AutoZone here reminds the Court that since SCO decided not to seek a preliminary injunction, the case is rendered stayed. For that reason, they argue, there was no reason for SCO to file their Report or to submit discovery to the court:

AutoZone is loathe to file with the Court yet another unnecessary document in light of the stay that is now in place; nevertheless, because SCO has attempted to impugn AutoZone's reputation to the Court and argue the facts and merits of the case through its Report, AutoZone believes it has no alternative but to respond.

They tell the Court that SCO has materially overstated the nature of the alleged unauthorized copying. For just one example, they say this on pages 4 and 5:

SCO contends that AutoZone has copied tens of thousands "of what SCO believes to be programs containing SCO proprietary code." (SCO Report at 2.) The implication of this and similar representations in the SCO Report is that AutoZone has copied tens of thousands of SCO programs or files. In reality, the expedited discovery process revealed the existence of only a handful of unique SCO files on AutoZone's servers, and AutoZone has licenses to use virtually every one of these files.

However, in the end, they don't ask the court to do anything about SCO's violation of the court rules, so I assume that means SCO gets away with it, other than the bad taste in the judge's mouth, one hopes. You don't want judges to get that bad taste in their mouths every time they see you coming.

With this document, AutoZone continues to offer an in-depth education to Judge Jones as to just exactly who he is dealing with. AutoZone's own education is ongoing, as well.

For example, do you think they'll ever do this again? --

As soon as AutoZone discovered these facts, it promptly reported the same to SCO. Significantly, AutoZone made no attempt to hide the fact that its original representations were incorrect. To the contrary, AutoZone went well beyond its disovery obligations by repeatedly volunteering information to SCO as a part of the discovery process that AutoZone could well have left for SCO to attempt to discover on its own.

I doubt that AutoZone will ever volunteer anything to SCO again as long as they live. No one else will either, I wouldn't think. AutoZone says that they were trying to be efficient so as to get this over with. But the result was probably the opposite, because SCO takes a nit and builds a battering ram from it, thus prolonging the agony.

I gather SCO doesn't care about staying in business as a software company, or they'd never sue their own customers and try to destroy their customer's good name in litigation. Who'd ever enter into a business relationship with them after reading their Report?

I guess they decided to use the ancient Assyrian method of warfare as their litigation model. The Assyrians were famous, or infamous, for their unbelieveable cruelty. They'd put out captured enemy soldier's eyes, put hooks in their lips and lead them around like dogs, rip off their skin off, etc. The intent was to so terrorize their neighbors that no one would dare to attack them or fight them over anything. But it had this unintended side effect: no one would ever surrender to them either. Would you, knowing what would happen to you? I think it's the same with SCO. They blame others for their loss of business, Novell, IBM, the Linux community, etc., but I think it's obvious why their business is in decline. They probably meant to spread terror in the hearts of Linux-using companies everywhere, to get them to sign up for SCOsource. Instead, everyone is fleeing from them with all their might. Folks don't even want to be on their radar, let alone in business with them. They have placed themselves outside the pale by their unusual behavior. No one has to use SCO's software. Well, that's not their story, but I mean no one is locked into only one source of software.

AutoZone scornfully ends like this:

After more than a year of litigation, the evidentiary posture of this case is identical to the IBM case. Despite SCO's wide ranging claims in the IBM case that Linux infringes UNIX, SCO has still failed to identify even a single line of Linux code in that case that infringes UNIX. The absence of such evidence prompted Judge Kimball to write in an Order entered on February 5, 2005, that it is "astonishing" that SCO Had not offered "any competent evidence" to create a disputed fact regarding SCO's allegations that IBM has infringed SCO's alleged copyrights through IBM's Linux activities.[5]

In this case, despite nine months of discovery, SCO is unable to establish that code found on AutoZone's computers infringes any code in which SCO can legitimately claim to own any rights it could assert against AutoZone. This would appear to be one of the principle reasons SCO decided not to file a motion for preliminary injunction against AutoZone, in addition to the fact that any claim for preliminary injunction would be moot because AutoZone voluntarily deleted all SCO compiled code from its servers as an accommodation to SCO.

