Yesterday, a federal judge in Salt Lake City ruled against The SCO Group on its claim to ownership of copyright in the UNIX operating system.  The court held that SCO’s predecessor, Santa Cruz Operations, received only a license to use the UNIX copyright material in a 1995 deal with Novell, Inc.  Ownership remains in Novell, the court concluded.  The SCO Group, Inc. v. Novell, Inc., No. 2:04CV139DAK (D. Utah Aug. 10, 2007).

SCO sued Novell in 2003 for slandering SCO’s title to copyrights in the UNIX software code.  More claims and counterclaims — and probably a good deal of bedlam — ensued.

The decision focuses on language in two schedules to the parties’ Asset Purchase Agreement.  Schedule 1.1(a) lists the "Intellectual Property" that Novell sells to SCO’s predecessor as including "[t]rademarks UNIX and UnixWare as and to the extent held by Seller (excluding any compensation Seller receives with respect of the license granted to X/Open regarding the UNIX trademark)."  But Schedule 1.1(b) defines "Excluded Assets"  as, among other things, "[a]ll copyrights and trademarks, except for the trademarks UNIX and UnixWare" and "All Patents".

The court wades through hundreds and probably thousands of pages of briefing and evidence before concluding that Schedule 1.1(b) means what it says — that assets that Novell sold excluded "[a]ll copyrights".  So there.

Blawgletter doesn’t understand anywhere near all the implications of the outcome.  But UNIX apparently boasts lots of swell features and has many derivatives, including Linux — the "freely available computer operating system that has become an alternative to Microsoft Corp.’s Windows operating system", according to the WSJ.

Barry Barnett

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Gibbon
Edward Gibbon (1737-94).

The great Gibbon wrote in chapter 2 of The History of the Decline and Fall of the Roman Empire (1776-88):

This long peace, and the uniform government of the Romans, introduced a slow and secret poison into the vitals of the empire.  The minds of men were gradually reduced to the same level, the fire of genius was extinguished, and even the military spirit evaporated.

Barry Barnett

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Check your email this Monday for the July-August issue of award-winning Barnett’s Notes on Commercial Litigation.

In this Issue

Legal Mythology.  Sing to me of the man, Muse, the man of twists and turns.  Plus law stuff.

Did You Know?  The hourly fee’s lethality.

Hydraulic Pressure to Settle.  A myth bigger than the Colossos of Rhodes.

The Trials of Yesteryear.  Why they’ve melted away.

Roundup.  Favorite Blawgletter posts.

Hot Lunch.  Tort reform now involves neither torts nor reform.

Free Trial Offer.  Cartoon.

You can subscribe to Barnett’s Notes by sending an email to notes@susmangodfrey.com.

Barry Barnett

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Applying Ohio’s blue sky law, the Sixth Circuit today held that one who exchanges stock in company A for stock in company B qualifies as a "purchaser" of the company B stock and therefore has a right to rescind the transaction.  Murphy v. Stargate Defense Systems Corp., Nos. 06-3980 & 06-4034 (6th Cir. Aug. 10, 2007).

Company B had no comment.

Barry Barnett

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Today the Seventh Circuit vacated a temporary restraining order that froze all assets of a commodity-pool operator.  The district court issued the TRO because the company failed to turn over records to the Commodity Futures Trading Commission.  The appeals court held that the TRO couldn’t last more than 20 days without a preliminary injunction hearing.  It also doubted that preventing customers from accessing their accounts reflected an appropriate response to a failure to produce documents.  Commodity Futures Trading Comm’n v. Lake Shore Asset Management Ltd., No. 07-2790 (7th cir. Aug. 9, 2007).

Barry Barnett

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Jessica Simpson in Daisy Duke mode for DIRECTV.

The Second Circuit today affirmed a preliminary injunction against DIRECTV’s television ads featuring Jessica Simpson (as Daisy Duke from The Dukes of Hazzard) and William Shatner (as Captain Kirk from Star Trek).  The court held that the spots falsely implied that DIRECTV provided better high-definition picture quality than cable.  Time Warner Cable, Inc. v. DIRECTV, Inc., No. 07-04680-cv (2d Cir. Aug. 9, 2007).

