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Red Hat's Latest Letter to the DE Judge - as text
Thursday, October 14 2004 @ 02:33 PM EDT

Here's Red Hat's letter to the judge in Delaware bringing her up to date on events in all the other cases in the last 90 days, as per her order. I think you will agree after you read it that by the time the Red Hat case goes to trial, SCO's name is going to be mud with this judge, if Red Hat keeps informing her of all the contradictory things SCO says in other courtrooms in other cases.

Again, Red Hat asks the judge, the Honorable Sue L. Robinson, Chief Judge of the United States District Court, to please reconsider her sua sponte stay and let the Red Hat case go forward. SCO's strategy, Red Hat tells her, is "delaying for as long as possible resolution of the copyright claims that are at the heart of the pending lawsuits." They tell her that all they know about the other cases is what they read in the papers, so to speak. They are not a party to any of the other cases, so they provide information culled from "publicly available information", which is another way of telling her that she kind of should let this case go forward, in their opinion, because none of the other cases settle their issues.

SCO's letter, already filed, tells Their Side of the Story.

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

Young Conaway Stargatt & Taylor, LLP
[letterhead]

October 4, 2004

BY HAND DELIVERY

The Honorable Sue L. Robinson
Chief Judge
United States District Court
[address]

RE: Red Hat, Inc. v. The SCO Group, Inc.
Civil Action No. 03-772-SLR

Dear Judge Robinson:

Pursuant to the Court's April 6, 2004 Order requesting a quarterly report on the status of various related litigation matters, Red Hat, Inc. submits this letter as an update to its previous letter dated July 6, 2004. Although Red Hat is not a party to these other related cases (and on that basis urges the Court to reconsider its order staying this Red Hat litigation), Red Hat offers the following summary based upon publicly available information.

1. SCO Group, Inc. v. International Business Machines Corp.

As of the date of Red Hat's previous letter, two substantive motions were pending before the court. SCO's motion to dismiss, or in the alternative, stay IBM's counterclaim ten and IBM's motion for partial summary judgment on IBM's tenth counterclaim for a declaratory judgment of non-infringement of copyrights. On September 15, 2004, a hearing was held to address these motions.

The crux of SCO's argument in support of its motion to dismiss IBM's declaratory judgment claim that it infringes no SCO copyrights is that the declaratory judgment claim goes beyond the breach of contract claim raised in SCO's complaint. In other words, SCO argued that there was not enough overlap between SCO's claims for breach of contract and IBM's counterclaim for non-infringement of copyrights to justify allowing IBM's counterclaim to proceed. IBM asserted that SCO's complaint for breach of contract directly raises the issue of copyright infringement. (Tr. at 24:21-22.)

IBM also noted that SCO has made a plethora of contradictory statements about the nature of its claims against IBM. More specifically, IBM pointed to SCO's representation to this Court that "[t]he infringement issues that Red Hat seeks to adjudicate in this case are currently before United States District Judge Dale A. Kimball in the SCO v. IBM case pending in the Utah Federal District Court." (Tr. at 28:6-9.) SCO maintained to the Utah Court -- in direct contradiction to its statements to this Court -- that "[the IBM case] is not about it, it never was about copyright violations." (Tr. at 39:5-6).

IBM argued that the Utah court should enter summary judgment in its favor on its counterclaim for a declaratory judgment of non-infringement of copyright because SCO failed to substantiate its public accusations of copyright infringement by IBM and others. IBM asserted that SCO's failure to respond to interrogatories that request identification of the specific code IBM is accused of infringing reveals that SCO cannot support its public claims of infringement. IBM argued that the only evidence SCO requires to prove copyright infringement is the Unix code -- which SCO has in its possession -- and the Linux code -- which is publicly available.

The court took all of the motions under advisement and adjourned the hearing.

SCO Group, Inc. v. Auto-Zone, Inc.

As of the date of Red Hat's previous letter updating the Court on the status of these related cases, Autozone had filed a motion seeking to stay the action pending resolution of the Red Hat case, the IBM case, and the dispute between Novell and SCO regarding ownership of the UNIX copyrights. On July 12, 2004, the Court held a hearing on this motion, during which SCO argued that the Autozone case should not be stayed and asserting, inter alia, that it sued Novell for "essentially a slander of title. It is not a copyright case. It is not a copyright infringement case." (Tr. at 16:21-24);

By its order dated August 6, 2004, the court granted Autozone's motion to stay, requiring each party to submit an update letter to the court every 90 days as to the status of the IBM, Novell, and Red Hat cases. Notwithstanding this stay, the court allowed the parties to take limited expedited discovery related to the issue of preliminary injunctive relief.

SCO v. Novell, Inc.

On January 20, 2004, SCO filed suit against Novell, Inc. in Utah state court asserting a single cause of action for slander of title. The complaint alleges that Novell has caused damage to SCO by publicly and falsely representing that it owns copyrights to Unix and UnixWare. The action was removed to the District Court for the District of Utah and shortly thereafter, Novell brought a motion to dismiss, arguing that SCO failed to sufficiently plead its falsity and special damages claims. Concurrent with the filing of its opposition to Novell's motion to dismiss, SCO brought a motion to remand the case to state court. A hearing was held on both of these motions on May 11, 2004.

By its order dated June 9, 2004, the court denied SCO's motion to remand, finding that there was a substantial question as to whether Section 204(a) of the Copyright Act had been satisfied. The order also denied Novell's motion to dismiss as to SCO's pleading of falsity, and granted Novell's motion to dismiss as to SCO's pleading of special damages. Soon after this order was issued, SCO amended its complaint. Novell responded with a motion to dismiss, which is currently pending before the court.

SCO v. DaimlerChrysler Corporation

On March 3, 2004, SCO filed suit in the Circuit Court for the County of Oakland in the State of Michigan against DaimlerChrysler Corporation ("DaimlerChrysler") claiming that DaimlerChrysler was in breach of its Unix System V licensing agreement. The basis of the alleged breach was SCO's assertion that DaimlerChrysler had refused to respond to a December 2003 letter from SCO requesting a "certification of compliance" as required by the agreement. DaimlerChrysler moved for summary judgment on April 15, 2004, arguing that it had submitted the necessary certification of compliance, even though it has not used the software for more than seven years and it was under no obligation to provide the certification. At the hearing held on July 2, 2004, SCO asserted that DaimlerChrysler failed to provide full certification because it had not certified that it had kept the source code confidential. The court disagreed with SCO, and granted summary judgment to DaimlerChrysler on all of the claims with respect to the sufficiency of DaimlerChrysler's certification, leaving only one remaining claim challenging the timeliness of DaimlerChrysler's certification.

* * *

In conclusion, the events in these related cases over the past 90 days provide further evidence of SCO's litigation strategy of delaying for as long as possible resolution of the copyright claims that are at the heart of the pending lawsuits. As demonstrated by IBM at the September 15, 2004 hearing, SCO continues to make inconsistent statements to this Court and to other courts, taking whatever position suits its purpose at the time. For these reasons, we respectfully request the Court to lift the order staying the case filed by Red Hat as requested in Red Hat's pending Motion for Reconsideration.

Respectfully submitted,

___[signature]_____
Josy W. Ingersoll

JWI:cg
cc: Clerk of the Court (by hand)
Jack B. Blumenfeld, Esquire (by hand)
Stephen N. Zack, Esquire (by facsimile)
Mark G. Matuschak, Esquire (by facsimile)


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