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The Buildup to the Next SCO-IBM Motion Battle - The 10th Counterclaim
Friday, June 18 2004 @ 09:07 AM EDT

There is a new Order from Judge Kimball, setting due dates for SCO and IBM in connection with the next big motion battle, the one over IBM's Tenth Counterclaim. Darl mentioned at the June 10th 2nd quarter financials teleconference that he anticipated that the oral arguments on these motions will be on August 4, which indicates that IBM's request that both motions be heard on the same day, both SCO's motion to dismiss or stay count 10 and IBM's motion for partial summary judgment on their tenth counterclaim, was granted. Here's the schedule:

  • June 21 - IBM has been given permission to file a Supplementary Memorandum in Opposition to SCO's Motion to Dismiss
  • July 26 - SCO must file their Reply Memorandum
  • July 8 - SCO's Memorandum in Opposition to IBM's Motion for Partial Summary Judgment
  • July 26 - IBM must file their Reply Memorandum
  • June 21 - IBM's Response to SCO's Memorandum Regarding Discovery

This is the fight over IBM's Tenth Counterclaim, added to COUNTERCLAIM-PLAINTIFF IBM'S SECOND AMENDED COUNTERCLAIMS AGAINST SCO.

You may not remember what this is all about, so if you wish to review, here are the documents that all of the new motions will be about, plus a snippet from each to remind you of the issues:

  • SCO's Corrected Motion to Dismiss or to Stay Count Ten of Counterclaim-Plaintiff IBM's Second Amended Counterclaims Against SCO. "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 Count Ten of Counterclaim-Plaintiff International Business Machines Corporation's ('IBM') Second Amended Counterclaims against SCO.

    "SCO bases its Motion on the following grounds:

    "On March 29, 2004, Defendant/Counter-Plaintiff International Business Machines Corp., ('IBM') filed its 'Second Amended Counterclaims Against SCO.' In Count Ten of that pleading, IBM added an entirely new claim seeking a declaratory judgment 'that IBM does not infringe, induce 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.' Paragraph 173. In other words, IBM is seeking to declare that a person or entity using Linux does not infringe upon SCO's copyrights and that some or all of SCO's copyrights are invalid or unenforceable.

    "These issues are being litigated in a case filed by SCO against AutoZone in federal district court in Nevada; a case that was filed prior to IBM's filing its Tenth Counterclaim. See The SCO Group Inc. v. AutoZone, Inc., Case No. CV-S-04-0237-DWH-LRL (D. Nev. 2004). This newly added counterclaim raises issues separate and apart from the primary breach of contract and other direct claims and counterclaims in this case. Given this fact, and to avoid multiple suits determining substantially similar issues, this Court should decline to exercise jurisdiction over and dismiss Counterclaim Ten. In the alternative, Counterclaim Ten should be stayed pending the outcome in the prior filed AutoZone case."

  • SCO's MEMORANDUM IN SUPPORT OF MOTION TO DISMISS OR TO STAY COUNT TEN OF PLAINTIFF IBM'S SECOND AMENDED COUNTERCLAIMS AGAINST SCO "The only copyright claim SCO has asserted against IBM is primarily for IBM's continuing use of AIX and Dynix after SCO terminated IBM's UNIX licenses. See Second Amended Complaint, Count V. The Second Amended Complaint, however, does not contain a claim against IBM for copyright infringement arising out of its use, reproduction or improvement of Linux. With SCO's Second Amended Complaint being the final amendment and not containing a claim for infringement arising out of IBM's Linux Activities, the need for IBM's Tenth Counterclaim seeking such a declaratory judgment is nil."

  • IBM's Cross-Motion for Partial Summary Judgment on its Claim for Declaratory Judgment of Non-Infringement. "1. SCO refuses . . . to disclose its purported evidence that IBM's Linux activities infringe SCO's alleged copyrights, despite two court orders requiring it to do so.

    "2. IBM asked SCO (more than seven months ago) to identify the precise lines of Linux code in which it claims rights, and the precise lines of code in the UNIX software from which SCO alleges such Linux code is copied or derives. Unless SCO can match up the lines of code in Linux to which it claims rights to the precise lines of code in the UNIX software over which SCO claims copyright protection, SCO cannot show copyright infringement.

    "3. Based upon SCO's failure to come forth with evidence to demonstrate infringement, summary judgment should be entered in favor of IBM on its claim that IBM's Linux activities do not infringe SCO's alleged copyrights relating to UNIX. . . .

    "In fact, SCO seeks to dismiss or stay IBM's claim for a declaration of non-infringement on the theory that, while the future of the global economy may hang in the balance, the issue of IBM's copyright infringement should be decided not in this case involving IBM, but in the case SCO just filed against AutoZone, Inc., an auto parts company that has had little, if anything, to do with the development of Linux."

  • IBM'S MEMORANDUM IN OPPOSITION TO SCO'S MOTION TO DISMISS OR STAY COUNT TEN OF IBM'S SECOND AMENDED COUNTERCLAIMS. "Although SCO's initial complaint against IBM did not include a claim for copyright infringement, SCO publicly accused IBM and others of infringing SCO's copyrights through their use of and contributions to Linux. As is explained in IBM's Counterclaims, SCO's claims in this case and its public accusations are part and parcel of SCO's campaign to foster and maintain fear, uncertainty and doubt in the marketplace about Linux in general and IBM's products and services in particular.

