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Red Hat - Letters to the Judge and RH Motion for Reconsideration Denied without Prejudice to Renew
Saturday, April 09 2005 @ 10:00 PM EDT

Action, of a sort, on the Red Hat front. Both sides have filed their obligatory status reports, and the judge has ruled, after one year, on Red Hat's motion for reconsideration, and she has denied without prejudice to renew. You remember what that means, but for new ones, it means it's not a Straight-out No Forever; it is more of a Not Now - Try Me Later. Here's SCO's letter, Red Hat's letter, and the Judge's Order, all three PDFs.

The Order is a lulu. She tells Red Hat that if SCO's claims or counterclaims change, they can renew, and the wording is telling:

The plaintiff, however, may renew its motion to reconsider the stay if the claims or counterclaims in the pending SCO litigations change, and it would no longer be an inefficient use of judicial resources for this court to consider whether the LINUX system contains any misappropriated UNIX system source code, or if there is evidence that SCO has misrepresented the issues of this case, or the Utah litigation.

*If* there is evidence? That is an open door Red Hat is no doubt thinking about walking through one of these sweet days, and the sooner the better. Alternatively, since she ignored the following paragraph in their memo in support of their motion entirely, they have the option of appealing her order, I would think:

"The purpose of a motion for reconsideration is to 'correct manifest errors of law or to present newly discovered evidence.' . . . In this District, reconsideration is also appropriate where the court decides an issue 'that was outside the adversarial issues presented by the parties.' . . . The likelihood that the court may have overlooked law or facts is increased when the court goes beyond the issues presented by the parties. . . . The Court based its decision to stay this action in favor of the Utah Action on its erroneous conclusion that the 'core issue' in both cases is 'whether the LINUX system contains any misappropriated source code.' Order at 5 P 2b. Based on this erroneous conclusion, the Court reasoned that it would be a waste of judicial resources to have two district courts resolving 'the same issue, especially where the first filed suit in Utah involves the primary parties to the dispute.' Id. The Court did not have or seek briefing from the parties on this issue before ruling."

Considering how long it took her to sort of brush them off, an appeal might be more effective, but there are a lot of things to consider, so I'm not saying what anybody should or shouldn't do. It's too bad the Judge's Order came the day before Red Hat filed its letter; they probably would have mentioned SCO trying to file an third amended complaint, had they gotten the Order first.

The fun part is, I guess SCO has mixed feelings now about getting permission to amend their complaint a third time, huh? I guess if it was me I'd wait and see if they get permission to amend the complaint so that the case becomes more or less a straight contract case and copyright infringement re Unix code on POWER, and if they do, I'd beat on Judge Robinson's door and say, what does any of this have to do with Linux? Could you please give us a ruling on that? But honestly, I believe I recall mention of misrepresentation in the status letters this judge has already received from Red Hat. (Even in this one, note the wording SCO presents as if it were the wording in Judge Wells' discovery order, including Linux, the word I can't find in her Order. They also don't mention any case but the IBM one, thus avoiding mentioning that their appeal of the DaimlerChrysler order was rejected.) Still, I see progress in Judge Robinson's perception. But heavens, it's slow as molasses in Delaware.

The good news is you can get all the documents now from Pacer. We don't need folks to go to the court there any more. They have joined the digital age.

Here is the full Order and the Red Hat letter as text, thanks to Frank Sorenson, and then SCO's letter:

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

ORDER

At Wilmington, this 31st day of March, 2005;

IT IS ORDERED that plaintiff's motion for reconsideration (D.I. 35) is denied without prejudice to renew, for the following reasons:

1. The purpose of a motion for reconsideration is to "correct manifest errors of law or fact or to present newly discovered evidence." Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). Accordingly, a court may alter or amend its judgment if the movant demonstrates at least one of the following: (1) a change in the controlling law; (2) availability of new evidence not available when summary judgment was granted; or (3) a need to correct a clear error of law or fact or to prevent manifest injustice. See id.

2. The court concludes that plaintiff has failed to demonstrate any of the aforementioned grounds to warrant a reconsideration of the court's April 6, 2004 order. The plaintiff, however, may renew its motion to reconsider the stay if the claims or counterclaims in the pending SCO litigations change, and it would no longer be an inefficient use of judicial resources for this court to consider whether the LINUX system contains any misappropriated UNIX system source code, or if there is evidence that SCO has misrepresented the issues of this case, or the Utah litigation.

[signature of Sue L. Robinson
United States District Judge


Young Conaway Stargatt & Taylor, LLP
[letterhead]

April 1, 2005

BY ELECTRONIC FILING

The Honorable Sue L. Robinson
Chief Judge
[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 January 3, 2005. Although Red Hat is not a party to these other related cases, Red Hat offers the following summary based upon publicly available information.

