Here's IBM's unsealed Memorandum in Support of its Motion for Summary Judgment on SCO's Copyright Claim (SCO's Fifth Cause of Action) [PDF] as text. It's a humdinger. SCO's "copyright" claim is the one where SCO claimed to have "terminated" IBM's irrevocable license for AIX and then for Dynix and then amended its complaint to add a copyright infringement claim when IBM didn't stop distributing. According to the termination letter, it was justified by breaches of "trade secret" confidentiality, but SCO later acknowledged it had no colorable trade secret claims and amended its complaint to drop trade secret claims, which raises the obvious question as to SCO's basis for "terminating" the licenses in the first place.
IBM is asking the court to toss the claim out of the litigation. How do you like this sentence? IBM has not sold Dynix since before SCO's purported termination, which is by itself fatal to SCO's allegations relating to Dynix. Hilarious, no? SCO can't get the simplest facts right. We saw the same flaw in the DaimlerChrysler and AutoZone cases, a lack of research to avoid bizarrely inappropriate allegations. If there is anything that speaks to the real purpose of this litigation, I'd say the carelessness is it. Nobody on that side seems to have cared much about the end game. You don't normally sue based on thin air, unless the whole point is thin air -- a desire to pollute it with some FUD, in which case clarity is counterproductive, because if you know you have no basis for a claim, you can be sanctioned for going forward with it.
That's how it looks to me, like the whole point really was just FUD, because there is otherwise no excuse for a law firm not to have checked whether or not IBM was still distributing Dynix before it filed a claim based on alleged distribution of Dynix. It's so basic. Here, nobody will sue for malpractice, because nobody cares. If you bring a lawsuit for a nonlegal purpose, what do you care about researching details? Sanctions, I believe, are, however, a real possibility.
No doubt IBM was tempted to begin by saying, Your Honor, of all the nonsensical, frivolous, stupid claims that SCO has lodged against us, in court and in the press, this one is the worst. Instead it begins like this: Shortly after beginning this lawsuit (amidst much fanfare), SCO purported to terminate IBM's right to distribute its own AIX and Dynix/ptx ("Dynix") products. Because IBM did not shut down its AIX and Dynix businesses based on SCO's purported termination of IBM's rights, SCO amended its complaint to assert a claim against IBM for copyright infringement. SCO alleges that IBM has infringed and is infringing SCO's alleged UNIX System V copyrights by continuing the business in which it has been engaged for more than two decades, and that SCO is therefore entitled to billions of dollars in damages. SCO's allegations of infringement are untenable as a matter of law, and summary judgment should therefore be entered in favor of IBM. And then IBM proceeds to elaborate on all the reasons SCO has no hope of prevailing, most particularly not on summary judgment. SCO isn't even alleging that IBM contributed any UNIX System V material, whether code, methods, or concepts, to Linux. It's suing IBM "for allegedly disclosing its own original works to Linux, on the theory that they were in and are also part of AIX and Dynix, which SCO contends to be modifications to or derivative works of UNIX System V." I think they had to know from day one that such a claim was unlikely to fly.
As for the allegations regarding AIX, IBM argues that there are four reasons SCO's claim fails, summarized like this:
1. IBM's first argument is that SCO's infringement claim is untenable, because SCO cannot establish a predicate breach of contract - i.e., a material breach sufficient to justify termination of IBM's rights to UNIX System V. This is based in part on the fact that SCO admitted to no trade secrets; and if there aren't any, and the contract sought to protect the confidentiality of trade secrets only, and it did, there can't be a material breach. Under New York law, a contract can't be terminated except for a material breach. Besides, the IBM Agreements themselves provided that IBM's rights could not be terminated for immaterial breaches.
2. SCO cannot show that it properly terminated IBM's license to market and distribute AIX based on the alleged breach. IBM has a perpetual and irrevocable license to AIX that cannot be terminated under any circumstances.
3. SCO failed to disclose its allegations and evidence as required by the Court.
4. SCO cannot enforce its alleged copyrights because it has misused them, further precluding its infringement claim. IBM explains that SCO has misused its copyrights in five different ways -- I'm wondering if it might be some kind of a record -- even if we pretended they had any: As stated, SCO has not offered any evidence that it owns the allegedly infringed copyrights, despite the Court's orders. (¶¶ 67-69.) Even if SCO could show that it owns the copyrights, however, it has misused them in at least five independent ways, each of which is sufficient to foreclose SCO from further prosecuting its infringement claim against IBM:
(1) SCO claimed ownership over code for which SCO has no copyright;
(2) SCO effectively asserted that its alleged copyrights extend to all of Linux;
(3) SCO claimed its alleged copyrights give it control of IBM's own copyrighted code (i.e., AIX and Dynix);
(4) SCO claimed its alleged copyrights include material not protectable by copyright; and
(5) SCO is seeking to enforce its alleged copyrights in ways that are unenforceable.
SCO's misuse of its alleged copyrights is described in detail in the memorandum in support of IBM's motion for summary judgment on its Tenth Counterclaim. (DJ Br. at 94-99.) Rather than repeat that discussion here in full, we incorporate it by reference.
Here's the memorandum in support of the motion on the 10th Counterclaim, so you can refer to it, Part 1 and Part 2 [PDFs]. The penalty for copyright misuse isn't that you lose your copyright. What you lose is your right to enforce. There is an interesting detail in this document relating to IBM's acquiring its nonterminable license, which it asked for and negotiated in 1996, resulting in an April 1996 Amendment. In the list of exhibits supporting IBM's summary judgment motions, it's sealed. (I am sorry to have originally placed the wrong amendment here.) But the fact is, we have had this exhibit for a couple of years now, assuming there was only one in April of 1996. It was attached as an exhibit to Michael J. DeFazio's Declaration in 2004. And significantly, it includes these sentences, "In the SCO Agreement, Novell has the right to amend the Related Agreements on behalf of SCO under certain circumstances applicable in this instance....Novell represents and warrants to IBM that it has the unrestricted right and authority to enter into and execute this Amendment on behalf of SCO." A couple of readers reminded me of this amendment; I had forgotten all about it. But so had IBM, I gather, since they marked it sealed and it's alrady public, and since they undoubtedly use specialty legal software almost all firms use to tracks all their exhibits, it tells me that our many eyeballs are even better than that software at keeping track. Me? I can't keep it all in my head. My head would explode. But as a group, we forget absolutely nothing. Novell worked out the language with IBM, but afterwards, IBM relates, Santa Cruz raised objections and tried to get language inserted limiting IBM's right to use methods and concepts: 32. Santa Cruz also sought to: (i) impose right-to-use fees on IBM contractors and customers who were provided licensed source code; and (ii) prevent IBM employees who had gained access to licensed source code from memorializing concepts, know-how, or techniques embodied in that code. (Ex. 256 ¶ 29.)
33. While IBM rejected both of these proposals, it ultimately did agree to a provision limiting its right to provide contractors and customers with copies of licensed source code to a specified number of copies (fifty) at a time. (Id.) In exchange for IBM's concession, Novell agreed to accept $350,000 less than it otherwise was entitled to as royalty payments, pursuant to an October 16, 1996 Letter Agreement between IBM and Novell. (Id. ¶ 30; Ex. 172 ¶ 26; Ex. 143.) So, here we see Novell acting on behalf of Santa Cruz, which supports its current claim to have the authority to do so now, and a repudiation of SCO's claims to methods and concepts. It was discussed and IBM refused to agree to such terms, and it prevailed. This alone would be fatal to SCO's methods and concepts claims regarding AIX, I would think. It's no longer a question of what was intended by the agreement, as can happen when a matter is not specifically negotiated. Here, the parties discussed methods and concepts and Santa Cruz tried unsuccessfully to get control, indicating to me that it knew it didn't have such control before 1996, and that it was unable to get such control. In short, it never had that control over IBM and it doesn't now. As for Santa Cruz objecting to Novell acting alone, if Santa Cruz had all the rights, why is Novell in the deal in the first place? This April Amendment was followed by Amendment X in October of 1996, which was signed by all three parties and which ratified and strengthened IBM's non-terminable license rights and which superceded the termination provisions of the agreements that came before. After Amendment X, IBM tells the court, no one had the right to terminate its rights or its license; the most anyone could do would be to enjoin certain conduct. Nor could anyone terminate "IBM's rights to copy and furnish sublicensed products that included material from UNIX System V Release 3.2 and previous releases, such as AIX, if IBM were to improperly disclose the licensed source code in breach of the Agreements". In short, SCO's "termination" of IBM's license was itself a breach of contract. Or as IBM succinctly puts it, "Termination is no longer a remedy under the Agreements....Because the termination right was contracted away in both the April 1996 Amendment and Amendment No. X, termination was no longer a remedy." If one interpreted the contract SCO's way, and played word games about irrevocable and nonterminable, it would lead to a silly and unfair result: Interpreting the terms "irrevocable" and "perpetual" to mean anything other than "non-terminable" would, in the context of Amendment No. X, lead to an absurd result. It would have made no sense for IBM to pay over $10 million for a license that SCO could terminate without any obligation to refund the license fee....If SCO's interpretation were correct (and it is not), then Novell or Santa Cruz could have terminated IBM's rights within days of Amendment No. X, and retained the entirety of IBM's fully paid-up royalty. That is nonsensical. Why doesn't SCO know all this? Because it wasn't a party to either agreement, probably, for starters, and we come back to the thin air issue. And, once again, if SCO really had gotten everything from Novell in its acquisition of assets, including copyrights, why would Novell still be a party in either deal? Whether SCO's carelessness in researching facts is deliberate or not may be discerned, I think, by this paragraph, part of IBM's recounting of its effort to get some specifics from SCO as to the basis for any terminations: 60. On June 13, 2003, IBM informed SCO:
Your [March 6, 2003] letter provided virtually no information beyond its conclusory assertions. We promptly requested such support ... but received nothing more prior to the June 2 meeting, 88 days into the purported 100 day "cure" period. At that meeting, your counsel did no more than repeat your accusations, refer us to particular paragraphs of your complaint and show us a handful of notes from a website that does not, in fact, demonstrate any violation of protected license rights. Thus, to this day, you have not provided IBM with any factual support for your accusations. That is precisely what we informed you and your colleagues at the June 2 meeting, when we expressed our disappointment with the lack of information received from you.
(Ex. 158 at 1.) Of course, no details were provided in response. Why not? IBM answers: The reason is plain: SCO had no interest in permitting IBM to cure the alleged breaches. SCO simply sought to "hold up" IBM's AIX business for ransom....
SCO made no meaningful effort to resolve the dispute, because its entire strategy, quite plainly, was to publicly pressure IBM into paying it off to avoid the risk of SCO shutting down its AIX business, and that strategy could not work if SCO put forward its best efforts to resolve the supposed breaches.
Despite three courts orders, SCO has not to this day, IBM states, "described by version, file, and line of code any material allegedly infringed by IBM's post-termination AIX and Dynix activities." For that reason alone, it argues, summary judgment should be granted. But to top it all off, since only AIX has actually been distributed since the SCO "termination," what are the items in SCO's Final Disclosures that relate to AIX? Incredibly, there is only one, Item No. 1, which relates to IBM's Journaled File System, or JFS, which wasn't contributed to Linux from AIX but from IBM's OS/2 Operating System, and later modifications of that OS/2 code. So even by SCO's strange interpretation of its rights, it has no rights over JFS. And that's the only AIX item. Hence this stupid copyright claim is based on... you guessed it, thin air. This document represents IBM at its best, thorough, detailed, complexities made clear, nothing overlooked. It even includes a case, on page 29, standing for the proposition that one can use dictionary definitions, which IBM had just done. This document is just one example of the skill that we've seen that leads me to say, once again, that classes will be taught using the documents filed in this case. I wish to thank juliac, feldegast, and fredex for helping with this very long and complicated HTML assignment. Also, you can find all the exhibits referenced in this document here. Pagination follows the internal document's pagination, as opposed to our usual practice of following the PDF pagination. ****************************
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 |
THE SCO GROUP, INC.
Plaintiff / Counterclaim-Defendant,
v.
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant / Counterclaim-Plaintiff. |
IBM'S UNSEALED MEMORANDUM
IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT ON SCO'S
CONTRACT CLAIMS (SCO'S FIFTH CAUSE OF
ACTION)
(ORAL ARGUMENT REQUESTED)
Civil No. 2:03CV-0294 DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells |
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 |
THE SCO GROUP, INC.
