U.S. Tenth Circuit Court of Appeals, Denver, Colorado

Senior Judge Bobby R. Baldock
Judge Carlos F. Lucero
Judge Michael W. McConnell

Stuart Singer for SCO
Michael Jacobs for Novell


Just got back.

May 06 2009 - 3:11 PM EDT

By Clocks - http://tinyurl.com/qa37d5

Just got back. Typing up my notes now.

Short version is that Stuart Singer would be LETHAL in front of a jury, that man is really really good with no base to stand on. I would be scared to see him in court when the facts are in his favor.

It really was an honor to have the chance to observe argument with really good pros working for each side. Makes me wish I had found the cash and time to attend the bench trial.

Short version? I think SCO came out "ahead" during argument but I wouldn't read too much into that as Ill get into in my full notes. Normand argued well but didn't do as good a job with time management in my opinion and spent most of his time on the timing of amendment two and thus got cut off by the time limit in addressing the 240(a) transfer issues.

Full notes headed to PJ's email shortly.

The amicus Ignored

May 06 2009 - 3:15 PM EDT

By Clocks - http://tinyurl.com/r3o74v

Oh, and the amicus was pretty well ignored, it was not even mentioned during oral argument by either the judges or the attorneys.

PJ has them now :)

May 06 2009 - 4:21 PM EDT

By Clocks - http://tinyurl.com/pttccl

PJ has them now but it might be a little bit before they go up. IT ended up being rather long typed up and she is welcome to do any editing she would like which may very well be substantial.

Sorry Jacobs

May 06 2009 - 4:44 PM EDT

By Clocks - http://tinyurl.com/q8yood

Referred back to my notes, it was indeed jacobs. Not sure why I have normand on the brain.

Report from Denver: The SCO v. Novell Appeals Court Hearing

May 06 2009 - 4:55 PM EDT

By Clocks - http://tinyurl.com/daqr7c

It's really important to understand that the format of an appeals oral argument is quite different from trial or some motion hearings. The judges are really an active presence here. Basically each side has 15 minutes on the clock in which to make their argument. There is little to no monologuing but rather, right from the start, the judges ask the attorneys questions during their time to probe for information that they need. The judges have already read all of the paperwork before them before walking into the room. They also come to the bench with some things they would like to see come out during oral argument, points of clarification or the attorney's position on a specific subject they are thinking about.

Oh, and remember that the appeals are generally focused on procedure and propriety of action, NOT the facts. Those are the domain of the court of first instance. The appeals court is looking more narrowly at the basic subject of "Should this case go back to the district court with some order to do something different this time?"

When you see the transcript, you will see what I'm talking about. There is a lot of back and forth between the judges and the attorneys. The judges have intelligence (generally) and a measure of wit as well, which comes out during questioning. In a case earlier in the day, there was a real gem where counsel for an immigration petitioner indicated that there was no way for her client to accurately provide an affidavit reflecting testimony from 5 months prior. She noted that any such statement from her client would "be likely to be self-serving." Justice Lucero responded "By all means, that's what the appeals court is all about; parties being self-serving.' [General laughter in the court room.]

I will also warn the folks reading this from generally reading too much into it. You are getting my notes on the questions that were asked and answers given. The judges are asking clarification around specific points that they would like to see more information on, or are looking to see what counsel are thinking about something the judge has already thought of. So let's say the court was leaning one way or another, they may still be asking hard questions around the edges of their leanings on the filed briefs which may be difficult for a party to answer -- even if the judges are leaning in that party's direction!

The case was brought before Carlos Lucero (first Hispanic judge on the 10th, by the way, and has served as president of the Colorado bar association among other posts), Senior Judge Bobby Baldock, and Judge Michael McConnell (for whom this was one of his last days on the bench for argument as he is resigning later this year to take a position at Stanford).

