Linux is apparently saved whether it deserves to be or not.

SCO Thursday lost its bid to get the jury verdict awarding Novell the Unix copyrights overturned along with its bid to get the copyrights despite the jury decision. It also lost its right to sue IBM for copying Unix code into Linux.

Unless it decides to appeal, one of its lawyers said, it’s all over for SCO. And it’s not clear if SCO has the financial staying power to last through an appeal. The legal bill for another appeal is already paid; it’s SCO basic viability that’s in question. Of course, it doesn’t have to be an operating company to get an appellate decision.

Deciding what to do next ultimately rests with the bankruptcy trustee, the retired district court judge currently in charge of SCO, and he was out-of-pocket Thursday. SCO’s general counsel Ryan Tibbets said the company’s lead outside lawyer was also out-of-pocket and anyway “you can’t come up with a strategy in three hours.”

SCO has 30 days to make a move.

After a federal jury found in March that the Unix copyrights never transferred to the Santa Cruz Operation and so never transferred to its descendent SCO, SCO filed two post-trial motions with the Utah district court that heard the case. One – and it was a long shot – asked the judge who presided over the case to overturn the jury’s verdict as a matter of law. The second – a little less of a long shot – asked for a new trial on the grounds that it wasn’t clear Novell should have won.

The judge denied both motions. He simply found Novell’s rendering of events, its evidence and its witnesses – which he details – overwhelmingly more credible and dismissed out of hand SCO’s contention that the “verdict cannot be squared with the overwhelming evidence and the law.”

It was also agreed by SCO and Novell before the trial began that in the event SCO lost the judge would decide whether to award SCO the copyrights anyway because it should have gotten them under the muffled intent of the infamous amended Asset Purchase Agreement (APA).

SCO kinda had its hopes pinned on this move but the judge also denied this maneuver, which is called specific performance in legal circles, because SCO didn’t need them to exercise its limited rights and because the intent was absent- “Novell purposefully retained those copyrights,” he said.

More importantly, along with it he decided that Novell had every right to waive SCO’s contract claims against IBM so barring a miracle IBM will never stand trial.

It’s just what IBM had in mind when it told Novell back in 2003 that Novell had the discretion under the APA to do so although the judge finds that Novell acted “to protect its own interests and those of the open source community and…not…because of influence by IBM or any ill-will toward SCO.”

In his decision the judge wrote that “The court finds that Amendment No 2 was not intended to confirm that the Unix and UnixWare copyrights were transferred to SCO under the APA, as argued by SCO. Rather, the court finds that Novell made a conscious decision to retain the copyrights in the APA and that intent was reflected throughout the negotiating and drafting of Amendment No 2. The court finds that Amendment No 2 was only meant to confirm that SCO had the right to use the Unix technology. The court finds the testimony of Novell’s witnesses, especially Ms Amadia and Mr Tolonen, to be credible. The court finds SCO’s witnesses to be less credible for a number of reasons, including the fact that many were not directly involved in the negotiation and drafting of Amendment No 2. Additionally, as previously stated, many have a financial interest in this litigation.”

Meanwhile, Novell has filed a notice of appeal in its 2004 WordPerfect antitrust case against Microsoft after Microsoft got the thing dismissed. Any claims went along with the software to Caldera.

First you have to remember that Novell has been suing Microsoft for antitrust since 2004 for allegedly beating up on its briefly held WordPerfect and Quattro Pro acquisitions years ago figuring to collect a king’s ransom from Redmond to go along with the tidy $536 million it already got from them for settling some similar NetWare charges six years ago.

Well, on Tuesday the judge hearing that case threw out Novell’s last two remaining claims out. He decided that Novell had sold the right to sue Microsoft to – guess who – Caldera, the Utah company that changed its name to SCO, back in 1996, which, if you’ll also remember, bought DR-DOS from Novell and settled claims against Microsoft arising out of that widgetry for around $290 million on the courthouse steps.

Anyway, Judge Frederick Motz in Baltimore decided that he was wrong to let those two Novell claims go forward and that the Asset Purchase Agreement Novell signed with Caldera was unambiguous, that it didn’t just transfer claims relating to DR-DOS to Caldera but all the claims “associated directly or indirectly” with operating systems products like the applications.

