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Some Implications of Judge Kimball's Ruling, by Marbux
Friday, February 11 2005 @ 08:02 AM EST

The media has been overwhelmingly on target in its coverage of the Kimball ruling. If you click on Google's 93 "related stories", here are some typical headlines:

Judge Says SCO's IBM Case Lacks Evidence
SCO Bad-Mouthed in Ruling
Judge slams SCO's lack of evidence against IBM
Judge Questions Lack of Evidence in SCO-IBM Case
Judge Slams SCO's Lack of Evidence
Judge Says SCO Supplying Insufficient Evidence
Judge Blasts SCO for Lack of Evidence
Judge Critical of SCO in IBM Case
SCO's Case Against IBM Takes Hard Hit
SCO Suit Still Alive, But Judge Peeved
Judge losing patience with SCO Group's courtroom tactics
Judge slams 'cavalier' SCO

So, they got it. How refreshing. Of course, there's always a contrarian, in this case the eternal optimist and rooter for all things SCO, Laura DiDio, who remembers the Red Sox coming from behind last year and beating the Yankees after being down 3-0.

What are the implications for the future? Marbux has a theory he'd like to present on the implications he sees for the SCO v. Novell case. He noticed something in a footnote in the Order that he thinks is significant, because it indicates to him that SCO is going to have to prove its copyright ownership first in the SCO v. IBM case, and separately from the SCO v. Novell litigation. That is something SCO has been trying to avoid from day one. So it's meaningful.

Why? It means that SCO's worst nightmare just came true. From the beginning of the SCO saga, they have tried to avoid a clean copyright infringement battle. That tells us that they have doubts they can prevail. If they thought they could prove copyright ownership, they would have alleged it, straight up, in SCO v. IBM. They didn't, and they tried hard to avoid it by bringing a motion to dismiss or stay IBM's copyright infringement counterclaim, which Kimball denied. So now they are cornered.

Remember their mealy-mouthed "we never accused IBM of copyright iinfringement except for post-termination AIX distribution" double speak? When Judge Kimball wrote scornfully, in essence, of *course* SCO has accused IBM of copyright infringement by its public statements, he placed on SCO the burden of proving that ownership not in the Novell case, but here in the IBM case. I missed that when reading the Order, so here is Marbux's working theory, and what he thinks Novell's attorneys might think about doing next, as a result of footnote 3.


Some Implications of Judge Kimball's Order
~by Marbux

Judge Kimball's most recent ruling in SCO v. IBM (the "IBM case") has important implications for SCO v. Novell (the "Novell case"), indeed for all of the pending SCO Linux cases except the Daimler-Chrysler case. But the implications for the Novell case are most immediate.

Judge Kimball said in his IBM case ruling, "[t]o prove copyright infringement, SCO must establish (1) that SCO owns valid copyrights in the UNIX software, and (2) that IBM has copied protectable elements of the allegedly copyrighted UNIX software." Ruling, footnote 3. Let that sink in for a moment. SCO has to prove that in the IBM case. The judge was not talking about the Novell case. He was talking about the IBM case. That is important.

My working hypothesis is that the ruling will trigger the Novell case being placed on hold until the judge rules on the copyright issues in the IBM case. That isn't the only way it could play out. Here are the reasons for my prediction, organized by process of elimination. As always, I appreciate reality checks and invite any constructive criticism.

Judge Kimball is the presiding judge in both the IBM and Novell cases. His resources would not be used efficiently were he to supervise development of two separate case records on closely related issues, particularly if resolution of the issue in one case is likely to resolve the same or substantially overlapping issues in the other case. In addition to announcing that SCO must prove copyright ownership and infringement in the IBM case, he also said it appears likely SCO will lose both of those issues, discussing at some length -- and with some pointed displeasure -- SCO's failure to come forward with any admissible evidence on either element of the copyright claim, as required by summary judgment procedures. He also specifically rejected SCO's request to delay consideration of IBM's copyright counterclaims, so seems bent on deciding the copyright issues first in the IBM case.

Judge Kimball has discretion to consolidate both cases for the limited purpose of determining the copyright issues, but two records are still required and consolidation would delay disposition of the more procedurally advanced IBM case and add unnecessary complexity to it, so I believe he is unlikely to exercise that discretion.

First, because IBM seeks a clean bill of health on all of its Linux activities which include copying and distribution of the entire Linux kernel, a clean bill of health for IBM is a clean bill of health for Linux too. Granting IBM a clean bill of health on Linux copyright issues thus disembowels SCO's ability to sue Linux end user companies based on claims of infringing SCO copyrights by acquiring their copies of Linux. It also clear the decks for the other judges waiting for a decision in the IBM case to move their cases forward.

Second, preparation of the IBM case is more advanced and were the cases consolidated, Novell would be entitled to have the discovery deadline extended while its lawyers catch up with IBM's and SCO's case preparation.

Third, the copyright issues in both cases are not necessarily mirror images. SCO may conceivably have copyrights or licenses it holds for relevant code it developed or acquired after the Novell-SCO agreement and those issues could not be resolved in the Novell case. On the other hand, in the IBM case not all of the copyrights SCO allegedly acquired from Novell are necessarily implicated by SCO's allegations that IBM improperly contributed code to Linux on which SCO holds both copyrights and contractual rights. SCO is not alleging that all of its code covered by copyrights it supposedly acquired from Novell are in the code IBM contributed to Linux. From the judge's perspective, it probably is better to process the cases in sequence rather than in parallel and see what remains for the Novell case after he rules in the IBMcase. (But that also suggests Judge Kimball will require excruciatingly detailed proof from SCO in theIBM case on precisely which code involves which copyrights. Otherwise, he runs the risk of partially inconsistent judgments in the two cases, which is grounds for reversal.)