    "IBM has therefore been seeking, since the very beginning of the case, a full recitation from SCO of exactly what rights (including, of course, copyrights) it claims to have to code in Linux, and how IBM's activities infringe those rights. SCO has resisted discovery at every turn, requiring IBM to file two motions to compel and leading to the entry of two court orders directing SCO to provide the discovery IBM seeks. In fact, despite the court orders, SCO still has not adequately identified the code in Linux to which it claims rights or explained how that code relates to code in the UNIX software allegedly covered by SCO's copyrights, and IBM has therefore cross-moved for summary judgment on its Tenth Counterclaim.

    "Rather than disclose the evidence necessary to support its allegations, SCO seeks to dismiss or stay IBM's counterclaim on the grounds that doing so would conserve judicial resources. In contrast to this case, however, in which both parties have essentially completed their document productions, depositions have commenced, and IBM has moved for summary judgment on the instant claim, discovery in AutoZone has not yet begun. Indeed, in lieu of answering SCO's complaint in that case, AutoZone recently moved to stay the case until the conclusion of SCO's suit against IBM and SCO's suit against Novell, Inc., The SCO Group, Inc. v. Novell, Inc., 2:04-CV-139 (D. Utah), both of which are pending before this Court. It makes no sense to dismiss or stay IBM's Tenth Counterclaim pending the outcome of a case that is far less advanced, especially where IBM has spent many months pursuing discovery relevant to its counterclaim, Magistrate Judge Wells has entered two orders compelling SCO to provide that discovery and IBM's claim is susceptible of immediate resolution under Rule 56. Dismissing or staying the counterclaim pending resolution of AutoZone would waste judicial resources and visit injustice upon IBM and all others who seek a prompt end to SCO's campaign to create fear, uncertainty and doubt about Linux. . . .

    "Moreover, IBM's Tenth Counterclaim is ripe for summary adjudication under Rule 56, given SCO's record of failure to adduce evidence supporting its assertions of copyright infringement. It would therefore be an incredible waste of judicial resources (as well as the parties' resources) to dismiss or stay IBM's Tenth Counterclaim, which can be summarily resolved (for the reasons set forth in IBM's cross-motion for summary judgment), in deference to the AutoZone case, in which discovery has not even started. Accordingly, the Court should deny SCO's motion and retain jurisdiction over IBM's Tenth Counterclaim."

Here is how the Tenth Counterclaim they are fighting about reads:

"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."

There is a lot at stake here for SCO, but not much for IBM. IBM would seem to have very little to lose, no matter how this hearing plays out, whereas SCO's head is squarely on the chopping block. No wonder they want AutoZone to go first. Here is the Order.

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

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

______________________________

THE SCO GROUP, INC.,

Plaintiff/Counterclaim-Defendant,

vs.

INTERNATIONAL BUSINESS MACHINES CORPORATION, INC.,

Defendant/Counterclaim-Plaintiff.

_____________________________

ORDER RE BRIEFING FOR PENDING MOTIONS

Case No. 2:03CV294DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke Wells

__________________________

Based upon the stipulation of the parties, and good cause appearing,

IT IS HEREBY ORDERED as follows:

IBM may file a supplemental Memorandum in opposition to SCO's Motion to Dismiss which shall be due on June 21, 2004.

IBM's Response to SCO's Memorandum Regarding Discovery shall be due on June 21, 2004.

SCO's Opposition Memorandum to IBM's Motion for Partial Summary Judgment shall be due on July 8, 2004.

IBM's Reply Memorandum in Support of its Motion for Summary Judgment shall be due on July 26, 2004.

SCO's Reply Memorandum in Support of its Motion to Dismiss shall be due on July 26, 2004.

DATED this 14th day of June, 2004.

BY THE COURT:

_____[signature]______
Honorable Dale A. Kimball
United States District Court Judge

BY: _____[signature]_______
SNELL & WILMER L.L.P.
Alan L. Sullivan
Todd M. Shaughnessy
Amy F. Sorenson

CRAVATH, SWAINE & MOORE
Evan R. Chesler
David R. Marriott

Counsel for Defendant International Business Machines Corporation

BY: _____[signature]_______
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch

BOIES, SCHILLER & FLEXNER LLP
Robert Silver
Mark J. Heise

Counsel for Plaintiff The SCO Group, Inc.


United States District Court
for the
District of Utah
June 15, 2004

CERTIFICATE OF SERVICE OF CLERK

Re: 2:03-cv-00294

True and correct copies of the attached werre either mailed, faxed or e-mailed by the clerk to the following:

Brent O. Hatch, Esq.
HATCH JAMES & DODGE
[address]

Scott E. Gant, Esq.
BOIES SCHILLER & FLEXNER
[address]

Frederick S. Frei, Esq.
ANDREWS KURTH
[address]

Evan R. Chesler, Esq.
CRAVATH, SWAINE & MOORE
[address]

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

Mark J. Heise, Esq.
BOIES SCHILLER & FLEXNER
[address]

Mr. Kevin P McBride, Esq.
[address]

Robert Silver, Esq.

BOIES SCHILLER & FLEXNER
[address]

Mr. David W Scofield, Esq.
PETERS SCOFIELD PRICE
[address]


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