I love to read the pleadings when I already know the outcome, because I feel no anxiety at all then. This was filed on April 12th. Judge Kimball's ruling is dated the 13th. That's a way of signifying that it wasn't even close. Knowing how court processes work, I doubt the filed document had time to reach his desk or that he even saw IBM's memorandum before ruling on SCO's motion. Isn't that the second time that has happened in this case? You can see that oral argument had been requested, but the judge didn't need to hear it. His decision was quickly made.

IBM makes reference to the Federal Rules of Civil Procedure, specifically 15(a), which is "Amended and Supplemental Pleadings", and which reads like this:

(a) Amendments.

A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.

So now you'll know what they are talking about when they argue SCO can't amend "as of right."

Instead, IBM says, they need to either get IBM's permission, which it doesn't wish to grant, or they must persuade the judge that justice requires it. There are two other clauses to Rule 15, that explain some other ways to amend pleadings. Here's 15(b):

(b) Amendments to Conform to the Evidence.

When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party's action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

15(d) talks about another way pleadings can end up amended:

d) Supplemental Pleadings.

Upon motion of a party the court may, upon reasonable notice and upon such terms as are just, permit the party to serve a supplemental pleading setting forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented. Permission may be granted even though the original pleading is defective in its statement of a claim for relief or defense. If the court deems it advisable that the adverse party plead to the supplemental pleading, it shall so order, specifying the time therefor.

IBM says this was all a SCO strategy to get leave to amend as of right. Unfortunately for SCO, they don't have leave to amend as of right, IBM says.

We'll find out more on April 21, specifically whether Judge Kimball agrees with this analysis, and speaking for myself, I can hardly wait. If you know of any other evidence re the AIX on POWER issue, now would be the time to produce it. I'm guessing SCO isn't sharing my eager anticipation for the 21st, but it has only itself to blame. They would keep trying to amend the pleadings.

There are a couple of typos in the document, but I left it as is, because we are trying to create an accurate history of the case. I only mention it so you won't feel you need to correct them. It wasn't me.

*************************

SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address, phone, fax]

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[address, phone, fax]

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

Argument

In asking for a "brief argument" of the hearing on SCO's motion for leave to amend, ¹ SCO seeks to achieve indirectly what it cannot achieve directly. SCO asks the Court not to consider the merits of its motion for leave to amend so that it may instead enter a scheduling order proposed by SCO that would set a new deadline for amending the pleadings (more than a year after the original deadline has passed) and, in doing so, allow SCO to amend its complaint "as of right" up to that deadline. SCO's tactical ploy should be seen for what it is -- and rejected. The Court should hear argument on SCO's motion to amend on April 21, 2005 as scheduled.

Although the deadline for amending the pleadings passed more than a year ago, SCO has filed a motion to amend its complaint for a third time. SCO seeks to assert a brand-new claim for copyright-infringement based on conduct that it has known about for years. The motion has been fully briefed since February 18, 2005, and the Court noticed the April 21 hearing date weeks ago. SCO has had ample time to prepare for the hearing. There is no good reason not to proceed with the argument on SCO's motion to amend as currently scheduled.

2

First, although SCO has proposed a scheduling order that would set a new deadline for amending the pleadings, it is just a proposal and not one the Court should endorse. IBM has opposed the entry of SCO's proposed order, including in particular the proposed provision purporting to reopen the pleadings. (See Memorandum Attaching and in Support of IBM's Proposed Scheduling Order at 7-8; Reply Memorandum in Further Support of IBM's Proposed Scheduling Order at 9.) In its order of June 10, 2004, the Court ruled that it would not permit future amendments of the scheduling order "absent extremely compelling circumstances". ² (See 6/10/04 Order at 3.) As is set out in the memoranda submitted in support

3

Even if the Court were to find "extremely compelling circumstances" and set a new deadline for amending the pleadings, however, SCO could not properly amend its complaint "as of right". Contrary to SCO's contention, the entry of an order setting a new deadline for amending the pleadings does not authorize a party to amend its pleading "as of right" at any time during the period leading up to the deadline. Instead, Rule 15(a) of the Federal Rules of Civil Procedure governs the amendment of pleadings "as of right" and, other than the limited and inapplicable circumstances in which amendments are allowed "as of right", requires a party to obtain leave of Court or written consent of the adverse party. This is confirmed in the Court's standard-form scheduling order, which states that "counsel must still comply with Rule 15(a)" in seeking to amend their pleadings. ⁴ Since IBM will not consent to SCO's amendment, SCO cannot amend its complaint except by motion and with leave of Court, no matter what the Court decides about the deadlline for amending the pleadings. ⁵ See Fed. R. Civ. P. 15. Thus, even indulging SCO's assumption that a "brief" adjournment of the argument on SCO's motion to amend would somehow result in the Court adopting SCO's proposed schedule, the adoption of

