• The SCO Group Wins One -Trademark, That Is

    by  • March 18, 2009 • trademark

    The effects of the infamous SCO Group copyright lawsuits ripple on and on. I can’t begin to summarize the complexities of the cases, but if you’re interested you can spend a few years perusing this site. In a sentence, The SCO Group claimed to be the owner of the copyright in one prong of the UNIX code. One of the consequent lawsuits was SCO Group v. Novell, brought in Utah by the SCO Group after Novell, Inc. said that the UNIX copyrights were not assets sold to the SCO Group’s predecessor. The Utah court agreed with Novell, granting summary judgment in Novell’s favor.

    This same transaction was significant in Gray v. Novell, Inc., a trademark lawsuit challenging the ownership of the UNIX mark. Novell, Inc. was also the owner of two registrations for the UNIX mark. In October, 1993, Novell, X/Open Company Limited, Digital, HP, IBM and Sun signed a term sheet for a future agreement between them to set up a single spec for UNIX. X/Open would be the sub-licensor of the UNIX mark, licensing it to companies whose products met the spec. In May, 1994 Novell and X/Open entered into a formal agreement that embodied the terms of the term sheet, granting X/Open the license to sublicense and agreeing to assign the mark at the end of three years or “at any time either earlier or later if Novell and X/Open agree.”

    Novell then sold some assets to The Santa Cruz Operation, a predecessor to The SCO Group, in an Asset Purchase Agreement dated September, 1995 – the same agreement examined by the Utah court on the copyright ownership claim. As to the trademark, the APA assigned the “trademarks UNIX and UnixWare as and to the extent held by [Novell].” The schedule of Excluded Assets listed “all copyrights and trademarks, except for the trademarks UNIX and UnixWare.”

    A year later, Novell, X/Open and SCO signed a Confirmation Agreement in which they expressly acknowledge that the 1995 APA conveyed the UNIX trademarks to SCO “subject to the rights and obligations established in a May 14, 1994 NOVELL – X/OPEN Trademark Relicensing Agreement . . . .” The agreement further provided that “SCO and X/Open desire to provide for the acceleration of the vesting of title in X/OPEN to the UNIX trademark, and the assignment to SCO of NOVELL’s rights under the 1994 [relicensing] Agreement.” The Confirmation Agreement also stipulated that Novell would be considered the legal owner of the mark for the purposes of the assignment and that the assignment would not be considered a breach of the 1995 APA between Novell and SCO. Two years later the assignment was executed with an effective date of November 13, 1998 and recorded at the PTO in June, 1999.

    Sometime in late 1998 or early 1999, Wayne R. Gray adopted the mark iNUX. On April 29, 1999, he filed an application to register it for “Computer operating system software for use in consumer hardware systems.” X/Open sent a cease and desist letter and opposed the application. Gray started digging, decided that X/Open wasn’t the owner of the UNIX mark, and ultimately filed this action in the District Court for the Middle District of Florida. He alleged that Novell and X/Open had a fraudulent scheme to hide Novell’s true ownership and that the documents were backdated as part of the scheme. (You need to read the opinion to get the full flavor of the allegations, I’m trying to summarize them as briefly as possible.) Gray claims that he was targeted because the defendants want the iNUX mark and domain names for themselves.

    Based on these facts, the court held that the trademark is owned by X/Open and dismissed all of Gray’s claims, since they were all rooted in the false ownership rationale. The court found that the UNIX mark was sold to SCO subject to the 1994 license to X/Open. This encumbrance was acknowledged in and modified by (or clarified by) the 1996 Confirmation Agreement, which superseded the 1995 APA to the extent that Novell would be the owner of the UNIX mark for purposes of assignment, rather than SCO.

    The court disregarded a statement in the SCO Group v. Novell case in Utah. The Utah court, in looking at this same 1995 APA to decide who owned the copyright in the UNIX software, stated “It is undisputed that trademarks did transfer.” The Florida court here rightfully recognized the statement as non-binding dicta, but also that it was correct, just not with respect to the UNIX mark.

    Thus the assignment in 1998 by Novell to X/Open was a valid transfer of ownership of the mark and all claims were dismissed.

    Gray v. Novell, Inc., No. 8:06-cv-01950-VMC-TGW, 2009 WL 425958 (M.D. Fla. Feb. 20, 2009).

    © 2009 Pamela Chestek