Plaintiff / Counterclaim-Defendant,
v.
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant / Counterclaim-Plaintiff |
IBM'S MEMORANDUM
IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT ON SCO'S
COPYRIGHT CLAIM (SCO'S FIFTH CAUSE OF
ACTION)
(ORAL ARGUMENT REQUESTED)
FILED UNDER SEAL PURSUANT TO 9/16/03
PROTECTIVE ORDER, DOCKET #38
Civil No. 2:03CV-0294 DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells |
Table of Contents
Page
Table Of Authorities | ii |
Preliminary Statement | 1 |
Statement of Undisputed Facts | 5 |
| A. | UNIX, IBM, and Sequent | 6 |
| B. | Amendment No. X | 9 |
| C. | SCO's Acquisition, Lawsuit, and Threatened Terminations | 15 |
| D. | SCO's Copyright Claim | 19 |
Standard of Decision | 21 |
Argument | 22 |
I. | SCO CANNOT ESTABLISH A PREDICATE BREACH OF CONTRACT | 22 |
II. | SCO CANNOT SHOW THAT IT PROPERLY TERMINATED IBM'S LICENSE | 27 |
| A. | IBM Has an Irrevocable License | 27 |
| B. | SCO Failed to Give IBM Proper Notice and an Opportunity to Cure, and to Exercise Its Good Faith Best Efforts to Avoid Termination | 34 |
III. | SCO CANNOT PROVE UNAUTHORIZED COPYING OR DISTRIBUTION BY IBM OF COPYRIGHTED WORKS OWNED BY SCO | 37 |
IV. | SCO HAS MISUSED ITS ALLEGED COPYRIGHTS | 40 |
Conclusion | 42 |
Table of Authorities
| Page(s) |
Cases |
Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999) | 40 |
Aron v. Gillman, 128 N.E.2d 284 (N.Y. 1955) | 31 |
Breed v. Ins. Co. of N. Am., 385 N.E.2d 1280 (N.Y. 1978) | 27,28 |
Brought to Life Music, Inc. v. MCA Records, Inc.. No. 02-1164, 2003 WL 296561 (S.D.N.Y. Feb. 11, 2003) | 37 |
Cambridge Elec. Corp. v. MGA Elec., Inc., 227 F.R.D. 313 (C.D. Cal. 2004) | 39,40 |
Cary Oil Co., Inc. v. MG Refining & Mktg., Inc., 90 F. Supp. 2d 401 (S.D.N.Y. 2000) | 24 |
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) | 21 |
Chimart Assocs. v. Paul, 66 N.Y.2d 570 (1986) | 31 |
Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 232 F.3d 153 (2d Cir. 2000) | 33 |
Consumers Power Co. v. Nuclear Fuel Servs., Inc. 509 F. Supp. 201 (W.D.N.Y. 1981) | 36 |
Fama v. Metro. Prop. & Cas. Ins. Co., 646 N.Y.S.2d 930 (Sup. Ct. 1996) | 28,29 |
Filmline (Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513 (2d Cir. 1989) | 36 |
Fin. Tech. Int'l, Inc. v. Smith, 247 F. Supp. 2d 397 (S.D.N.Y. 2002) | 25 |
Frank Felix Assocs., Ltd. v. Austin Drugs, Inc., 111 F.3d 284 (2d Cir. 1997) | 24,26 |
Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823 (10th Cir. 1993) | 37 |
Gen. Supply and Constr. Co. v. Goelet 241 N.Y. 28 (1925) | 37 |
Goldstein v. AccuScan, Inc., 815 N.E.2d 657 (N.Y. 2004) | 30 |
Greenfield v. Philles Records, Inc., 780 N.E.2d 166 (N.Y. 2002) | 30 |
ii
| Page(s) |
I.A.E., Inc. v. Shaver, 74 F.3d 768 (7th Cir. 1996) | 1 |
In re Grandote Country Club Co., 252 F.3d 1146 (10th Cir. 2001) | 21 |
In re Indep. Serv. Orgs. Antitrust Litig., 964 F. Supp. 1469 (D. Kan. 1997) | 40 |
In re the Estate of Stravinsky, 770 N.Y.S.2d 40 (App. Div. 2003) | 31 |
Int'l Fid. Ins. Co. v. County of Rockland, 98 F. Supp. 2d 400 (S.D.N.Y. 2000) | 31 |
Int'l Gateway Exch., LLC v. Western Union Fin. Servs., 333 F. Supp. 2d 131 (S.D.N.Y. 2004) | 25 |
Internet Law Library, Inc. v. Southridge Capital Mgmt., LLC, No. 01-6600, 2005 WL 3370542 (S.D.N.Y. Dec. 12, 2005) | 24,25 |
Jacobsen v. Deseret Book Co., 287 F.3d 936 (10th Cir. 2002) | 37 |
Jean v. Bug Music Inc., No. 00-4022, 2002 WL 287786 (S.D.N.Y. Feb. 27, 2002) | 21 |
Kolvek v. Ferrucci, 667 N.Y.S.2d 554 (App. Div. 1997) | 37 |
Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990) | 40,41 |
Lauth v. McCollum, No. 03-8529, 2004 WL 2211620 (N.D. Ill. Sept. 30, 2004) | 39,40 |
Lawrence v. IBP, Inc., No. 94-2027, 1995 WL 261144 (D. Kan. April 21, 1995) | 39,40 |
Lovink v. Guilford Mills, Inc., 878 F.2d 584 (2d Cir. 1989) | 24 |
MSF Holding Ltd. v. Fiduciary Trust Co. Int'l, 435 F. Supp. 2d 285 (S.D.N.Y. 2006) | 33, 34 |
Reda v. Eastman Kodak Co., 649 N.Y.S.2d 555 (App. Div. 1936) | 30 |
SAA-A, Inc. v. Morgan Stanley Dean Witter & Co., 721 N.Y.S.2d 640 (App. Div. 2001) | 31 |
Sauer v. Xerox Corp., 17 F. Supp. 2d 193 (W.D.N.Y. 1998) | 36 | |
Scholastic Inc. v. Stouffer, 221 F. Supp. 2d 425 (S.D.N.Y. 2002), aff'd, 81 Fed. Appx. 396 (2d Cir. 2003) | 21 |
iii
| Page(s) |
Signature Realty v. Tallman, 814 N.E.2d 429 (N.Y. 2004) | 30 |
Stone v. CGS Distributing Inc., No. 93-F-2188, 1994 WL 832021 (D. Colo. Aug. 18,1994) | 39,40 |
Trs. of the Bricklayers & Allied Craftworkers v. Charles T. Driscoll Masonry Restoration Co., Inc., 165 F. Supp. 2d 502 (S.D.N.Y. 2001) | 34 |
U-Haul Intern., Inc. v. WhenU.com, Inc., 279 F. Supp. 2d 723 (E.D. Va. 2003) | 37 |
Vermont Teddy Bear Co., Inc., v. 538 Madison Realty Co., 807 N.E.2d 876 (N.Y. 2004) | 31 |
W.W.W. Assocs., Inc. V. Giancontieri, 566 N.E.2d 639, 642 (N.Y. 1990) | 27,28,32 |
Wechsler v. Hunt Health Sys., Ltd. 186 F. Supp. 2d 402 (S.D.N.Y. 2002) | 25 |
Winfield Collection Ltd. v. Gemmy Indus. Corp., 311 F. Supp. 2d 611 (E.D. Mich. 2004) | 21 |
Statutes |
Fed. R. Civ. P. 56 | 21 |
N.Y. Gen. Obl. L. § 15-301 | 31 |
Other Authorities |
The American Heritage College Dictionary (3d ed. 1993) | 28,29 |
Black's Law Dictionary (8th ed. 2004) | 28,29 |
3 Arthur L. Corbin, Corbin on Contracts § 615 (1951) | 31 |
4 Arthur L. Corbin, Corbin on Contracts § 946 (1951) | 24 |
2 E. Allan Farnsworth, Farnsworth on Contracts § 8.16 (1998) | 24 |
Merriam-Webster Online Dictionary (http://www.merriam-webster.com/dictionary/perpetual) (2006) | 28,29 |
The Random House Dictionary of the English Language (1st ed. 1966) | 28,29 |
iv
| Page(s) |
Restatement (Second) of Contracts § 236 | 24 |
Fenwick & West LLP, Technology Licensing and Online Legal Commerce (1998) | 29 |
Software Council of Southern California, Understanding and Using Licensing Terminology, www.scsc.org/resources/licensing terminology.html | 29 |
Webster's Third New International Dictionary of the English Language (17th ed. 1976) | 28,29 |
11 Richard A. Lord, Williston on Contracts § 1292 (3d ed. 1968) | 24 |
v
Defendant/Counterclaim-Plaintiff International Business Machines Corporation ("IBM")
respectfully submits this memorandum in support of its motion for summary judgment on the
copyright claim of Plaintiff/Counterclaim-Defendant The SCO Group, Inc. ("SCO").1
Preliminary Statement
Shortly after beginning this lawsuit (amidst much fanfare), SCO purported to terminate
IBM's right to distribute its own AIX and Dynix/ptx ("Dynix") products. Because IBM did not
shut down its AIX and Dynix businesses based on SCO's purported termination of IBM's rights,
SCO amended its complaint to assert a claim against IBM for copyright infringement. SCO
alleges that IBM has infringed and is infringing SCO's alleged UNIX System V copyrights by
continuing the business in which it has been engaged for more than two decades, and that SCO is
therefore entitled to billions of dollars in damages. SCO's allegations of infringement are
untenable as a matter of law, and summary judgment should therefore be entered in favor of
IBM.
More than two decades ago, IBM and Sequent Computer Systems ("Sequent"), which
IBM subsequently acquired, entered into a series of licensing agreements (the "Agreements")
under which they licensed AT&T's UNIX software and obtained, among other rights, the right to
prepare modifications and derivative works of that software. As permitted by the Agreements,
IBM and Sequent developed their own "flavors" of UNIX, known as AIX and Dynix. After
acquiring Sequent, IBM ceased selling Dynix, but IBM continues to sell AIX, which is an
important part of IBM's business. In fact, more than a decade ago, IBM made the decision to
protect its AIX business by ensuring that its license to use AT&T's UNIX software would be
irrevocable and perpetual. To that end, IBM entered into an amendment to the Agreements with
Novell, Inc. ("Novell") and The Santa Cruz Operation, Inc. ("Santa Cruz"), which then shared
ownership of AT&T's rights to the UNIX software, for a non-terminable license. Based in
significant part on that amendment, which is known as Amendment No. X, IBM further invested
in its AIX business.
Until SCO filed this lawsuit, IBM and Sequent had sold AIX and Dynix without
challenge from AT&T or from any of its successors in interest, including SCO. None of them
ever challenged IBM's or Sequent's ownership of AIX or Dynix, or, after Amendment No. X,
IBM's non-terminable right to sell AIX. In fact, they repeatedly recognized that IBM and
Sequent owned AIX and Dynix, and that they could exercise their rights of ownership (so long as
they protected AT&T's UNIX software). The first time AT&T or any of its successors
challenged IBM's right to distribute AIX or Dynix was in the letter SCO sent IBM with its
original complaint, purporting to terminate IBM's perpetual and irrevocable license on the
supposed ground that IBM had breached the Agreements by contributing portions of its AIX and
Dynix code to Linux.
As with most of SCO's allegations in this case, SCO revealed none of the particulars of
its infringement claim (such as exactly what code SCO alleges has been infringed), even in the
face of three court orders requiring it to do so. SCO simply asserts that IBM improperly
contributed certain AIX and Dynix material to the Linux operating system in violation of its
contractual obligation to AT&T, thereby permitting SCO to terminate IBM's license to use AIX
and Dynix. Thus, SCO says, IBM's continued distribution of AIX and Dynix infringes SCO's
2
alleged copyrights relating to UNIX System V. However, IBM has not sold Dynix since before
SCO's purported termination, which is by itself fatal to SCO's allegations relating to Dynix.
