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Novell Litigation

Believing that its asset sale to SCO left it with some ownership of UNIX, Novell sent a letter on May 28, 2003 to SCO, asking them to verify the allegations SCO made in its complaint against IBM. SCO responded by producing Amendment #2 to the 1995 SCO-Novell Asset Purchase Agreement, but Novell claims to have no record of this amendment.

After Novell publicly questioned SCO's claim to own UNIX, SCO sued Novell on January 20, 2004. SCO claims that Novell slandered SCO's title to UNIX, which has damaged SCO's reputation and relationship with potential customers by claiming to own part of the UNIX code. Novell has moved to dismiss the case, and SCO has opposed the motion. Also, in an unusual procedural move, SCO asked to move the Novell lawsuit from federal to state court.

On June 9, 2004, Judge Kimball denied both SCO's request to move the case to state court and Novell's motion to have the case dismissed. However, the judge raised the requirements for SCO's "slander of title" claim, requiring SCO to allege specific financial damage attributable to Novell's actions. Despite denying Novell's motion to dismiss, Judge Kimball seemed troubled by the interaction between the initial asset sale and the subsequent amendment, labeling the net effect "ambiguous."

Editors' Note: The following paragraph was added by the authors on June 23 as a point of clarification, and is meant to replace erroneous information in the preceding paragraph.

Correction: On June 9, Judge Kimball denied SCO's request to remand the case to state court. However, the previous paragraph was incorrect about Novell's motion. Instead, Judge Kimball granted Novell's motion to dismiss the slander of title claim without prejudice. This means that SCO may refile the lawsuit so long as it alleges specific financial damage attributable to Novell's actions.

Meanwhile, Novell recently acquired SuSE, a Linux distributor. By putting Novell in the Linux business, this acquisition gives Novell even more motivation to disprove SCO's claim that it owns all UNIX rights.

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