Judge denies Novell's second request to stop SCO suit

See correction below

The SCO Group's slander lawsuit against Novell  is now set to enter the discovery phase after Novell's attempts to again halt proceedings failed. The judge in the bitter legal battle denied Novell's second motion to dismiss the case late Monday.

"We are pleased the court has denied Novell's second attempt to dismiss this case," a SCO spokesman said, welcoming the move towards the discovery phase of the proceedings. Novell officials declined to comment on the judge's decision.

In its suit filed in January 2004, SCO argues that it owns the rights to the Unix and UnixWare copyrights and is seeking damages from what it claims are Novell's false representations about owning the operating systems' source code. SCO purchased Unix Systems Laboratories (USL) assets from Novell. Novell acquired USL, the owner of the Unix trademark and the Unix System V source code, in 1993. Novell maintains that it did not transfer copyright during the SCO purchase and that it, and not SCO, is the owner of the Unix copyright.

SCO's claim on the Unix System V source code forms the basis of its assertions that the open source Linux operating system contains SCO intellectual property. SCO has been pursuing this argument in the courts, filing lawsuits against IBM Corp., Autozone Inc. and DaimlerChrysler AG.

At issue is the wording of the September 19, 1995 asset purchase agreement (APA) between Novell and SCO's previous incarnation, Santa Cruz Operations, and whether Unix and UnixWare copyrights were transferred to SCO, as well as the wording of an October 16, 1996, amendment to the APA.

In his memorandum decision and order dated June 27, US District Judge Dale Kimball wrote, "Even though Novell argues that it has evidence to support its alleged good faith basis for claiming ownership of the Unix copyrights, the proper place to introduce that evidence and argue its significance is not on a motion to dismiss."

Kimball continued, "The court cannot rule as a matter of law on Novell's intent at the motion to dismiss stage before any discovery is considered in the case. Unlike the court's ability to determine the ambiguities of a written contract, the court cannot opine on a party's state of mind when it was advancing certain legal positions. While it may be true that the plausibility of Novell's legal arguments regarding ownership is relevant to its state of mind, the court cannot draw inferences in favor of Novell at the motion to dismiss stage."

Next up in the case, the judge will set up a scheduling order for the discovery phase.

Correction:
In this article, Novell's claims about the Unix copyright were originally incorrect. Also, the nature of SCO's lawsuit with Autozone was mischaracterized. The errors have been corrected.