throbber
FILED
`United States Court of Appeals
`Tenth Circuit
`August 24, 2009
`Elisabeth A. Shumaker
`Clerk of Court
`UNITED STATES COURT OF APPEALS
`
`PUBLISH
`
`TENTH CIRCUIT
`
`THE SCO GROUP, INC.,
`
`Plaintiff-Appellant,
`
`v.
`NOVELL, INC.,
`
`Defendant-Appellee.
`
`No. 08-4217
`
`APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF UTAH
`(D.C. NO. 2:04-CV-00139-DAK)
`
`Stuart Singer, Boies, Schiller & Flexner LLP, Fort Lauderdale, Florida (David
`Boies, Robert Silver, and Edward Normand, Boies Schiller & Flexner LLP,
`Armonk, New York; Brent O. Hatch, Mark F. James, Hatch, James & Dodge, PC,
`Salt Lake City, Utah; Devan V. Padmanabhan, Dorsey & Whitney LLP,
`Minneapolis, Minnesota with him on the briefs) for Plaintiff-Appellant.
`
`Michael Jacobs, Morrison & Foerster LLP, San Francisco, California (George C.
`Harris, Grant L. Kim, David E. Melaugh, Morrison & Foerster LLP, San
`Francisco, California; Thomas R. Karrenberg, Heather M. Sneddon, Anderson &
`Karrenberg, Salt Lake City, Utah with him on the briefs) for Defendant-Appellee.
`
`Before LUCERO, BALDOCK and McCONNELL, Circuit Judges.
`
`McCONNELL, Circuit Judge.
`
`

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`This case primarily involves a dispute between SCO and Novell regarding
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`the scope of intellectual property in certain UNIX and UnixWare technology and
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`other rights retained by Novell following the sale of part of its UNIX business to
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`Santa Cruz, a predecessor corporate entity to SCO, in the mid-1990s. Following
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`competing motions for summary judgment, the district court issued a detailed
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`opinion granting summary judgment to Novell on many of the key issues. We
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`affirm the judgment of the district court in part, reverse in part, and remand for
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`trial on the remaining issues.
`
`I. Background
`
`We begin by laying out some of the basic facts underlying Novell’s transfer
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`of certain UNIX-related assets to Santa Cruz, as well as the background to the
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`instant litigation. Other facts will be discussed as the issues require.1
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`A. The UNIX Business and the Sale to Santa Cruz
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`UNIX is a computer operating system originally developed in the late
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`1960s at AT&T. By the 1980s, AT&T had developed UNIX System V (“SVRX”);
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`it built a substantial business by licensing UNIX source code to a number of
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`major computer manufacturers, including IBM, Sun, and Hewlett-Packard. These
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`manufacturers, in turn, would use the SVRX source code to develop their own
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`individualized UNIX-derived “flavors” for use on their computer systems.
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`1 The motion of Wayne R. Gray, for leave to file a brief as amicus curiae, is
`denied.
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`-2-
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`

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`Licensees could modify the source code and create derivative products mostly for
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`internal use, but agreed to keep the UNIX source code confidential.
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`In 1993, Novell paid over $300 million to purchase UNIX System
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`Laboratories, the AT&T spin-off that owned the UNIX copyrights and licenses.
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`Only two years later, however, Novell decided to sell its UNIX business.
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`Although Novell may have initially intended “to sell the complete UNIX
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`business,” both parties agree that Santa Cruz was either unwilling or unable to
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`commit sufficient financial resources to purchase the entire UNIX business
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`outright. App’x 8610; Aplt. Br. 8; Aple. Br. 5. The deal was therefore
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`structured so that Novell would retain a 95% interest in SVRX license royalties,
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`which had totaled $50 million in 1995.
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`The transfer of Unix-related rights occurred pursuant to three documents:
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`an asset purchase agreement (“APA”) executed on September 19, 1995;
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`“Amendment No. 1” signed by the parties at the actual closing on December 6,
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`1995; and “Amendment No. 2” on October 16, 1996. The APA provided that:
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`“Buyer will purchase and acquire from Seller on the Closing Date . .
