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SCO Asks Not to Litigate One of IBM's Counterclaims, Or in the Alternative, Not Yet, Or Separately
Tuesday, April 27 2004 @ 11:20 AM EDT

(UPDATE: Please note that there is now a corrected Motion from SCO, asking that Count Ten only be dismissed or stayed. I will put it up soon, but I don't want anyone to be confused. Well. We were all confused, including me, but I have the new Motion, and it matches the Memorandum, linked to below.)

SCO has filed a cynical motion with the court handling the IBM case, asking that three of IBM's counterclaims be dropped, stayed or bifurcated.

They call it their MOTION TO DISMISS, OR, IN THE ALTERNATIVE, TO SEPARATE OR STAY, COUNTS NINE, TEN AND FOURTEEN OF THE COUNTERCLAIM-PLAINTIFF IBM'S SECOND AMENDED COUNTERCLAIMS AGAINST SCO.

Whew. There's a mouthful.

I translate it that they are desirous of a delay. If not, they'll settle for separating more of IBM's counterclaims out from the main claims.

Um, they already asked that patents be separated and now some of the copyright stuff. What does that leave, exactly? Might this be another little hint that this is only a contract case after all and has very little, if anything, to do with "IP" infringement or Linux? Or, in the alternative, as they say, that their case on IP infringement is so weak, they want to peel the hopeless claims away from the ones that they think still might have a chance?

It is obvious they studied the Red Hat and AutoZone legal pleadings and are copying away. Those pirates. It's going to be so funny to see how they answer AutoZone's killer Motion, because they will have to argue the exact opposite of what they argue here. I even wonder if what they say here will be presented to the judge in the AutoZone case by hook or by crook.

The cynical part is, they say that because the "prior filed" Novell case (here is where the Red Hat work no doubt helped them out) is handling the question of whether or not SCO holds a valid copyright, that case should decide the matter or at least go first. They don't want to waste judicial resources, don't you know.

( UPDATE: I just reread what they wrote. They are, unbelievably enough, arguing that the AutoZone case was prior filed, not the Novell case. It says "prior filed Nevada", not Novell. That is so unbelievable I think it may be a typo.)

(UPDATE 2: Here is the Memorandum. It is AutoZone, at least with respect to Count 10. I am speechless. Except to point out that while the motion speaks about Counts 9, 10 and 14, this Memorandum "in support" is called "Memorandum in Support of Motion to Dismiss or to Stay Count Ten of Plaintiff IBM's Second Amended Counterclaims Against SCO [emphasis added]. And I also draw your attention to footnote 3, where they specifically claim they are not moving to dismiss or stay Count 9, upon which they base their argument for staying or dismissing Count 10. This really is the gang that can't shoot straight.)

(UPDATE 3: There is an Amended Motion, which will not surprise you, and we should have it for you soon.)

They don't want to face IBM on the copyright question at all, actually, any copyright question. Surprised? Really, who can blame them? IBM's attorneys have been making mincemeat out of them so far, and they must know they are on shakey ground with their alleged copyright ownership, plus delay is their middle name, so here they throw some more tacks in the road, hoping to deflect or slow down the IBM steamroller.

Poor SCO. Steamrollers are not deflected or harmed by tacks.

[Note that because of all the updates, the next two paragraphs are not relevant so feel free to skip them.] Perhaps they agree with BayStar, that they only have maybe a bit of a chance with IBM, but are hoping for better with Novell. Their problem is, whatever happens with Novell won't affect IBM's case at all (unless SCO is ruled not to have any copyright rights at all). But even if SCO were to prevail over Novell, the IBM matter still stands without IBM's position being the worse for wear. They don't much care who holds the copyright as far as defending themselves against a "copyright" infringement claim.

