decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
IBM's Unsealed Opposition to SCO's Motion for Leave to File 3d Amended Complaint - as text
Tuesday, July 05 2005 @ 04:09 AM EDT

If you wonder what happened over the weekend while you were at the beach or at the family barbecue, here's what happened: IBM won big when SCO's Motion for Leave to File Third Amended Complaint was denied, so SCO can't add the claims about AIX on Power they told their pals in the media were going to knock IBM to its knees or whatever. That is over, unless SCO is nuts and appeals. A trial date has been set. I wonder when the last journalist will figure out that SCO isn't such a "reliable source"? Judge Dale Kimball very properly said it's too late to raise all that now:

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.

You can see why the judge ruled as he did when you read this now-unsealed Opposition to SCO's Motion for Leave to File a Third Amended Complaint Pursuant to Federal Rules of Civil Procedure 15(a) and 16(b) [PDF]. Our thanks to Laomedon and Steve Martin for the text version.

So much for "we only just found out from a leaked email that IBM used SVR4 in AIX on Power. We are shocked, shocked..." Puh-lease.

Frankly, even if the fix were in, no judge would dare to rule any differently than Judge Kimball did on this motion, I don't think, after reading this document, because the weight was all on IBM's side. Even a crooked judge has to pretend to be straight. Judge Kimball has shown himself to be an honorable man to date, but even if he were not, when you read this document, ask yourself, what else could he do but rule in IBM's favor? It is in this document that you can see most of the facts IBM brought into evidence. There was more at the April hearing, and you can review that as well.

By the way, I ended up watching a TV show over the weekend I normally don't watch, which can happen when you are visiting. And it was all about a crooked detective and a crooked judge, and I was thinking, on TV such things are assumed. In real life, it's not so common, actually, at least not in my experience. It is definitely not the first thing you should think. And when a judge *is* on the take, usually the lawyers that practice in front of the judge know it. So, if a judge rules differently than you hoped, don't leap to ugly conclusions. Percentage-wise, your odds of being right are not good, from where I sit. Anyway, human imperfection is more than enough to explain most bad rulings. And it is also possible for two honorable people to disagree about what the right decision should be in a particular matter. If you're married, you know what I mean.

Then there is one more factor, in my view. When one is an honorable man or woman, someone whose word is their bond, who doesn't lie or cheat, and who loves people, it takes a much longer time to figure out you are being lied to or cheated, because it *isn't* the first thing you think. You can't recognize something you've never seen before and don't have in you.

That's why hustlers in New York City look for folks with cameras around their necks who are looking up at the tall buildings. They know they are tourists, not hard-bitten New Yorkers, who keep their gaze firmly on a horizontal plane, so as to keep an eye out for anything that moves suddenly in their direction, and a strong grip on their pocketbooks to boot. Tourists are easier to spin, because New Yorkers expect the worst. They plan for it. Sad, but true.

So when a decent person is lied to, when you start to think you may be being lied to or cheated, you say to yourself, "That can't be it, can it? No one would tell a big lie like that, would they? Who'd do something so unethical, so mean?" It is so outside your experience, it takes time to even absorb it. I know that before I did Groklaw, I never witnessed the kinds of things that I have seen and heard and experienced and written about since. It's been an education. Frankly, it's one I'd rather have skipped, but I know one thing for sure. I spot liars now more quickly, and I discern the provocateurs more easily, and my moral outrage is deeper, too, because I measure it all more accurately and realistically now.

Personally, I think it may be a bit like that with Judge Kimball, that he is an honest person watching some things that he wouldn't do himself in a million years, not only Kimball but his clerk and Judge Wells and her clerk. I think we saw a hint of that in Judge Wells' "can't we all just get along" order. There was a naive sweetness to it that does her and her staff credit as people but that is worrisome in a judge dealing with SCO v. IBM. Might it be that, like tourists in Times Square, they are saying to themselves, "This can't be just a scam, can it?"

Of course, much of the delay we have witnessed has simply been because of having to take time to decide issues like this, issues that "SCO -- or its predecessor -- either knew or should have known" but asserted it didn't know and then threw motions at the court that had to be worked through to establish as a fact what SCO or its predecessor either knew or should have known already. Years ago. Some of you would like the judge to hit them on the head with his gavel for it, but that isn't how it works. How it works is, their motion gets denied. Eventually they lose the case. And the whole world is watching and concludes it appears SCO was not so up-front in their claims in a court of law.

Oh, that last part? It's cumulative.