`. all of Seller’s right, title, and interest in and to the assets and
`properties of Seller relating to the Business (collectively the
`“Assets”) identified on Schedule 1.1(a). Notwithstanding the
`foregoing, the Assets to be so purchased shall not include those
`assets (the “Excluded Assets”) set forth on Schedule 1.1(b).
`
`Schedule 1.1(a) included within the list of “Assets” transferred, “[a]ll rights and
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`ownership of UNIX and UnixWare.” App’x 313. Section V of the Asset
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`-3-
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`

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`Schedule, entitled “Intellectual property” provided that Santa Cruz would obtain
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`“[t]rademarks UNIX and UnixWare as and to the extent held by Seller” but did
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`not explicitly mention copyrights. App’x 315. In contrast, Schedule 1.1(b), the
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`list of assets excluded from the deal, did expressly speak to copyrights. Section
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`V—“Intellectual Property”—explained that “All copyrights and trademarks,
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`except for the trademarks UNIX and UnixWare,” as well as “[a]ll [p]atents,” were
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`excluded from the deal. App’x 318 (emphasis added).
`
`Less than a year after the deal closed, the parties agreed to Amendment No.
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`2, which amended the APA’s treatment of copyrights. Amendment No. 2
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`provided that:
`
`With respect to Schedule 1.1(b) of the Agreement, titled ‘Excluded
`Assets’, Section V, Subsection A shall be revised to read:
`
`All copyrights and trademarks, except for the copyrights and
`trademarks owned by Novell as of the date of the Agreement required
`for SCO to exercise its rights with respect to the acquisition of UNIX
`and UnixWare technologies. However, in no event shall Novell be
`liable to SCO for any claim brought by any third party pertaining to
`said copyrights and trademarks.
`
`App’x 374.
`
`The APA separately purported to give Novell certain residual control over
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`“SVRX Licenses.” Section 4.16(b) of the agreement provided that:
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`Buyer shall not, and shall not have the authority to, amend, modify
`or waive any right under or assign any SVRX License without the
`prior written consent of Seller. In addition, at Seller’s sole discretion
`and direction, Buyer shall amend, supplement, modify or waive any
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`-4-
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`

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`rights under, or shall assign any rights to, any SVRX License to the
`extent so directed in any manner or respect by Seller.
`
`The parties differ markedly in their characterization of the rights
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`transferred to Santa Cruz and the value of the deal. According to SCO, Santa
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`Cruz purchased the bulk of the business, including the core UNIX copyrights, for
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`$250 million, but Novell retained a 95% interest in royalties as a “financing
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`device.” According to Novell, SCO’s $250 million figure improperly inflates the
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`value of the deal, by accounting not only for the value of assets actually
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`transferred by SCO to Novell, but including the share of the SVRX royalty stream
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`retained by Novell. See Aple. Br. 5 n1. Novell calculates that it received only
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`about $50 million in stock, as well as a promised share of the “UnixWare”
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`revenue stream exceeding certain targets. Novell contends that it retained
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`ownership of the UNIX copyrights, extending only an implied license to Santa
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`Cruz to use the copyrights, for instance, to develop and distribute an improved
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`version of Novell’s “UnixWare” product.
`
`In support of its understanding of the transaction, SCO relies heavily on
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`extrinsic evidence of the parties’ intent at the time of the APA—including
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`testimony from Novell’s leadership at the time—suggesting that the parties’ intent
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`was to transfer the copyrights. For instance, Robert Frankenberg, then President
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`and CEO of Novell, testified that it was his “initial intent,” his “intent at the time
`
`when the APA was signed,” and his “intent when that transaction closed” that
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`-5-
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`

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`“Novell would transfer the copyrights to UNIX and UnixWare technology to
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`Santa Cruz” and that “that intent never changed.” App’x 8563. Similarly, Ed
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`Chatlos, a Senior Director for UNIX Strategic Partnerships and Business
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`Development within Novell’s Strategic Relations and Mergers and Acquisitions
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`organization, submitted an affidavit affirming SCO’s version of the facts. See
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`App’x 8659–60:
`
`In or about June 1995, I became the lead negotiator for Novell in the
`negotiations with SCO and headed the day-to-day responsibility for
`the potential deal. . . . During these negotiations, I met regularly with
`SCO representatives. . . . Early in our discussions, it became
`apparent that SCO could not pay the full purchase price as
`contemplated by Novell. To bridge the price gap, it was ultimately
`agreed that Novell would retain certain binary royalty payments
`under UNIX licenses. It was my understanding and intent, on behalf
`of Novell—that the complete UNIX business would be transferred to
`SCO.