IBM has continued to sell AIX, but, unless SCO properly terminated IBM's license (which is
non-terminable), IBM has done so with permission. Thus, SCO's infringement claim depends on
whether it can show that SCO properly terminated IBM's license to AIX. SCO cannot make that
showing.
Based on the undisputed facts, SCO's infringement allegations lack merit, and IBM is
entitled to summary judgment, for at least four independent reasons:
First, SCO's infringement claim is untenable, because SCO cannot establish a predicate
breach of contract - i.e., a material breach sufficient to justify termination of IBM's rights to
UNIX System V. SCO's infringement claim fails unless IBM committed a material breach of
the Agreements by contributing code, methods, and concepts from its AIX product to Linux. As
we explain in IBM's accompanying motion for summary judgment on SCO's contract claims,
which we incorporate here by reference, SCO's claims for breach of contract fail as a matter of
law for at least four reasons.2 Moreover, even if the alleged breach were in fact a breach of
contract – and it is not – it would be immaterial as a matter of law, and therefore could not
serve as a predicate to termination of IBM's AIX license. It could not possibly be a material
breach of IBM's UNIX licensing agreements for IBM to contribute its own copyrighted code to
Linux, as SCO alleges. (See Section I.)
3
Second, even if (contrary to fact) SCO could establish a material breach of contract by
IBM, SCO's infringement claim fails because SCO cannot show that it properly terminated
IBM's license to market and distribute AIX based on the alleged breach. IBM has a perpetual
and irrevocable license to AIX that cannot be terminated under any circumstances. The plain
language of Amendment No. X and the relevant parol evidence demonstrate that IBM's license
to distribute AIX is non-terminable. Moreover, even if (contrary to fact) IBM's AIX license
were terminable, the license could not be terminated except following: (1) notice and a
reasonable opportunity to cure the alleged basis of the claimed breach; and (2) SCO's "good
faith best efforts to resolve any alleged breach" prior to termination. The undisputed evidence
shows that SCO failed to give IBM adequate notice or a reasonable opportunity to cure the
alleged breach, which was the only basis for the purported termination, and that SCO failed to
exercise its good faith best efforts to avoid termination, (See Section II.)
Third, SCO cannot establish unauthorized copying or distribution by IBM of copyrighted
works owned by SCO, because SCO failed to disclose its allegations and evidence as required by
the Court. From the beginning of this case, IBM asked SCO to disclose its allegations and
evidence of alleged infringement by IBM, and, from the beginning of this case, SCO declined to
do so. The Court entered two separate orders requiring SCO to disclose its allegations and
evidence with specificity. SCO failed to comply, requiring the Court to enter an order setting a
final disclosure deadline. Even in the face of that order, SCO failed again to describe in any
meaningful way – let alone in detail, as specified by the Court – its allegations and evidence of
unauthorized copying or distribution by IBM of copyrighted works owned by SCO. SCO has
not, for example, identified a single line of allegedly infringing AIX code. Having failed to
4
substantiate its allegations as ordered by the Court, SCO's claims of infringement necessarily
fail. (See Section III.)
Fourth, SCO cannot enforce its alleged copyrights because it has misused them, further
precluding its infringement claim. Copyright misuse is an equitable doctrine applied by courts to
prevent a copyright holder from enforcing a copyright it has misused. A copyright holder
misuses its copyright when it extends the scope of its limited copyright grant to secure an
exclusive right or limited monopoly not granted by the Copyright Office, or otherwise uses the
copyright contrary to public policy. SCO has misused its alleged copyrights by: (1) claiming
ownership over code for which SCO has no copyright; (2) effectively asserting that its alleged
copyrights extend to all of Linux; (3) claiming its alleged copyrights give it control of IBM's
own copyrighted code (i.e., AIX and Dynix); (4) claiming its alleged copyrights include material
not protectable by copyright; and (5) seeking to enforce its alleged copyrights in ways that are
unenforceable. (See Section IV.)
Statement of Undisputed Facts
The undisputed and indisputable facts material to this motion are set forth below, and in
the memoranda in support of IBM's other motions for summary judgment, which are submitted
herewith and incorporated herein by reference.3
5
A. UNIX, IBM, and Sequent.
1. In 1969, Bell Laboratories, then the research division of AT&T Corp. ("AT&T"),
developed a computer operating system that came to be known as the UNIX operating system.
(See Ex. 3 ¶¶ 1, 23; Ex. 5 ¶¶ 1, 8; Ex. 64 ¶ 1.)
2. AT&T developed many different versions of its UNIX operating systems,
including UNIX System V, the version of UNIX developed by AT&T during the early 1980s.
(See Ex. 5 ¶ 9; Ex. 297 at 32.)
3. Over the years, through various business units and subsidiaries, including AT&T
Technologies, Inc. and UNIX System Laboratories, Inc. ("USL"), AT&T licensed its UNIX
operating systems, both in source code and object code form, to many thousands of persons and
entities for their use. (See Ex. 3 ¶¶ 23-24 ; Ex. 5 ¶ 9; Ex. 64 ¶ 2.) AT&T also licensed many
companies to distribute their own UNIX operating systems, such as Hewlett-Packard Co.'s "HP-
UX" operating system. (See Ex. 3 ¶¶ 24-27; Ex. 64 ¶ 3.)
4. Among AT&T's licensees were IBM and Sequent, which IBM acquired in 1999.
(See Ex. 3 ¶¶ 62-69; Ex. 5 ¶¶ 12, 15.) IBM and Sequent entered into their UNIX licensing
agreements with AT&T (collectively, the "Agreements") in early 1986. (See Ex. 5 ¶¶ 12, 15;
Ex. 3 ¶¶ 62-69.) The Agreements are governed by New York law. (See, e.g., Ex. 492 § 7.13.)
5. Both companies entered into software agreements, which set forth the terms under
which they could use AT&T's UNIX software, as well as sublicensing agreements, which set
forth the terms under which software programs "based on" UNIX System V could be distributed.
(Ex. 492; Ex. 119; Ex. 120; Ex. 121; Ex. 282 ¶¶ 6-8; Ex. 182 ¶ 15.) IBM also entered into a side
letter with AT&T (the "Side Letter") that further defined their relationship. (Ex. 122.)
6
6. While the Agreements placed restrictions on what IBM and Sequent could do
with AT&T's UNIX software, they did not restrict what IBM and Sequent could do with their
original works. IBM and Sequent were free under the Agreements to do as they wished with
their original works, whether or not they were included in a modification or derivative work of
UNIX System V, so long as they protected AT&T's UNIX software. (See Ex. 492 § 2.01;
Ex. 122 ¶ A.2; Ex. 182 ¶¶ 18, 20.)
7. The Agreements were primarily designed to protect any trade secrets embodied in
UNIX System V source code provided by AT&T or USL. (See Ex. 281 ¶ 31.) AT&T "did not
intend to impose a confidentiality obligation beyond what [it] could enforce under trade secret
law". (Id.)
8. IBM's and Sequent's rights under the Agreements could not be terminated except
for material breach. (See Ex. 492 § 6.03; Ex. 120 § 3.03; Ex. 122 ¶ A.5; Ex. 119 § 6.03; Ex. 260
at 247-48.)
9. AT&T did not consider a breach material unless it presented a significant
violation of its core intellectual property rights. (See Ex. 260 at 247.) Michael DeFazio, the
head of AT&T's UNIX licensing efforts, has testified that AT&T's purpose was "to ensure that
immaterial or trivial violations of confidentiality would not be judged to be a breach of the
[Agreements]". (Id.; Ex. 182 ¶ 1.)
10. AT&T's goal in implementing its licensing agreements was not to have
"gotcha's" with its licensees on minor violations, but to protect the core of its intellectual
property. AT&T focused, therefore, on substance and materiality from a business perspective.
(See Ex. 260 at 248.) As Michael DeFazio stated, "[AT&T's] goal was not here to implement a
7
lot of agreements and then have what I'll call 'gotcha's' with all our licensees on insignificant or
minor or trivial violations. We [AT&T] were concerned about protecting the core of our
intellectual property, and that meant substance and materiality is what we were focused on from
a business side." (Id.)
11. Even in the event of a material breach, the Agreements could only be terminated
after 100 days notice (for AIX) or 60 days notice (for Dynix) and an opportunity to cure any
breach. Furthermore, the Side Letter required AT&T to exercise its "good faith best efforts to
resolve any alleged breach" prior to termination. (Ex. 492 § 6.03; Ex. 121 § 3.03; Ex. 122
¶ A.5.)
12. Pursuant to the Agreements, and with the understanding that they could do as they
wished with their original works, IBM and Sequent further developed and distributed their own
"flavors" of UNIX software – IBM's was known as AIX, and Sequent's as Dynix. (See
Ex. 492 § 2.01, 122 ¶ A.2.; Ex. 119; Ex. 121.) SCO concedes that IBM owns AIX and Dynix.
(See Ex. 44.)
13. Both AIX and Dynix, which IBM owns, consist of millions of lines of code,
including code written by IBM and Sequent software engineers (or outside contractors retained
by them), and also code written by third parties and licensed to IBM or Sequent for inclusion in
AIX or Dynix. (See Ex. 236 ¶¶ 4-5; Ex. 269 ¶¶ 3-5; Ex. 414 at 22.) By contrast, the material
SCO claims in its December 22, 2005 Final Disclosures of Material Allegedly Misused by IBM
("Final Disclosures") that IBM has misused constitutes only a negligible proportion of this code.
(See K Br. ¶ 231.) For example, AIX 5.1.G for Power consists of more than 160 million lines of
source code, while the "Journaled File System" ("JFS") material allegedly misused by IBM
8
amounts to only 11,170 lines of code from AIX – i.e., less than 0.01% of AIX 5.1.G. for Power.
(See Ex. 181 (Ex. C), (Ex. G); K Br. ¶ 231.)
B. Amendment No. X.
14. In 1993, AT&T sold USL, which then held all of AT&T's UNIX-related assets, to
Novell, which sold some, but not all, of AT&T's UNIX assets to Santa Cruz in 1995. Among
other things, Novell retained all of AT&T's UNIX copyrights pursuant to an Asset Purchase
Agreement ("APA") dated as of September 19, 1995. (See Ex. 123 Art. 1.1(a), Sched. 1.1(b).)
15. In 1996, IBM approached Novell about amending its UNIX licensing agreements
for the purpose of acquiring non-terminable rights to distribute AIX. (See Ex. 160 ¶¶ 7-16;
Ex. 163 ¶¶ 5-7.) IBM wanted to invest further in AIX and develop its AIX business, but it did
not wish to do so without ensuring that it had a non-terminable right to use AIX. (See, Ex. 256
¶ 13.)
16. IBM sought to amend the Agreements in order to: effect a royalty buy-out,
thereby eliminating the need to maintain a team to audit the required annual royalty payments;
make IBM's rights under the Agreements irrevocable, fully paid-up, and perpetual; make it
easier to redistribute licensed source code to contractors and customers for limited purposes; and
loosen the confidentiality restrictions in the Agreements. (See id. ¶ 8; Ex. 172 ¶ 19; Ex. 163 ¶ 6.)
17. Novell was represented by A. Allison Amadia and Lawrence A. Bouffard in the
negotiations leading to the modification of IBM's UNIX Licensing Agreements. (Ex. 160 ¶ 9;
Ex. 172 ¶ 18.) IBM was represented by William Sandve, Kenneth Stokes, and Paul D. Vineis.
(See Ex. 256 ¶ 9.) To the extent Santa Cruz expressed its views during the negotiations, it was
by and through Novell. (See Ex. 163 ¶¶ 8, 10; Ex. 160 ¶ 7, 19, 27-29.)
9
18. IBM made clear during the negotiations that it wanted a non-terminable license.
(Ex. 163 ¶ 7.) In IBM's view, it made no sense to undertake significant further investment in
AIX absent the assurance that no one could terminate its rights to use AT&T's software, and
thereby hold hostage IBM's AIX business. (See Ex. 256 ¶ 13; Ex. 160 ¶ 14.)
19. IBM stated that in order to justify a $10,125,000 non-refundable payment for
what was, even in 1996, very old software, IBM's rights under the Agreements could never be
terminated under any circumstances. (See Ex. 256 ¶ 13; Ex. 160 ¶ 14.)
