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To read comments to this article, go here
IBM Wins Big - SCO Motion to Amend Complaint Denied; Trial Date Set
Friday, July 01 2005 @ 06:25 PM EDT

Here's the decision [PDF] we've been waiting for: IBM wins big and SCO's Motion For Leave to File Third Amended Complaint -- to add their phony baloney claim regarding the AIX on Power that SCO's journalistic minions told you would be so powerful and that they claimed they had just discovered -- was denied totally. The new trial date is February 26, 2007. To any who thought Groklaw was off base in digging up all that Project Monterey material, you owe me a dinner. No wonder SCO's been quiet as a tomb.

IBM also won on its motion to narrow the scope of its 9th Counterclaim, since that is part of why SCO's motion to amend was denied. SCO tried to expand its interpretation in order to justify their delay in bringing the claims about AIX. Judge Kimball writes:

To permit the proposed amendment would expand this already sizable and complex litigation and would serve only to delay its resolution. Furthermore, SCO has twice amended its Complaint during this litigation, and the deadline for seeking leave to further amend has long-since passed. SCO has not demonstrated the "extremely compelling circumstances" required by this court's June 10, 2004 Order. In addition, it has not demonstrated "good cause" under Rule 16(b) of the Federal Rules of Civil Procedure, and the court finds that SCO has unduly delayed seeking leave to assert the proposed cause of action. It appears that SCO -- or its predecessor -- either knew or should have known about the conduct at issue before it filed its original Complaint. Accordingly, the court declines to permit the filing of a Third Amended Complaint.

In short, nice try, SCO. I'm thinking we won't be hearing any more about those stupid IBM emails SCO leaked any more. This time, the tricks didn't work. Judge Kimball accepted essentially all of IBM's arguments.

Judge Kimball ruled on the other motions argued at the same April hearing, and SCO gets a puny four hours with Palmisano. Our eyewitnesses at the hearing said they thought SCO would get something on that motion, and they did. It's amazing to me how Groklaw's lay eyewitnesses get it so right, time after time.

On the scheduling, both parties have until December 22 to identify "with specificity all allegedly misused material." That would be SCO, of course, despite being listed as a deadline for the "parties." So, no open-ended "we'll tell you as we find it" or monthly "status meetings" at court about discovery, which is what they asked for. Remember this SCO suggestion?

Fourth, IBM seeks to use its proposed discovery schedule to trump the Federal Rules of Civil Procedure in an additional respect. IBM asks this Court to require SCO to identify, at interim and final deadlines, all "allegedly misused material" by "version, file, and line of code." IBM's Proposed Scheduling Order at 2 n.2; IBM Mem. at 5 & n.4. The discovery mechanisms provided in the Federal Rules of Civil Procedure, such as interrogatories, permit the parties to seek exactly the information that IBM now asks the Court to order SCO to disclose as part of the pretrial schedule. IBM has availed itself of these processes, and SCO will supplement its discovery responses as information becomes available upon its review of the discovery that IBM had refused to produce for over a year

Nope. They have to now do exactly what IBM asked for: identify on a fixed schedule with specificity exactly what they claim has been misused. This is part of what IBM suggested, for comparison:

Specifically, IBM proposes an interim deadline of June 11, 2005, by which the parties would identify the Allegedly Misused Material known to them as of that date, and a final deadline of August 11, 2005, by which the parties would identify any and all material that the other party is alleged to have misused. All fact discovery would close on August 11, 2005, except as to defenses to claims relating to the Allegedly Misused Material. The only fact discovery that would be permitted thereafter would be fact discovery relating to defenses to claims relating to the Allegedly Misused Material. No party could contend that another party misused material not identified by the August 11 deadline; no expert could opine as to the misuse of material not identified by the deadline.

SCO had best start looking for that needle in the haystack expeditiously. At last. They have to finally tell us what this saga has been about, if they can, with specificity.

[UPDATE: I started to think about the date for dispositive motions, and it occurs to me that I must be wrong on that, because there isn't normally any deadline for filing dispositive motions, no cutoff. You can usually do that any time you want, even after the trial starts. So I contacted Lewis Mettler of Lamlaw, after reading his excellent article on this Order, and I asked him about it. He thinks it means the first date that the parties can begin filing dispositive motions. It's listed in a long list of termination deadlines, so even he isn't positive, but he thinks, for the same reason I started to wonder, that it must mean the first date Judge Kimball will again entertain dispositive motions, so I have corrected the text.]
The deadline, not the opening of the gates, for dispositive motions (the ones IBM is drooling to file again, for example) is July 28, 2006, and trial is set for February 26, 2007. Fact discovery "except as to defenses to claims relating to allegedly misused material" is January 27, 2006, and the close of all discovery is March 17, 2006. So, a light at the end of the tunnel, finally.