`
`Novell, in contrast, defends its interpretation of the transaction largely by
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`pointing to the language of the contract itself, and by arguing that the witnesses
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`put forward by SCO to offer extrinsic evidence of the parties’ intent lacked any
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`familiarity with the actual drafting of the APA’s language or Amendment No. 2.
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`See Aple. Br. 6–10. At oral argument, Novell suggested that whatever the intent
`
`of the business negotiators involved in the deal, it was superseded by the work of
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`those lawyers who ultimately negotiated the language of the contract that governs
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`the transaction.
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`-6-
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`

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`B. Proceedings Below
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`In May 2001, Santa Cruz sold its UNIX business to Caldera, the immediate
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`predecessor to SCO. Santa Cruz purported to transfer its interest in the UNIX and
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`UnixWare copyrights to Caldera / SCO. In 2002 and 2003, tensions increased
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`between Novell and SCO. SCO asserted that users of Linux, an alternative to
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`UNIX, might be infringing on SCO’s UNIX-related intellectual property rights.
`
`See App’x 7178. It purported to offer Linux users the opportunity to purchase an
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`intellectual property license in order to continue using Linux without infringing
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`any of SCO’s copyrights. See id.; Aple. Br. 13. In March 2003, SCO brought
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`contract and copyright claims against IBM on the basis of SCO’s alleged
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`intellectual property rights in UNIX. Novell then directed SCO “to waive any
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`purported right SCO may claim to terminate [certain of] IBM’s SVRX Licenses,”
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`on the basis of its aforementioned waiver rights, set out in Section 4.16 of the
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`APA. After SCO refused, Novell ultimately claimed publicly that it—rather than
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`SCO—maintained ownership over the UNIX copyrights. App’x 5875.
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`SCO filed a slander of title action against Novell. Novell asserted
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`counterclaims for slander of title, breach of contract, and unjust enrichment. Both
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`parties then proceeded to amend their pleadings to add additional claims and
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`counterclaims. After the parties filed dueling motions for summary judgment, the
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`United States District Court for the District of Utah issued a detailed
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`memorandum decision and order on August 10, 2007.
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`-7-
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`

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`The district court first concluded that Novell is the owner of the UNIX and
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`UnixWare copyrights. It reviewed the APA and Amendment No. 2 separately and
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`sequentially. See Dist. Ct. Op. 45–46. The court found that the plain language of
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`the APA indicated that the UNIX copyrights were not transferred to Santa Cruz.
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`See Dist. Ct. Op. 52. The court also determined that Amendment No. 2 did not
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`transfer ownership of the copyrights. See id. at 59. It reasoned that “[u]nlike the
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`APA, Amendment No. 2 was not accompanied by a separate ‘Bill of Sale’
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`transferring any assets.” Id. In addition, it found persuasive that Amendment No.
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`2 amended only the list of excluded assets from the transaction (Schedule 1.1(b)),
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`but did not alter the language of the list of included assets (Schedule 1.1(a)).
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`Finally, the court determined that Amendment No. 2 did not sufficiently identify
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`which copyrights were to change hands, and therefore failed to satisfy the
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`requirements necessary to transfer ownership of a copyright under Section 204(a)
`
`of the Copyright Act, 17 U.S.C. § 204(a).
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`Having found that SCO’s assertions of copyright ownership were false, the
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`court granted summary judgment to Novell on SCO’s claims alleging slander of
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`title and seeking specific performance of Novell’s alleged duty to transfer
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`ownership of the UNIX and UnixWare copyrights to SCO. See Dist. Ct. Op. 62.
