells that out.

Brennan said what was sold to SCO was not a "complete transfer" of Unix. The buyer could not afford the full price Novell wanted, he said, and Novell sold future development rights and revenues but held back Unix copyright interests, among other things. Novell "did sell the rights to develop UnixWare … but retained the rights to Unix." And it reserved to Novell all of its royalty rights, as well, he said, adding that there was "no equivocation."

Singer promised the six women and seven men of the jury (one will be an alternate) that they'll hear testimony showing "executives at the time of the sale on (both sides) agreed that the copyrights were sold. … It was the intent of Novell to sell the entire business, including the copyrights."

He called it "ridiculous" that SCO would buy Unix without the copyrights.

SCO said what it is calling slander is "particularly malicious" because "Novell knew better than anyone else that it sold the copyrights."

Both sides have made money claims against the other. SCO, which is in bankruptcy, is seeking monetary damages for the harm it says Novell's claim of copyright ownership did to its business. Novell has sought royalties it says SCO collected but did not pass back to Novell.

Another SCO attorney, Brent O. Hatch, said Novell's ownership assertions killed some business deals, further hurting SCO. And while he put forth no particular dollar amount they are seeking during his opening statement, Hatch said that "SCO asks you to make them whole."

The outcome of this lawsuit will determine whether SCO can pursue a suit it filed earlier against IBM, which it says placed Unix code into the Linux operating system. That would open the door to charging Linux users a licensing fee, something the open-source community strongly opposes.

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