Novell bought WordPerfect in 1994 when it was already in decline. Its market share went from ~50% in 1990 to less than 10% in 1996 when Novell sold it and Quattro Pro to Corel up in Canada.

Novell claimed that it was all Microsoft’s fault and that Microsoft had withheld information to run the WordPerfect word processor and the Quattro Pro spreadsheet on Windows. Microsoft, in turn, said Novell should blame its “own mismanagement and poor business decisions.” It lost a bunch of other claims against Microsoft in 2005 when Motz threw them out because it took Novell so very long to sue.

Novell, which apparently needs to practice writing clearer contracts, says it’s gonna appeal. The suit was the last of the private antitrust complaints arising from the government’s antitrust suit against Microsoft, a gravy boat that folks like Sun and IBM stuck their bread in.

With its copyright and slander-of-title case lost to Novell, it says it still means to bring its suspended contract and unfair competition case against IBM if the judge who presided over the Novell case – and who may have been as surprised as the Novell lawyers at the verdict – decides that Novell has no business blocking it.

Back eons ago Novell stepped into the SCO v IBM lawsuit – or at least tried to – and told SCO it couldn’t sue IBM or lift IBM’s license to distribute AIX, IBM’s version of Unix.

Judge Stewart – he’s the guy who ran the copyright trial – now gets to decide whether Novell’s so-called waiver holds any water and how far it extends.

Briefs from both SCO and Novell are expected to land on his desk on April 19. He’ll have a think and then decide. There probably won’t be a hearing.

If it can cross that hurdle, SCO will still have to fight to get its Monterey charges against IBM recognized. Judge Kimball – the guy whose summary judgment awarded Novell the Unix copyrights in 2007 – barred them from the case when he wouldn’t admit SCO’s third amended complaint. SCO’s got an aging right-to-amend motion floating around out there somewhere.

Then it’s got to try to get its multibillion-dollar AIX/Dynix case, which was gutted by Magistrate Judge Brook Wells, patched back together again – it’s got a reconsideration motion pending too – otherwise it’ll have to go with the stump of a case.

Both sets of claims contend that IBM looted Unix for the sake of Linux and the AIX case includes a destruction of evidence charge that could prove highly entertaining and potentially profitable for SCO if it ever gets heard.

Anyway, Judge Kimball’s summary judgment was of course overturned by the 10th Circuit Court of Appeals last year, which is how Judge Stewart gets to make the decisions that could potentially put SCO, now older and poorer, kinda back where it was before the Novell distraction.

If the waiver ruling goes in SCO’s favor, it’s unclear who exactly would get to decide the right-to-amend and reconsideration motions, Judge Stewart or Judge Tina Campbell, who drew the IBM case when Kimball’s summary judgment was overturned. It’s possible Judge Stewart could take the IBM case because of his Novell learning curve.

Anyhow, even if Stewart does give SCO what it wants SCO’s bigger problem is simply surviving.

See, there’s the little matter of the $3 million, $3.5 million that SCO owes Novell from the money that it collected from Sun Microsystems, a sum Novell will now doubtlessly press for along with Chapter 7 liquidation. That means the scene flips back to the bankruptcy court in Delaware. If bankruptcy Judge Kevin Gross keeps SCO in what amounts to protective custody for the duration – and that’s a mighty long time – then SCO might get to pursue its IBM quest – the lawyers are all paid up – but if he doesn’t then SCO could be road kill.

Of course, Novell doesn’t have any dibs on SCO’s business (yes, Virginia, there’s still some business there) and remaining assets. The consortium of investors that just put $2 million in the company does. They would get paid first and if there’s no money left in the till then they get the assets including the IP and the right to chase SCO’s claims.

Ah, but there’s another course the lawyers could take right now – one that would drive the Linux hoards utterly nuts – and that’s to ask Judge Stewart to scotch the jury verdict on the grounds that they got it wrong and award SCO the copyrights anyhow.

And there’s another way of getting to the same place and that’s by demanding what they call in legal circles specific performance. The jury was given four if-yes-go ahead-if-no-stop-right-there questions to answer. It never got past the first one: “Did the amended Asset Purchase Agreement between Novell and the Santa Cruz Operation transfer copyrights.” The jury said no.