20. Novell understood IBM's proposal to mean that neither Novell nor Santa Cruz
(nor their successors or assigns) could: terminate IBM's rights under the Agreements; demand
any additional royalty payments beyond the agreed-upon amount in connection with IBM's
distribution of its AIX operating system product on specified architectures (and, after five years,
other sublicensed products); or interfere with the proper exercise of IBM's rights under the
Agreements. (See Ex. 256 ¶ 13; Ex. 160 ¶ 14; Ex. 182 ¶ 51.)
21. Initially, Novell declined IBM's request for a non-terminable license. However,
IBM persisted in the request, and Novell ultimately agreed to grant IBM a non-terminable
license. (Ex. 160 ¶¶ 11, 18; Ex. 172 ¶ 21; Ex. 163 ¶ 8.)
22. The only limitation on its rights to which IBM would agree was that Novell would
retain the right to enjoin or otherwise prohibit IBM from violating Novell's rights under the
amendment, the Agreements, or under general patent, copyright, or trademark law. (Ex. 160
¶ 14; Ex. 163 ¶ 13; Ex. 182 ¶ 51.)
23. On April 26, 1996, IBM and Novell (on behalf of itself and Santa Cruz) entered
into an amendment to IBM's UNIX licensing agreements (the "April 1996 Amendment"). The
10
April 1996 Amendment, among other things, provided IBM a non-terminable license. (See
Ex. 256 ¶ 20; Ex. 160 ¶ 10, 20-22; Ex. 172 ¶ 22; Ex. 582 at 1.)
24. Section I of the April 1996 Amendment stated that, upon payment of the
consideration contemplated in the Agreement, IBM would have the "irrevocable, fully paid-up,
perpetual right to exercise all of its rights under the [Agreements] ...". (Ex. 582 at 1.) IBM and
Novell intended and understood the April 1996 Amendment to render IBM's UNIX licenses
non-terminable. (Ex. 160 ¶ 35; Ex. 256 ¶ 22.)
25. Santa Cruz raised no objections during the negotiation of the April 1996
Amendment, but after it was executed, Santa Cruz objected, on the grounds that the Amendment
constituted a breach by Novell of the APA, and was an improper exercise of Novell's authority.
(Ex. 583; Ex. 172 ¶ 23.)
26. Novell disagreed with Santa Cruz's objection, but undertook to resolve Santa
Cruz's concerns, since Novell believed it had authority to execute the April 1996 Amendment.
(See Ex. 256 ¶ 26; Ex. 172 ¶ 23.)
27. Pursuant to a "standstill agreement" with Santa Cruz, IBM and Novell therefore
agreed to refrain from acting under certain sections of the April 1996 Amendment for a period of
thirty days. The standstill agreement was extended several times pending negotiations with
Santa Cruz. (See Ex. 256 ¶ 26.)
28. Novell negotiated separately with IBM and with Santa Cruz to resolve Santa
Cruz's concerns. (See id.; Ex. 172 ¶ 25.) IBM did not deal directly with Santa Cruz during the
negotiations. Santa Cruz authorized Novell to act on its behalf. (See Ex. 256 ¶ 26.)
11
29. During this round of negotiations, IBM continued to insist on non-terminable
rights, and Novell continued to assure IBM that there would be no change in that part of the
parties' agreement. (See Ex. 256 ¶¶ 29-30.)
30. Santa Cruz sought to revise the language of the irrevocability provision by,
among other things, making it "subject to the provisions of this Amendment". (Id. ¶ 27; Ex. 163
¶ 9.) IBM, however, rejected this proposal, and Santa Cruz ultimately agreed to let the
irrevocability provision stand as written in the April 1996 Amendment. (Ex. 256 ¶ 30.)
31. At no point after this did Novell suggest that IBM's license would be terminable.
(Ex. 163 ¶ 9.) At no point in the negotiations did IBM indicate a willingness to back off of the
position that it must have a non-terminable license. (Id.; see Ex. 256 ¶¶ 8-14, 17, 29-30.)
32. Santa Cruz also sought to: (i) impose right-to-use fees on IBM contractors and
customers who were provided licensed source code; and (ii) prevent IBM employees who had
gained access to licensed source code from memorializing concepts, know-how, or techniques
embodied in that code. (Ex. 256 ¶ 29.)
33. While IBM rejected both of these proposals, it ultimately did agree to a provision
limiting its right to provide contractors and customers with copies of licensed source code to a
specified number of copies (fifty) at a time. (Id.) In exchange for IBM's concession, Novell
agreed to accept $350,000 less than it otherwise was entitled to as royalty payments, pursuant to
an October 16, 1996 Letter Agreement between IBM and Novell. (Id. ¶ 30; Ex. 172 ¶ 26;
Ex. 143.)
12
34. On October 17, 1996, Novell, Santa Cruz, and IBM executed Amendment No, X,
which was substantially similar to, but replaced, the April 1996 Amendment. (Ex. 124 at 1; see
Ex. 163 ¶ 11.)
35. Amendment No. X specifically acknowledged that, as part of the sale by Novell
of its UNIX assets to Santa Cruz, "SCO purchased, and Novell retained, certain rights with
respect to" the agreements IBM entered into with AT&T, including "Software Agreement
SOFT-00015 as amended" and "Sublicensing Agreement SUB-0015A as amended". (Ex. 124
at 1.)
36. Under Section I of Amendment No. X, Novell and Santa Cruz agreed to grant
IBM the following rights, in exchange for a payment of $10,125,000:
No Additional Royalty. Upon payment to SCO of the consideration in
the section entitled "Consideration", IBM will have the irrevocable,
fully paid-up, perpetual right to exercise all of its rights under the
[Agreements] beginning January 1, 1996 at no additional royalty fee
.... Notwithstanding the above, the irrevocable nature of the above
rights will in no way be construed to limit Novell's or SCO's rights to
enjoin or otherwise prohibit IBM from violating any and all of
Novell's or SCO's rights under this Amendment No. X, the
[Agreements], or under general patent, copyright, or trademark law.
(Id. §§ 1, 4.)
37. Section I of Amendment No. X superseded the term and termination provisions
of the Agreements. (See, e.g. Ex. 492 § VI; Ex. 120 § 111; Ex. 122 ¶ A.5.; see Ex. 256 ¶ 22; see
also Ex. 124 § 11 (providing that the terms and conditions of the Agreements will remain in
effect "[e]xcept as modified herein").)
13
38. In granting IBM an irrevocable and perpetual license, Amendment No. X gave
IBM a non-terminable license. IBM's license under the Agreements cannot be terminated for
any reason. (See Ex. 256 ¶ 33; Ex. 160 ¶ 35.)
39. Although Novell and Santa Cruz retained the right to enjoin or otherwise prohibit
any conduct in violation of the amended Agreements, or under general patent, copyright, or
trademark law (as long as they could meet the standards for obtaining that relief), neither Novell,
Santa Cruz, nor anyone else had the right to terminate IBM's rights under the Agreements.
(Ex. 256 ¶ 33; Ex. 160 ¶ 35; Ex. 163 ¶ 14.)
40. After Amendment No. X, Novell and Santa Cruz could no longer terminate IBM's
rights to copy and furnish sublicensed products that included material from UNIX System V
Release 3.2 and previous releases, such as AIX, if IBM were to improperly disclose the licensed
source code in breach of the Agreements. However, Novell or Santa Cruz could attempt to
enjoin improper disclosures. (Ex. 256 ¶ 33; Ex. 160 ¶ 35; Ex. 163 ¶ 14.)
41. All of the persons who negotiated Amendment No. X on behalf of IBM and
Novell agree that the parties intended for IBM to obtain a non-terminable license. (See Ex. 256
¶¶ 13, 35; Ex. 160 ¶¶ 14, 37; Ex. 172 ¶ 28.)
42. IBM and Novell intended and understood that Amendment No. X was to effect a
royalty buy-out for a lump sum payment, and thereby give IBM rights that could not be revoked
or terminated for any purpose. (See Ex. 160 ¶ 35; Ex. 256 ¶ 33.) No one ever communicated
any contrary intent to IBM or Novell. (See Ex. 160 ¶ 35; Ex. 256 ¶ 33.)
43. Any argument that IBM's rights are terminable is inconsistent with the language
of Amendment No. X and the understanding of the people who negotiated the April 1996
14
Amendment and Amendment No. X. Termination is no longer a remedy under the Agreements.
(Ex. 256 ¶¶ 13, 35; Ex. 160 ¶¶ 14, 37; Ex. 172 ¶ 28; Ex. 182 ¶ 52.)
44. When advised that SCO, which was not involved in negotiating the April 1996
Amendment or Amendment No. X, had threatened to terminate IBM's rights under the
Agreements based on alleged breaches by IBM of the Agreements, Ms. Amadia stated that she
did not believe that IBM's rights under the Agreements were terminable. She stated that, to her
mind, any argument that IBM's rights were terminable was inconsistent with the language of
Amendment No. X, and the understanding of the parties who negotiated the April 1996
Amendment and Amendment No. X. Because the termination right was contracted away in both
the April 1996 Amendment and Amendment No. X, termination was no longer a remedy.
(Ex. 160 ¶ 37.)
C. SCO's Acquisition, Lawsuit, and Threatened Terminations.
45. In 2001, approximately five years after Amendment No. X, Caldera International
("Caldera") acquired most, if not all, of the UNIX assets owned by Santa Cruz. After failing to
make a profit, Caldera switched management, changed its name to SCO, and adopted a business
model based upon litigation. (See Ex. 123.)
46. On March 6, 2003, SCO commenced this lawsuit against IBM, alleging in general
terms that IBM improperly "dumped" UNIX source code into the publicly available Linux
operating system. (See Ex. I ¶¶ 82-103.)
47. Linux is an "open source" program, which means, among other things, that its
source code is publicly available and royalty-free, and that users have the freedom to run, copy,
15
distribute, study, adapt, and improve the software. (See Ex. 5 ¶ 22; Ex. 64 ¶ 8.) Indeed, the
source code for Linux is publicly available for download on the Internet. (See Ex. 5 ¶ 23.)
48. At the same time SCO served its complaint, SCO sent a letter to IBM threatening
to terminate its rights to distribute AIX and Dynix based on IBM's alleged breach of its licensing
agreements. (Ex. 153.) In a March 7, 2003 press release, SCO publicized the letter, and publicly
repeated its threat to terminate IBM's rights. (Ex. 592.)
49. SCO similarly sought to terminate Sequent's rights to use and distribute Dynix.
By way of a letter dated May 29, 2003, SCO purported to notify Sequent of the alleged breaches,
and gave Sequent until September 2, 2003 to remedy any alleged breaches. Without waiting
until September 2, 2003, SCO later sent a purported letter of termination dated August 11, 2003,
and claimed that the Dynix licenses had been terminated as of July 30, 2003. (See Ex. 154;
Ex. 155.)
50. Neither SCO's letters nor its complaint described SCO's specific allegations of
misconduct by IBM in any detail. (See Ex. 1; Ex. 2 at 153.) As a result, SCO did not give IBM
reasonable notice of SCO's claims, or a reasonable opportunity to cure. (See Ex. 492 § 6,03;
Ex. 120 §§ 2.07, 3.03; Ex. 122 ¶ A.5.)
51. SCO's purported termination letter referred only to breaches of "trade secret"
confidentiality. (Ex. 153.) SCO, however, amended its complaint to eliminate any trade secret
claims, and later admitted that it had no colorable trade secret claims: "There is no trade secret
in UNIX System [V] files. That is on the record. No problem with that." (Ex. 414 at 46.)
52. In order to give IBM an opportunity to cure, IBM asked SCO to identify the
alleged breaches of the Agreements, both in person through counsel on June 2, 2003, and via
16
letters of April 2, 2003, May 5, 2003, June 13, 2003, and August 14, 2003. (See Ex. 580;
Ex. 156; Ex 157; Ex. 158; Ex. 159.)
53. In a letter dated April 2, 2003, IBM asked SCO to provide IBM with meaningful
details about its allegations, and to state what SCO wanted IBM to do to cure the alleged
breaches. (Ex. 580.) IBM asked SCO to inform IBM specifically what SCO contended IBM had
done in violation of its obligations to SCO. (Id. at 2.)
