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SCO's MEMORANDUM OF LAW IN OPPOSITION TO RED HAT'S MOTION TO SUPPLEMENT THE RECORD
Tuesday, February 24 2004 @ 10:43 AM EST

Here is SCO's MEMORANDUM OF LAW IN OPPOSITION TO RED HAT'S MOTION TO SUPPLEMENT THE RECORD.

SCO's argument is that Darl McBride's speech at Harvard and the three letters to Lehman Brothers, which Red Hat requests the judge to consider, all happened after Red Hat filed its lawsuit against SCO. They cite a case that says, "The test for an actual case or controversy is an objective one. Reasonable apprehension and the other jurisdictional prerequisites must exist at the time suit is filed."

This argument ignores that Red Hat's request to supplement was asking to add them as *more examples* of what they say has been going on for some time.

SCO argued originally that there was no "actual controversy" between the parties, asserting that Red Hat was asking the court merely for "general guidance" for the Linux industry. Red Hat said there really was an imminent danger their customers would be sued, and now they wish the court to take a look at what has just happened as another example of SCO's conduct that proves that what they told her before was true. Here is what their papers said:

"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. . . .

"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 here also tries to say that Red Hat is filing this Motion to Supplement because SCO, in its Reply Brief in Support of Its Motion to Dismiss, "demonstrated that Red Hat consistently failed to allege the requisite 'reasonable apprehension of suit' necessary to sustain an action under the declaratory judgment statute." Red Hat's Motion to Supplement, they argue, is in response to their pointing out this alleged "failure".

Slick, but one might argue, since some of us read the arguments quite differently at the time, they are submitting the motion because everything they said SCO was threatening to do, it has now taken further down the road to fulfillment, proving Red Hat's point even more completely than before. The December letters to Lehman Brothers, after all, make reference back to the May letters that got the ball rolling. Red Hat is merely saying to the judge: "Remember that rock we said SCO was starting to roll down the hill and aimed right at us? Well, it's true what we told you, because look where the rock was before, and look where it moved to further down the hill toward us." Interestingly, SCO calls those receiving its letters "purported Red Hat customers" which indicates to me that it maybe didn't realize that Lehman was a customer of Red Hat's.

Woops.

Here is the Memorandum. We *really* owe poncewattle a big thank you. He ran to the courthouse not once but twice. Page 4 was missing on the first trip, and he had to go back. Well, he didn't *have* to, but he just did. Thank you, poncewattle!

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

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

_____________________________________________

RED HAT, INC.,

Plaintiff,

v.

THE SCO GROUP, INC.

Defendant.

_______________________________________________

DEFENDANT THE SCO GROUP'S MEMORANDUM OF LAW
IN OPPOSITION TO RED HAT'S MOTION
TO SUPPLEMENT THE RECORD

Civil Action No. 03-772-SLR

______________________________________________

In its Reply Brief in Support of Its Motion to Dismiss ("SCO Reply Brief"), SCO demonstrated that Red Hat consistently failed to allege the requisite "reasonable apprehension of suit" necessary to sustain an action under the declaratory judgment statute. In response to the SCO Reply Brief, Red Hat filed its Motion to Supplement the Record ("Motion to Supplement"). In this motion, Red Hat points to a February 2, 2004 speech by SCO's CEO, Darl McBride, in addition to three letters sent by SCO to various end users of Linux. According to Red Hat's Motion to Supplement, these items somehow demonstrate that "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." (Motion to Supplement, 9). The fundamental flaw with this argument, and the reason why the Motion to Supplement should be denied, is that each of these letters is dated months after Red Hat filed its complaint. Notably, Red Hat did not include within its Motion to Supplement a single reference nor shred of evidence related to any threats of litigation made by SCO prior to the filing of the instant suit. Red Hat's position that the Court should consider these post-filing letters in its determination of SCO's Motion to Dismiss is without legal support. Therefore, SCO respectfully requests this Court deny Red Hat's Motion to Supplement.

Memorandum of Law

As a prerequisite to filing suit under the Declaratory Judgment Act (28 U.S.C. 2201), a declaratory plaintiff must demonstrate that it has a "reasonable apprehension that it will face an infringement suit." Honeywell Intern., Inc. v. Universal Avionics Systems Corp., 288 F.Supp. 2d 638, 644 (D.Del. 2003). The "reasonable apprehension" requirement is a means by which a court ensures it is properly exercising its jurisdiction over an actual "case or controversy" as mandated by Article III of the U.S. Constitution. Id. In infringement suits, facts leading a declaratory plaintiff to have a "reasonable apprehension" must exist prior to and contemporaneously with the filing of its complaint. G. Heileman Brewing Co., Inc. v. AnheuserBusch Inc., 676 F.Supp. 1436, 1478 (E.D.Wis. 1987) ("The test for an actual case or controversy is an objective one. Reasonable apprehension and the other jurisdictional prerequisites must exist at the time suit is filed.").