4

Second, SCO's claim that it "will be seeking leave to amend its complaint further in order to add claims in addition to the currently proposed copyright claim" is equally unavailing. Again putting aside the fact that the deadline for amending pleadings passed more than a year ago, SCO could not amend it complaint to assert its proposed-but-unidentified claims without filing a motion to amend and making the requisite showing of "extremely compelling circumstances" (for the reasons stated above). Briefing on any such motion would obviously be separate from the long-completed briefing on SCO's pending motion to amend, which depends primarily on propositions likely irrelevant to the other claims SCO seeks to add, i.e., whether SCO's proposed copyright claim in governed by a forum-selection clause and barred by a contractual statute of limitations. As a result, the efficiencies SCO purports to seek by way of a "brief adjournment" are not more real than the prospect that the requested adjournment would "obviate the need for additional briefing and court arguments".

Simply stated, SCO's application for an adjournment seeks to avoid having the Court hear its pending motion for leave to amend on the merits but to achieve the objective of the motion by indirection. Contrary to the premise of SCO's application, however, SCO cannot amend its complaint even one more time (let alone as many times as it wants prior to June 17) absent a showing of "extremely compelling circumstances" and substantive review Rule 15(a). There is no reason for SCO's motion not to be heard as scheduled. On the contrary, hearing the motion as scheduled will accelerate the resolution of this litigation.

5

Conclusion

For the foregoing reasons, IBM respectfully requests that the Court deny SCO's ex parte motion to adjourn the April 21 argument on SCO's pending motion to compel.

DATED this 12th day of April, 2005.

SNELL & WILMER L.L.P.

____[signature]____
Alan L. Sullivan
Todd M. Shaughnessy
Amy F. Sorenson

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler
David R. Marriott

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

Of counsel:

INTERNATIONAL BUSINESS MACHINES CORPORATION
Donald J. Rosenberg
Alec S. Berman
[address,phone]

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

¹ Although SCO purports to seek only a "brief adjournment", there is nothing brief about what SCO seeks. Not only does SCO not ask for an adjournment of any specific duration, but also its application makes clear that the adjournment it seeks would likely be for at least three months. SCO requests until June 17, 2005 to amend its pleadings. A stated objective of SCO's instant motion is to permit the Court to consider all of SCO's proposed amendments at the same time. If the Court were to reopen the pleadings and allow SCO until June 17 to move to amend -- and we do not believe that it should -- the motion would likely not be fully briefed and ready for argument until the end of July.

² While the Court's January 18 Order struck the then-current scheduling order, it was plainly directed to future deadlines, not missed deadlines. In fact, the deadline for amending the pleadings was set out in an order dated September 19, 2003, not the scheduling order struck by the January 18 Order.

³ Putting aside the fact that the deadline to extend it, the new copyright claim that SCO seeks to assert is not only based on conduct that SCO has known about for years (and could have challenged years ago if it has any basis for a challenge), but also it is subject to a forum-selection clause that requires that the claim be litigated in a New York Court and it is barred by the statute of limitations.

⁴ See http://www.utd.uscourts.gov/forms/Proposed_Scheduling_Order.pdf.

⁵ In fact, SCO's previous two amendments to its complaint were made by motion pursuant to Rule 15(a), even though in the first instance (in June 2003) there was not yet a scheduling order setting forth a deadline for amending pleadings, and in the second instance (in February 2004) the deadline under the scheduling order for amending pleadings had not yet expired.

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CERTIFICATE OF SERVICE

I hereby certify that on the 12th day of April, 2005, a true and correct copy of the foregoing was served on the following by hand delivery:

Brent O. Hatch
Mark F. James
HATCH, JAMES & DODGE, P.C.
[address]

and on the following by U.S. Mail, postage prepaid:

Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]

Robert Silver
Edward Normand
Sean Eskovitz
BOIES, SCHILLER & FLEXNER LLP
[address]

[signature]