Regardless of why SCO elected not to move for a preliminary injunction, no legitimate reason existed for SCO to file its Report with the Court. The Report was unnecessary and contained numerous misstatements and omissions. Because of SCO's decision not to move for a preliminary injunction, AutoZone submits that all issues in this case are now properly stayed pending the resolution of the related IBM, Novell, and RedHat cases without need for further briefing by either party regarding any issue.

I don't know if that is a hint to SCO to quit now, without replying to this filing. But if SCO does reply after that sentence, they have to know that there will be issues raised.

They quote Judge Kimball's ruling in the IBM case. Red Hat quoted Judge Kimball on the same point, that there was an astonishing absence of "any competent evidence" regarding SCO's grandiose claims of IBM copyright infringement through its Linux activities. So SCO's reputation -- and their MO -- is becoming known in courtrooms all over America. But in the end, in this case, it is up to Judge Jones to decide if he agrees with AutoZone or whether SCO's tactic will pay off. Courts do try to be sensible, though, even if the parties don't.

This should be the end of activity in this case for quite a while. The case is presumably stayed until the big three SCO litigations are decided. If there is anything left on the table after that, we can expect AutoZone to fight vigorously, just as it here foreshadows. Meanwhile, it has done what it can to restore its honor and good name, and that of Jim Greer, despite SCO's "material misstatements". It's a crying shame that it was even necessary to write a document like this. It turns my stomach just thinking about all the damage, the unnecessary damage, that has resulted from SCO's litigation course.

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

James J. Pisanelli, Esq., Bar No. 4027
Nikki L. Wilmer, Esq., Bar No. 6562
SCHRECK BRIGNONE
[address, phone]

Michael P. Kenny, Esq.
James A. Harvey, Esq.
David J. Stewart, Esq.
Christopher A. Riley, Esq.
Douglas L. Bridges, Esq.
ALSTON & BIRD LLP
[address, phone]

Attorneys for Defendant AutoZone, Inc.

_______________________________________

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

_______________________________________

THE SCO GROUP INC.

a Delaware Corporation

Plaintiff,

v.

AUTOZONE, INC.

a Nevada Corporation

Defendant.

______________________________________

Civil Action File No.
CV-S-04-0237-RCJ-LRL

______________________________________

DEFENDANT'S RESPONSE TO PLAINTIFF'S DISCOVERY REPORT

On May 27, 2005, Plaintiff The SCO Group. Inc. ("SCO") filed a document with the Court entitled "Report of the Plaintiff The SCO Group, Inc. Regarding Discovery Pursuant to the Order of the Court Dated August 6, 2004" (the "SCO Report"). SCO contends that the SCO Report is submitted pursuant to the terms of the Court's August 6 Order; however, the SCO Report is in no way properly responsive to The Court's Order. SCO's decision not to pursue a motion for preliminary injunction against Defendant AutoZone, Inc. ("AutoZone") renders this case stayed pursuant to the Court's August 6 Order. Thus, no reason exists for SCO to have submitted discovery to the Court at this time or to have filed a lengthy brief that argues the merits of its claims.

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I. PROCEDURAL AND FACTUAL BACKGROUND

SCO purports to own the copyright in a computer operating system known as UNIX. AutoZone formerly used a version of the UNIX operating system known as "OpenServer" that AutoZone licensed from SCO on its store servers. As a result of an announcement by SCO in 1999 that it would no longer support the OpenServer system, AutoZone decided to switch its store servers to the competing Linux operating system. This migration process took approximately three years and was completed in 2003.

SCO filed this lawsuit against AutoZone on March 3, 2004, alleging that AutoZone's use of Linux infringes copyrights that SCO purports to own in the code for UNIX System V and various supporting materials. At the time it filed this case, three cases involving SCO were already pending in federal courts in Utah and Delaware that involved seminal issues of fact and law also at issue in this case; namely, whether SCO owns the copyright in UNIX and whether Linus infringes UNIX. On April 23, 2004, AutoZone moved to stay this case pending resolution of the prior filed cases.