And no doubt they'd like their own opportunity to disprove SCO's ownership. SCO hardly filed against Novell first in any normal computation, and not even if you use Red Hat's recent argument in the Motion for Reconsideration, because before SCO filed against Novell on January 20, 2004, it told the Utah court in the IBM case on December 5, 2003, that their case against IBM was a copyright infringement matter and that they intended to add a claim of copyright infringement within a week or so. Remember that detail? They can hardly claim that their subsequent delay in doing so, in part because of having to request permission first from the court to amend their complaint again, means that Novell was "prior filed", I don't think. And in the off chance that they actually mean AutoZone, it was filed on March 2, 2004. Their Second Amended Complaint, with the copyright infringement claim, is dated February 27, 2004, which is why I think the "Nevada" reference must be a typo.

(UPDATE: It was no typo, so what is their argument on prior filed? That IBM filed its Second Amended Counterclaims on March 29, and that is why AutoZone is prior filed. It's a convoluted argument that goes like this: Count 10 raises an "entirely new" claim that IBM does not infringe SCO's copyright "through its Linux activities" and that some of SCO's copyrights, if not all, are invalid and unenforceable. This is the same issue in the AutoZone case, they claim. AutoZone may wish to take notes, since they already filed a motion in Nevada asking the court to make SCO tell them exactly what they are talking about, and asking that court to stay everything while everybody else goes first, including IBM. SCO here admits that the only copyright claim SCO has asserted against IBM involves use of AIX and Dynix after SCO "terminated" IBM's UNIX licenses. They never, they say, asserted a claim against IBM "for copyright infringement arising out of its use, reproduction or improvement of Linux." So IBM is asking for a declaratory judgment that they are not guilty of doing something SCO never accused them of, SCO argues. In court, maybe, but what about in the media for a year and a half? Anyway, you don't have to wait to ask for a declaratory judgment until the other guy sues you, as Red Hat successfully pointed out in Delaware. SCO tries to argue that AutoZone, who have never I don't think, contributed code to Linux, is a case that matches exactly what IBM is talking about. Therefore it should be handled exclusively in Nevada. Or in Alice's Wonderland, where this all may make sense to someone.)

The Novell case won't resolve the IBM issues, and neither will AutoZone's, and I believe this judge will know that, and if not, IBM's lawyers will likely point it out when they answer this document. And they will answer it. SCO seems at one point to be arguing that it would be cheaper to have two trials than one. Er... no, that isn't cheaper. Or, who knows? Maybe SCO's victims will decide to join up the cases? If economy is what we all desire, surely that would achieve it.

My translation of their arguments about Count Fourteen is this: "Please, please, pretty please, can you make this declaratory judgment request go away so David Boies can present our case to what we imagine will be a stupid jury instead of to you? Our whole strategy depends on it, and a lot of people invested in us thinking this was going to be heard by what they hoped would be a dumb, xenophobic Utah jury confused by the tech and mesmerized by Boies' speaking skills. IBM is ruining everything."

Meanwhile, everywhere they go, in every courtroom, in every state, SCO asks for delay, delay, delay. Just filing a motion, no matter how goofy, achieves some delay. What does that tell you, folks? That's what it tells me too.

I have put the IBM counterclaims after the motion, with footnotes in the motion, so you can jump down and back, and can draw your own conclusions, based on the documents themselves. Actually, I only know how to code so you can jump down. If anyone can inform me how to jump back, I'd be delighted. Anyway, here is a link to the IBM Counterclaims as well. Our thanks go to JeR, for doing the text.

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

Brent O. Hatch (5715)
HATCH, JAMES & DODGE
[address, phone]

Stephen N. Zack (admitted pro hac vice)
Mark J. Heise (admitted pro hac vice)
David K. Markarian (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address, phone]

Attorneys for PLaintiff/Counterclaim Defendant

____________________________________

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

____________________________________

THE SCO GROUP, INC.,

Plaintiff,

vs.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Defendant.