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

As of Red Hat's last update letter, SCO's motion to dismiss, or in the alternative, stay IBM's counterclaim ten and IBM's motion for partial summary judgment on its tenth counterclaim for a declaratory judgment of non-infringement of copyright were pending. Following a September 15, 2004 hearing on the motions, the Court issued an order on February 8, 2005 which denied or rendered moot all of the claims brought by both parties. With respect to the denial of SCO's motion to dismiss IBM's tenth counterclaim, the Court found that "there is clearly significant overlap" between IBM's and SCO's respective claims and held that litigating the claim made sense from "a judicial economy and fundamental fairness perspective." Although it was "tempt[ed] to grant IBM's motion" for partial summary judgment on its counterclaim, the Court declined to do so, holding that it would be premature. The Court also ruled that no dispositive motions may be filed until after the close of discovery.

On February 18, 2005, IBM filed a motion for an entry limiting the scope of its ninth counterclaim which seeks a declaration with respect to its UNIX activities. IBM seeks to narrow the scope of its ninth counterclaim to a declaration that its continued distribution of its AIX and Dynix products does not infringe SCO's alleged copyrights because it has not breached its license agreements with AT&T and SCO's purported termination of those licenses is invalid.

2. SCO Group, Inc. v. AutoZone, Inc.

By an order dated August 6, 2004, this case remains stayed subject to a limited period of discovery relating to the issue of preliminary injunctive relief. At SCO's request, the court extended this period on March 23, 2005, granting SCO an additional forty-five days to complete its discovery. SCO has until May 31, 2005 to file a motion for preliminary injunction.

3. SCO v. Novell, Inc.

As of Red Hat's January 3, 2005 update letter, Novell's motion to dismiss the amended complaint had been fully briefed and a hearing scheduled for January 20, 2005. The court granted a motion for continuance filed by Novell and rescheduled the hearing for May 25, 2005.

4. SCO v. DaimlerChrysler Corporation

On December 29, 2004, SCO filed a claim of appeal from the Oakland County Circuit Court's order of dismissal entered in this case on December 21, 2004. SCO's claim of appeal was dismissed by the Michigan Court of Appeals on January 21, 2005 for lack of jurisdiction.

Respectfully submitted,

[signature of Josy W. Ingersol]
Josy W. Ingersoll

JWI:cg
cc: Clerk of the Court (by hand delivery/electronic filing)
Jack B. Blumenthal, Esquire (by hand delivery/electronic filing)
Stephen N. Zack, Esquire (by e-mail)
Mark G. Matuschak, Esquire (by e-mail)
Michelle D. Miller, Esquire (by e-mail)


MORRIS, NICHOLS, ARSHT & TUNNELL
[letterhead]

April 4, 2005

BY ELECTRONIC FILING

The Honorable Sue L. Robinson, Chief Judge
[address]

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

Dear Chief Judge Robinson:

Pursuant to this Court's April 6, 2004 Order, SCO respectfully submits this 90-day status report to apprise the Court of events that have transpired since our last update (on January 3, 2005) in SCO v. IBM, Case Nno. 2:03CV0294 (DAK), which is currently pending before the Honorable Dale A. Kimball in the United States District Court for the District of Utah.

The Parties' Dispositive Motions

On February 8, 2005, Judge Kimball decided various dispositive motions, relating to certain claims and counterclaims, as follows:

1. The Court denied IBM's Motion for Partial Summary Judgment on SCO's Breach of Contract Claims, IBM's Motion for Partial Summary Judgment on Its Claim of Copyright Infringement (Eighth Counteclaim), and IBM's Motion for Partial Summary Judgment on Its Claim for Declaratory Judgment of Non-Infringement (Tenth Counterclaim), all without prejudice to IBM's re-filing those motions at the close of discovery.

2. The Court vacated its Order of September 30, 2004, to the extent that it had granted the parties permission to file dispositive motions before the close of discovery, directing the parties not to file any further dispositive motions until the close of discovery unless both parties stipulate that an issue may be so resolved before that time.

3. The Court denied SCO's Motion to Dismiss or Stay Count Ten of IBM's Second Amended Counterclaims (Tenth Counterclaim).

SCO's Motion to Amend Its Complaint

As last reported to the Court, SCO filed a motion on October 14, 2004, for leave to amend its complaint in order to add a copyright-infringement claim based on newly discovered evidence of IBM's unauthorized use of SCO code in AIX. The parties have now fully briefed this motion, and the Court has scheduled oral argument for April 21, 2005.