My impression was that Judge Baldock was largely silent, Lucero was coming from the perspective of trying to make the point that much of SCO's argument about getting to parole evidence relies on FIRST finding ambiguity in the contract, and McConnell spent much of his time in a back and forth with the parties over the specific relationship of Amendment 2 to the APA and was trying to find out exactly what amendment 2 did if "copyrights required for" the UNIX business was "a null set" and if that were the case, why does amendment 2 even exist?

Stuart Singer argued for SCO. Singer is amazing, and if he is put in front of a jury, there is no doubt in my mind that we would see some spectacular lawyering.

For those interested, the difference between mediocrity and the class of attorney we had here is shown in the coherence, flexibility, preparation, and articulation of both side's attorneys. They were both coherent and smooth, even on direct examination by the judges. Singer in particular seemed unflappable even when the judges repeatedly interrupted him early on from going down the path of discussing the strength of his client's parole evidence as moot until they determine that there is sufficient ambiguity to address it. Both attorneys felt polished, prepared, and likely had a number of prepared arguments in anticipation of probable questions, with the applicable statutes and cases memorized to support their arguments. They didn't get bogged down trying to make their point even under direct. Also, Singer did a good job with his last couple of minutes weaving in excerpts (out-of-context, to my ears) from Jacobs' argument that made it sound like Novell's position suited SCO's own. Great stuff.

** THESE NOTES ARE NOT COMPLETE (People talk way too fast for that) **

Lucero started, when calling the case, with a note of irony / muted sarcasm, calling the case and docket number and noting that "fortunately, this is not a contentious case." [Laughter in courtroom.]

Singer started for SCO.

Singer stated that the district court's error was in disregarding the ten strong witnesses they had to provide evidence around the business intent and was in the middle of making a statement to the effect that an opposing side usually has difficulty finding one witness from the other side that supports their position and that SCO has ten.

Baldock or McConnell (I didn't write down which) interrupted to note that we hadn't gotten that far yet. The court needs to find ambiguity to get to parole evidence and to look at the strength of your parole evidence; the APA has a plain exclusion for copyrights. Baldock jumped in with "I'm with Judge McConnell, it's pretty clear on this to me."

Singer restated the number of witnesses and was starting a statement around the business evidence that doesn't support that being the intent.

Court (didn't write down which judge said this) said that they "didn't want to get there yet".

SCO stated that "when you look at the APA with amendments it creates ambiguity". Asserted that Amendment 2 transferred the copyrights and the district court did not make their decision within Amendment 2 making any inferences with the reading most lenient to SCO in making summary judgment against them.

The court, McConnell in particular, asked about the chronology of the agreements and some of the work that Novell did to specifically add a clause that stated the effective date of Amendment 2. They asked Singer whether that had any impact on the issue here. Singer stated that it did not and that it is their client's decision that the dating of Amendment 2 within the document is irrelevant. McConnell came back with "I find it mysterious that they would insist on language which you say makes no difference at all."

SCO said that the amendment date does not change how it modifies the APA and that all of the causes of action related to this case are after Amendment 2 was signed anyway. He reiterated SCO's position that Amendment 2's date is irrelevant.

McConnell asked SCO about the differences in language between Amendment 2 and the representations that were made in SCO's brief. The difference of "required for versus "pertains to". "I think we can all agree that required for is narrower than pertains to".

Singer stated that he thought that was arguable and was going to go on and McConnell stated something to the effect of "yet you seem to be making your case based on the 'pertains to' argument when the language is 'required for'"

SCO finished its time saying that they are asking for remand to a jury to appropriately put the issues of whether the contract was clear and whether the copyright transferred before a jury.

Michael Jacobs for Novell then took the podium and stated that there is a chronology to making these kinds of agreements. There are business negotiations that happen that form the basic intent of what they want to do with a legal document. Then there are the legal negotiations where a different team takes over and implements the technical parts to make sure that each party is properly protected in whatever instrument is created to execute the business intent. Bringing in the negotiators from the business portions of the agreement process is irrelevant, and they would be unqualified to provide evidence as they are not competent on the legal mechanisms required to implement the business agreement.