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

SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address]
[phone]
[fax]


CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[phone]
[fax]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

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

INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant/Counterclaim-Plaintiff.
IBM'S UNSEALED OPPOSITION TO SCO'S
MOTION FOR LEAVE TO FILE A THIRD
AMENDED COMPLAINT PURSUANT TO
FEDERAL RULES OF CIVIL PROCEDURE 15(a)
AND 16(b)
[Docket No. 337]

Civil No. 2:03CV-0294 DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells

1

SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address]
[phone]
[fax]


CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[phone]
[fax]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

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

INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant/Counterclaim-Plaintiff.
IBM'S OPPOSITION TO SCO'S MOTION FOR
LEAVE TO FILE A THIRD AMENDED
COMPLAINT PURSUANT TO FEDERAL RULES
OF CIVIL PROCEDURE 15(a) AND 16(b)

FILED UNDER SEAL

Civil No. 2:03CV-0294 DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells

2

Defendant/Counterclaim-Plaintiff International Business Machines Corporation ("IBM") respectfully submits this opposition to Plaintiff/Counterclaim-Defendant The SCO Group, Inc.'s ("SCO") Motion for Leave to File a Third Amended Complaint.

Preliminary Statement

SCO's motion for leave to file yet another amended complaint is just one more attempt by SCO to prolong unnecessarily the resolution of this case, which has been pending for more than 20 months. SCO has already twice amended its complaint. SCO should not be allowed to amend its complaint yet again, just months before the close of discovery, when the plain purpose of the amendment is merely to set up another request for a discovery extension so that SCO may continue to pursue a useless fishing expedition.

The premise of the new claim asserted by SCO in its proposed complaint is that IBM has infringed SCO's purported UNIX copyrights, not just by its copying of the Linux operating system as SCO's present complaint alleges, but also by its copying of IBM's own "AIX for Power" operating system.[1] There is no merit to this claim. The evidence will establish that IBM has a valid license to the UNIX source code included in its AIX products, a license obtained as part of the Joint Development Agreement entered into by IBM and SCO's alleged predecessor-in-interest, The Santa Cruz Operation, Inc. ("Santa Cruz") in 1998. Even setting aside, however, the question of whether IBM in fact has a license for the allegedly infringing code which the Court obviously need not decide on this motion there is no reason why the current case should be broadened to include SCO's new claim at this late date.

Since SCO's motion for leave to amend was filed eight months after the deadline set by the Court for such motions (and more than 19 months after SCO filed its original complaint), SCO must satisfy the requirements of both Rule 16(b) and 15(a) of the Federal Rules of Civil

3

Procedure. Under Rule 16(b), a court should not modify a scheduling order to allow for the late amendment of pleadings "except upon a showing of good cause". Under Rule 15(a), although leave to amend "shall be freely given when justice requires", a court may deny leave to amend where there is a showing of (1) undue delay, (2) undue prejudice to the opposing party, (3) bad faith or dilatory motive on the part of the movant or (4) futility of the proposed amendment. In this case, SCO cannot satisfy either Rule 16(b) or Rule 15(a).

First, SCO's motion should be denied under Rule 16(b) because SCO has not shown, and cannot show, "good cause" for its late application to amend its pleadings. Despite its claim to have only recently discovered facts supposedly supporting its new claim for copyright infringement against IBM, SCO unquestionably was in possession of such facts long before October 2004, indeed, long before it ever filed its original complaint in March 2003. Documents within SCO's possession that were produced to IBM in this lawsuit reflect the very facts that SCO now asserts form the basis of its new claim that IBM included UnixWare 7/UNIX System V Release 4 ("UnixWare/SVR4") code in its AIX for Power product. In fact, publicly available industry reports and IBM publications issued at the time AIX for Power was released in 2001 expressly state that the product contained UnixWare/SVR4 code. SCO's claim, therefore, that it did not know, and could not have known, until October 2004, that any UnixWare/SVR4 code was included in AIX for Power is disingenuous at best.

Second, SCO's motion should further be denied under Rule 15(a) because (1) SCO unduly delayed in bringing this motion, given that it plainly knew (or should have known) of the facts supporting its claim long before it even filed its original complaint; (2) SCO's motive in seeking the new amendment is merely to allow it to pursue another extension of discovery in this case (which the Court has otherwise already refused to grant SCO); (3) IBM would be prejudiced by the addition of an entirely new copyright claim just a few months before the close of discovery in a case that has already been pending for more than a year and a half; (4) SCO's new

4

copyright infringement claim is in any case futile because it has not been brought in the proper venue and is barred by an applicable statute of limitations.

