SCO files for appeal of loss to Novell

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SCO files for appeal of loss to Novell

SCO filed notice on Tuesday that it will appeal Judge Kimball's final judgment in its unsuccessful lawsuit against Novell, wherein it tried to claim ownership of the copyrights to UNIX SVRx.

Refusing to admit its resounding defeat in US District Court, SCO hopes to persuade the 10th Circuit US Court of Appeals that it deserved a jury trial in SCO v. Novell.

In order to do that, it will have to convince the appellate court that Judge Kimball improperly ruled that: Novell's counterclaims sought merely equitable relief rather than damages, and that the plain language of SCO's UNIX SVRx asset purchase agreement with Novell was clear and unambiguous, and therefore that no substantive facts were in dispute between the parties.

That reasoning led Judge Kimball to try SCO's lawsuit without a jury, finding for Novell on most of its counterclaims and assessing a judgment of over US$2.5 million against SCO. In an even more important ruling, Judge Kimball also found that Novell, not SCO, owns the copyrights to UNIX SVRx, completely demolishing SCO's pretenses to claims over Linux.

Having fled into US Bankruptcy Court in Delaware in September 2007 in order to delay the trial of its related lawsuit against IBM, SCO has been steadily depleting its remaining funds. It would not be able to afford to appeal in SCO v. Novell if it hadn't earlier paid its lawyers more than $30 million in advance for both cases, including appeals.

But SCO is running out of time to file a voluntary plan of reorganisation in its Chapter 11 bankruptcy proceeding, which is due by December 31. Unless it can quickly attract added capitalisation or other new financing, it could be headed into dissolution under Chapter 7 sometime next year. So it's possible that the company won't survive long enough to see its appeal decided, a process that could take anywhere between 18 months and five years.

Yet, supposing SCO somehow survives and emerges from bankruptcy, that will revive two other lawsuits that were stayed by its bankruptcy filing – SCO v. IBM and Redhat v. SCO – plus a Novell v. SCO arbitration in Switzerland.

The Swiss arbitration case seems relatively minor, and the Redhat case will remain stayed pending resolution of the IBM lawsuit, but the IBM litigation is a wholely different matter.

All of SCO's major claims in the IBM lawsuit were either dismissed or effectively eviscerated by rulings in SCO v. Novell before the IBM case was stayed, so only IBM's counterclaims against SCO really remain to be settled at trial.

Given the fact that SCO very publicly insulted IBM's corporate integrity, plus the tens of millions of dollars in legal fees SCO forced IBM to spend on its defence, the thousands of man hours IBM had to expend, and the truckloads of documents and millions of lines of software code it had to deliver to respond to SCO's bootless discovery, IBM most probably won't be well disposed to quietly settle the case or let SCO off lightly. If the IBM case goes to trial, IBM's unblinking lawyers will be out for blood and the grinding of bones.

Novell's attorneys at Morrison Foerster are very good – but IBM's lawyers are, if possible, even more fearsome. Given a chance, they will launch SCO on a one-way journey into the heart of the Sun, then start looking for whomever they can find that put it up to this Linux lawsuit scam.

Now that prospect is almost enough to make one hope that SCO actually gets that far.
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