Property, intangible

a blog about ownership of intellectual property rights and its licensing

Confirmed – X/Open Owns the UNIX Trademark

I previously blogged about a case where there was a challenge to the ownership of the UNIX trademark. The decision has now been affirmed in an unpublished decision by the 11th Circuit.

The UNIX mark was owned by Novell, but Novell decided to first license, then assign the mark to X/Open, a technology consortium.  Novell had used the mark for computer code and licensed it for use on products running the UNIX code.  X/Open was to license the mark, not based on use of the source code, but based on the products’ conformity to specifications. In three years, X/Open would ultimately become the owner of the trademark. It’s a messy set of transactional documents, but I think construed correctly.

First, in the Novell to X/Open Licensing Agreement, Novell granted X/Open an “exclusive, perpetual, irrevocable license to use, and sub-license to third parties the use of,” the UNIX trademark, with assignment to X/Open after three years’ time.

Next, Novell sold certain assets to The SCO Group, Inc. The Asset Purchase Agreement transferred “all rights and ownership of UNIX and UNIXWARE,”* including, “without limitation,” the “trademarks UNIX and UNIXWARE as and to the extent held by [Novell] (excluding any compensation [Novell] receives with respect of the license granted to X/Open regarding the UNIX trademark).”

Next we have the Confirmation Agreement.  Novell, X/Open and SCO jointly executed an agreement regarding the UNIX trademark.  The agreement “provided 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 Licensing Agreement.”  Novell was to assign the mark “as soon as possible,” which would not be a breach of Novell’s obligations to SCO under the APA. The agreement also stated that the APA was subject to the rights and obligations of the X/Open Licensing Agreement.

After the Confirmation Agreement was executed, Novell and SCO amended the Asset Purchase Agreement.  The amendment clarified that Novell was assigning to SCO the UNIX and UNIXWARE trademarks “required for SCO to exercise its rights with respect to the acquisition of UNIX and UNIXWARE technologies.”

Finally is the Deed of Assignment, where Novell assigned “all property, right, title and interest in the [UNIX] trademarks with the business and goodwill attached to the said marks.”

Plaintiff Gray had filed an application for the mark “iNux,” which was opposed by X/Open.  Gray responded by filing a complaint in the Middle District of Florida, claiming that Novell had transferred ownership to SCO not X/Open, making X/Open’s opposition fraudulent. It boiled down to this:

The linchpin of Gray’s complaint is his allegation that X/Open is not the true owner of the UNIX mark. He claims that Novell did not grant X/Open an exclusive license to the UNIX mark. According to Gray, Novell instead transferred ownership of this mark to SCO via the APA; and ever since, the three Defendants — X/Open, Novell, and SCO — have conspired to conceal the mark’s true owner. If Gray is mistaken about the ownership of the UNIX mark, all of his claims must fail; nothing would be fraudulent in X/Open representing itself as the UNIX mark’s owner, nor would there be fraud attributable to Novell or SCO. Gray is mistaken.

The court found that, by virtue of its exclusive licensing arrangement with Novell, X/Open was the owner of the mark.  (A minor problem – all those oppositions Novell, not X/Open, filed after this point in time. The court disposed of it in a footnote on the theory that, under Section 13 of the Lanham Act, 15 U.S.C. § 1063, Novell didn’t have to be an owner to file an opposition.)  You be the judge how exclusive the license is; the agreement is here.

The Asset Purchase Agreement only assigned the UNIX mark to SCO “to the extent held” by Novell. Since Novell didn’t “hold” the UNIX mark, it therefore couldn’t have assigned it to SCO. The court noted that Novell’s retention of royalties from the X/Open licensing arrangement showed that the APA was reached in contemplation of the Licensing Agreement, a point reinforced by the Confirmation Agreement’s references to the License Agreement also.  The court was puzzled by the Confirmation Agreement but rolled with the punches:

Given that the APA had not altered Novell’s obligations under the Licensing Agreement in the first place,[**] it is not clear that Novell and SCO needed to modify the APA — but they certainly had the right to do so under California law.  Accordingly, we conclude that the Confirmation Agreement reaffirmed that Novell would be assigning ownership of the UNIX mark to X/Open.

The post-Confirmation Agreement amendment to the APA — excluding all trademarks from the transfer except those SCO “require[d]” — supported the conclusion that X/Open owned the mark, since SCO did not need the UNIX mark to carry out the business it acquired, rather X/Open did. Finally, the Deed of Assignment effected change in legal ownership. With that, X/Open was the owner of the marks and Gray had no case left.

Gray v. Novell, Inc.No. 09-11374 (11th Cir. Jan. 7, 2011).

*UNIXWARE was a product business that was not part of the X/Open licensing arrangement.
**Hindsight’s 20/20.

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