In its opposition to AutoZone's motion, SCO contended that AutoZone had infringed SCO's purported copyrights in OpenServer "static shared libraries" when AutoZone converted from OpenServer to Linux. (Hearing on Motion to Stay Transcript pg. 17, ln. 19 - pg. 18, ln. 3.) SCO further contended that these alleged infringements were not at issue in the other federal court actions. (Id.)

In an Order dated August 6, 2004, the Court stayed this action pending resolution of the three prior filed cases; however the Court permitted SCO to take the expedited discovery for the limited purpose of determining whether it needed to file a motion for preliminiary injunction. Through extensions, SCO had until May 30, 2005 to decide whether to file a preliminary injunction motion. Nothing in the August 6 Order or any subsequent orders of the Court

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The SCO Report contains numerous material misstatements of the facts discovered during discovery and omits certain facts necessary to understand the proper factual and legal significance of the facts discovered. AutoZone is loathe to file with the Court yet another unnecessary document in light of the stay that is now in place; nevertheless, because SCO has attempted to impugn AutoZone's reputation to the Court and argue the facts and merits of the case through its Report, AutoZone believes it has no alternative but to respond.

In an effort to limit the amount of information that the Court needs to review to appreciate the inaccuracies in the SCO Report, AutoZone has addressed in summary fashion below the more significant misstatements contained in the Report. For the sake of completeness, AutoZone has included a discussion of additional, but less significant, inaccuracies in the document attached in Exhibit A.

II. CLARIFICATION OF THE RECORD

A. AutoZone Has at All Times Been Candid and Truthful With the Court and SCO

When this case began, Autozone's software developers understood that they had properly migrated all of AutoZone's applications to Linux by recompiling the applications under Linux. All statements that AutoZone made to the Court at the outset of this case regarding the nature of AutoZone's migration from UNIX to Linux were truthful to the best of AutoZone's knowledge and understanding at the time made.

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As soon as AutoZone discovered these facts, it promptly reported the same to SCO. Significantly, AutoZone made no attempt to hide the fact that its original representations were incorrect. To the contrary, AutoZone went well beyond its disovery obligations by repeatedly volunteering information to SCO as a part of the discovery process that AutoZone could well have left for SCO to attempt to discover on its own. (See e.g. Letter from David Stewart dated October 27, 2004, attached as Exhibit B hereto and Letter from David Stewart dated November 24, Exhibit B to Declaration of David S. Stone accompanying the SCO Report.)

In short, AutoZone has been truthful with both the Court and SCO to the best of AutoZone's knowledge, information and belief at all times in this litigation. Moreover, not only has AutoZone discharged its obligations in this case in good faith, it has exceeded the requirements of the discovery process in an attempt to expedite discovery and resolve these issues as efficiently as possilble.²

B. SCO Materially Overstated the Nature of the Alleged Unathorized Copying at Issue.

SCO contends that AutoZone has copied tens of thousands "of what SCO believes to be programs containing SCO proprietary code." (SCO Report at 2.) The implication of this and

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Most of SCO's claims are premised on the allegation that AutoZone is running programs on its Linux servers that include copies of OpenServer libraries. As set forth in more detail in Exhibit A, AutoZone's intention in its migration from OpenServer to Linux was to recompile all of its application programs using a Linux compiler so that none of those programs would contain any OpenServer libraries. (Celmer Deposition 26:5-13, attached hereto as Exhibit C.) AutoZone was surprised to find when it analyzed its servers during discovery that approximately 127 programs existed on its store servers (out of thousands of programs on AutoZone's typical store server) that were compiled under OpenServer and therefore included SCO libraries. (See Letter from David Stewart dated October 27, 2004.) Of these programs only two appear to have been used on any of AutoZone's servers at any time since the migration process was completed: Compx, and Decompx. Since they had not been used, the remainder of the 127 programs clearly were copied by mistake to the store servers. Out of all of the OpenServer compiled programs that AutoZone discovered on its servers, AutoZone's initial analysis indicates that only approximately twenty OpenServer libraries were included in the programs.