In its motion papers, SCO argued that IBM would not be prejudiced by the proposed amendment because, among other things, SCO's new claim pertained to issues already covered by IBM's own Ninth Counterclaim, which seeks a broad declaratory judgment of non-infringement relating to AIX. On February 18, 2005, IBM filed a Motion for Entry of Order Limiting the Scope of its Ninth Counterclaim. That motion has also been briefed, but no argument date has been set.

SCO's Renewed Motion to Compel Discovery

On January 18, 2005, United States Magistrate Judge Brooke Wells entered an Order granting in part SCO's Renewed Motion to Compel Discovery. Judge Wells ordered IBM to produce programming-history information including:

1. source code for all versions and changes to the AIX and Dynix operating systems, including an additional "approximately 'two billion lines of code' as represented by IBM" and all other code contained in IBM's revision-control databases relating to AIX and Dynix.

2. all programming-history information contained in IBM's CMVC and RCS revision control databases, including all changes made to those operating systems and the identity of the persons who made such changes;

3. programmer's notes, design documents, white papers, and comments and notes for the 3,000 persons who made the greatest contributions and changes to the development of the AIX, Dynix, and Linux operating systems; and

4. the names and contact information for those 3,000 programmers, and the specific changes each made to the operating systems at issue. 1

Judge Wells ordered IBM to complete its production of all of the above discovery by no later than March 18, 2005.

Recognizing that this discovery order "necessitates some modification to the scheduling order," Judge Wells struck the Amended Scheduling Order, including the fact-discovery deadline of February 11, 2005. She also ordered the parties to meet and confer regarding a new schedule and to submit a new proposed scheduling order by March 25, 2005. The parties submitted separate proposed orders on that date.

On February 11, 2005, IBM filed a Motion for Reconsideration of the portion of the Court's January 18 Order that required IBM to produce programmer-contribution information for 3,000 people. In its motion papers, IBM seeks to relitigate that part of the January 18 Order, to advance an interpretation of the Order that limited the scope of IBM's obligations to produce much of the discovery that the Court had specified therein. The parties have fully briefed this motion, but no date has been set for oral argument.

On March 9, 2005, IBM filed a Motion for a 45-day Extension of Time to Comply with the Court's January 18 Order as it applies to materials that are not the subject of IBM's above-referenced Motion for Reconsideration. On March 16, 2005, the Court granted the extension and entered an order requiring IBM to produce those materials by May 3, 2005. With respect to the materials that are the subject of IBM's Motion for Reconsideration, the Court granted IBM's request to stay its discovery obligations until the Court rules on that motion.

SCO's Additional Motions to Compel Discovery

On January 12, 2005, SCO filed its Motion to Compel IBM to Produce Samual J. Palmisano for Deposition. Mr. Palmisano is IBM's Chief Executive Officer, the Chairman of its Board of Directors, and the IBM executive who, according to IBM's own public statement, spearheaded IBM's strategic shift to Linux. The parties have fully briefed this motion, and the Court has scheduled oral argument for April 21, 2005.

The parties have also now fully briefed SCO's December 23, 2004 Renewed Motion to Compel Discovery, which seeks to compel IBM's compliance with prior Court orders relating to IBM's obligation to produce (1) all documents pertaining to Linux from the files of Mr. Palmisano, IBM "Linux czar" Irving Wladawsky-Berger, and IBM's Board of Directors; and (2) to compel IBM to produce witnesses to testify on several topics in two Rule 30(b)(6) notices of deposition that SCO has served. The Court has not set a hearing date for this motion.

Additional Developments

G2 Computer Intelligence, Inc.'s November 30, 2004 Motion to Intervene and Motion to Unseal Court's File has been fully briefed and is scheduled for argument for April 26, 2005.

Pursuant to Judge Wells's February 11, 2005 Order, the parties filed and served their respective privilege logs and have until April 9, 2005, to file their respective objections.

The parties also took eleven additional depositions during the period covereed by this report.

SCO will submit its next 90-day update to the Court by July 5, 2005.

Respectfully,

/s/ Leslie A. Polizoti

cc: Peter T. Dalleo, Clerk (By Hand)
Josy W. Ingersoll, Esquire (By Hand)
William F. Lee, Esquire (By Fax)
Edward Normand, Esquire (By Fax)


1 In its Motion for Reconsideration of the Court's January 18, 2005 Order (2/11/05), IBM also seeks to limit the Order's scope, arguing that IBM is not required to provide information concerning its Linux contributions. In its Opposition to IBM's Motion for Reconsideration (2/28/05), SCO identifies IBM's renewed attempt to avoid producing this outstanding discovery and asks the Court to reject IBM's interpretation of the Court's discovery order.


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