______________________________________

MOTION TO DISMISS, OR, IN THE ALTERNATIVE, TO SEPARATE OR STAY, COUNTS NINE, TEN AND FOURTEEN OF THE COUNTERCLAIM-PLAINTIFF IBM'S SECOND AMENDED COUNTERCLAIMS AGAINST SCO

Case No. 2:03CV0294DAK

Hon. Dale A. Kimball

Magistrate Judge Brooke Wells

_________________________________________

Plaintiff/Counterclaim-Defendant The SCO Group ("SCO"), by and through undersigned counsel, hereby moves the Court pursuant to Federal Rule of Civil Procedure 12(b) for dismissal, or, in the alternative, to stay or separate, pursuant to Federal Rule of Civil Procedure 42(b), counts Nine, Ten and Fourteen of Counterclaim-Plaintiff International Business Machines Corporation's ("IBM") Second Amended Counterclaims against SCO.

SCO bases its Motion to dismiss/stay or separate on the following grounds:

In counts Nine 9 and Ten10 of IBM's "Second Amended Counterclaims against SCO" IBM seeks a declaratory judgment that IBM has not infringed on any SCO copyrights because, allegedly, SCO's copyrights are invalid. The issue of the validity of SCO's copyrights is pending in litigation in Nevada. In count Fourteen,14 IBM seeks a declaratory judgment that all of IBM's contentions in its numerous other counterclaims against SCO are valid and should be declared so, and that all claims SCO has made against IBM in SCO's Complaint are invalid. These counterclaims should be dismissed in that they are redundant of issues already presented in this litigation and in the pending Nevada litigation.

Count Fourteen 14 is no more than a sweeping reiteration of the core issues in this case, repackaged as a declaratory judgment request. Courts have frequently declined to issue a declaration, where redundant of the relief sought in its other counts, because the relief sought will be afforded, if at all, in the other counts. As such, this Court should decline to exercise jurisdiction over Count Fourteen of IBM's Second Amended Counterclaims Against SCO on the basis that it is redundant of IBM's allegations in other counts, as well as SCO's allegations in other counts.

Counts Nine9 and Ten 10raise issues that are redundant of those presented in the prior filed Nevada action and therefore should be dismissed or stayed. Having the validity of SCO's copyrights determined in this action as well as in the federal court in Nevada would entail duplication of judicial efforts and run the risk of varying adjudications. Moreover, two federal courts should not simultaneously be determining whether the same copyrights are valid. Counts Nine and Ten should be dismissed or stayed pending the Nevada litigation.

Alternatively, Counts Nine and Ten should be separated pursuant to Federal Rule of Civil Procedure Rule 42(b). IBM's copyright counts are separable and can therefore be bifurcated. Because the copyright counts would needlessly complicate litigation that both parties concede is already highly complex, separating counts Nine and Ten would also be convenient for the parties. In addition, if counts Nine and Ten are not separated, SCO may be prejudiced by the potential confusion these counts present to the jury as well as the time, cost, and delay defending the copyright counts would entail. Finally, this court and the parties would benefit enormously, by way of expedition and economy, if Counts Nine and Ten were separated.

SCO's Motion is supported by the Memorandum in Support of Motion to Dismiss, or, in the Alternative, to Separate or Stay, Counts Nine, Ten and Fourteen of Counterclaim-Plaintiff IBM's Second Amended Counterclaims Against SCO submitted concurrently herewith.

DATED this 23rd day of April, 2004.

Respectfully submitted,

HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
Stephen N. Zack
Mark J. Heise
David K. Markarian
(admitted pro hac vice)

By:_____ [signature]_____
Brent O. Hatch

Counsel for Plaintiff/Counterclaim defendant.