This is a huge win for IBM. We have all been spared a lot more discovery nonsense, and its accompanying PR silliness.

And speaking of being spared, Judge Kimball asks that "the parties" not deluge the court with newly unsealed documents. That would be IBM. I haven't seen any from SCO yet. The instructions are to file a notice only if it's being unsealed. If redacted, then they file a notice and also file the redacted document.

Here's the Order as text, and my deepest thanks to Henrik Grouleff for stepping in and fixing my attempt at a table and redoing the HTML so it looks nice:

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

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

CENTRAL DIVISION


THE SCO GROUP, INC.,
Plaintiff/Counterclaim-
Defendant,
vs.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant/Counterclaim-
Plaintiff.


ORDER



Civil No. 2:03CV294 DAK



This matter is before the court on (1) Plaintiff The SCO Group, Inc.’s (“SCO”) Motion to Compel IBM to Produce Samuel J. Palmisano for Deposition, (2) SCO’s Motion for Leave to File Third Amended Complaint, and issues pertaining to the parties’ proposed Amended Scheduling Orders. A hearing on the motions was held on April 21, 2005. The court also heard brief argument on IBM’s Motion for Entry of Order Limiting Scope of IBM’s Ninth Counterclaim, which was not set for argument, but which is related to SCO’s Motion for Leave to File Third Amended Complaint. At the hearing, IBM was represented by David R. Marriott and Todd M. Shaughnessy. SCO was represented by Sean Eskovitz, Edward Normand, and Brent O. Hatch. Before the hearing, the court considered carefully the memoranda and other materials submitted by the parties. Since taking the motions under advisement, the court has further considered the law and facts relating to the motions. The court has also considered the

1

letter dated April 25, 2005, sent to the court from SCO’s counsel and also the letter dated April 28, 2005, sent to the court from IBM’s counsel in response to SCO’s April 25, 2005 letter. Now being fully advised, the court renders the following Order.

I. SCO’S MOTION TO COMPEL IBM TO PRODUCE SAMUEL J. PALMISANO FOR DEPOSITION

SCO Seeks to Compel IBM to Produce its Chairman and Chief Executive Officer, Samuel J. Palmisano, for Deposition. IBM argues that SCO has failed to demonstrate that Mr. Palmisano has unique personal knowledge of the claims in the instant suit and that the information sought by SCO is available from other sources.

The court finds that Mr. Palmisano could have unique personal knowledge related to the claims in this action. Thus, IBM must produce Mr. Palmisano for a deposition. To minimize the disruption of IBM’s operations, SCO has agreed to depose Mr. Palmisano in New York. Although SCO seeks a seven-hour deposition, the court imposes a limit of four hours, not including any breaks taken during the deposition.

II. SCO’S MOTION TO FILE THIRD AMENDED COMPLAINT AND IBM’S MOTION TO LIMIT SCOPE OF NINTH COUNTERCLAIM

In its Ninth Counterclaim, IBM seeks declaratory judgment that “IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through the reproduction, improvement, and distribution of AIX and Dynix.” IBM, however, seeks to limit the scope of the Ninth Counterclaim, arguing that it intended to seek only a declaration that because IBM has not breached IBM’s license agreements with AT&T, and because SCO’s purported termination of those licenses is invalid, IBM’s continued distribution of AIX and

2

Dynix products does not infringe SCO’s alleged copyrights. In seeking a narrow interpretation of its Ninth Counterclaim, IBM contends, among other things, that the Ninth Counterclaim must be read in the context in which it was asserted. At that time, SCO had sued IBM for copyright infringement with respect to its continued distribution of AIX and Dynix, but it had not sued IBM for copyright infringement with respect to other non-Linux activities. IBM asserts that SCO had not even threatened to sue IBM for copyright infringement with respect to non-Linux activities other than IBM’s “post-termination” distribution of AIX and Dynix. Thus, IBM claims, it did not have a reasonable apprehension of being sued by SCO, thus there was not a case or controversy, and IBM could not have properly sued SCO for a declaration of noninfringement with respect to IBM’s non-Linux activities, other than the “post-termination” distribution of AIX and Dynix. Moreover, IBM argues that it should not be required to litigate a claim it did not intend to make, does not believe it asserted, and has no reason to pursue.

SCO, on the other hand, claims that IBM is attempting to recharacterize its Ninth Counterclaim now that SCO has found clear evidence that IBM infringed SCO’s copyrights. Based on this purported evidence, SCO seeks not only to defend against IBM’s Ninth Counterclaim, but to add a claim for affirmative relief. Specifically, SCO seeks to assert a cause of action for copyright infringement based on IBM’s alleged unauthorized use of copyrighted SCO code in IBM’s AIX for Power products.