However, according to the testimony at the trial the copyrights were meant to transfer and – since the jury said they didn’t – SCO’s got a specific performance claim. It’s already scheduled to ask Judge Stewart, also on April 19, that they transfer now to compensate for the oversight. That’s another decision – besides the waiver business – that he reserved to himself alone in the run-up to the trial.

Whether Judge Stewart will in fact rule in SCO’s favor is another thing. But with the copyrights in hand SCO could do what it can’t do now thanks to the jury verdict and that’s demand a Linux tax from all the Linux installations out there and refill its coffers – or at least that’s the theory.

Plus ça change, plus c’est la même chose.

Of course Novell would undoubtedly appeal. Or maybe owned and operated by Elliott Associates, the hedge fund that’s trying to buy it, a less Linux-sensitive Novell offers SCO a few million gratefully accepted by SCO’s trustee Judge Kahn to go away once and for all.

Since Novell acknowledged that it was for sale when it rejected Elliott’s $2 billion bid as “inadequate,” it’s assumed to be dialing for dollars looking for other possible buyers and perhaps, if there’s any interest, cutting NDAs. At least Elliott assumes it. And Elliott has expectations of looking at the books too and possibly refining its bid. The stock market apparently expects it. Novell’s stock price is back over Elliott’s $5.75-a-share offer – and it can’t be just glee over SCO.

Darl McBride may not be the only person willing to press SCO’s Linux claims.

They could also be there protecting their assets.

The spectators have probably observed that Novell appears to be down to catching out either the judge or SCO’s lawyers in a mistake so it can appeal. It’s already asked the judge to declare a mistrial because SCO told the jury that Novell continues to publicly cling to the idea it owns Unix despite the 10th Circuit overturning that decision and saying a jury should decide (speaks to damages).

McBride testified this week that Novell’s claims to own Unix led to a drop in SCO’s stock price as well as a loss of revenues and Linux licensing deals such as a $30 million arrangement that was in the works with HP and a $50 million one with Google. It’s unclear what the one that was being negotiated with Dell would have been worth.

McBride said that when he confronted Novell CEO Jack Messman, Messman ducked the issue of whether IBM was behind Novell’s ownership claims – to protect IBM against SCO’s charges of pilfering Unix code for the sake of Linux – and refused to discuss the subject without his lawyer being present. IBM did after all give Novell $50 million to buy SUSE after SCO sued IBM.

Novell claims SCO’s losses were its own fault since it alienated the Linux community, which, however, one would be hard pressed to see as being decisive Wall Street punters or controlling the legal opinion of Fortune-something companies.

Novell’s position so far depends on a Novell lawyer saying he and a couple of other Novell attorneys exceeded their instructions and excluded the Unix copyrights from the Santa Cruz purchase agreement without telling anybody. SCO maintains that deficit was later corrected by an amendment, a point Novell initially conceded in a press release then retracted.

An observer in the courtroom with a SCO bias said Novell’s case consists of the amendment not existing and the 10th Circuit Court of Appeals not overturning the summary judgment saying Novell owns the copyright.

SCO experts testified that SCO was damaged to the tune of $130 million-$215 million plus punitive damages. SCO has conceded what is called a “higher standard” or constitutional proof, meaning the jury has to decide that Novell exhibited “reckless disregard” in claiming ownership.

Novell hammered at one of the witnesses, a lady accounting professor, part of Wednesday and all day Thursday and insisted on bringing up the summary judgment – even reading parts of it into the record – despite the judge’s previous warnings that he would instruct the jury to disregard what Novell said and tell them that decision was overturned because it was wrong and that it was their job to make a decision, which is exactly what he did – three times. It is unclear what Novell gained in courting his ire.

In the interests of full disclosure, we should say that this paper is being called to testify that then Novell vice-chairman Chris Stone said in an interview on May 27, 2003 that Novell would assert its ownership claims the following day and pointed out that that was the same day that SCO was due to report its earnings, a point that would have escaped us if he hadn’t mentioned it and laughed. We put out a story, Novell made the claims and SCO’s stock took a dive. The point is malice. And it was not the only time Novell timed an ownership claim to a SCO earnings call. Chris Stone was also supposed to appear last we heard.

So far it’s been SCO’s show; Novell’s case is expected to kick off next week then go to the jury. If left to its own devices there could be a verdict this time next week. Usually in such cases the defense starts off trying to prove it has no liability. Novell’s first witness, however, is supposed to speak to damages.

