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Red Hat's Motion to Supplement the Record and Proposed Order
Tuesday, February 17 2004 @ 10:19 PM EST

Here is the motion that Red Hat just filed in Delaware. It's a motion to supplement the record, asking the judge to allow this new information be added. They also put in a proposed order, so if the judge says yes, all she has to do is sign on the dotted line. Here is the heart of it:

"This information should be made a part of the record before this Court because it demonstrates - if any more demonstration was necessary - precisely the unfair tactics and unsubstantiated, claims that SCO has utilized for almost one year to stall the growth and business of companies like Red Hat who distribute and support the Linux operating system. Red Hat and its customers should not be forced to wait for the hammer to fall before being able to demonstrate in court that SCO's year-long public campaign against Linux, companies like Red Hat, which distribute and support Linux, and companies like Lehman Brothers who utilize it, is an emperor without clothes. These circumstances are exactly those for which the declaratory judgment statute was created."

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

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
________________________________________

RED HAT, INC.,

Plaintiff,

v.

THE SCO GROUP, INC. (formerly Caldera International, Inc.),

Defendant.
_______________________________________


MOTION TO SUPPLEMENT THE RECORD

Civil Action No.: 03-772-SLR
_______________________________________

Red Hat, Inc. ("Red Hat"), hereby moves pursuant to Local Rule 7.1.2(c), to supplement the record with regard to the motion to dismiss filed by The SCO Group, Inc. ("SCO").

As more fully explained below, letters sent by SCO after the motion to dismiss was fully briefed provide compelling further evidence that a justiciable case or controversy exists and contradict earlier representations made by SCO to this Court. These letters explicitly accuse one of Red Hat's customers of infringing SCO's copyrights by using the computer operating system Linux distributed to that customer by Red Hat. The existence of a justiciable controversy was also confirmed by the public statements made just this week by SCO's Darl McBride, that SCO intends to begin suing end users of Linux "within the next few weeks" and "by February 18." Because these letters and statements occurred only recently, this evidence was not available to Red Hat when it opposed SCO's motion.

In support of this motion to supplement the record, Red Hat respectfully represents as follows:

1. On August 4, 2003, Red Hat filed a complaint against SCO seeking, inter alia, a declaratory judgment that Linux software sold, used or distributed by Red Hat does not infringe any rights that SCO may have pursuant to Section 106 of the United States Copyright Act, or otherwise.

2. On September 15, 2003, SCO moved to dismiss Red Hat's Complaint claiming, inter alia, that this Court lacks subject matter jurisdiction to decide the copyright declaratory judgment claim, arguing that there is no "actual controversy" between the parties, and asserting that Red Hat is merely attempting to seek "general guidance" for the Linux industry. Red Hat opposed SCO's motion, and the matter has been fully briefed.

3. As explained in Red Hat's opposition to SCO's motion, threats to Red Hat's customers plainly establish an "actual controversy" justifying declaratory relief. Indeed, the Third Circuit specifically has held that "it is not necessary that notice be given directly to the plaintiff or that any threat be made to sue the plaintiff. Notice to plaintiffs customers is sufficient." Aralac, Inc. v. Hat Corp. of Am., 166 F.2d 286, 292-93 (3d. Cir. 1948). See also Cargill, Inc. v. Sears Petroleum & Transp. Corp., No. 02 Civ.1396, 2002 WL 31426308, at *5 (S.D.N.Y. Oct. 28, 2002) (stating that "informing customers of a potential patent dispute is exactly the sort of damaging claim that the [Declaratory Judgment Act] is designed to address"); Nippon Elec. Glass Co., v. Sheldon, 489 F. Supp. 119, 121-22 (S.D.N.Y. 1980)(stating that accusation need not be made directly to the declaratory judgment plaintiff, but may be made to its customers or to the industry at large").

4. In Red Hat's Complaint and in its opposition to SCO's motion to dismiss, Red Hat detailed a number of statements that SCO had already made to Red Hat's customers and potential customers. SCO recently has sent a letter to a Red Hat customer claiming that the customer's use of Linux infringes SCO's copyrights. In fact, the customer has advised both SCO and Red Hat that it is looking to Red Hat for a response. Red Hat's response is this declaratory judgment action to demonstrate - once and for all - that SCO's prominent public statements about copyright infringement are false. Only in this way can SCO's avowed campaign to discredit and inhibit the use and sales of Linux products and services distributed by Red Hat be stopped.