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`The court also rejected SCO’s claims against Novell for unfair competition under
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`Utah common law or statutory law, or for breach of the implied covenant of good
`
`faith under California law. See id. at 63.
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`-8-
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`

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`Next, the court reviewed the parties’ competing cross motions regarding
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`whether the APA authorized Novell to direct SCO to waive its claims against
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`IBM and Sequent (which had been acquired by IBM in 1999) for alleged breach
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`of their SVRX license agreements. The parties disputed both whether the IBM
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`and Sequent Sublicensing Agreements were “SVRX Licenses” within the meaning
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`of the APA, as well as the scope of provisions in the APA purportedly authorizing
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`Novell to take action on SCO’s behalf after SCO refused to waive the claims. See
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`id. at 76. Although the district court agreed with SCO that “there appears to be
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`some ambiguity in the APA’s attempt to define SVRX Licenses,” id. at 78, it
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`ultimately found “no support in the language and structure of the APA for SCO’s
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`interpretation of SVRX License[s].” Id. at 86. It therefore concluded that
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`“SVRX Licenses” referred to the “entire set of agreements relating to the
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`licensing of SVRX code.” Id. As a result, the court found that Novell “was and
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`is entitled, at its sole discretion, to direct SCO to waive its purported claims
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`against IBM and Sequent, and [that] SCO is obligated to recognize Novell’s
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`waiver.” Id. at 88. Having determined that SCO gave Novell the right to waive
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`SCO’s claims by virtue of “an explicit grant of contractual authority,” the court
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`also concluded that California law precluded the application of the covenant of
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`good faith and fair dealing. Id. at 87.
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`Finally, the court addressed Novell’s entitlement to royalties from certain
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`licensing agreements entered into between SCO and Sun and Microsoft in 2003.
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`-9-
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`The court found that SCO’s duty to turn over revenue from SVRX licenses was
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`not limited only to licenses existing at the time of the APA. See id. at 93. It also
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`concluded that the Sun agreement represented an unauthorized amendment to an
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`SVRX License, in violation of Section 4.16(b) of the APA. As a result, it
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`concluded that “SCO breached its fiduciary duties to Novell by failing to account
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`for and remit the appropriate SVRX Royalty payments to Novell for the SVRX
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`portions of the 2003 Sun and Microsoft Agreements.” Id. at 96. After a later
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`bench trial on the value of payments due to Novell, the district court awarded
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`Novell judgment in the amount of $2,547,817. Findings of Fact, July 16, 2008 at
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`42.2
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`On appeal, SCO challenges various aspects of the decision below. It argues
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`that the district court erred by concluding, as a matter of law, that (1) Santa Cruz
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`did not obtain the UNIX and UnixWare copyrights from Novell, but instead
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`acquired only an implied license; (2) SCO was not now entitled to specific
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`performance—the transfer of any copyrights not transferred by the APA; (3)
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`Novell has the right under the APA to force SCO to waive legal claims against
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`IBM for its alleged breach of software and sublicensing agreements; (4) Novell
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`did not have to comply with the implied covenant of good faith and fair dealing in
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`2The district court also issued a number of rulings regarding specific
`arguments made in support of both parties’ claims and counterclaims. To the
`extent that those rulings do not directly affect the substance of this appeal, we do
`not address them.
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`-10-
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`exercising any waiver rights; (5) Novell retained an interest in royalties from
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`SCO’s 2003 agreement with Sun Microsystems and other post-APA contracts
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`related to SVRX technology. We address each argument in turn.
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`II. The Ownership of UNIX and UnixWare Copyrights
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`We begin by reviewing the district court’s decision to grant summary
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`judgment to Novell with regard to SCO’s claims of ownership in the UNIX and
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`UnixWare copyrights. Summary judgment is appropriate only “if the pleadings,
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`depositions, answers to interrogatories, and admissions on file, together with the
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`affidavits, if any, show that there is no genuine issue as to any material fact and
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`that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P.