By the way, the bankruptcy court in Delaware has cleared it for SCO to get maybe up to $2 million from its former chairman and friends as a “super-priority credit facility” in case it needs it to survive and press its litigation claims, support the remains of its Unix business and sell off other assets. The hearing on McBride’s bid to buy SCO’s mobility business was moved from March 15 to April 7.

Meanwhile, Novell has asked the Supreme Court to hear its claim that copyrights need an itemized bill of sale signed by the owner – or at least something in writing – to transfer. As with most appeals to the Supremes, it’s a long shot.

That means a Utah jury will decide who the heck owns Unix.

Novell tried like the dickens but failed to get the date pushed back to next summer during a scheduling hearing Tuesday with Judge Ted Stewart, who’ll be presiding.

If Judge Stewart didn’t already know how jury-shy Novell is, he does now.

Novell’s outside counsel Michael Jacobs first tried pleading that the trial would take three weeks not two as SCO maintained. The first open date for a two-week trial was March 8. The first open date accommodating a three-week trial was in June and Jacobs was reportedly all over that idea like, well, a June bug on a ripe fig.

When that didn’t work he tried pleading that there was an awful of work to be done and briefs to be filed beforehand and he needed time. Judge Stewart reportedly asked him what briefs he had in mind exactly since the case was fully briefed and on the brink of going to trial in August of 2007.

That was right before Judge Stewart’s predecessor Judge Dale Kimball took the decision away from a jury with his now famous summary judgment that Novell owns Unix, the decision that the 10th Circuit Court of Appeals overturned sending the case back to Utah to be heard.

Perhaps Judge Stewart was sending Jacobs a coded message not to bother filing any motions to stay. According to Groklaw, Jacobs means to reprise Novell’s bid for no special damages, i.e., no malice intended when it claimed to still own the Unix IP. He also means to take another run at the Supreme Court to see if he can get the appeals court’s decision overturned. It’s a real long shot.

Jacobs’ motion to get SCO’s case against Novell combined with SCO’s case against IBM – a thought that used to appall Novell – also looks pretty futile. Ditto his attempt to get the two cases assigned to one judge – preferably Judge Tena Campbell, who’s already drawn the IBM case.

Read between the lines here. Judge Campbell is getting close to senior status when district court judges can unload half their cases and go part-time. Judge Stewart has a reputation for getting things done, especially old cases with tortuous histories, as he’s quoted as saying about SCO.

In its attempt to get to trial ASAP cash-strapped SCO and its Chapter 11 trustee pushed back against Novell’s stay-out-of-court-as-long-as-we-can consolidation motion.

Observers are crediting SCO’s trustee Ed Cahn, himself a retired district court judge and a relatively neutral party, with helping get the court off the dime. He filed a declaration with Judge Stewart saying the case has merit and should be expedited. Joining it to the complexities of the IBM case would only confuse people, he said.

As it turns out, according to Groklaw, after some squeezing and shoving by the clerk of the court Novell got its three-week trial anyway. Now it remains to be seen whether anybody actually uses this carved-out period of time or whether we’ll see a settlement on the courthouse steps. Novell’s sudden, inexplicable desire to consolidate its case with the IBM case raises suspicions about either case ever going to a jury.

For its part Groklaw figures the date will be reset due to Novell’s motions. It’s also characterizing Judge Stewart as partial to SCO.

He expects to get fired because he’s adamantly opposed to winding SCO down, laying off its people and settling the company’s litigation against Novell and IBM for chump change, which is the way he sees things going if the Chapter 11 trustee put in charge of SCO keeps going down the path he appears to be going down – despite the fact that the trustee told McBride when he got there that he thinks there is “significant value in the litigation.”

What’s got McBride’s hackles up is that after the favorable 10th Circuit ruling overturning the summary judgment that Novell owns Unix McBride brought a major Wall Street investor new to the scene to the table, complete with term sheet, to invest up to $25 million in SCO, keep it functioning and let it get to the jury trial it’s been hankering after all these years.

The only problem is this opportunity fell on deaf ears. Not so much as a return phone call to the would-be investor from the trustee, McBride says.

So here’s what’s gonna happen.