5. More specifically, on December 19, 2003, SCO sent a letter (Exhibit A) to Lehman Brothers Holdings, Inc., a Red Hat Linux customer. In this letter, SCO refers back to a May 2003 warning that use of Linux violates SCO's intellectual property rights in UNIX. The letter identifies a portion of the code that SCO alleges was copied without authorization, and explicitly states that use of the Linux operating system, and thus the one distributed to Lehman Brothers by Red Hat, violates SCO's rights under the United States Copyright Act. SCO demands that Lehman Brothers "discontinue these violations" and that SCO "will take appropriate actions to protect [its] rights."

6. Following up on its first letter, SCO then sent two more letters to the Lehman Brothers' Chairman and Chief Executive Officer, Richard Fuld (Exhibit B), and its Chief of Operations and Technology, Jonathan Beyman (Exhibit C). These letters reiterate SCO's position that use of Linux violates the Copyright Act. SCO concludes this letter by stating that:

If you fail to respond to our efforts to pursue a licensing arrangement, WE WILL TURN YOUR NAME OVER TO OUR OUTSIDE COUNSEL FOR CONSIDERATION OF LEGAL ACTION.

7. Lehman Brothers responded (attached as Exhibit D), and among other things, noted that it purchased Linux products and services from Red Hat.

8. Further, at a public presentation at Harvard Law School on Monday, February 2, 2004, SCO's President and Chief Executive Officer, Darl McBride, emphasized that SCO is planning to begin suing end users of Linux. McBride promised that SCO would be "in the courtroom with an end user by February 18," that lawsuits against end users are "coming up within the next few weeks," and that SCO's outside legal counsel has told McBride that "we'll have them filed by February 18" and "we expect that to happen."

9. This information should be made a part of the record before this Court because it demonstrates - if any more demonstration was necessary - precisely the unfair tactics and unsubstantiated, claims that SCO has utilized for almost one year to stall the growth and business of companies like Red Hat who distribute and support the Linux operating system. Red Hat and its customers should not be forced to wait for the hammer to fall before being able to demonstrate in court that SCO's year-long public campaign against Linux, companies like Red Hat, which distribute and support Linux, and companies like Lehman Brothers who utilize it, is an emperor without clothes. These circumstances are exactly those for which the declaratory judgment statute was created. SCO has yet again engaged in conduct that gives rise to an objectively reasonable apprehension on Red Hat's part that Red Hat and its customers will be sued and that conduct is, therefore, further evidence that a case. or controversy does exist. See Interdynamics, Inc. v. Firma Wolf, 698 F.2d 157, 166 (3d Cir. 1982) (patent infringement); Dow Chem. Co. v. Exxon Chem. Patents, Inc., Civ. A. No. 94-572-SLR, 1995 WL 562289, at *7 (D. Del. Aug. 16, 1995).

10. These SCO letters and statements also contradict earlier representations made by SCO to this Court. See SCO Reply Br. p. 1- 2 ("...Red Hat has not alleged a `reasonable apprehension' that SCO has threatened it or its customers with claims for copyright infringement...."); (SCO Reply Br. p. 5-6.)(denying that there is an "unmistakable threat of litigation" which would put customers "in reasonable apprehension of suit...."). Plainly, SCO's recent letters and statements do exactly what SCO previously denied.

WHEREFORE, Red Hat respectfully requests that this Court enter an order, in the form submitted herewith, permitting the submission of this information in further support of Red Hat's opposition to SCO's motion to dismiss.

DATED: February 11, 2004

Respectfully submitted,

RED HAT, INC.
By its attorneys

______________
Josy W. Ingersoll (#1088)
Adam W. Poff (#3990)
Young Conaway Stargatt & Taylor, LLP
[address, phone]


William F. Lee
Mark G. Matuschak
Michelle D. Miller
Donald R. Steinberg
Hale and Dorr LLP
[address, phone]




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

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
______________________________________

RED HAT, INC.,

Plaintiff,

V.

THE SCO GROUP, INC. (formerly Caldera International, Inc.),

Defendant.

______________________________________

ORDER

Civil Action No.: 03-772-SLR

_____________________________________

WHEREFORE, the Court having considered Red Hat, Inc.'s Motion to Supplement the
Record, and the parties' submissions,

IT IS HEREBY ORDERED that Red Hat, Inc.'s Motion to Supplement the Record is granted.

Dated:


U.S.D.J.

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