Also stated that when you look at the amendment on top of the APA, it's an integrated whole -- it's not a separate agreement that could create ambiguity between the two.

Lucero asked about whether or not Amendment 2 created ambiguity in a document that was on its face apparently clear in the form of the APA and Amendment 1. Jacobs said to look at it as the "entire package" and that the judge should not have to look at the extrinsic evidence to make a determination on the contracts.

McConnell said that the amendment was a clarification to the APA and if that is a clarification and if the legal language is inconsistent between the agreement and the amendment, does it create an inconsistency?

Jacobs replied to the effect that the amendment is controlling because in the chronology it specifically states that it is amending the terms of the previous agreements.

McConnell stated something to the effect that the language for the exclusion in Amendment 2 includes all copyrights and trademarks other than the ones "that are required". He also said that he has no problem with the premise that they have not shown what is required and the appeals court likely will not rule on that, but he didn't see how that would not be an issue for trial.

Jacobs indicated that 204(a) has to be met and there plainly needs to be an instrument of transfer.

Lucero asked how Novell would characterize the sale.

Jacobs stated that SCO purchased the developers, the business licenses, the sales streams -- much like some of the other business deals. Without the copyrights, they get rights and didn't need ownership of the copyrights to carry on that business.

The court (I didn't note which judge) stated that Jacobs was making it sound like SCO was another licensee when it is the impression of the judges that the deal with Santa Cruz was more expansive than that. Jacobs clarified the way that SCO purchased the business and explained that what they purchased was the right to take over the revenue stream and act as Novell's agent.

SCO took the podium with just another minute or two of time (including a small extension because Novell went over slightly).

Before SCO said anything, McConnell commented that "I hope you will address the 204(a) issue."

Singer stated that he believed that the contracts satisfy 204(a) as 204(a) even lists a memorandum as a means of conveyance for contracts.

McConnell asked, if the first transfer used a bill of sale then how does Amendment 2 relate to that first bill of sale, when there is no other bill of sale for further asset transfer?

SCO replied that they felt that Amendment 2 is like a curative deed in that it was retroactively correcting the bill of sale through a contract to address a loophole that had come up in a dispute with IBM before Amendment 2 had been signed.

McConnell said something about he didn't entirely accept that line of reasoning and treating the contract amendment like a curative deed and Lucero indicated SCO was out of time at that point and made his speech about the appeal being fully briefed.

Nice. Because I didnt write those quotes in my report here.

May 06 2009 - 10:24 PM EDT

By Clocks - http://tinyurl.com/qap96k

Which means you were there too. Gee I wonder who would write the full quotes that I paraphrased above and choose those as thier favorite quotes...

Is that you "snowshoes"?

May 06 2009 - 10:31 PM EDT

By Clocks - http://tinyurl.com/pbpcwn

Oh and McConnell was definitely investigating along those lines but Lucero and Baldock definitely seemed to be looking in other directions. Lucero in fact repeatedly made comments about the contract seeming clear it was one of the first comments he made to singer and came up repeatedly indicating that he didnt feel there was really ambiguity there.

I think its going to come down to the judges' discussion of Amendment 2 and whether there is sufficient ambiguity there to force a trial.

If McConnell is the only one leaning in that direction, and all we have to judge by is some of his lines of questioning, including some which were more difficult to singer, its difficult to excerpt a handful of one judge's line of inquiry and make broad pronouncements of the overall direction of the appeal on that basis.

Is that you "snowshoes"?

May 07 2009 - 02:34 PM EDT

By Anonymous - http://tinyurl.com/pncbpw

Clocks (and anyone else) - to me, that quote seems worrisome. Isn't the judge basically implying something along the lines of "Novell, that position makes no sense?"

Should I be reading it some other way?

Is that you "snowshoes"?

May 07 2009 - 03:24 PM EDT

By Clocks - http://tinyurl.com/o27cyz

Yes, one of several comments from mcconnell that kind of worried me but remember that on appeal there are THREE judges. Notably, Lucero and Baldock did not really jump into that lock of questioning. Instead, they were asking more questions around the chronology of the documents and seemed to be looking for more information about how the amendment related to the contract itself.