If McBride gets fired and the trustee comes through with a reasonable settlement all well and good, he said. IBM can have the company and declare victory. However, if the best the trustee can do is a quick settlement in the range of tens of millions, then the shareholders will revolt and McBride is prepared to lead them to the bankruptcy court in Delaware and plead for the opportunity for their case to be heard by a jury in the district court in Utah where the Novell case is currently headed anyway.

Mock trials – whether done by SCO or reportedly by IBM and Novell – all indicate SCO would win and be declared the owner of Unix, reopening the IBM case and the charge that Big Blue ripped off SCO’s IP and stuck it in Linux and reopening the SCOsource tax on Linux. The third-party calculations of the damages SCO suffered all reportedly put the number somewhere between $2.5 billion and $7 billion.

That’s why serious people with serious money and equally serious lawyers of their own who look at the case are reportedly willing to underwrite SCO and roll the dice.

McBride is figuring on coming up with a counter-proposal to lay before the bankruptcy judge to get SCO its day in court and keep the shareholders’ right intact.

He denied everybody’s motions.

SCO can’t sell everything-but-its-litigation to Unxis. Novell and IBM can’t liquidate SCO on the spot and SCO’s current management presumably looses the jobs they’ve been angling to cling to. At least they’re no longer in control. The board is out at any rate.

So nobody gets what they wanted.

As Judge Gross points out his decision is “sua sponte,” meaning it’s his own idea and he says it’s based on the “unusual circumstances” that there might be something to the SCO litigation. He’s leaving it to the trustee to find out and then figure out what to do with SCO.

His decision advises the US Trustee’s Office (OUST) to go and find a retired judge or litigator to assess the litigation since that will be the trustee’s main job.

Whether OUST will or not is another matter since it sided with IBM and Novell in asking the court for a Chapter 7 conversion order.

Judge Gross’ decision presumably buys SCO the time to hear from the 10th Circuit Court of Appeals about whether or not it’s going to overturn the summary judgment handing Novell ownership of Unix.

It’s assumed that decision will be out by the end of August since one of the three judges who heard the expedited appeal is going off to teach at Stanford on August 31.

SCO obviously has Judge Gross’ sympathies.

Although he compares its “constant refrain of waiting for the litigation to succeed” to Beckett’s “Waiting for Godot,” he says his “decision is not intended as a criticism of debtors’ efforts or conduct. SCO found their Unix operating system under attack and sought redress through litigation. Their principal adversaries, IBM and Novell, are wealthy and have used their deep pockets in the litigation and in these bankruptcy cases to debtors’ disadvantage. As creditors, IBM and Novell are entitled to act in their self-interest and that is what they are doing. The reality is that eliminating debtors’ litigation against them is far more valuable to IBM and Novell than any recovery from debtors in the bankruptcy cases. The interests of debtors’ other creditors may differ.”

SCO fled to the bankruptcy court 23 months ago as Judge Gross says “to preserve litigation” against the imposition of a constructive trust by the federal court in Utah where Novell was looking for a judgment of $37 million, a claim that after a trial dwindled to $3.5 million, a sum that will shrink further if the 10th Circuit rules in SCO’s favor.

However, there are time limits in bankruptcy court and most of the sand has run out of SCO’s hourglass plus, as the judge says, it’s “an understatement to say that since the filing of their bankruptcy [SCO’s] financial situation has greatly declined.” It’s quickly going broke and has abandoned the idea of reorganizing and soldiering on in favor of selling out.

But it hasn’t had much luck with buyers either. The 11th hour conversion-avoiding sales agreement it put together in mid-June with Unxis for $5.25 million is full of holes.

Judge Gross says it’s unclear whether the price is fair especially since it’s just enough to get SCO out of bankruptcy court and the letter of credit ostensibly meant to pay a Novell judgment “terminates on December 31, 2009 with no guarantee that the Novell litigation will be concluded.”

The judge said he is “very disturbed that the sale agreement contains a provision (which [IBM and Novell] refer to a ‘poison pill’) requiring the transfer of assets to Unxis upon conversion or appointment of a trustee.” He feels it “calls into question whether the sale has a sound business purpose and raises doubts of the parties’ good faith. There is simply no record upon which the court can find that the sale is in the best interests of the creditors and the estate.”