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`56(c). “When applying this standard, we view the evidence and draw reasonable
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`inferences therefrom in the light most favorable to the nonmoving party.”
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`Davidson v. America Online, Inc., 337 F.3d 1179, 1182 (10th Cir. 2003) (citation
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`omitted). We review the district court’s grant of summary judgment de novo. Id.
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`SCO argues that the district court erred by interpreting the APA and
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`Amendment No. 2 as separate and independent. It further contends that the text
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`of the APA and Amendment No. 2 is at least ambiguous concerning whether the
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`parties intended to transfer ownership of the copyrights, making it appropriate to
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`consider extrinsic evidence. SCO asserts that a thorough review of extrinsic
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`evidence makes summary judgment inappropriate on whether the copyrights were
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`transferred by the transaction. Finally, SCO argues that the language in the APA
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`-11-
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`and Amendment No. 2 was sufficient to meet the requirements to transfer
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`ownership of a copyright under the Section 204(a) of the Copyright Act.
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`Novell, in contrast, argues that we ought to consider the APA and
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`Amendment No. 2 separately. It asserts that the plain language of the APA itself
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`unambiguously did not transfer copyright ownership, making consideration of
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`parol evidence inappropriate. As for Amendment No. 2, Novell contends that no
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`admissible extrinsic evidence shows that it was intended to transfer copyright
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`ownership. Additionally, Novell claims that “SCO presented no evidence that
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`copyright ownership was required to exercise its APA rights.” Aple. Br. 33
`
`(emphasis added). Because Amendment No. 2 revised the excluded assets
`
`schedule so as to allow only for transfer of those “copyrights . . . owned by
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`Novell as of the date of the Agreement required for SCO to exercise its rights
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`with respect to the acquisition of UNIX and UnixWare technologies,” Novell
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`argues that SCO has failed to demonstrate that any copyrights were transferred.
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`Finally, Novell argues that any purported transfer of copyrights did not meet the
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`requirements for transfer of ownership under the Copyright Act.
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`We will proceed in three steps, asking first, whether the APA and
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`Amendment No. 2 should be considered separately or together; second, whether
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`the APA and Amendment No. 2 satisfy any requirements imposed by the
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`Copyright Act in order to effect a transfer of copyright ownership; and third,
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`-12-
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`whether the district court erred by concluding, as a matter of law, that the
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`transaction’s language and any admissible extrinsic evidence could not support
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`the conclusion that Novell and Santa Cruz intended the copyrights to transfer.
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`A. Should We Consider APA and Amendment No. 2 Separately or Together?
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`The parties initially contest whether Amendment No. 2 should be read
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`separately from the APA or together with it, as a successive writing elucidating
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`the parties’ intent in the original document. As we explain below, our disposition
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`on this point is important primarily because it operates to fix the scope of
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`extrinsic evidence admissible to clarify the contract.
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`California law “generally prohibits the introduction of any extrinsic
`
`evidence to vary or contradict the terms of an integrated written instrument.”
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`Gerdlund v. Elec. Dispensers Int’l, 190 Cal. App. 3d 263, 270 (Cal. Ct. App.
`
`1987). California’s parol evidence rule provides that “[t]erms set forth in a
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`writing intended by the parties as a final expression of their agreement . . . may
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`not be contradicted by evidence of any prior agreement or of a contemporaneous
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`oral agreement.” Cal. Code Civ. Proc. § 1856(a). Such a writing “may not be
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`contradicted by even the most persuasive evidence of collateral agreements. Such
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`evidence is legally irrelevant.” EPA Real Estate P’ship v. Kang, 12 Cal. App. 4th
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`171, 175 (Cal. Ct. App. 1992); see also Gerdlund, 190 Cal. App. 3d at 270 (Cal.
`
`Ct. App. 1987) (although all parties testified that they shared same intent as to
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`employment agreement, evidence was not admissible to prove meaning of
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`-13-
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`contract where plain language of contract could not support that interpretation).