I dont see how legally you could say that an amendment that was at odds with the original contract could make the overall whole ambiguous. Its an AMENDMENT for gosh sakes. They AMEND things. AMEND means change, even in a legal context :)

The only real ambiguity here is whether they determine that the "required for" exception from the contractual IP exception (yes that is a double negative) was ambiguous and hence required parole evidence, hence making the district summary judgement on the subject improper, and hence demanding a remand for jury trial on whether the copyrights transferred.

Report from Denver: The SCO v. Novell Appeals Court Hearing

May 07 2009 - 04:14 PM EDT

By Anonymous

Let me report what I heard in the courtroom. Judge McConnell (brilliant, BTW) stated that SCO's position that Amendment 2 was a clarification of the intent of the deal and conformed the deal to what the parties had already agreed to. He said "that strikes me as very reasonable and logical."

When Novell's lawyer tried to advance the fiction that Santa Cruz was simply a licensee to UNIX just like IBM and HP, Judge McConnell squashed him and said "so you're telling me the Santa Cruz agreement here is just like IBM's?" Novell: "Er, ah, no its an APA."

Judge: "That is what I recall, Santa Cruz bought the WHOLE business, they're not just a licensee."

Novell: "Ya, but . . . "

Judge Lucero: "Novell would you please just respond to our questions, for once."

Judge McConnell: "Do you seriously want us to believe that Amendment 2 accomplished nothing? Transferred no copyrights at all?"

Novell: "That's our position."

Judge: "Sorry, that is just unreasonable. I can't agree with you and I cant see any way you will be able to avoid a trial."

Judge to SCO: "You are simply asking us to remand this back to the district court for trial, right?"

SCO: "Yes, your honor."

Judge: "That is what I thought; thank you."

PJ knowing your view that there can never, ever, ever; no matter what, be any positive news for SCO, I'm still surprised that you are encouraged by what happened yesterday. My observation is that Novell got its head handed to it. .

Report from Denver: The SCO v. Novell Appeals Court Hearing

May 07 2009 - 07:57 PM EDT

By PJ - http://tinyurl.com/o8gvmr

So, since you are clearly a SCO insider, how about sharing a transcript with us, so we can verify?

I was going to write to both Novell and SCO and ask, but since you came here, how about it? We'd love to see it, and as you know, there is no transcript for the public. That of course makes it possible to write any old thing and pretend it happened, but the way to let me weigh the value of your comment would be to see a transcript. If you are correct, I will not only acknowledge it, I'll publish it so the whole world can read it, if you give permission.

I would also like to ask you some questions:

1. I have long wondered if there was some kind of anticipated help SCO was expecting from an appellate judge, specifically the judge appointed by Bush, and I also wondered if that was why SCO was in such a rush to get the appeal going, before he retired. I do recall that at the very beginning of the case, a SCO executive told us that we should not be surprised if the Bush administration entered into the case. That didn't happen, but at the same time, we see, according to your account, that the very judge I've wondered about seemed to be favoring SCO.

Can you or anyone there comment?

2. Did Darl attend? He told the Salt Lake Tribune that he flew to Denver to attend, but did he?

And I'll answer your question honestly. I don't really care about the appeal. Even if it is remanded, I don't really think it much matters to the ultimate outcome. And personally, I would welcome it, because there are some issues that didn't make it into an appeal by Novell, but I think they would be effective before a jury, and I expect if the case is remanded that there will be an opportunity to present them.

What do you see as your strongest argument, by the way? Why don't you write an article about it for Groklaw? Love to publish it. Seriously. Darl, Tibbits, Singer, take your pick.


May 08 2009 - 9:00 AM EDT

By Clocks - http://tinyurl.com/qnaqgr

Heres the thing,

With McConnell so active on that line (among several that were brought up) and I take issue with none of hte INDIVIDUAL quotes above (except the one from Lucero), I take issue with them being edited together and the interjection from Lucero.

