The SCO Group, Inc. v. Novell, Inc.

Novell, Inc. (defendant) owned the bundle of intellectual property relating to UNIX, a computer operating system. Novell initially wanted to sell its entire UNIX business to Santa Cruz Operation (SCO), but SCO was unable or unwilling to purchase it. The parties structured a deal so that Novell would retain a 95 percent interest in licensing royalties. The transfer from Novell to SCO of UNIX-related rights occurred in three documents: an asset-purchase agreement (APA), a first amendment, and a second amendment (the amendment). The APA, executed in 1995, stated that SCO was acquiring all of Novell’s assets identified on a schedule (assets), but excluding those listed on a separate schedule (excluded assets). The assets included all rights and ownership in UNIX. The excluded assets listed “all patents” and “all copyrights and trademarks,” except for the UNIX trademarks. In 1996, the parties executed the amendment, which revised the excluded assets to state, “All 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.” Years later, The SCO Group, Inc. (plaintiff), successor to SCO, publicly claimed to own the UNIX copyrights. Novell disputed that the UNIX copyrights were transferred to SCO. The SCO Group sued Novell, and both parties moved for summary judgment as to the ownership of the copyrights. Each party presented evidence in the form of documents and witness affidavits to support the deal history and each party’s intent in entering into the transaction. The district court granted summary judgment to Novell, finding that the UNIX copyrights were not transferred to SCO under the APA. SCO appealed, arguing that the APA and the amendment must be construed together, that UNIX copyrights were transferred, and that the ownership issue could not be decided on summary judgment.