January 2011 Issue
Gray v. Novell, Inc.,
2011 WL 69373 (11th Cir. Jan. 7, 2011)
X/Open opposed Gray’s application to register the mark iNUX based on X/Open’s prior rights to the mark UNIX. In defending the opposition, Gray alleged that X/Open was not the owner of the UNIX mark and, consequently, that X/Open’s opposition was “fraudulent” in violation of various federal and state statutes. Specifically, Gray alleged that a series of agreements between Novell (the previous owner of the UNIX mark), X/Open, and SCO actually showed that Novell had assigned the UNIX mark to SCO and not to X/Open. The district court subsequently found that the agreements clearly transferred ownership of the UNIX mark to X/Open and granted summary judgment to X/Open. The court of appeals affirmed.
The UNIX mark was developed by AT&T for its computer-operating systems in 1972 and has been registered with the PTO since 1986. By 1994, the mark had been acquired by Novell, Inc. (“Novell”). Subsequently, Novell exclusively licensed X/Open to manage the UNIX licensing program for products that conformed to a single UNIX specification. Novell also committed to assign the UNIX mark to X/Open within three years (unless the parties agreed to a different time). Novell retained sole rights to the UNIXWARE mark, which identified its particular UNIX-certified operating system.
About a year later, Novell sold its UNIXWARE business to The SCO Group (“SCO”). The Asset Purchase Agreement (“APA”) with SCO listed the assigned assets as all rights and ownership of UNIX and UNIXWARE “as and to the extent held by [Novell] (excluding any compensation [Novell] receives with respect of the license granted to X/Open regarding the UNIX trademark).”
A year later, Novell, X/Open, and SCO jointly executed a tripartite Confirmation Agreement that confirmed X/Open’s ownership of the UNIX mark and obligated Novell to assign the UNIX mark to X/Open as soon as possible, as well as confirmed that the future assignment of the UNIX mark to X/Open would not be a breach of the Novell/SCO APA. Shortly thereafter, Novell and SCO amended the APA to exclude from the assets transferred to SCO any trademarks that were not required for SCO to exercise its rights with respect to the UNIXWARE technology that it had acquired from Novell. In 1998, Novell executed a Deed of Assignment transferring all right, title, and interest in the UNIX mark to X/Open.
In 1999, Wayne Gray filed an application with the PTO to register the mark iNUX in connection with computer-operating systems software. X/Open opposed Gray’s application to register iNUX on the ground that iNUX was confusingly similar to the famous UNIX mark. During discovery, Gray claimed he learned that the APA transferred the UNIX trademark to SCO, thus rendering both the Deed of Assignment to X/Open and X/Open’s opposition to Gray’s application invalid. Gray alleged that Novell, X/Open, and SCO had conspired to conceal the true owner of the UNIX mark from him and induced him to abandon his iNUX business.
Based on this theory, Gray requested suspension of the opposition then pending before the PTO and sued Novell, X/Open, and SCO in federal court seeking a determination that X/Open did not own the UNIX trademark; that the defendants committed violations under the Lanham Act, federal and state RICO statutes, the Florida Communications Fraud Act, and common-law fraud; and caused Gray substantial damages.X/Open and Novell both moved for summary judgment, arguing that no issue of material fact existed as to X/Open’s lawful ownership of the UNIX mark. The district court granted summary judgment in the defendants’ favor and Gray appealed.
The Court of Appeals reasoned that the linchpin of Gray’s complaint was his allegation that X/Open was not the true owner of the UNIX mark. If the allegation was untrue, then there could have been no fraud and all of Gray’s claims must fail. Gray contended in support of his position that (1) the APA transferred “without limitation” the UNIX and UNIXWARE marks from Novell to SCO, and (2) in a prior Utah litigation, Novell admitted that it had transferred the UNIX mark to SCO. The appeals court found that both of Gray’s contentions were wrong.
First, the APA did not transfer the UNIX trademark to SCO. Rather, the APA expressly transferred the trademarks to SCO only “as and to the extent held” by Novell. Since Novell had already exclusively licensed the UNIX mark to X/Open, under the terms of that license agreement, it could not transfer the mark to SCO. Indeed, the APA specifically referenced the X/Open agreement and excluded from transfer any compensation that Novell would receive based on the UNIX license to X/Open. Further, the APA transferred only the UNIXWARE business to SCO, as well as any royalties from the UNIX trademark licenses that predated the X/Open exclusive license agreement. This interpretation of the APA was reinforced by the Confirmation Agreement, which was signed by all three parties and specifically stated that Novell should assign the UNIX mark to X/Open and that doing so would not violate the APA between Novell and SCO. This interpretation was also supported by the subsequent amendment of the APA, which specified that the APA only transferred to SCO the marks that it needed in order to exploit the technology it had acquired from Novell. Since the UNIX mark was not required for SCO to exploit the UNIXWARE technology, the UNIX mark was not included in the APA transfer. Finally, the 1998 Deed of Assignment accomplished the anticipated transfer of the UNIX mark to X/Open that had been referenced in the original exclusive license agreement and in the Confirmation Agreement.
Second, the Utah case referenced by Gray contained no admission from Novell with respect to trademark assignment. Rather, the Utah litigation related to the ownership of the AT&T “System V” UNIX source code copyrights, and not the trademarks. Therefore, the statements in the Utah litigation were irrelevant to Gray’s trademark case.
Because Novell’s assignment of the UNIX mark to X/Open was valid, X/Open’s opposition to the iNUX application could not have been fraudulent and Gray’s related trademark-ownership fraud claims must fail. The court of appeals accordingly affirmed summary judgment in favor of X/Open, Novell, and SCO.
This decision affirms nonprofit consortium X/Open’s exclusive ownership to the UNIX trademark—one of the computer industry’s best known operating-system brands.