54. IBM also informed SCO that "IBM does not believe that the license rights granted
under the agreements are terminable". (Ex. 580 at 1.) IBM noted that SCO had filed its
complaint without notifying IBM, and that SCO's purported notification of IBM's alleged breach
of the Agreements "do[es] not specify IBM's alleged misconduct". (Id.)
55. IBM therefore asked SCO to specify:
(1) any products, code, files, trade secrets and/or confidential
information that SCO believed IBM had improperly used, transferred,
disposed of or disclosed;
(2) the ways and specific instances in which SCO alleged IBM had
improperly used, transferred, disposed of or disclosed any products,
code, files, trade secrets and/or confidential information; and
(3) the steps that SCO believed IBM was required to take to cure the
alleged breaches and injuries about which SCO complained.
(Id. 1-2.)
56. SCO, however, refused to provide IBM with this information, and instead wrote
to IBM and stated that, "If you would like further written information regarding IBM's past and
continuing violations, we need more information from you." (Ex. 581 at 1.)
57. IBM reiterated its request for specifics by letter of May 5, 2003, stating that none
of SCO's letters to date had given IBM sufficient notice of alleged breaches, as required. IBM
17
reminded SCO that, even if the AIX-related Agreements permitted termination of its rights, they
required, in addition to 100 days specific written notice, SCO's "good faith best efforts" to
resolve any alleged breach. IBM also informed SCO that the specific information it requested
was required in order for IBM to cure any alleged breach. (See Ex. 156.)
58. Counsel for SCO and IBM met on June 2, 2003, some eighty-eight days into
SCO's purported 100-day cure period. (Ex. 158 at 1.) Despite IBM's request, SCO did not
provide the information requested in IBM's April 2, 2003 letter. (Id.)
59. By letter of June 12, 2003, SCO informed IBM that it would seek to terminate the
license permitting IBM to use and distribute AIX on June 13, 2003. (Ex. 157 at 4.)
60. On June 13, 2003, IBM informed SCO:
Your [March 6, 2003] letter provided virtually no information beyond its
conclusory assertions. We promptly requested such support ... but
received nothing more prior to the June 2 meeting, 88 days into the
purported 100 day "cure" period. At that meeting, your counsel did no
more than repeat your accusations, refer us to particular paragraphs of
your complaint and show us a handful of notes from a website that does
not, in fact, demonstrate any violation of protected license rights. Thus, to
this day, you have not provided IBM with any factual support for your
accusations. That is precisely what we informed you and your colleagues
at the June 2 meeting, when we expressed our disappointment with the
lack of information received from you.
(Ex. 158 at 1.)
61. After IBM received SCO's letter of August 11, 2003, which purported to
terminate the Dynix licenses as of July 30, 2003, IBM advised SCO on August 14, 2003 that
SCO had never given IBM notice of any possible July 30, 2003 termination date in its letter.
(Ex. 155; Ex. 159 at 1.) IBM also made yet another request for specific notice of the alleged
breaches, in order that it might attempt a cure: "I write to ask that you inform IBM specifically
18
what SCO contends IBM has done in violation of its obligations to SCO, and what you contend
IBM should do to cure such violations." (Ex. 159 at 1.) SCO declined to respond.
D. SCO's Copyright Claim.
62. By letter dated June 12, 2003, SCO purported to terminate IBM's AIX license as
of June 13, 2003. In a letter dated August 11, 2003, SCO also purported to have terminated
IBM's Dynix license as of July 30, 2003. (Ex. 155; Ex. 157.) SCO did so without using its good
faith best efforts to resolve the alleged breach prior to termination. (See Ex. 122 ¶ A.5; Ex. 581;
Ex. 156; Ex. 158.)
63. IBM had ceased selling Dynix source code prior to SCO's purported termination,
and IBM has not sold it since. (See Ex. 229 at 60-62.) However, IBM has continued to sell
AIX, as it has for more than two decades. (See Ex. 229 at 45; Ex. 256 ¶¶ 1, 33.)
64. In February 2004, SCO amended its complaint to add a claim for copyright
infringement. (See Ex. 3 ¶¶ 173-80.) By that claim, SCO alleges that IBM has infringed,
induced the infringement of, and contributed to the infringement of, certain UNIX copyrights
allegedly owned by SCO. (See id.)
65. SCO, however, does not own the allegedly infringed copyrights, because Novell
retained them under the APA. An amendment to the APA, Amendment No. 2, addressed certain
UNIX copyrights, but did not actually transfer them. (Ex. 444.)
66. Despite the fact that SCO does not own the allegedly infringed copyrights, SCO
now claims: that IBM breached its UNIX licensing agreements by contributing AIX and Dynix
code to Linux; that SCO terminated IBM's licenses under the agreements based on its alleged
19
breaches; and that distribution of AIX and Dynix after the purported termination infringes SCO's
alleged copyrights. (See Ex. 3 ¶¶ 173-86.)
67. IBM propounded a series of discovery requests asking SCO to disclose its
allegations and evidence of copyright infringement. (Ex. 11; Ex. 12.) SCO declined to provide
IBM with the information it requested, forcing IBM to make two separate motions to compel, on
October 1, 2003 and November 6, 2003. (Ex. 62; Ex. 63.)
68. The Court entered three separate orders, dated December 12, 2003, March 3,
2004, and July 1, 2005, requiring SCO to describe in detail its allegations of infringement.
(Ex. 55 ¶ 4; Ex. 56 ¶¶ I.1-5; Ex. 58 III.) The Court required SCO to respond to IBM's
interrogatories, and to identify all allegedly misused material, by version, file, and line of code,
including all allegedly infringed and allegedly infringing material, not later than December 22,
2005, in its Final Disclosures. (Ex. 55 ¶ 4; Ex. 56 ¶ I.1-5; Ex. 58 III.)
69. Despite the Court's orders, SCO has never described by version, file, and line of
code any material allegedly infringed by IBM's post-termination AIX and Dynix activities. (See
Ex. 151; Ex. 53; Ex. 54; Ex. 66; Ex. 59 at 28, 32, 35-38.) Moreover, SCO has declined to
provide the full and detailed responses to IBM's interrogatories directed at SCO's allegations of
unauthorized copying. (Ex. 151; Ex. 53; Ex. 54.) Nowhere in its interrogatory responses served
with its interim disclosures did SCO provide any specific allegations or evidence of any conduct
by IBM constituting unauthorized copying. (See Ex. 151; Ex. 53.)
20
Standard of Decision
Summary judgment is proper if "the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter of law". Fed.
R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986); In re Grandote
Country Club Co., 252 F.3d 1146, 1149 (10th Cir. 2001). Claims for alleged copyright
infringement are susceptible to resolution on a motion for summary judgment. See, e.g.,
Scholastic Inc. v. Stouffer, 221 F. Supp. 2d 425, 433, 438-39 (S.D.N.Y. 2002), affd, 81 Fed.
Appx. 396, 397-98 (2d Cir. 2003); Winfield Collection Ltd. v. Gemmy Indus. Corp., 311
F. Supp. 2d 611, 617 (E.D. Mich. 2004).
IBM is entitled to summary judgment of non-infringement if at least one element of the
alleged copyright infringement cannot be proven – i.e., if there is either no "ownership of a
valid copyright", or there is no "copying [or distribution] of constituent elements of the work that
are original". Jean v. Bug Music Inc., No. 00-4022, 2002 WL 287786, at *4 (S.D.N.Y. Feb. 27,
2002) (Ex. A hereto); see also I.A.E., Inc. v. Shaver, 74 F.3d 768, 778 (7th Cir. 1996);
Scholastic, Inc., 221 F. Supp. 2d at 433, 438-39.
Here, summary judgment is appropriate with respect to SCO's copyright claim for at least
four reasons: (1) SCO cannot establish the predicate breach of contract necessary to SCO's
infringement claim; (2) SCO cannot show that it properly terminated IBM's license – both
because IBM's license is irrevocable, and because SCO: (a) denied IBM proper notice and an
opportunity to cure any alleged breaches; and (b) failed to exercise its good faith best efforts to
avoid termination; (3) SCO cannot prove unauthorized copying by IBM of copyrighted works
21
owned by SCO, because SCO failed to disclose its allegations and evidence as required by the
Court; and (4) SCO has misused its alleged copyrights, and therefore cannot enforce them.
Argument
SCO has publicly claimed the right to shut down IBM's AIX and Dynix businesses for
more than three years. But it has never disclosed to IBM, let alone described with specificity, its
allegations and evidence that IBM's continued distribution of AIX and Dynix infringes SCO's
alleged copyrights. That is so, despite three orders of the Court requiring SCO to disclose its
evidence. In any event, SCO's claim fails because: SCO cannot establish a predicate breach of
contract; IBM has a non-terminable license; and SCO has misused its alleged copyrights. Thus,
SCO's allegations cannot survive scrutiny.4
I. SCO CANNOT ESTABLISH A PREDICATE BREACH OF CONTRACT.
SCO's claim for copyright infringement depends on its establishing a material breach of
the Agreements that would (according to SCO) justify its terminating IBM's right to distribute
AIX and Dynix. SCO does not, and cannot, dispute that it could not terminate IBM's right to
distribute AIX and Dynix absent a material breach of the Agreements. SCO cannot establish a
material breach of the Agreements. Thus, its infringement claim is untenable.
SCO contends that IBM breached the Agreements by contributing portions of its own
AIX and Dynix products to Linux. (¶¶ 46, 66.) SCO concedes that IBM owns AIX and Dynix,
but claims that it has the right, by way of the Agreements, to control what IBM does with AIX
and Dynix. (¶ 12; K Br. ¶¶ 178-99.) According to SCO, by contributing portions of AIX and
22
Dynix to Linux, IBM materially breached the Agreements and empowered SCO to terminate
IBM's rights under the Agreements. (¶¶ 48-49, 66; K Br. ¶¶ 180-81.) Thus, says SCO, any
distribution of AIX and Dynix by IBM after the purported termination of its rights infringes
SCO's alleged UNIX copyrights. (¶¶ 48-49, 66; K Br. ¶200.) SCO is wrong.
Because IBM has not licensed Dynix source code since before SCO's purported
termination of IBM's license, the only alleged breach relevant to SCO's copyright claim relates
to AIX. (¶ 63.) The Final Disclosures identify only one item allegedly relating to AIX.
(K Br. ¶ 231.) That is Item No. 1, which relates to IBM's Journaled File System ("JFS"). (Id.)
SCO's claims for breach of contract relating to JFS are untenable as a matter of law:
(1) SCO's contract claims assume that the JFS material identified in SCO's
Item I was contributed to Linux from AIX. That is incorrect. The
contribution was of material from IBM's OS/2 Operating System, and
later modifications of that OS/2 code. Even if the disputed JFS item had
been contributed to Linux from AIX, however, SCO could not establish
that the contribution represents a breach of the Agreements. The
Agreements place no restraints on IBM's use of its own code (so long as it
protects AT&T's code). The JFS contribution at issue was written by
IBM and non-SCO developers independent of AT&T's UNIX Software
and is indisputably owned by IBM and third parties other than SCO. IBM
was free to do with it as it wished. (¶ 12; K Br. ¶¶ 47-93, 244-255.)
(2) SCO is, in any case, estopped from pursuing a claim for breach of contract
based on the alleged disclosure by IBM of its own code. AT&T and its
successors made clear to IBM and other UNIX licensees that they could
do as they wished with their own code, methods and concepts for more
than a decade. Moreover, IBM and other UNIX licensees exercised
control over the AIX and Dynix code, methods and concepts owned by
them for more than two decades without any objection by AT&T or its
successors. SCO cannot now, two decades after IBM and Sequent
executed the Agreements, change course to the detriment of IBM and
others who took AT&T and its successors at their word. (See
K Br. ¶¶ 160-70; DJ Br. ¶¶ 88-102.)
(3) SCO's contract claims have also been waived because: (a) SCO's
predecessors, including in particular AT&T and Novell, voluntarily
23
relinquished the right to assert rights to their licensee's code, methods and
concepts; (b) Novell exercised its right under the APA to waive IBM's
alleged breaches of contract; and (c) SCO itself waived any claims as to
JFS by shipping the material in its own Linux products under the GNU
General Public License with the understanding that it came from AIX.
The waiver is underscored by the fact that SCO expressly granted IBM a
license to use any material included in its Linux products. (See
DJ Br. ¶¶ 88-102, 123.)