He wants the trustee to figure out whether pursuing the litigation is in the best interests of the creditors and the estate. “The ‘potential’ of the litigation must, however, be weighed against the reality of the cost,” he said. “A trustee will be in a better position to make that assessment without the personal and emotional investment of SCO’s management. Similarly, a Chapter 11 trustee can evaluate an asset sale independent of debtors’ management’s pursuit of the litigation.”

In what the judge described as a “Perry Mason” moment, SCO waltzed into bankruptcy court Monday with a surprise asset purchase agreement hammered out that morning and signed only moments before.

To Novell and IBM’s chagrin the move silenced any discussion of their liquidation motions, which was why everybody was there.

Stephen Norris, one of the original founders of the chi-chi Carlyle Group, and his current equity arm Gulf Capital Partners LLC – the money is reportedly coming from Saudi Arabia unless the White House stops it – are offering $2.4 million for what remains of SCO’s Unix business plus its mobility technology.

SCO will also get a $2.9 million line of credit to pursue the lawsuit, the existing mobility apps on which to build and SCO CEO Darl McBride.

The spin-off would take president Jeff Hunsaker and most of SCO’s remaining 62 employees.

There’s a hearing set for July 16 – July 27 at the latest – at which Novell and IBM are expected to complain but maybe by then the 10th Circuit Court of Appeals in Denver will have decided whether or not to overturn the ruling awarding ownership of Unix to Novell.

If SCO winds up with the Unix copyrights after all it only gets to run with them for 10 years then they revert to Gulf Capital Partners.

In a correction – or clarification if you like – that Steve Norris evidently sent the SCO-baiting, trash-talking, Groklaw-quoting writer Steven Vaughan-Nichols, who sees Microsoft under every bed and holds Microsoft responsible for SCO’s longevity, Norris said the new company would be called UnXis and would be funded by Gulf Cap, the London private equity house MerchantBridge and a “number of other investors.”

He explained that the “negotiations with SCO were highly complex and continued over a substantial period primarily because of the difficulty of due diligence, the changing legal framework and, in particular, understanding SCO’s entitlement to IP as well as the desire of UnXis to detach itself from past and continuing litigation. The new company has no issue with Linux and supports open source in all appropriate contexts.”

UnXis will evidently be headed by Jim Kelly, the former CEO of SynXis, a Sabre Holdings business that provides reservation management, distribution and technology services for hotels around the world, who was once a senior executive of Carlyle.

See http://gulfcappartners.com/index.html.

SCO also wants the appeals court to reverse Utah’s decision that SCO owes Novell a piece of the royalties it got from Sun Microsystems, a judgment that would have SCO write a check to Novell for $2.55 million.

SCO’s lawyers say the Utah court was wrong on all points as a matter of law and had no business issuing a summary judgment in the first place rather than let the case go to trial.

They say the court insisted on reading the Asset Purchase Agreement (APA) that transferred Unix and its copyrights from Novell to SCO’s predecessor company, the Santa Cruz Operation, for $250 million in 1995 in isolation from the Amendment that supposedly clarified the transfer of the copyrights and construed ambiguities in Novell’s favor when – according to the California law governing the deal – they should have been drawn in favor of SCO.

The brief argues that the expression “all rights and ownership of Unix and UnixWare” that appears in the APA means copyrights too – the core IP on which the Unix licensing business depended. Anything less would have been sheer folly; buying a software business means buying the copyrights.

When Novell replies, it’s going to have to grapple with issues like why it licensed the technology back from Santa Cruz in 1995 if it still owned the copyrights; how it is that Novell sent SCO its Unix copyright registrations; why Novell changed the copyright notices on existing Unix and UnixWare source code to read Santa Cruz; why Novell sent out a press release saying the “Unix IP” had been acquired; why it notified customers that its “ownership interest in Unix” had transferred; or why when Santa Cruz caught Novell selling IBM royalty buy-out rights in 1996 Novell never mentioned it still owned the copyright but plodded through six months of negotiations and ultimately paid Santa Cruz $1.5 million for a release from its claims.

Without ever saying so outright, the 70-page brief makes a strong case for judicial bias.

The Utah court, for instance, dismissed out of hand the evidence offered by all the top-ranking folks at both Novell and the Santa Cruz Operation including their respective CEOs that – whatever the ambiguities of the APA – the intent was to sell Santa Cruz the copyrights.