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`The rule “is based upon the premise that the written instrument is the agreement
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`of the parties.” Id. (citing Tahoe Nat’l Bank v. Phillips, 480 P.2d 320, 4 Cal.3d
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`11, 22–23 (Cal. 1971)).
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`On the other hand, “[e]ven if a contract appears unambiguous on its face,
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`California law permits the use of extrinsic evidence to expose “a latent ambiguity
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`. . . which reveals more than one possible meaning to which the language of the
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`contract is yet reasonably susceptible.” Dore v. Arnold Worldwide, Inc., 139 P.3d
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`56, 60 (Cal. 2006) (emphasis added). “The test of admissibility of extrinsic
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`evidence to explain the meaning of a written instrument is not whether it appears
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`to the court to be plain and unambiguous on its face, but whether the offered
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`evidence is relevant to prove a meaning to which the language of the instrument is
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`reasonably susceptible.” Id. (quoting Pacific Gas & E. Co. v. G.W. Thomas
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`Drayage & Rigging Co., 442 P.2d 641, 644 (Cal. 1968)). Thus, California law
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`does not permit the use of extrinsic evidence to establish an ambiguity in the
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`parties’ intent independent from the terms of the contract; instead, it can only be
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`used to expose or resolve a latent ambiguity in the language of the agreement
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`itself.
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`If we were to interpret the contract based initially only on the APA
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`itself—without regard to Amendment No. 2—we agree that its language
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`unambiguously excludes the transfer of copyrights. Although SCO argues that
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`the asset schedule approves of the transfer of “[a]ll rights and ownership of UNIX
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`and UnixWare” to SCO, this ignores that the APA explicitly provides that
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`“Notwithstanding [those assets listed on the Asset Schedule], the Assets to be so
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`purchased shall not include those assets (the “Excluded Assets”) set forth on
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`Schedule 1.1(b).” App’x 264–65. Schedule 1.1(b), in turn, explains
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`straightforwardly that “all copyrights” were excluded from the transaction. App’x
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`318. None of SCO’s extrinsic evidence explains how the actual language of the
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`APA is “reasonably susceptible” to its interpretation of the transaction—namely,
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`that all relevant copyrights were transferred (or in other words, the exact opposite
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`of what the APA’s language suggests). See Dist. Ct. Op. 46–51 (explaining why
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`the language of the APA itself cannot bear the interpretation that copyrights
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`transferred to SCO). Novell argues, therefore, that we ought not consider any of
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`SCO’s extrinsic evidence bearing on the development of the APA itself, and limit
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`any inquiry beyond the text of the agreement to the course of the parties’
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`negotiations over Amendment No. 2.
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`But if we understand Amendment No. 2 to clarify the parties’ original
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`intent as to the transfer of copyrights, SCO’s extrinsic evidence concerning the
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`business negotiations may be relevant to resolving ambiguity concerning the
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`content of that original intent. Indeed, SCO argues that Amendment No. 2 was
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`designed to bring the language of the transaction in line with the parties’ original
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`intent to transfer the copyrights. See Aplt. R. Br. 10 (“Amendment No. 2
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`clarified the APA to confirm that the copyrights had been transferred
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`thereunder.”) Of course, Novell disputes this characterization of Amendment No.
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`2. But unlike the language of the APA itself, the contractual language of
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`Amendment No. 2 concerning the transfer of copyrights is ambiguous.
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`Amendment No. 2 revises the excluded asset schedule to limit those copyrights
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`excluded from the transaction to “[a]ll copyrights and trademarks, except for the
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`copyrights and trademarks owned by Novell as of the date of the Agreement
`
`required for SCO to exercise its rights with respect to the acquisition of UNIX
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`and UnixWare technologies.” App’x 374 (emphasis added). Because what
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`copyrights are “required” for SCO to exercise its rights under the agreement is not
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`clear on its face, California law allows courts to consider extrinsic evidence to
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`resolve the ambiguity. See ASP Properties Group v. Fard, Inc., 133 Cal. Rptr. 3d
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`343, 349 (Cal. Ct. App. 2005). Thus, to the extent that it is proper for us to read
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`Amendment No. 2 as clarifying the APA, SCO’s extrinsic evidence of the
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`business negotiators’ intent concerning the transaction ought to be admissible.