These flaws in SCO's contract claims relating to JFS are described in IBM's motion for
summary judgment on SCO's contract claims, which we incorporate here by reference. Suffice
it to say here that each is independently dispositive of SCO's copyright claims.
Putting aside the fatal flaws described in IBM's motion for summary judgment on SCO's
contract claims, SCO cannot establish a predicate breach of contract because the alleged breach
is immaterial as a matter of law. Under New York law, which governs the Agreements (¶ 4), a
contract cannot be terminated except for a material breach. Cary Oil Co., Inc. v. MG Refining &
Mktg., Inc., 90 F. Supp. 2d 401, 409 n.29 (S.D.N.Y. 2000) (applying New York law) ("if the
breach is not material ... the breach is deemed partial, and the contract remains in force") (citing
2 E. Allan Farnsworth, Farnsworth on Contracts § 8.16 (1998); Restatement (Second) of
Contracts § 236, cmt. b.); Lovink v. Guilford Mills, Inc., 878 F.2d 584, 586 (2d Cir. 1989) ("A
total breach justifies termination of the contract and damages for complete failure of
performance; a partial breach does not.") (citing 11 Richard A. Lord, Williston on Contracts
§ 1292 at 8-11 (3d ed. 1968); 4 Arthur L. Corbin, Corbin on Contracts § 946 at 809-13 (1951)).5
24
Moreover, the IBM Agreements themselves provided that IBM's rights could not be
terminated for immaterial breaches. (¶ 8.) As Michael DeFazio, who was the overall head of
AT&T's UNIX licensing effort, and ultimately responsible for AT&T's UNIX licensing
agreements, put it at his deposition: "[AT&T's] goal was not here to implement a lot of
agreements and then have what I'll call 'gotcha's' with all our licensees on insignificant or minor
or trivial violations. We were concerned about protecting the core of our intellectual property,
and that meant substance and materiality is what we were focused on from a business side."
(¶ 10.) In short, AT&T's purpose was "to ensure that immaterial or trivial violations of
confidentiality would not be judged to be a breach of the agreement". (¶ 9.)
SCO does not allege that IBM contributed any UNIX System V material (code, methods,
or concepts) to Linux. (K Br. ¶ 212.) Instead, SCO faults IBM for allegedly disclosing its own
original works to Linux, on the theory that they were in and are also part of AIX and Dynix,
which SCO contends to be modifications to or derivative works of UNIX System V. (K Br.
¶¶ 178-79.) Even if there were merit to SCO's theory – and there is not – it could not possibly
result in a material breach of the Agreements. (¶¶ 7-10.)
Under New York law, a breach of contract is not material unless it "go[es] to the root of
the agreement between the parties", and "is so substantial that it defeats the object of the parties
in making the contract". Frank Felix Assocs., 111 F.3d at 289 (internal quotation marks
25
omitted). Precluding IBM and Sequent from disclosing their own original works plainly does
not go to the root of the Agreements. (¶¶ 6, 9- 10; K Br. ¶¶ 116-18, 101-06, 277-8 8.)6 Nor would
the disclosure by them of their original works defeat the object of the parties in making the
contracts. (¶¶ 6, 9-10; K Br. ¶¶ 117-18, 101-06.) Even if that were not so, the allegedly misused
material represents a trivial portion of AIX and Dynix, which is each comprised of millions of
lines of code. (¶ 13.) For example, AIX 5.I.G for Power consists of more than 160 million lines
of source code, while the allegedly misused JFS material amounts to only 11,170 lines of code
from AIX – i.e. less than 0.0 1% of AIX 5.1.G. for Power. (Id.)
Notably, it was not even a basic purpose of the Agreements to preclude IBM from
disclosing any part of the software product. (¶¶ 6-7, 12; K Br. ¶¶ 116-20.) And even if (contrary
to fact) protecting against the disclosure of UNIX software had been a primary object of the
Agreements, the purpose of the Agreements' disclosure provision was to protect the
confidentiality of any trade secrets embodied in the UNIX software. AT&T "did not intend to
impose a confidentiality obligation [under the Agreements] beyond what [it] could enforce under
trade secret law". (¶ 7.) SCO, however, does not claim that the alleged breach committed by
IBM disclosed any trade secrets whatsoever – "There is no trade secret in UNIX System [V]
files." (¶ 51.) Therefore, the alleged breach could not possibly have been material. See Frank
Felix Assocs. 111 F.3d at 289.
26
II. SCO CANNOT SHOW THAT IT PROPERLY TERMINATED IBM'S LICENSE.
Even if (contrary to fact) SCO could establish a predicate breach of the Agreements,
SCO's infringement claim also lacks merit because it depends on SCO's showing that it properly
terminated the Agreements. As we discuss below, SCO cannot show that it properly terminated
IBM's license relating to AIX, for at least two independent reasons: (1) IBM has a perpetual and
irrevocable license to distribute AIX, so SCO had no right whatsoever to terminate IBM's
license; and (2) even assuming (contrary to fact) the contract allowed termination, SCO: (a)
denied IBM proper notice and an opportunity to cure the alleged breaches of its UNIX licensing
agreements; and (b) failed to exercise its good faith best efforts to avoid termination.
A. IBM Has an Irrevocable License.
To protect against the very sort of claim at issue, IBM took steps during the mid-1990s to
acquire a perpetual and irrevocable license to distribute AIX. (¶¶ 15-33.) On October 17, 1996,
IBM executed Amendment No. X to the Agreements with Novell and Santa Cruz, which then
shared ownership of AT&T's UNIX rights. (¶ 34.) Amendment No. X granted IBM a non-terminable right to distribute AIX. (¶¶ 34-44.) The plain language of Amendment No. X and the
relevant parol evidence foreclose any claim to the contrary.
1. The plain language.
Under New York law, which governs Amendment No. X, the agreement must be
interpreted according to its plain language. See W.W.W. Assocs., Inc. v. Giancontieri, 566
N.E.2d 639, 642 (N.Y. 1990) (citations omitted). "It is axiomatic that a contract is to be
interpreted so as to give effect to the intention of the parties as expressed in the unequivocal
language employed." Breed v. Ins. Co. of N. Am., 385 N.E.2d 1280, 1282 (N.Y. 1978) (citation
27
omitted). A court may not make a contract for the parties, or vary the terms of a contract, even
to accomplish its own "notions of abstract justice or moral obligation".7 Id.
Under the plain language of Amendment No. X, IBM has a perpetual and irrevocable
right to distribute AIX. Amendment No. X provides as follows:
No Additional Royalty. Upon payment to SCO of the consideration in the section
entitled "Consideration", IBM will have the irrevocable, fully paid-up, perpetual
right to exercise all of its rights under the [Agreements] beginning January 1,
1996 at no additional royalty fee .... Notwithstanding the above, the irrevocable
nature of the above rights will in no way be construed to limit Novell's or SCO's
rights to enjoin or otherwise prohibit IBM from violating any and all of Novell's
or SCO's rights under this Amendment No. X, the [Agreements], or under general
patent, copyright, or trademark law.
(¶ 36 (emphasis added).)8
Here, the terms of Amendment No. X are plain and commonly understood. "Irrevocable"
means "not to be revoked or recalled; unable to be repealed or annulled".9 Similarly, "perpetual"
means "continuing or enduring forever".10 See Fama v. Metro. Prop. & Cas. Ins. Co.. 646
28
N.Y.S.2d 930, 934 (Sup. Ct. 1996) (finding dictionary definitions to be "useful guideposts" to
courts interpreting contracts). These meanings hold both in common parlance and in the trade
usage of the software licensing field. See, e.g., Software Council of Southern California,
Understanding and Using Key Licensing Terminology, www.scsc.org/resources/licensing
terminology.html ("An irrevocable license is most often understood as a license that cannot be
terminated under any circumstances, including for breach of the license itself by the licensee.").11
By contrast, however, "terminate" means "to bring to an end [or] put an end to: [e.g.,] to
terminate a contract". Random House Dictionary 1465 (1 st ed. 1966); see also Black's 1511 (8th
ed. 2004) ("1. To put an end to; to bring to an end. 2. To end; to conclude"); Webster's 1884
(17th ed. 1976) ("1.a. to bring to an ending or cessation in time, sequence, or continuity : CLOSE.
b.: to form the ending or conclusion of; c.: to end formally and definitely (as a pact, agreement,
contract") (see also "termination – 4 : the act of terminating : act of setting bounds or bringing
to an end or concluding; syn. see END"); American Heritage 1399 (3d ed. 1993) ("1. to bring to
an end or a halt. 2. to occur at or form the end of, conclude; 3. to discontinue the employment
of, dismiss. int. 1. to come to an end. 2. to have as an end or a result"). Thus, Amendment
29
No. X modified the term and termination provisions in the Agreements, and prevented SCO from
attempting to terminate the Software and Sublicensing Agreements with IBM.
As they are employed in Section I of Amendment No. X, the terms "irrevocable" and
"perpetual" are absolute and all-encompassing, and are not accompanied by qualifying language
that would allow SCO to terminate IBM's license, A court may not imply qualifications or
limitations upon express terms such as "irrevocable" or "perpetual" in their absence. See, e.g.,
Goldstein v. AccuScan, Inc., 815 N.E.2d 657, 657 (N.Y. 2004); Signature Realty v. Tallman 814
N.E.2d 429,430 (N.Y. 2004); Reda v. Eastman Kodak Co., 649 N.Y.S.2d 555,557 (App. Div.
1936). Indeed, "the party seeking exception or deviation from the meaning reasonably conveyed
by the words of the contract should bear the burden of negotiating for language that would
express the limitation or deviation". Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 172
(N.Y. 2002). No such burden could be borne as to termination in Amendment No. X. Section I
of Amendment No. X does include a "notwithstanding" clause, but this clause makes no mention
whatsoever of the preservation of any right to early termination; instead, this clause provides
only for measures whereby Novell or SCO may seek to enjoin or otherwise prohibit any conduct
that violates their rights – a situation not implicated here. (¶ 22.)
Interpreting the terms "irrevocable" and "perpetual" to mean anything other than "non-terminable"
would, in the context of Amendment No. X, lead to an absurd result. It would have
made no sense for IBM to pay over $10 million for a license that SCO could terminate without
any obligation to refund the license fee. (¶¶ 19, 36.) If SCO's interpretation were correct (and it
is not), then Novell or Santa Cruz could have terminated IBM's rights within days of
Amendment No. X, and retained the entirety of IBM's fully paid-up royalty. That is non-
30
sensical. Under New York law, the court should "examine the entire contract and consider the
relation of the parties and the circumstances under which [the contract] was executed". In re the
Estate of Stravinsky, 770 N.Y.S.2d 40, 45 (App. Div. 2003); see also Aron v. Gillman, 128
N.E.2d 284, 288 (N.Y. 1955). Absent compelling reason to do so, courts do not adopt contract
interpretations that make no economic sense. See Int'l Fid. Ins. Co. v. County of Rockland, 98
F. Supp. 2d 400, 422 (S.D.N.Y. 2000). There is no such reason here.
Courts applying New York law are especially loathe to look beyond the "four corners" of
agreements, where, as here: (1) the parties were sophisticated, well-counseled business entities,
dealing at arms' length, see Vermont Teddy Bear Co., Inc., v. 538 Madison Realty Co., 807
N.E.2d 876, 879 (N.Y. 2004); (2) the agreements were reduced to deliberately prepared and
executed written instruments, see Chimart Assocs. v. Paul, 66 N.Y.2d 570, 574 (1986) ("[T]here
is a heavy presumption that a deliberately prepared and executed written instrument manifest[s]
the true intention of the parties ... and a correspondingly high order of evidence is required to
overcome that presumption") (citations and internal quotation marks omitted); see also 3 Arthur
L. Corbin, Corbin on Contracts § 615 (1951), at 745-46; and (3) the agreements contain explicit
merger clauses that prohibit oral modification (i.e., Ex. 492 at 1, ¶ 4; Ex. 120 at 1, ¶ 4), see
SAA-A, Inc. v. Morgan Stanley Dean Witter & Co. 721 N.Y.S.2d 640, 642 (App. Div. 2001) (noting
that, where a contract requires that any amendments be evidenced by a writing subscribed by the
parties, oral modification is prohibited by N.Y. Gen. Obl. L. § 15-301).
