US District Judge Dale Kimball is hearing both SCO’s contract and copyright infringement case against IBM and its slander of title case against Novell and last week ruled on the nature of the Novell case and the schedule for the action against IBM.

Lindon, Utah-based SCO alleges that IBM breached its contract with SCO by contributing Unix code to Linux, amongst other things, prompting IBM’s counterclaims of patent and copyright violation. In March SCO asked the court to split, or bifurcate, the patent counterclaims, before in April asking to delay the entire case by five months to give it more time to respond to those counterclaims.

Judge Kimball has denied SCO’s request to bifurcate the patent counterclaims, disagreeing with SCO’s claim that they are unrelated to the case but has agreed to amend the scheduling order to allow for the additional claims.

The deadline for the fact discovery portion of the case is now February 2005, while the deadline for the expert discovery portion has been put back to April 2005. The five-week trial, originally due to start in April 2005, will now begin in November 2005. Judge Kimball warned that the schedule will not be altered at the request of SCO or IBM again, absent extremely compelling circumstances.

Meanwhile Judge Kimball also denied SCO’s motion to move its slander of title case against Novell to state court, and also denied Novell’s motion to dismiss. Waltham, Massachusetts-based Novell is the former owner of the Unix System V code and claims that it retained copyright for the code when it sold the business.

According to Novell, that gives it the right to waive SCO’s claims against both IBM and Linux users. This prompted SCO to sue Novell for slander of title in January. The argument about whether the case should be heard in state or federal court centered on whether the court agreed with SCO’s belief that the case is simply a matter of contractual agreements, or Novell’s position that because the case requires SCO to prove copyright ownership, the case requires the application of federal copyright law.

Judge Kimball agreed with Novell. Although SCO’s slander of title claim is a state law claim, the determination of copyright ownership controls necessary elements of the claim, he wrote. SCO has failed to cite any relevant state common law that would control the disposition of this issue. Accordingly, this court concludes that it has subject matter jurisdiction over SCO’s slander of title action.

Having done so, Judge Kimball then moved on to Novell’s motion to dismiss SCO’s claim, which it filed in February, arguing that SCO had failed to establish two of the four grounds it needs to bring such an action, specifically that SCO has failed to establish that Novell’s statement that it has retained Unix copyright is false and that SCO has failed to show that Novell’s statements have caused it actual damages.

The Judge agreed with Novell’s reading on the latter point, noting that SCO had only pointed to general damages, rather than a specific financial loss, and granted SCO 30 days to amend its complaint accordingly.

The Judge also denied Novell’s motion to dismiss on the grounds that SCO had failed to establish that Novell’s statement that it retained Unix copyright was false.

The question of who owns copyright over Unix centers on the Asset Purchase Agreement through which Novell sold its Unix software and services business to Santa Cruz Operation Inc in 1995. Santa Cruz Operation later sold the business to Caldera Systems, which changed its name to SCO Group.

SCO maintains that the APA, and particularly the later Amendment No 2, detail the fact that copyrights for Unix System V were transferred to Santa Cruz Operation, and therefore on to SCO, while Novell’s position is that the APA and Amendment 2 constitute a promise to assign certain copyrights if required, and as such fail to meet the requirements of the Copyright Act for the transfer of copyright ownership.

Judge Kimball wrote that Novell had raised persuasive arguments as to whether there was intent to transfer copyright but agreed with SCO and concluded that the arguments about the agreements at the heart of the case would be more properly heard on potential later motions for summary judgment or trial.