Here is IBM's Supplemental Memorandum in Opposition to SCO's Motion to Dismiss or Stay Count Ten of IBM's Second Amended Counterclaims. Remember at the June 8 hearing when the judge asked if counterclaim 10 was compulsory and the attorney said no? Well, he should have said yes, and this memorandum is IBM saying yes, correcting the record. Counterclaim 10, IBM's request for a declaration of non-infringement of SCO's copyrights (if they even have any), IBM is clarifying, is compulsory, and this document provides all the reasons why they say so.
Here is what you do when you need to correct something. You send a letter to the judge and quickly let him or her know that you need to correct what you said or wrote. Then you file your supplemental memorandum. That is what happened here, and you'll see all that in footnote 1.
It's not possible never to make a mistake or never to want to fix something, particularly things that happen in oral arguments. We've seen that on both sides now. SCO put in a Corrected Motion to Dismiss or Stay on this very motion, if you recall. Now IBM is clarifying their position on the compulsory issue. SCO has been trying to limit their copyright claims against IBM, narrowing them down to "IBM's own contributions to Linux", but IBM argues that even if you so narrow, judicial economy is best served by IBM seeking a declaration of non-infringement "as to all the allegedly infringing code in Linux". In short, this is the copyright infringement ball of wax as far as IBM's contributions of code to Linux (as opposed to SCO's claims about AIX post-termination), and SCO knows it, so they are fighting hard to fight this claim off, seeking a dismissal or a stay until after the AutoZone case is heard. IBM is saying: there is no proof of copyright infringement in Linux. They told the world we were guilty, and now there is nothing to back up what they said, so we'd like the court to clear our good name.
IBM in this memorandum gives us a class on what it means that a counterclaim is compulsory:
"Under Rule 13(a), a counterclaim is compulsory 'if it arises out of a transaction or occurrence that is the subject matter of the opposing party's claim.' Fed. R. Civ. P 13(a). Courts give 'the terms "transaction" and "occurrence" contained in Rule 13(a) . . . flexible and realistic constructions in order to effect "judicial economy", i.e., trial in one action of all related controversies between the parties and, of course, the avoidance of multiplicity of suits.' . . . 'The reason for compelling the litigant to interpose compulsory counterclaims is to enable the court to settle all related claims in one action, thereby avoiding a wasteful multiplicity of litigation on claims arising from a single transaction or occurrence.'
"Rather than articulate precise definitions for the terms 'transaction' and 'occurrence', the Tenth Circuit (like other circuits) has articulated a number of standards 'by which the compulsory or permissive nature of specific counterclaims may be determined', including the following:
'(1) Are the issues of fact and law raised by the claim and counterclaim largely the same?
'(2) Would res judicata bar a subsequent suit on defendants' claim absent the compulsory counterclaim rule?
'(3) Will substantially the same evidence support or refute plaintiffs' claim as well as defendants' counterclaims? and
'(4) Is there any logical relation between the claim and the counterclaim?'"
Under any of those four tests, IBM argues, their 10th counterclaim is compulsory. There is another footnote of interest related to this same issue. The memorandum discusses the compulsory nature of the 10th counterclaim by pointing out that it mirrors the allegations SCO has made against it in the IBM case but then it also throws in SCO's face what they said on the same subject in the Red Hat case. You have noticed the conflicting claims, and so has IBM and now they highlight them to the judge, and they quote from the Red Hat pleadings to highlight the inconsistencies. Then footnote 9 reveals that SCO has sent a letter to the judge in the Red Hat case, something you may have noticed on Pacer. Footnote 9 tells us what it is about:
"More recently, in May 2004, SCO argued in opposition to Red Hat's attempt to lift the stay the Delaware Court had imposed sua sponte 'pending a resolution of the Utah litigation between SCO and IBM' (Sorenson Decl. Ex. 2 Paragaph 2) that 'the IBM case will address a central issue in this [Red Hat] case: whether Linux contains misappropriated UNIX code'. (Sorenson Decl. Ex. 3 at 3.) . . . . . .9. Apparently recognizing that its position in the Red Hat case is inconsistent with its new view of its copyright claim, SCO recently submitted a letter to the Red Hat court attempting, it seems, to explain away the inconsistency. There is no explanation except that SCO seeks now to redefine its claim to support its present motion."
In other words, a counterclaim is compulsory if it stems from the same facts and is logically related to the claims alleged by the plaintiff, or as IBM puts it:
"It is axiomatic that counterclaims relating to the same copyrights that are the subject of a plaintiff's claims are logically related to the plaintiff's claims and are therefore compulsory."
The rule is Federal Rule of Civil Procedure 13(a), and civil procedure just means the rules the federal courts follow when handling trials. States have their own rules. You need guidelines, so both sides know what the judge will accept, how to present things, etc. It's not the same as a law, but it might as well be in a sense, because you have to follow the rules. There are Federal Rules of Evidence too, by the way, letting you know what you can offer as evidence and what you can't. Here is a case that explains it:
"Federal Rule of Civil Procedure 13(a) provides that:
A pleading shall state as a counterclaim any claim
which at the time of serving the pleading the pleader
has against any opposing party, if it arises out of the
transaction or occurrence that is the subject matter of
the opposing party's claim and does not require for its
adjudication the presence of third parties of whom the
court cannot acquire jurisdiction."
Res judicata just means you can't bring a case afresh once it's been decided. You can't bring a case, lose and then try again on the same facts. As IBM quotes from a case, "a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in the prior action." So, if SCO's copyright claims against IBM are decided here and now, "SCO is barred from bringing a subsequent claim of copyright infringement against IBM for any other allegedly infringing code in Linux of which it is presently aware or could be aware with the exercise of due diligence." Ah. No more discovery fishing trips. Wouldn't that be delightful?
Aren't you glad to know that somebody thought about plaintiffs from hell and clipped their evil wings with the rule of res judicata?
IBM is certainly giving us quite a legal education, don't you think? It's more fun to learn like this than to sit in a classroom, for sure. For one thing, there are no pop quizzes.