In sum, SCO could not properly terminate IBM's right to distribute AIX; IBM still has a
license to distribute AIX; and SCO's infringement claim necessarily fails.
31
2. The relevant parol evidence.
The Court need not – indeed, should not – look beyond the four corners of
Amendment No. X to conclude that SCO could not properly terminate IBM's license to
distribute AIX. New York law dictates that where, as here, the Court is faced with unambiguous
and commonly used terms such as "irrevocable" and "perpetual", the Court should look no
further than the "four corners" of the Amendment and Agreements to adjudge the rights of the
respective parties. See W.W.W. Assocs., 566 N.E.2d at 642. Even if this Court were to look to
the parol evidence, however, the result would be the same. The relevant parol evidence supports
the conclusion that IBM's license is not terminable.
IBM approached Novell about amending its UNIX licensing agreements for the purpose
of acquiring non-terminable rights to distribute AIX. (¶¶ 15-18.) IBM wanted to invest further
in AIX and develop its AIX business, and did not wish to do so without ensuring that it had a
non-terminable right to use AIX. (¶¶ 15-18.) In IBM's view, it made no sense to undertake
enormous further investment in AIX absent the assurance that no one could terminate its rights to
use AT&T's software and thereby hold hostage IBM's AIX business. (¶ 18.) IBM made clear to
Novell that it wanted a non-terminable license; Novell understood IBM wanted a non-terminable
license; and IBM and Novell (on behalf of itself and Santa Cruz) entered into the April 1996
Amendment, which provided IBM a non-terminable license. (¶¶ 15-23.)
When Santa Cruz objected to the April 1996 Amendment, Novell negotiated separately
with IBM and Santa Cruz to reach the understanding resulting in Amendment No. X. (¶¶ 28-30.)
IBM reaffirmed its insistence on non-terminable rights to AIX during these subsequent
negotiations. (¶ 29.) Novell understood and agreed that IBM's rights would be non-terminable.
32
(¶¶ 20, 21, 29.) Santa Cruz initially proposed to revise the language of the irrevocability
provision by making it "subject to the provisions of this Amendment". (¶ 30.) IBM, however,
rejected this proposal, and Santa Cruz ultimately agreed to let the irrevocability provision stand
as written. (Id.)
At no point in the negotiations did IBM indicate a willingness to back off of the position
that it must have a non-terminable license. (¶ 31.) At no point did Novell suggest that IBM's
license would be terminable. (Id.)
Amendment No. X was negotiated by IBM on its own behalf, and by Novell on behalf of
Novell and Santa Cruz. (¶ 17.) William Sandve participated in the negotiations for IBM, and
Allison Amadia and Lawrence Bouffard of Novell participated in the negotiations on behalf of
Novell and Santa Cruz. (Id.) To the extent Santa Cruz expressed its views during the
negotiations, it was by and through Novell, which was authorized to act on behalf of Santa Cruz.
(¶¶ 17, 28.) The IBM and Novell participants in the negotiations have offered unrebutted and
unrebuttable testimony that the parties intended for IBM to receive a non-terminable license.
(¶¶ 41-44.)
Courts have held that where, as here, the relevant parol evidence overwhelmingly
supports one view of a contract, summary judgment is appropriate. See Compagnie Financiere
de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 232 F.3d 153,
161 (2d Cir. 2000) (affirming grant of summary judgment on contract interpretation where "the
overwhelming weight of the extrinsic evidence supports plaintiffs' contention"); MSF Holding
Ltd. v. Fiduciary Trust Co. Int'l, 435 F. Supp. 2d 285, 302-03 (S.D.N.Y. 2006) (granting
summary judgment where the "extrinsic evidence before the Court is so one-sided as to dispel
33
any dispute of the parties' intent"); Trs. of the Bricklayers & Allied Craftworkers v. Charles T.
Driscoll Masonry Restoration Co., Inc., 165 F. Supp. 2d 502, 510-13 (S.D.N.Y. 2001) (granting
summary judgment on contract interpretation upon consideration of extrinsic evidence).
As the only relevant and admissible parol evidence unequivocally supports what the plain
language of Amendment No. X clearly indicates – i.e., that IBM had a non-terminable
license – summary judgment should be granted.
B. SCO Failed to Give IBM Proper Notice and an Opportunity to Cure, and to
Exercise Its Good Faith Best Efforts to Avoid Termination.
Even if, contrary to fact, the Agreements could actually be terminated, SCO could still
not establish that it properly terminated them here. SCO failed to give IBM the requisite notice
and reasonable opportunity to cure the alleged breaches before the purported termination. SCO
also failed to exercise its good faith best efforts to avoid termination. Thus, SCO's infringement
claim lacks merit for these additional reasons.
With or without Amendment No. X, SCO could not terminate the Agreements absent
100 days notice in the case of AIX. (¶¶ 11, 57.) Nor could SCO terminate before giving IBM a
reasonable opportunity to cure its alleged breaches. (¶¶ 11, 57.) The Agreements further
required the parties to "exert their mutual good faith best efforts to resolve any alleged breach
short of termination". (¶¶ 11, 57.) SCO purports to have given IBM notice of its breaches and
an opportunity to cure, and to have exerted its good faith best efforts to resolve the alleged
breaches. SCO purports to have done so by way of the letter that SCO sent IBM at the same
time it served its complaint on March 6, 2003, and by way of the communications that followed.
(¶¶ 48, 50-51, 56, 58-59, 61.) SCO is wrong.
34
SCO's purported "termination" letter of March 6, 2003 comes nowhere close to giving
IBM notice of SCO's claims or an opportunity to cure. This letter refers only to breaches of
"trade secret" confidentiality – claims that are indisputably no longer in this case. (¶¶ 48,
50-51.) SCO amended its complaint to eliminate any trade secret claims, and SCO admitted that it
has no colorable trade secret claims whatsoever: "There is no trade secret in UNIX System [V]
files. That is on the record. No problem with that." (¶ 51.) Thus, the March 6, 2003 letter gave
IBM no notice whatsoever of the nature of the alleged material breach that SCO claimed allowed
it to terminate the agreement. It would not have been possible for any licensee to even attempt to
cure such concealed alleged breaches on the basis of this letter. At the very least, this letter
could not have started the 100-day clock running on the cure period, such that the June 13, 2003
notice of termination could have been effective. (See ¶¶ 48, 50-51, 59.)
IBM repeatedly informed SCO that it needed more information if it were to attempt to
remedy any alleged breaches. (¶¶ 52-61.) SCO repeatedly refused to provide the information
IBM requested. (¶¶ 52-61.) SCO in effect told IBM that IBM knew what it had done to violate
the Agreements, such that it needed nothing from SCO, and SCO offered IBM nothing other than
vague generalities about its alleged misconduct. (¶¶ 52-61.) At no point prior to the purported
termination of IBM's rights did SCO identify a single version, file, or line of allegedly misused
material, or provide IBM any specific indication of what SCO wanted IBM to do to cure the
alleged breaches. (¶¶ 52-61.) The reason is plain: SCO had no interest in permitting IBM to
cure the alleged breaches. SCO simply sought to "hold up" IBM's AIX business for ransom.
Putting aside the fact that SCO plainly did not afford IBM proper notice or an
opportunity to cure, SCO did not exert its "good faith best efforts to resolve any alleged breach
35
short of termination". (¶ 11.) When all is said and done, SCO did nothing to try to resolve the
alleged breach short of termination, except to send IBM highly publicized letters purporting to
terminate IBM's licenses at the same time that it sued IBM based on the alleged breaches.
(¶¶ 48-51, 59, 61.) SCO met once with IBM representatives to discuss its allegations, but
offered no more detail about its claims than was provided in its complaint. (¶ 58.) SCO made no
meaningful effort to resolve the dispute, because its entire strategy, quite plainly, was to publicly
pressure IBM into paying it off to avoid the risk of SCO shutting down its AIX business, and that
strategy could not work if SCO put forward its best efforts to resolve the supposed breaches.
(¶ 62.) No reasonable trier of fact could find that SCO's conduct amounted to good faith best
efforts.
As SCO failed to comply with the conditions precedent to its supposed but non-existent
right of termination, its purported termination was ineffective, even if (contrary to fact) the
Agreements had been terminable. It is well-established under New York law that, where, as
here, a contract specifies conditions precedent to the right of cancellation, such as notice,
opportunity to cure, and the exercise of good faith best efforts to resolve a breach prior to
termination, such conditions must be satisfied before any purported cancellation may be
effective. See Consumers Power Co. v. Nuclear Fuel Servs., Inc., 509 F. Supp. 201, 211
(W.D.N.Y. 1981); see also Sauer v. Xerox Corp., 17 F. Supp. 2d 193, 197 (W.D.N.Y. 1998)
("[w]here ... the parties have agreed to provide notice and an opportunity to cure prior to suing
for performance or asserting termination rights under a contract, those covenants must be
adhered to"); Filmline (Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513, 518
(2d Cir. 1989) (finding that, where defendant did not give timely notice and opportunity to cure
36
as required under agreement, its attempt to terminate agreement was ineffective, as it "did not
conform to the [a]greement") (citing Gen. Supply and Constr. Co. v. Goelet, 241 N.Y. 28, 34
(1925)). As the party that sought to terminate the Agreements, SCO has the burden of proving
that it complied with the contractual provision requiring it to give notice of default and an
opportunity to cure, and requiring it to use its good faith best efforts to resolve the alleged breach
short of termination. See Kolvek v. Ferrucci, 667 N.Y.S.2d 554, 554 (App. Div. 1997). SCO
has not borne, nor can it bear, this burden.
III. SCO CANNOT PROVE UNAUTHORIZED COPYING OR DISTRIBUTION BY
IBM OF COPYRIGHTED WORKS OWNED BY SCO.
Putting aside the fact that SCO cannot establish a predicate breach of the Agreements,
and putting aside the fact that IBM has a non-terminable license that SCO could not have
terminated, SCO's infringement claim also lacks merit because SCO failed to disclose its
allegations and evidence as required by the Court.
To establish a claim of copyright infringement, SCO must prove: (1) ownership of a
valid copyright; and (2) unauthorized copying or distribution by the defendant of protected
components of the copyrighted material. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 942
(10th Cir. 2002); Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 831 (10th Cir.
1993). Absent admissible evidence of unauthorized copying or distribution by IBM of
copyrighted materials owned by SCO, SCO's allegations of infringement fail, and IBM is
entitled to summary judgment. See U-Haul Intern., Inc. v. WhenU.com, Inc., 279 F. Supp. 2d
723, 726-30 (E.D. Va. 2003); Brought to Life Music, Inc. v. MCA Records, Inc., No. 02-1164,
2003 WL 296561, at *1 (S.D.N.Y. Feb. 11, 2003) (Ex. C hereto).
37
From the beginning of this case, IBM has asked SCO to disclose its allegations and
evidence of alleged infringement by IBM, and from the beginning of this case, SCO has declined
to do so. (¶¶ 50-61.) The Court entered two separate orders requiring SCO to disclose with
specificity its allegations and evidence. (¶ 68.) SCO failed to do so, requiring the Court to enter
an order setting a final disclosure deadline. (Id.) Even in the face of that order, SCO failed to
disclose in any meaningful way – let alone in detail, as required by the Court – its allegations
and evidence of unauthorized copying or distribution by IBM of copyrighted works owned by
SCO. (¶ 69.) Nowhere, in fact, has SCO ever described in detail its allegations and evidence of
how IBM's continued distribution of AIX and Dynix infringes SCO's alleged copyrights – not
in its Final Disclosures, not in its interrogatory answers, nowhere. (¶¶ 50-61, 67-69; DJ Br.