As exhibits to its Motion to Supplement, Red Hat attaches three letters received by purported Red Hat customers from SCO dated well after the filing of the complaint in this action. The earliest of these letters is dated December 19, 2003. The latest is dated January 16, 2004. The instant suit was filed by Red Hat on August 4, 2003. Clearly, the letters included by Red Hat as exhibits to its Motion to Supplement could not have created the necessary "reasonable apprehension of suit" as they did not exist until months after Red Hat filed suit. On the very first page of its own Motion to Supplement, Red Hat states "these letters and statements occurred only recently" (Motion to Supplement, p. 1). This fact, in conjunction with established law, requires this Court to deny Red Hat's Motion to Supplement.

Red Hat cites to the recent letters attached to its Motion to Supplement as exhibits as justification for its decision to file suit under the Declaratory Judgment Act. However, the law is clear as to the use of such post-filing events:

Courts have addressed . . . whether events occurring subsequent to the complaint's filing are relevant to establishing reasonable apprehension. Unanimously, the answer to the latter question has been a resounding "no." This sensible result follows from the fact that a declaratory plaintiff's objective, reasonable apprehension at the time of filing cannot be based on events that had not yet occurred.

CAE Screenplates, Inc. v. Beloit Corp., 957 F.Supp. 784, 789 (E.D.Va. 1997) [emphasis in original] citing West Interactive Corp v. First Data Resources, Inc., 972 F.2d 1295, 1297 (Fed. Cir. 1992); Spectronics Corp. v. H.B. Fuller Co., Inc., 940 F.2d 631, 635 (Fed. Cir. 1991) overruled on other grounds by 355 F.3d 1361 (Fed. Cir. 2004); Arrowhead Indus. Water, Inc. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988).

Under similar circumstances, the Eastern District of Virginia denied the plaintiff's motion to supplement the record with the declaration of plaintiff's employee who relayed communications from defendant to one of plaintiff's potential customers related to its intent to sue made after the filing of the complaint. Ion Beam Applications S.A. v. Titan Corp., 156 F.Supp. 2d 552, 556 (E.D.Va. 2000). The CAE holding was central to its decision to deny the Motion to Supplement. Id. ("Like in CAE, none of the facts learned by the plaintiffs subsequent to the filing of this action are accorded any weight in the jurisdictional calculus."). See also Bell v. Illinois Central RR Co., 236 F.Supp.2d 882, 894 (N.D.Ill. 2001) ("Only the actions of a declaratory defendant known to a declaratory plaintiff at the time the action is commenced can be considered in determining whether such a threat exists."); Friede & Goldman, Ltd. V. Gotaverken Arendal Consultants, AB, 2000 WL 288375, *5 (E.D. La.) ("It is well-established that the existence of an actual controversy must be determined at the time a complaint for declaratory relief is files."); Waters Corp v. Hewlett-Packard Co., 999 F.Supp. 167, (D.Mass. 1998), citing Spectronics Corp. v. H.B. Fuller Co., 940 F.2d at 635 ("[L]ater events may not create jurisdiction where none existed at the time of filing.")

As stated above, Red Hat has not alleged that SCO threatened it or any of its customers with litigation prior to the filing of the complaint. Nor has it alleged it had any awareness of letters similar to those it attached to its Motion to Supplement. Without any evidence to substantiate its claim of reasonable apprehension prior to the filing date, this Court should determine Red Hat's Motion to Supplement to be baseless. See Performance Abatement Services, Inc. v. GPAC, Inc., 733 F.Supp. 1015, 1019 (W.D.N.C. 1990) ("[Plaintiff] has produced no evidence establishing that it actually knew of these other factors when it filed its declaratory judgment action. The Court believes [Plaintiff] cannot attempt to justify its claimed apprehension on factors that occurred after [Plaintiff] filed this action.")

Under these circumstances, it is apparent that Red Hat's Motion to Supplement is simply an attempt to further argue its opposition to SCO's Reply Brief rather than an effort to complete the record before this Court. The law is clear; Red Hat may not bolster its position that it held a "reasonable apprehension" of an infringement suit at the time its complaint was filed by pointing to letters sent by SCO well after the filing date. Accordingly, Red Hat's Motion to Supplement with facts that are legally irrelevant should be denied.

WHEREFORE, The SCO Group respectfully requests this Court deny Red Hat's Motion to Supplement the Record.

OF COUNSEL:

Stephen N. Zack
Mark J. Heise
Boies, Schiller & Flexner, LLP
[address]

February 19, 2004

Respectfully submitted,

MORRIS, NICHOLS, ARSHT & TUNNELL

B. Blumenfeld (#1014)
Jack C. Schecter (#4335)
[address, phone]
Attorneys for Defendant
The SCO Group, Inc.


CERTIFICATE OF SERVICE

I hereby certify that true and correct copies of the foregoing were caused to be served this 19th day of February, 2004, upon the following counsel of record in the manner indicated:

BY HAND DELIVERY

Josy W. Ingersoll
Adam W. Poff
Young Conaway Stargatt & Taylor LLP
[address]

BY FEDERAL EXPRESS

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

Signed, Jack C. Schecter


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