CERTIFICATE OF SERVICE

I hereby certify that I caused a true and correct copy of the foregoing to be mailed, postage prepaid, this 23 day of April, 2004, to the following:

Evan R. Chesler, Esq.
Cravath, Swaine & Moore LLP
[address]

Donald J. Rosenberg, Esq.
[address]

Alan L. Sullivan, Esq.
Snell & Wilmer L.L.P.
[address]

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

IBM's COUNTERCLAIMS:

9 NINTH COUNTERCLAIM

163. SCO purports to hold copyrights relating to UNIX software, including the following copyrights: [lists]

164. SCO has sued IBM claiming that IBM has infringed, induced the infringement of, and contributed to the infringement of, SCO's purported UNIX copyrights by, among other things, continuing to "reproduce, prepare derivative works of, and distribute copyrighted UNIX materials through its activities relating to AIX and Dynix.

165. IBM does not believe that its activities relating to AIX and Dynix including any reproduction, improvement and distribution of AIX and Dynix, infringe, induce the infringement of, or contribute to the infringement of valid, enforceable copyrights owned by SCO.

166. An actual controversy exists between SCO and IBM as to the noninfringement of SCO's copyrights and the validity of any purported SCO copyrights concerning UNIX.

167. IBM is entitled to a declaratory judgment pursuant to 28 U. C. g 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through the reproduction, improvement, and distribution of AIX and Dynix, and that some or all ofSCO' s purported copyrights in UNIX are invalid and unenforceable.

10 TENTH COUNTERCLAIM

Declaratory Judgment of Noninfringement of Copyrights

168. IBM repeats and realleges the averments in paragraphs 1 through 167 with the same force and effect as though they were set forth fully herein.

169. As discussed above, SCO purports to hold copyrights relating to UNIX software.

170. SCO has sued IBM claiming that IBM has infringed, induced the infringement of, and contributed to the infringement of, SCO's purported UNIX copyrights by, among other things, continuing to "reproduce, prepare derivative works of, and distribute copyrighted UNIX materials through its activities relating to Linux.

171. IBM does not believe that its activities relating to Linux, including any use, reproduction and improvement of Linux, infringe, induce the infringement of, or contribute to the infringement of valid, enforceable copyrights owned by SCO.

172. An actual controversy exists between SCO and IBM as to the noninfringement ofSCO' s copyrights and the validity of any purported SCO copyrights concerning UNIX.

173. IBM is entitled to a declaratory judgment pursuant to 28 U. C. 9 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through its Linux activities, including its use, reproduction and improvement of Linux, and that some or all of SCO' s purported copyrights in UNIX are invalid and unenforceable.

14 FOURTEENTH COUNTERCLAIM

Declaratory Judgment

192. IBM repeats and realleges the averments in paragraphs 1 through 191, with the same force and effect as though they were set forth fully herein.

193. SCO has breached its contractual obligations to IBM, violated the Lanham Act, engaged in unfair competition, interfered with IBM's prospective economic relations, engaged in unfair and deceptive trade practices, breached the GPL, infringed IBM copyrights and infringed IBM patents, as stated above.

194. Pursuant to 28 U.S.C. 2201, IBM is entitled to declaratory relief with respect to SCO's and IBM's rights, including among other things a declaration that SCO has violated IBM's rights as outlined above by breaching its contractual obligations to IBM, violating the Lanham Act, engaging in unfair competition, interfering with IBM's prospective economic relations, engaging in unfair and deceptive trade practices, breaching the GPL, infringing IBM copyrights and infringing IBM patents, and is estopped as outlined above.

195. Moreover, IBM is entitled to a declaration that (1) SCO has no right to assert, and is estopped from asserting, proprietary rights over programs that SCO distributed under the GPL except as permitted by the GPL; (2) SCO is not entitled to impose restrictions on the copying, modifying or distributing of programs distributed by it under the GPL except as set out in the GPL; and (3) any product into which SCO has incorporated code licensed pursuant to the GPL is subject to the GPL and SCO may not assert rights with respect to that code except as provided by the GPL.

196. There is a justiciable controversy between IBM and SCO with respect to all of the issues described above.

197. Absent declaratory relief, SCO's misconduct will continue to cause injury to IBM, the open-source community and the public at large.


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