Fourth, if SCO loses the copyright ownership issue in the IBM case, its case against Novell becomes largely a house of cards that will tumble. No slander of title action is sustainable unless SCO actually holds title to the relevant copyrights. That is SCO's sole grounds for its complaint against Novell. Under the doctrine of collateral estoppel, to the extent SCO loses the copyright issues in theIBM case, the judgment would carry over to the Novell case. That in turn would destroy SCO's legal standing to continue that case for any code involved in both the IBM and Novell cases. In the Novellcase, to the extent that SCO holds no relevant copyrights, any Novell public statements to the contrary could not have slandered SCO's title to those copyrights. An initial Novell motion to assert collateral estoppel offensively would probably be based on SCO's lack of standing rather than on the truth of Novell's allegations that it is the true owner of the copyrights. That is because a standing challenge is jurisdictional in nature and avoids the factually more complicated issue of whether Novell itself holds valid copyrights.

As has become crystal clear, the ownership and scope of relevant copyrights in Unix is a quagmire. The side that has the burden of proof on that issue is likely to lose it. A standing challenge based on the decision in the IBM case would therefore whittle SCO's slander of title case to any code not necessarily implicated in the IBM decision. Moreover, Novell should get the benefit of any failure of proof by SCO on the standing issue, because a plaintiff always has the burden of proof and persuasion on jurisdictional issues. Truth as a defense, however, is not jurisdictional and places on Novell the burden of proving that SCO does not hold valid copyrights. So the more whittling Novell can do via the standing challenge, the fewer issues it will have to deal with under its own burden of proof. Should SCO's case survive that whittling, it is likely that SCO would drop what is left of its case, if anything is left at all.

Fifth, Novell -- and any of the parties to other cases facing SCO copyright claims to Linux code -- have incentives to let the issue be decided in the IBM case. Let IBM fire the first salvo. Novell and the others can still fire their own shells in their own cases if there is anything left of SCO's claims of copyright ownership after the judgment in the IBM case. Should IBM lose the copyright issues, the right of Novell and the other companies to litigate factual issues in their own cases remains unaffected; only the Judge Kimball's rulings on the law might create barriers. They still would have the right to litigate their factual claims, and for those outside the jurisdiction of the Utah federal district court, even the judge's adverse legal rulings would not be binding (but might still be persuasive).

But because Novell and the other litigants are not parties to the IBM case, the doctrine of collateral estoppel can not apply from the IBM case to them. The doctrine is intended only to prevent those who have lost an issue from relitigating the same issue in another case. It does not apply to those who have not litigated the issue. Moreover, the right to have collateral estoppel apply in the other cases runs from entry of judgment in the IBM case, so the companies opposing SCO in the other cases can simultaneously move for judgment, forcing SCO to litigate against everyone at once during the time it also has to prepare for appeal of the IBM case.

Sixth, Novell and the other parties to cases involving SCO's copyright claims in Linux code have not exercised their right to intervene in the IBM case. They meet the Rules criteria for intervention of right, that they are so situated that Judge Kimball's judgment may, as a practical matter, affect the exercise of their rights. That Novell and the other parties have not already exercised that right indicates that they are even less likely to do so now. A potential intervenor is supposed to intervene when they first realize their rights may be affected by disposition of another case. Undue delay is grounds for denial of intervention. Let's just say that the IBM case has from the beginning of the other cases been a very large elephant in the "room" of undue delay. Also, intervention can be denied where an intervenor's interests are adequately being represented by an existing party. In light of Judge Kimball's very pro-IBM ruling, it would be more than a stretch for the other companies to argue that their interests in the copyright issues are not being adequately represented by IBM and its lawyers, another grounds for denial of an otherwise proper intervention as of right.

Seventh, Novell suffers scant cognizable injury by awaiting decision in the IBM case. It is the defendant, not the plaintiff. It did not ask for that lawsuit to be filed and considered. It has raised no counter-claims. There is little risk that relevant evidence may go stale while it waits. To the extent that an important witness contracts a fatal disease or other need arises to preserve evidence, Novell can seek relief from any stay and its motion would almost certainly be granted forthwith. Plus, Novell can likely avoid most expenses of preparing its defense if the Novell case is stayed.

Eighth, all judges in the other cases involving SCO copyright claims have decided to stay them until the IBM case is decided. None of them have stayed their cases until the Novell case is decided. Judge Kimball said he is going to decide the copyright issues in the IBM case. The judicial consensus seems to be that the IBM case should go first. All concerned eyes are on the IBM case in Judge Kimball's court. Except for SCO's appeal from the dismissal in the Daimler-Chrysler case, which was not based on copyright issues, the rest of the judges are not going deal with further SCO Linux litigation until they can see what rulings Judge Kimball makes in the IBM case.

If I were Novell's lead attorney, I would probably be working on an expedited motion for a stay of the Novell case pending Judge Kimball's disposition of the IBM case. The moment seems right.

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