The court will permit IBM to narrow the scope of its Ninth Counterclaim. In the context in which the Ninth Counterclaim was asserted, the court finds that IBM did not intend for the counterclaim to be interpreted as broadly as it has been interpreted. Having determined that the Ninth Counterclaim was not intended to sweep so broadly, SCO’s proposed amendment is no

3

longer the mirror-image of IBM’s Ninth Counterclaim. To permit the proposed amendment would expand this already sizable and complex litigation and would serve only to delay its resolution. Furthermore, SCO has twice amended its Complaint during this litigation, and the deadline for seeking leave to further amend has long-since passed. SCO has not demonstrated the “extremely compelling circumstances” required by this court’s June 10, 2004 Order. In addition, it has not demonstrated “good cause” under Rule 16(b) of the Federal Rules of Civil Procedure, and the court finds that SCO has unduly delayed seeking leave to assert the proposed cause of action. It appears that SCO–or its predecessor–either knew or should have known about the conduct at issue before it filed its original Complaint. Accordingly, the court declines to permit the filing of a Third Amended Complaint.

III. REVISED SCHEDULING ORDER

Having considered the parties’ proposed Amended Scheduling Orders and the briefing related to the proposed Orders, the court sets forth the following deadlines:

EVENT

DEADLINE

IBM’s Complete Production of
Discovery Pursuant to the
Order of April 20, 2005

August 1, 2005

Interim Deadline for Parties to
Disclose with Specificity All
Allegedly Misused Material
Identified to Date and to
Update Interrogatory
Responses Accordingly

October 28, 2005

Final Deadline for Parties to
Identify with Specificity All
Allegedly Misused Material

December 22, 2005

4

Close of All Fact Discovery
Except As to Defenses to
Claims Relating to Allegedly
Misused Material

January 27, 2006

Close of All Remaining
Discovery (i.e., Fact Discovery
As to Defenses to Any Claim
Relating to Allegedly Misused
Material)

March 17, 2006

Initial Expert Reports

April 14, 2006

Opposing Expert Reports

May 19, 2006

Rebuttal Expert Reports

June 16, 2006

Final Deadline for Expert
Discovery

July 10, 2006

Dispositive Motions

July 28, 2006

Oppositions to Dispositive
Motions

September 1, 2006

Reply Briefs on Dispositive
Motions

September 29, 2006

Rule 26(a)(3) Disclosures

January 12, 2007

Final Pretrial Order

January 19, 2007

Deadline for Exchanging
Proposed Jury Instructions1

January 22, 2007

Motions in Limine

January 26, 2007

Special Attorney Conference
and Settlement Conference

January 30, 2007

5

Oppositions to Motions in
Limine

February 5, 2007

Reply Briefs on Motions in
Limine

February 9, 2007

5-week Jury Trial

February 26, 2007



IV. UNSEALING OF DOCUMENTS

The parties have been in the process of unsealing various documents. To ease the burden on the Clerk’s Office, the court requests that the parties comply with the following procedure for all papers that are unsealed in the future.

If a party seeks to unseal an entire document, that party shall file only a Notice that sets forth the name and docket number of the document to be unsealed. The Clerk’s Office will then unseal that document. The parties shall not refile the entire document.

If, however, only parts of a document are to be unsealed (i.e., various exhibits from an appendix containing many exhibits), that party shall file a Notice indicating each specific paper to be unsealed, the docket number of the document containing the papers, and actual copies of each paper to be unsealed.

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that (1) SCO’s Motion to Compel IBM to Produce Samuel J. Palmisano for Deposition is GRANTED; (2) SCO’s Motion for Leave to File Third Amended Complaint is DENIED, (3) International Business Machines Corp.’s (“IBM”) Motion for Entry of Order Limiting Scope of IBM’s Ninth Counterclaim is

6

GRANTED. IBM is directed to file a proposed Order that restates its Ninth Counterclaim.2 An Amended Scheduling Order is set forth above, as is a procedure to follow when unsealing documents that were previously filed under seal.

DATED this 1st day of July, 2005.



BY THE COURT:

______[signed]______
DALE A. KIMBALL
United States District Judge

7



1Approximately six weeks prior to trial, the court will send to the parties a Trial Order that sets forth deadlines regarding the exchange of jury instructions between the parties, filing of stipulated instructions and proposed instructions to which the parties could not agree, objections to proposed instructions, and responses to the objections. In the Trial Order, the court will also provide deadlines for filing proposed voir dire and proposed special verdict forms.

2IBM has previously submitted a proposed Order on this issue, but the language of the proposed Order is less than clear. Thus, the court directs IBM to file another proposed Order that clarifies the scope of the Ninth Counterclaim.


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