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Exhibit B to IBM's Memorandum in Support of its 1st Motion to Compel
Tuesday, January 27 2004 @ 04:41 PM EST

Here is Exhibit B to SCO's October Memorandum in Support of its First Motion to Compel. We have had the Memorandum as text and as PDF for a while, and all the exhibits as pdfs, as well as Exhibit A as text, an April IBM letter to SCO, but now we have the rest of the exhibits as well, B-J, thanks to our prodigious Henrik.

This is a second letter to SCO, dated early in May, from IBM's Assistant General Counsel, Ronald Lauderdale, in which he reiterates his request that SCO tell him what IBM is alleged to have done wrong. It's a stronger letter than the first, stating point blank that they have not yet been given "proper notice" of any breach, because no details have been given. Attaching this to their October Motion to Compel Discovery indicates to me that they hoped to show the judge that they had been trying for months, without success, from day one, to find out what their alleged breach consisted of.

By carefully sending these two letters, Exhibit A and B, they prepared the way to be able to offer evidence later to support their claim that they had to bring the Motion to Compel to find out the information this April letter is requesting. This is careful lawyering, to paper the file just in case. When they sent the letters, they didn't know for sure they would come in handy later and they were not sent just for that purpose, but it's another example of how IBM leaves nothing to chance. When they finally appeared before the judge, it wasn't just their word against SCO as to whether SCO had been forthcoming. They had something in writing to demonstrate that their position had weight and merit.

You'll notice the letter was sent by Airborne Express, which is one way to prove you have sent a letter and that it was in fact received by the party you sent it to. I'm thinking they didn't send by that method because of any need for speed. They won this motion on December 5.

By this time, in May, you'll remember, SCO has filed and served its complaint on IBM, but Lauderdale says the complaint isn't specific either. Then he says again that IBM had a contractual right to 100-day notice and opportunity to cure any alleged breach. The letter points out sharply that without actual notice of how they allegedly breached, they can hardly cure. In any case, the letter asserts, their license was not terminable and contractually SCO was obligated to make an effort to resolve any such problems.

Finally, he quotes McBride's statements to the press accusing IBM of donating System V and Project Monterey code to Linux and asks for proof of the allegations. As for SCO's previous letter to IBM saying that if they wished further written information they should tell SCO whether they were questioning if donating AIX to Linux was a breach, he coldly responds: "SCO does not need to know that or anything else from IBM to provide the information IBM has requested." That's a "Yeah, right. Nice try," to my reading.

This is not a love letter.


May 5, 2003


Mr. Darl McBride
President and Chief Executive Officer


Software Agreement Number Soft-00015
Sublicensing Agreement Number Sub-00015A
Substitution Agreement Number XFER-00015B
Letter Agreement dated February 1, 1985
Amendment X dated October 16, 1996

Dear Mr. McBride:

This responds to your letter of April 24, 2003.

In my letter of April 2, 2003, in an effort to avoid an unnecessary dispute, I asked that you inform IBM specifically (1) what SCO contends IBM has done in violation of its obligations under the above-titled agreements (the "Agreements") and under applicable law; and (2) what you contend IBM should do to cure these alleged violations. Unfortunately, your April 24 letter does not give IBM proper notice of its alleged breaches of the Agreements. As I mentioned in my April 2 letter, the license rights granted under the Agreements are not terminable. However, even if the termination provisions in the original Agreements were still in effect, they would: (1) entitle IBM to a period of no less than 100 days, from proper notice, in which to cure any alleged breach; and (2) require that SCO exercise its "good faith best efforts" to resolve any alleged breach.

Neither your letter to Mr. Palmisano nor SCO's complaint specifies (1) any products, code, files, trade secrets and/or confidential information that SCO believes IBM has improperly used, transferred, disposed of or disclosed; (2) the ways and specific instances in which you believe IBM has improperly used, transferred, disposed of or disclosed any products, code, files, trade secrets and/or confidential information; and (3) the steps that SCO believes IBM is required to take to cure the alleged breaches and injuries about which SCO complains.

In your letter, you state that "[i]f [IBM] would like further written information concerning IBM's past and continuing violations, we need more information from [IBM]" including information as to "whether IBM is questioning if donating AIX code to Linux is a violation of the agreements". SCO does not need to know that or anything else from IBM to provide the information IBM has requested. The provisions described above would entitle IBM to learn the specific facts on which SCO relies in asserting that IBM has breached its obligations to SCO. Not only is that what the parties contemplated, but it is also the only way IBM could cure any alleged breach. I note that you have made public statements to the effect that IBM has donated "substantial System V code" to the open-source community and that IBM "took chunks out of Monterey, a derivative of AIX, and gave it away." If you have information to support these assertions, we do not understand why you have not provided it to us.

I therefore reiterate my request that you provide IBM with the information requested in my letter of April 2 and set out above.

We are willing to meet with you at a mutually convenient time to discuss these issues. However, we believe we will be in a position to have a more productive meeting after SCO has given IBM the information it seeks.


Ronald A. Lauderdale
Vice President and Assistant General Counsel

Copy to:
Evan R. Chesler, Esq.
David Boies, Esq.

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