The Simpson advert shows her as Daisy Duke the waitress:

Simpson: Y’all ready to order?

Hey, 253 straight days at the gym to get this body and you’re not gonna watch me on DIRECTV HD?

You’re just not gonna get the best picture out of some fancy big screen TV without DIRECTV. 

It’s broadcast in 1080i. I totally don’t know what that means, but I want it.

In the Shatner commercial, the action happens on the deck of the Starship Enterprise:

Mr. Chekov:  Should we raise our shields, Captain?

Captain Kirk:  At ease, Mr. Chekov.  Again with the shields.  I wish he’d just relax and enjoy the amazing picture clarity of the DIRECTV HD we just hooked up.

With what Starfleet just ponied up for this big screen TV, settling for cable would be illogical.

Mr. Spock:  [Clearing throat.]

Captain Kirk:  What, I can’t use that line?

Funny stuff.  Also, per the Second Circuit, false.

Oh, yes.  The court reversed in part.  Why?  Because it concluded that DIRECTV’s internet ads went so far over the top that nobody would believe them.

Barry Barnett

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The Fair Labor Standards Act authorizes "collective actions" into which workers seeking overtime or other compensation may opt.  But prospective opt-ins usually won’t know about their right to join a collective action unless they get notice of it.  And without notice they may lose their claims to expiry of the statute of limitations.

Today, the Ninth Circuit rejected an interlocutory effort to require such notice.  The court held that the "collateral order" doctrine didn’t apply because the plaintiffs could obtain effective relief after final judgment.  The court also refused mandamus relief.  McElmurry v. U.S. Bank Nat’l Ass’n , No. 05-36047 (9th Cir. Aug. 8, 2007).

Blawgletter sees good news and bad news in the outcome.  On the one hand, the rationale will allow FLSA cases in which courts grant collective action status and authorize notice to proceed without appellate delays.  But, on the other, this case will likely languish and may disappear as a result of the district court’s refusal to act.  C’est la guerre.

Barry Barnett

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Blawgletter doesn’t often see elegance in judicial opinions, but we do admire the Federal Circuit’s eight-page gem today in Boston Scientific Scimed, Inc. v. Medtronic Vascular, Inc., No. 06-1434 (Fed. Cir. Aug. 8, 2007). 

The court considered which among three patent applications had priority.  One patent owner alleged that a foreign application established its priority.  But the district court and the Federal Circuit disagreed.  A foreign filing counts only if the patent holder owned the application at the time of its filing.  And the rule applies even if, as in this case, the applicant later assigns the foreign application/patent to the patent holder.

That Circuit Judge Mayer can write!

Barry Barnett

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The False Claims Act pays people to report fraud and other misdeeds against the federal government.  They do it by filing a lawsuit under seal in federal court and sending a copy to the Department of Justice. 

But the law excludes claims "based upon" information already in the public domain.  Courts lack jurisdiction to hear those qui tam claims unless the relator qualifies as the "original source" of the public information.

What "based upon" and "original source" mean has given courts trouble.  (See July 27 post re Seventh Circuit’s minority position; the Tenth Circuit stuck to the majority rule.)  Yesterday, the Tenth Circuit considered whether the jurisdictional bar applies to an entire complaint if it alleges any claim "based upon" public information.  The court held that including three bad claims doesn’t necessarily spoil the other seven.  And so it remanded the case for a fresh look at the seven remaining claims.  United States ex rel. Boothe v. Sun Healthcare Group, Inc., No. 06-2156 (10th Cir. Aug. 7, 2007).

Barry Barnett

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A federal jury in San Francisco found the former chief executive officer of Brocade Communications guilty on 10 counts relating to backdating of stock options.  The verdict against Gregory Reyes represents the first conviction of a CEO for the practice.  Bloomberg reports:

Reyes was charged a year ago with securities fraud and conspiracy for misleading investors by backdating hundreds of employee stock grants in 2001 and 2002, including giving grants with dates that preceded hiring dates, and altering documents to hide the practice and inflate Brocade’s financial results.

Improper backdating enhances the grantees’ compensation at the expense of the company that granted the options.

Barry Barnett

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