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`Having closely considered the parties’ arguments, as well as the district
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`court’s reasoning, we find that Amendment No. 2 must be considered together
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`with the APA as a unified document. Under California law, “[s]everal contracts
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`relating to the same matters, between the same parties, and made as parts of
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`substantially one transaction, are to be taken together.” Cal. Civ. Code § 1642.
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`“[M]ultiple writings must be considered together when part of the same contract.”
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`Nish Noroian Farms v. Agric. Labor Relations Bd., 35 Cal. 3d 726, 735 (Cal.
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`1984). Even if we considered the language of the APA and Amendment No. 2 to
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`be mutually antagonistic, California law still dictates that we construe them
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`together, following Amendment No. 2 wherever its language contradicts the APA.
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`Where “two contracts are made at different times, [but where] the later is not
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`intended to entirely supersede the first, but only modif[y] it in certain
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`particulars[,] [t]he two are to be construed as parts of one contract, the later
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`superseding the earlier one wherever it is inconsistent therewith.” Hawes v. Lux,
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`294 P. 1080, 1081 (Cal. Dist. Ct. App. 1931); accord San Diego Const. Co. v.
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`Mannix, 166 P. 325, 326 (Cal. 1917).
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`In so doing, we note that SCO paid no additional consideration for Novell’s
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`agreement to Amendment No. 2. That makes sense if Amendment No. 2 was a
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`clarification of the agreement, to bring the language of the APA into line with the
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`parties’ intent. If Amendment No. 2 were a change in the agreement (and a
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`commercially significant one, at that), it is hard to see why Novell would have
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`agreed to it without compensation.
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`Therefore, we construe the contract and Amendment No. 2 together for the
`
`purpose of assessing any ambiguities in the contract. This means that extrinsic
`
`evidence regarding the parties’ intent is relevant to our interpretation of the
`
`combined instrument.
`
`B. Does the Amended APA Satisfy the Requirements of the Copyright Act?
`
`-17-
`
`

`
`We next consider whether the amended APA constituted a writing
`
`sufficient to transfer copyrights under federal law. Under the Copyright Act, “[a]
`
`transfer of copyright ownership, other than by operation of law, is not valid
`
`unless an instrument of conveyance, or a note or memorandum of the transfer, is
`
`in writing and signed by the owner of the rights conveyed or such owner’s duly
`
`authorized agent.” 17 U.S.C. § 204(a). Section 204 is intended “to protect
`
`copyright holders from persons mistakenly or fraudulently claiming oral licenses
`
`[or transfers].” Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27,
`
`36 (2d Cir. 1982). As a result, Section 204 “enhances predictability and certainty
`
`of ownership—‘Congress’s paramount goal’ when it revised the [Copyright] Act
`
`in 1976.” Konigsberg Intern. Inc. v. Rice, 16 F.3d 355, 357 (9th Cir. 1994)
`
`(quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 749
`
`(1989)). Novell argues that the Copyright Act imposes not only the requirement
`
`that a copyright transfer be in writing, but also that it state with sufficient clarity
`
`the copyrights to be transferred. See Aple. Br. 25–26; 34. Novell contends that
`
`Amendment No. 2 fails this test because its language is ambiguous. Since it is
`
`not clearly apparent which copyrights are “required for Novell to exercise its
`
`rights with respect to the acquisition of UNIX and UnixWare technologies,”
`
`Novell asserts that Amendment No. 2 was not a valid “instrument of conveyance.”