This state of affairs is further underscored by the fact that, as soon as Autozone discovered the existence of the SCO compiled programs, it immediately deleted or recompiled the programs. Significantly, AutoZone was under no legal obligation to delete or recompile most of the programs because it has a valid and subsisting licenses to continue to use them.

By virtue of its purchase of a license for a software developer's kit from SCO, AutoZone is licensed to develop programs, compile them under OpenServer and copy the resulting programs on computers running any operating system. Additionally, AutoZone purchased end user licenses from SCO to use SCO compiled code on more than 2900 computers. These licenses cover the vast majority of the copies about which SCO complains in the SCO Report to the Court. Thus, AutoZone's deletion or recompilation of the programs discovered in the

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Finally, and most importantly, the totality of the facts revealed in the expedited discovery process has made abundantly clear that any copying that occurred was mistaken and resulted from the complexities of a huge project to transition AutoZone's operating system, rather than SCO's implication of an institutional intent on the part of AutoZone to inappropriately benefit from SCO's alleged proprietary rights.

C. SCO's Allegations of Proprietary Rights are Subject to Significant Question

The SCO Report contends that it has uncovered "extensive copying" of "SCO proprietary OpenServer code." (SCO Report at 2). Despite this broad assertion, there may in fact be nothing that SCO owns -- since the copyrightability of the materials is subject to question, and if the materials are found to be copyrightable, there is significant dispute as to the nature and extent of SCO's ownership rights in them. Also, there is substantial reason to believe that the libraries may not be subject to protection under U.S. copyright laws on functionality or other grounds. (See AutoZone's Memorandum of Law in Support of Its Motion to Stay or, in the Alternative, Motion for a More Definite Statement, at 16.)³

Even assuming for purposes of argument that any of the SCO code is subject to copyright protection, there is no evidence in the record that SCO owns the copyright and this is also the subject of significant dispute.⁴ There is also the very real possibility that the code is in the public domain. AutoZone expects to explore both of these issues extensively (among others) if the

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D. SCO's Ad Hominem Attacks on Jim Greer are Inappropriate and Unfounded

Jim Greer is a developer who was previously employed by AutoZone and who was responsible for AutoZone's initial actions to port AutoZone's code from OpenServer to Linux. Mr. Greer left AutoZone in January 2002, before the migration process was completed. For reasons that AutoZone fails to understand, SCO perceived the need in its Report to level unfounded attacks on Mr. Greer's veracity -- a third party with no interest in this litigation.

In footnote 3 of its Report, SCO insinuates that Mr. Greer misrepresented the facts in a pre-litigation Internet post when he stated that AutoZone had not copied SCO libraries in AutoZone's migration to Linux and that Mr. Greer recanted those alleged misrepresentations in his deposition. (See SCO Report at 5, n.3.) What the record in fact reflects is that Mr. Greer testified that AutoZone's objective was to recompile all AutoZone programs under Linux such that none of the programs would include any SCO libraries when the migration was completed. (Greer Deposition 43:2 -- 46:19, attached hereto as Exhibit D.) When Mr. Greer made his Internet post, it was his understanding that this objective had been met. Mr. Greer only later discovered, as a result of AutoZone's investigations in this case, that some pre-migration OpenServer compiled programs had been copied errantly to the store server image. Significantly, all of this copying occurred after Mr. Greer AutoZone's employ. Accordingly, Mr. Greer would have had no way of knowing about the errant copying when he made his Internet post. Mr. Greer's Internet post was therefore wholly truthful to the best of his knowledge and information at the time made, and SCO's ad hominem attacks on Mr. Greer's veracity are utterly unfounded.