I also take exception with anyone characterizing that Novell got their rears handed to them. I think that the any such implication would be, at the least, ignorant based on the hearing and understanding how an appellate court works and how decisions are reached.

To clarify this issue a little bit, ill repost some of my commentary to PJ from a side conversation.


Re my feeling on the judges, I think the retiring one is actually going to be the biggest problem. He posed some tough questions on each side but I came away with the feeling that he was the only one at all persuaded to really look deeper at the parole evidence. He seemed more willing to find ambiguity between the amendment and the APA and easily asked 90% of the questions. Lucero and Baldock definitely were a lot quieter and interjected a question here and there but McConnell definitely owned most of the questioning.

At one point McConnell made a comment that piqued my attention after novell presented their argument that there is one set of people who do the business and one set who do the legal and what really matters is the people who did the legal, not one of whom SCO has and that this does not create ambiguity, this creates business people testifying to what they thought they were talking about, which as you probably well know as a paralegal does not always exactly match with what the legal instrument HAS to be. Sometimes the business stuff gets changed because if you don’t change it at the legal level, your contract potentially gives away the farm.

McConnell seemed to buy SCO's position on that and said that if the legal contract doesn’t reflect what the business people were trying to do, potentially the legal document is then unclear and he didn’t see how anyone could make a determination on that without looking at parole evidence which is rightfully the purview of the jury. He made some other comments at other points that kind of argued against that position too. Some of his comments might have been to probe the attorneys on each side so its hard to know what he really was going for in them.

Lucero made comments early and often that to my outside mind seemed geared towards trying to shut down that line of argument. Baldock really only interjected a handful of times and it was mostly on points that lucero was making along the lines of identifying the contracts and determining how something would be required for the business.

To be honest, I really don’t know where the some of the chronology questions were coming from or going to. With contracts at work, we do amendments all the time, so its not like its not common or the appeals court had not seen this 100 times before. I can only imagine they have been talking amongst themselves about it. They wasted an awful lot of time on it which left little time for the 204(a) issues which I think SCO "won" handily in terms of what was discussed mainly on the point of them having both the last word and the willingness to kind of bend what Jacobs had said.


Clarifying what i meant by that last paragraph:


I wouldn’t say they prevailed on the law, I was speaking more in the effectiveness of the presentation. It wasn’t so much style as they had easily 3 times the time that Jacobs had to address the point. And the active judge (McConnell) was definitely active with a number of questions on the subject.

Their primary focus on that was that the law specifies several things including something like "a memorandum" and that what the amendment constitutes was more substantial than that, it was a contract which spefieid that copryrights required for the business transferred. One of the questions that Jacobs got from Mconnell thinking back on it was something to the effect of "Wouldn’t the copyrights be 'required for' the business if as part of the business you were suing
to enforce your rights?" Jacobs response was in the negative that in his view they would not be because Novell who granted the business license still had the copyrights, Sco was a licensed user of such and thus they would still have causes of action to enforce against someone misusing the unix product.

As I noted in my earlier email, I don’t think that it necessarily means that they will earn a remand order in their favor but having seen mcconnell and the way that oral went, if I were a betting man, id say it was 60/40 against that SCO will get a jury trial out of the appeal. Its not certain by any means but its also not the remote chance that I think all of us in the community want it to be.


Another thing that I didn't put in my notes above because it really wasn't relevant, Lucero said at the end that "We appreciate the superb arguments on both sides" and stressed both. Its not relevant in dealing with the issues and the parties but it IS relevant, I think on putting to bed trolls that attempt to make it seem like Lucero felt Novell was withholding or misdirecting.

Part of the problem here is that we aren't likely to get the transcript as it is not released to the public. So these kinds of things can be posted, etc, and there is no clear way to refute them or really to support them (Im betting even if we got ahold of the transcript, it probably SHOULDN'T be posted as that is the clear intent of not making one publicly available from the court in the first place.)

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