`
`As an initial matter, we note that the language of 17 U.S.C. § 204(a) does
`
`not readily lend itself to the construction Novell seeks to give it. Section 204(a),
`
`-18-
`
`

`
`by its terms, imposes only the requirement that a copyright transfer be in writing
`
`and signed by the parties from whom the copyright is transferred; it does not on
`
`its face impose any heightened burden of clarity or particularity. Likewise,
`
`Novell points to nothing in the legislative history of Section 204 which suggests
`
`that Congress envisioned it to invalidate copyright transfer agreements carrying
`
`material language subject to multiple reasonable interpretations. Nonetheless,
`
`some courts have understood Section 204(a) to impose requirements similar to
`
`that necessary to satisfy the statute of frauds. They have found that a writing is
`
`insufficient to transfer copyrights unless (1) it reasonably identifies the subject
`
`matter of the agreement, (2) is sufficient to indicate that the parties have come to
`
`an agreement, and (3) states with reasonable certainty the essential terms of the
`
`agreement. Pamfiloff v. Giant Records, Inc., 794 F. Supp 933, 936 (N.D. Cal.
`
`1992) (citing Restatement (2d) of Contracts § 131 (1981)).
`
`Novell argues that Section 204’s writing requirement would disserve the
`
`goals of “predictability and certainty of copyright ownership” if parties could
`
`fulfill it without making clear what copyrights they intend to transfer. But it is
`
`hardly clear that imposing strict requirements of clarity in order to effect a
`
`copyright transfer will always aid “predictability and certainty of copyright
`
`ownership.” “[A]mbiguities in copyright grants are anything but rare in the
`
`jurisprudence.” 3 Melville B. Nimmer and David Nimmer, Nimmer on Copyright
`
`§ 10.08 (2009). “The written memorialization of [an] agreement [transferring
`
`-19-
`
`

`
`copyrights] inevitably fails to mandate only one pellucid interpretation.” Id. If
`
`every copyright transaction were vulnerable to challenge whenever a party is able
`
`to point out some ambiguity within the governing agreement, parties might be
`
`forced to engage in costly, protracted litigation to determine whether the transfer
`
`is valid, putting into doubt the proper holder of the copyright.
`
`In the absence of any support from the language or legislative history, we
`
`are unwilling to read into Section 204 such an onerous restraint on the alienability
`
`of copyrights. As the Second Circuit has commented, “[t]he need for
`
`interpretation of a contract does not necessarily mean that there is a bona fide
`
`issue as to whether the contract is a writing for purposes of section 204(a). In
`
`most cases, there will be no doubt that the contract is a section 204(a) writing,
`
`and the only substantial issue will be contract interpretation.” Jasper v. Bovina
`
`Music, 314 F.3d 42, 47 (2d Cir. 2002). In copyright as elsewhere, “[t]he making
`
`of a contract depends not on the agreement of two minds in one intention, but on
`
`the agreement of two sets of external signs—not on the parties having meant the
`
`same thing but on their having said the same thing.” Nimmer on Copyright, §
`
`10.08 (quoting Tingley Sys. v. Healthlink, Inc., 509 F. Supp.2d 1209, 1216 (M.D.
`
`Fla. 2007)). Where ambiguity persists in the language of a parties’ shared
`
`agreement concerning a copyright transfer, the transfer is not invalidated; instead,
`
`we look to parol evidence to construe the terms of the agreement. See Nimmer on
`
`Copyright, § 10.08.
`
`-20-
`
`

`
`We think that Section 204’s writing requirement is best understood as a
`
`means of ensuring that parties intend to transfer copyrights themselves, as
`
`opposed to other categories of rights. See, e.g., Papa’s-June Music, Inc. v.
`
`McLean, 921 F. Supp. 1154, 1158–59 (S.D.N.Y. 1996) (although a writing need
`
`not explicitly mention “copyright” or “exclusive rights” to satisfy 204(a), the
`
`better practice is that it should). But when it is clear that the parties contemplated
`
`that copyrights transfer, we do not think that a linguistic ambiguity concerning
`
`which particular copyrights transferred creates an insuperable barrier invalidating
`
`the transaction. Thus, the majority of cases that Novell draws our attention to, in
`
`which alleged copyright transfers are found not to satisfy Section 204, involve
`
`transactions where it is not clear whether the parties intended that copyrights
`
`would transfer at all—not disputes over which specific copyrights were within the
`
`scope of an intended transfer. See, e.g., Radio Television Espanola S.A. v. New
`
`World Entertainment,

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