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After more than a year of litigation, the evidentiary posture of this case is identical to the IBM case. Despite SCO's wide ranging claims in the IBM case that Linux infringes UNIX, SCO has still failed to identify even a single line of Linux code in that case that infringes UNIX. The absence of such evidence prompted Judge Kimball to write in an Order entered on February 5, 2005, that it is "astonishing" that SCO Had not offered "any competent evidence" to create a disputed fact regarding SCO's allegations that IBM has infringed SCO's alleged copyrights through IBM's Linux activities.⁵

In this case, despite nine months of discovery, SCO is unable to establish that code found on AutoZone's computers infringes any code in which SCO can legitimately claim to own any rights it could assert against AutoZone. This would appear to be one of the principle reasons SCO decided not to file a motion for preliminary injunction against AutoZone, in addition to the fact that any claim for preliminary injunction would be moot because AutoZone voluntarily deleted all SCO compiled code from its servers as an accommodation to SCO.

Regardless of why SCO elected not to move for a preliminary injunction, no legitimate reason existed for SCO to file its Report with the Court. The Report was unnecessary and contained numerous misstatements and omissions. Because of SCO's decision not to move for a preliminary injunction, AutoZone submits that all issues in this case are now properly stayed

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DATED this 9th day of June, 2005

SCHRECK BRIGNONE

By: ___[signature]___
James J. Pisanelli, Esq., #4027
Nikki L. Wilmer, Esq., #6562
[address]

and

Michael P. Kenny, Esq.
James A. Harvey, Esq.
David J. Stewart, Esq.
Christopher A. Riley, Esq.
Douglas L. Bridges, Esq.
ALSTON & BIRD LLP
[address]

Attorneys for Defendant
AutoZone, Inc.

¹ The August 6 Order states that only "SCO will file its motion for preliminary injunction and supporting memorandum of authorities within twenty days after the conclusion of discovery." Order dated August 6, 2004.

² SCO's counsel asserts in the SCO Report that AutoZone hampered SCO's discovery efforts by refusing to produce relevant source code. This assertion is simply untrue. On October 27, 2004, more than seven months ago, AutoZone produced all source code that it had in its possession for all AutoZone programs that are now on its server. (See Letter of David J. Stewart to David Stone dated October 27, 2004 discussing and forwarding the requested source code, included in Exhibit B hereto).

³ AutoZone has not evaluated this issue for itself because SCO has not produced the source code for the libraries to AutoZone as a result of the parties' agreement that SCO would not have to respond to AutoZone's discovery requests unless SCO elected to move for a preliminary injunction.

⁴ Novell and SCO agree that SCO could only own the copyright in UNIX System V if Novell assigned those rights to SCO pursuant to an Asset Purchase Agreement dated December 6, 1995 or by a later executed amendment to this agreement. In The SCO Group, Inc. v. Novell, No. 2:04CV00139 (D.Utah), Novell contends that this agreement does not assign the copyright to SCO. If Novell is adjudged to be correct, and if the OpenServer libraries at issue in this case are entirely UNIX System V. libraries, then SCO would not own copyright in the libraries.

⁵ Judge Kimball noted in the same order that SCO "chose to cavalierly ignore IBM's claims that SCO could not create a disputed fact regarding whether it even owned the relevant copyrights." Nevertheless, the Court resisted the "temptation to grant IBM's motion" and held that summary judgment was premature because of ongoing discovery in the case. The SCO Group v. International Business Machines Corp., No. 2:03CV294 (D.Utah), Memorandum and Order dated February 9, 2005, pg. 10.

CERTIFICATE OF SERVICE

I hereby certify that I have this day served a copy of the within and foregoing DEFENDANT AUTOZONE, INC.'S RESPONSE TO PLAINTIFF'S DISCOVERY REPORT upon all counsel of record by depositing copies of the same in the United States mail with adequate postage affixed thereon, or hand-delivered, addressed as follows:

Stanley W. Parry, Esq.
Glenn M. Machado, Esq.
CURRAN & PARRY
[address]
(Hand-delivered)

Stephen N. Zack, Esq.
Mark J. Heise, Esq.
BOIES, SCHILLER & FLEXNER, LLP
[address]
(Via United States Mail)

Dated this 9th day of June, 2005.

___[signature]____
An employee of SCHRECK BRIGNON

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