¶¶ 178-96.) Thus, IBM is entitled to summary judgment based on SCO's failure of proof, for
two independent reasons:
First, IBM is entitled to summary judgment because SCO has failed to adduce adequate
evidence of ownership. The Final Disclosures identify "Allegedly Infringed Material" from four
"Allegedly Infringed Works". (DJ Br. ¶¶ 178-96.) They do not, however, disclose any evidence
that SCO owns the copyrights in the Allegedly Infringed Works. (DJ Br. ¶¶ 178-96.) The
evidence shows that Novell retained the UNIX System V copyrights, and did not transfer them to
Santa Cruz, pursuant to the APA. (¶ 14; DJ Br. ¶¶ 296-301.) Schedule 1.1(b) of the APA
expressly provides that Novell retained "all copyrights and trademarks, except for the trademarks
UNIX and UnixWare", and Amendment No. 2 to the APA did not transfer the copyrights. (¶ 14;
DJ Br. ¶¶ 297-98.) Thus, SCO could not have acquired the copyrights to the Allegedly
Infringed Works in its acquisition of UNIX assets from Santa Cruz, and SCO cannot sustain a
38
claim against IBM for infringing these copyrights. That is plainly why SCO asked Novell to
transfer the copyrights to it prior to the commencement of this case. (DJ Br. ¶ 38.)
Second, IBM is entitled to summary judgment because SCO has failed to adduce
adequate evidence of unauthorized copying or distribution by IBM. In addition to not disclosing
any evidence of ownership, the Final Disclosures and SCO's interrogatory responses reveal no
evidence of unauthorized copying by IBM. (¶ 69; DJ Br. ¶¶ 178-96.) Nowhere, in fact, has SCO
ever disclosed with the specificity required by the Court its allegations and evidence that IBM's
continued distribution of AIX and Dynix infringes SCO's alleged copyrights. (¶¶ 67-69; DJ Br.
¶¶ 178-96.) While the Final Disclosures accuse certain lines of code in Linux of infringing
UNIX copyrights, and certain "Project Monterey" code of having been improperly included in
AIX, they do not identify a single copyright that IBM is alleged to have infringed by continuing
to distribute AIX or Dynix after SCO's purported termination of IBM's rights. (DJ Br. ¶¶
178-96.) Moreover, the Final Disclosures do not identify a single version, file, or line of code that
IBM is alleged to have infringed by continuing to distribute AIX or Dynix after SCO's purported
termination of IBM's right to do so. (¶ 69.) In short, SCO has failed to reveal to IBM even the
most basic facts underlying its allegations of infringement.
A party cannot survive summary judgment if it fails during discovery to produce
evidence supporting a necessary element of its opposition. See, e.g., Cambridge Elec. Corp. v.
MGA Elec., Inc., 227 F.R.D. 313, 325 (C.D. Cal. 2004), Lauth v. McCollum, No. 03-8529, 2004
WL 2211620, at *4 (N.D. Ill. Sept. 30, 2004) (Ex. D hereto), Lawrence v. IBP, Inc., No. 94-2027,
1995 WL 261144, at *7 (D. Kan. Apr. 21, 1995) (Ex. E hereto); Stone v. CGS Distrib.
Inc., No. 93-1288, 1994 WL 832021, at *2 (D. Colo. Aug. 18, 1994) (Ex. F hereto), Courts enter
39
summary judgment in these circumstances, see, e.g., Lawrence, 1995 WL 261144, at *7, 13 (Ex.
E hereto); Stone, 1994 WL 832021, at *2 (Ex. F hereto), and this Court should do so here. See
Cambridge, 227 F.R.D. at 325 (granting summary judgment where plaintiff "failed to discharge
its affirmative burden" of establishing a genuine issue of material fact because it relied upon
evidence that was "not disclosed to defendants in plaintiff s deficient interrogatory answers").12
IV. SCO HAS MISUSED ITS ALLEGED COPYRIGHTS.
Finally, SCO's infringement claim should be rejected because SCO has misused the
allegedly infringed copyrights, and therefore it is not entitled to enforce them.
A copyright holder may not enforce a copyright that it has misused. See Lasercomb Am.,
Inc. v. Reynolds 911 F.2d 970, 972 (4th Cir. 1990) (copyright misuse is an equitable defense
that "bars a culpable plaintiff from prevailing on an action for infringement of the misused
copyright"). A copyright holder misuses a copyright when it seeks to extend the scope of its
limited monopoly to gain control over material outside the monopoly, or otherwise uses the
copyright contrary to public policy. Id.; see also In re Indep. Serv. Orgs. Antitrust Litig., 964 F.
Supp. 1469, 1477 (D. Kan. 1997) ("An alleged infringer can establish copyright misuse by
showing ... that ... the defendant illegally extended its monopoly beyond the scope of the
copyright or violated the public policies underlying the copyright laws."); Alcatel USA, Inc. v.
DGI Techs., Inc., 166 F.3d 772, 792 (5th Cir. 1999) (the doctrine of copyright misuse "forbids
40
the use of the [copyright] to secure an exclusive right or limited monopoly not granted by the
[Copyright] Office and which is contrary to public policy to grant") (alterations in original)
(quoting Lasercomb, 911 F.2d at 976).
As stated, SCO has not offered any evidence that it owns the allegedly infringed
copyrights, despite the Court's orders. (¶¶ 67-69.) Even if SCO could show that it owns the
copyrights, however, it has misused them in at least five independent ways, each of which is
sufficient to foreclose SCO from further prosecuting its infringement claim against IBM:
(1) SCO claimed ownership over code for which SCO has no copyright;
(2) SCO effectively asserted that its alleged copyrights extend to all of Linux;
(3) SCO claimed its alleged copyrights give it control of IBM's own copyrighted code (i.e., AIX and Dynix);
(4) SCO claimed its alleged copyrights include material not protectable by copyright; and
(5) SCO is seeking to enforce its alleged copyrights in ways that are unenforceable.
SCO's misuse of its alleged copyrights is described in detail in the memorandum in support of
IBM's motion for summary judgment on its Tenth Counterclaim. (DJ Br. at 94-99.) Rather than
repeat that discussion here in full, we incorporate it by reference.
41
Conclusion
For the foregoing reasons, summary judgment should be entered in favor of IBM and
against SCO on SCO's copyright claim.
DATED this 25th day of September, 2006.
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SNELL & WILMER L.L.P.
[signed Todd M. Shaughnessy]
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
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Of Counsel:
INTERNATIONAL BUSINESS MACHINES CORPORATION
Alec S. Berman
[address]
[phone]
Attorneys for DefendantICounterclaim-Plaintiff
International Business Machines Corporation
1 The undisputed and indisputable facts set out in this motion are supported by the
declarations and documents submitted herewith, including those appended to the Declaration of
Todd M. Shaughnessy, which are cited herein as "Ex. ___".
2 Specifically: (1) SCO's contract claims are unsupported by the plain language of the
Agreements, the relevant parol evidence and common sense; (2) SCO is estopped from pursuing
its theory of breach, by which it seeks to control millions of lines of code written and owned by
IBM; (3) SCO's theory of breach has been waived by SCO and its alleged predecessors; and
(4) SCO's claim is barred by the statute of limitations as it relates to RCU technology.
3 References to the memoranda in support of IBM's motions for summary judgment
submitted herewith are cited as follows: IBM's motion for summary judgment on SCO's unfair
competition claim as "UC Br.___"; IBM's motion for summary judgment on SCO's contract
claim as "K Br.___"; IBM's motion for summary judgment on SCO's interference claims as
"Interference Br.___"; IBM's motion for summary judgment for copyright infringement (IBM's
Eighth Counterclaim) as "Copyright Br.___"; and IBM's motion for summary judgment for a
declaration of non-infringement (IBM's Tenth Counterclaim) as "DJ Br.___".
4 The undisputed facts are generally cited in this Part as "¶ ___", referring to the relevant
paragraph number(s) in the foregoing "Statement of Undisputed Facts".
5 Under New York law, whether a breach of contract is material is an issue of law for the
court to decide. See Frank Felix Assocs., Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 289 (2d Cir.
1997) (holding that "[w]hether Austin materially breached the [contract] is a question of law");
Internet Law Library, Inc. v. Southridge Capital Mgmt., LLC, No. 01-6600, 2005 WL 3370542,
at *5 n.23 (S.D.N.Y. Dec. 12, 2005) (stating that, under New York law, materiality of a breach is
a question of law for the court to decide) (Ex. B hereto); Int'l Gateway Exch., LLC v. Western Union Fin. Servs., 333 F. Supp. 2d 131, 143 (S.D.N.Y. 2004) (holding that the "determination of
the materiality of a breach is, of course, an issue of law for the [c]ourt"); Fin. Tech. Int'l, Inc. v.
Smith, 247 F. Supp. 2d 397, 412 (S.D.N.Y. 2002) (holding that "[w]hether a breach is material or
not is a question of law"); Wechsler v. Hunt Health Sys., Ltd., 186 F. Supp. 2d 402, 413
(S.D.N.Y. 2002) ("[I]t is beyond cavil that a preliminary determination must be made that the
breach at issue is material. Under New York law, this issue is a question of law for the [c]ourt to
decide.").
6 The only conceivable interest that AT&T could have had in seeking to prevent a
licensee from disclosing its own original works was as a prophylactic protection against the
disclosure of UNIX System V material. AT&T could have had no interest in precluding the
disclosure of its licensees' original works in their own right. (¶ 6.)
7Whether a writing is equivocal or ambiguous is a question of law to be decided by the
court. W.W.W. Assocs., 566 N.E.2d at 642. Contractual language is unambiguous when it has a
"definite and precise meaning ... concerning which there is no reasonable basis for a difference
of opinion". Breed, 385 N.E.2d at 1282 (citation omitted).
8
This provision superseded both the term and termination provisions of the Agreements.
(¶ 37; see also Ex. 124 (Amendment No. X) § 11 (providing that the terms and conditions of the
Agreements will remain in effect "[e]xcept as modified herein") (emphasis added).)
9 The Random House Dictionary of the English Language 754 (1st ed. 1966); see also
Black's Law Dictionary 848 (8th ed. 2004) ("Unalterable; committed beyond recall.");
Webster's Third New International Dictionary of the English Language 1196 (17th ed. 1976)
("incapable of being recalled or revoked : past recall : UNALTERABLE"); The American Heritage
College Dictionary 719 (3d ed. 1993) ("Impossible to retract or revoke: an irrevocable
decision.").
10 Random House Dictionary 1074 (1st ed. 1966); see also Merriam-Webster Online
Dictionary (http://www.merriam-webster.com/dictionary/perpetual) (2006) ("1.a. : continuing forever: EVERLASTING; b. (1): valid for all time (2): holding (as an office) for life or for an
unlimited time"); Webster's 1684-85 (17th ed. 1976) ("1.a.: continuing forever: EVERLASTING,
ETERNAL, UNCEASING: dedicated to be valid for all time (2): holding (as an office) for life or for
an unlimited time"); American Heritage 1018 (3d ed. 1993) ("1. Lasting for eternity. 2.
Continuing or lasting for an indefinitely long time. 3. Instituted to be in effect or have tenure for
an unlimited duration: perpetual friendship. 4. Continuing without interruption.").
11 See also Fenwick & West LLP, Technology Licensing and Online Legal Commerce
(1998) at 6 ("Rights of early termination also present potentially strategic issues for licensor and
licensee. At one extreme, there are licenses that allow for the licensor to terminate without cause
(i.e., for convenience). At another extreme there are irrevocable licenses that cannot be
terminated even due to a material default by the licensee.").
12 See also Lauth, 2004 WL 2211620, at *4, *6 (granting summary judgment over
plaintiffs opposition, which was supported by facts that were "never identified ... in
[plaintiff's] answer to [d]efendants' interrogatories") (Ex. D hereto); Stone, 1994 WL 832021, at
*6 (granting summary judgment against plaintiff who, in response to defendant's deposition
questions and interrogatories, "could have [but did not] name[] businesses he contacted
regarding employment", but did so only on opposition to summary judgment, and thereby failed
to satisfy his evidentiary burden as to mitigation of damages) (Ex. F hereto).
42
CERTIFICATE OF SERVICE
I hereby certify that on the 25th day of September, 2006, a true and correct copy of the
foregoing was served by U.S. Mail, postage pre-paid,
to the following:
Brent O. Hatch
Mark F. James
HATCH, JAMES & DODGE, P.C.
[address]
Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address]
43
CERTIFICATE OF SERVICE
I hereby certify that on the 29th day of September, 2006, a true and correct copy of the
foregoing was electronically filed with the Clerk of the Court and delivered by CM/ECF system
to the following:
Brent O. Hatch
Mark F. James
HATCH, JAMES & DODGE, P.C.
[address]
Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]
and by U.S. Mail, postage pre-paid to:
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address]
44
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