SCO also points out that the district court nodded off at times like when it said the copyright exclusion made sense because “Santa Cruz indisputably did not acquire ownership of Novell’s Unix-related patent.” Honey, Novell didn’t have any Unix-related patents.

The district court, which according to the rules had no business weighing evidence, decided that the testimony of a dozen or more SCO witnesses was “less reliable given the passage of years and witnesses’ mistaken beliefs” but didn’t apply the same standard to the declarations of two Novell lawyers who claimed that they – unbeknownst to any of the parties – made changes in the deal that gave Santa Cruz only an “implied license” to the IP, an expression that appears nowhere else outside their statements.

Implied licenses, by the way, can only be non-exclusive and might fly in cases of commissioned works but the APA clearly gave Santa Cruz the right to sue and according to case law holders of a non-exclusive license lack standing to sue. But more to the point, SCO says that copyright exclusion the Novell lawyers claim to have secretly inserted was inserted into an “inoperative version of the Excluded Assets Schedule” not the revised APA.

Bottom line, SCO says that if you buy the Utah court’s interpretation of things then “Novell retained the unlimited right to destroy the economic value of the business it had sold and for which it had received more than $250 million of consideration.”

And so SCO argues that Santa Cruz didn’t pay “for rights that Novell could abrogate at its whim by, among other things, allowing licensees to violate contract and intellectual property rights. Whether Novell was motivated to exercise its purported waiver rights due to IBM’s $50 million payment [to Novell to buy SUSE] or for some other reason, it is clear that the action damaged SCO, interfered with its rights to manage the Unix business that it had purchased under the APA and thus cannot be accepted, beyond factual dispute, as a good faith exercise of discretion.”

SCO, which is currently also trying to put together a reorganization plan to get out of Chapter 11, is asking Denver to hear oral arguments during its normal course of business in May or else convene a special panel in June. It says it’s willing to file its reply brief to Novell’s retort early.

SCO’s appeal of the Utah district court’s 2007 summary judgment finding in Novell’s favor has been put on an expedited schedule by the US Court of Appeals for the 10th Circuit in Denver.

That means that a decision could be handed down sometime in the fall.

The Denver court has told SCO that it can file its opening brief as soon as it’s ready; it doesn’t have to wait for the March 6 deadline SCO was seeking.

The Utah court even certified the record for the appeal Tuesday so there’s no stumbling block left to overcome.

As soon as SCO files, the clock will start on when Novell has to file its response brief. The rule in the 10th Circuit is 30 days. Novell has already asked for 60 days. Its foot-dragging didn’t go down well with the circuit court, which “discouraged” Novell “from filing any motion for extension of time within which to file its response brief.”

The court also disabused Novell of the idea that if it went ahead and did file for an extension it could get 30 days. The court said it would be “limited to a single extension of time of no more than 15 days.”

We’ll take a wild guess that Novell figured an extension would push out the hearing and perforce move the appeal court’s decision into next year. But that’s sheer speculation.

Anyway, the court also told SCO that it can file its retort to Novell’s response brief the day after Novell files it if it wants to. It also said it assumes SCO wants an expedited hearing and told SCO it can ask for one as soon as the appeal is fully briefed.

That suggests the appeal could be heard sometime this spring.

Judge Dale Kimball, the Utah justice who decided that Novell owns Unix – and so had every right to order SCO to drop its claims against IBM and Sequent for allegedly poaching Unix code and sticking it in Linux – has wracked up a long list of overturned decisions.

And his SCO decision is said to have a good chance of being overturned because Kimball ignored the basic rules of civil procedure in issuing a summary judgment in the first place.

Summary judgment is not supposed to weigh evidence, champion one side’s interpretation of the fact over the other’s, or decide that one set of witness is more credible than another. That’s what juries are for. And that’s why there’s going to be a lot of surprised lawyers if Kimball isn’t overturned.

He denied SCO the jury trial it was expecting so if his summary judgment is overturned SCO’s slander-of-title/breech-of-contract/copyright infringement case against Novell will go back to a jury in Utah and, if SCO wins there – and moot courts suggest it will – well then, the question of whether Linux stole Unix code will again be troubling Linux users, particularly IBM’s Linux users.

And given the state of SCO’s finances, or lack of them, it will probably think about resuscitating its Linux tax scheme.

If SCO loses the appeal, it’ll be pushing up daisies, if it isn’t already.