SCO's motion for leave to amend further its pleadings should be denied. SCO should not be allowed to continue to perpetuate the fear, uncertainty and doubt it has created in the marketplace concerning Linux simply by devising new ways to delay the resolution of this case.

Argument

I.SCO'S MOTION SHOULD BE DENIED UNDER RULE 16(b) BECAUSE SCO CANNOT SHOW GOOD CAUSE FOR ITS UNTIMELY FILING.

Since SCO filed its motion to amend eight months after the Court's deadline for filing such motions had passed, SCO must first satisfy the requirements of Rule 16(b).[2] See Deghand v. Wal-Mart Stores, Inc., 904 F. Supp. 1218, 1221 (D. Kan. 1995); Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000). Rule 16(b) provides that a scheduling order "shall not be modified except upon a showing of good cause and by leave of the [Court]". Fed. R. Civ. P. 16(b). "The 'good cause' standard primarily considers the diligence of the party seeking the amendment." Deghand, 904 F. Supp. at 1221. Thus, SCO "must show that despite due diligence it could not have reasonably met the scheduled deadlines." Id. at 1221 (emphasis added); accord Rowen v. New Mexico, 210 F.R.D. 250, 252 (D.N.M. 2002).

In this case, SCO has not demonstrated because it cannot do so that there is good cause for SCO's untimely filing. As we have noted before, in order to prevail on a claim for copyright infringement against IBM, SCO must show that (1) it owns valid copyrights and (2) IBM copied protectable elements of SCO's copyrighted work. See Mitel, Inc. v. Iqtel, Inc., 124

5

F.3d 1366, 1370 (10th Cir. 1997) (stating elements of copyright infringement); accord Country Kids `N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1284 (10th Cir. 1996). Here, although SCO claims to have only recently discovered that IBM copied SCO's UnixWare/SVR4 code into its AIX for Power product, SCO has long been in possession of the very facts that it now claims serve as the basis for its new infringement claim.[3] Accordingly, SCO has no excuse for waiting eight months after the deadline for amending pleadings has passed to bring the instant motion.

As an initial matter, the agreement at the heart of SCO's new claim, the Joint Development Agreement ("JDA") entered into by Santa Cruz SCO's alleged predecessor-in- interest and IBM in October 1998, specifically envisioned IBM's use of the purportedly copyrighted UnixWare/SVR4 code in IBM's AIX products, so it should not have come as a surprise to SCO that IBM in fact included UnixWare/SVR4 code in AIX for Power. Indeed, the JDA, which set forth the parties' rights and obligations with respect to the joint development project known as "Project Monterey", specifically gave IBM a royalty-free license to include such UnixWare/SVR4 code in its products, including AIX for Power, the allegedly infringing product here. (See Shaughnessy Decl. Ex. 1 2.0(d)(2).) Geoff Seabrook, Santa Cruz's Senior Vice President for Development, memorialized the parties' basic understanding in a September 10, 1998 memorandum:

Both companies [Santa Cruz and IBM] will exchange technology to be used in [Santa Cruz's] UnixWare 7 on the IA32 and [IBM's] AIX on PPC [Power]. The purpose of these exchanges is to create a compatible family of products, together with the resultant IA64 product [that was to be developed jointly by Santa Cruz and IBM]. It is intended that the effective value of these exchanges will be equivalent, and that no royalties will be due to either company as a result of these exchanges. The zero royalty agreement is also to

6

allow our engineering teams to freely select the best available technology, without worrying about any royalty impact.

(Shaughnessy Decl. Ex. 2, at 1710141629.) In any case, even setting aside whether the JDA gives IBM a royalty-free license to the code which, as stated, the Court need not decide on this motion, and which IBM will therefore not debate on the merits here SCO was well aware (or should have been had it exercised due diligence) that IBM did in fact incorporate certain UnixWare/SVR4 code into its AIX for Power product.

First, documents within SCO's possession that were produced in this litigation reflect that Santa Cruz (and thus, SCO, by extension) had long been aware that IBM intended to, and did, incorporate purportedly copyrighted UnixWare/SVR4 code into AIX for Power, the allegedly infringing product.

For example, a number of documents produced from SCO's files show that Santa Cruz and IBM intended from the outset that Project Monterey would consist of a "family" of three operating systems, Santa Cruz's UnixWare/SVR4 operating system, IBM's AIX for Power operating system, and the jointly-developed Monterey operating system, all of which would share certain source code.[4] Thus, the documents reflect that certain UnixWare/SVR4 code would be incorporated into IBM's AIX for Power product, just as certain AIX code would be incorporated into Santa Cruz's UnixWare/SVR4 product:

  • An undated joint Santa Cruz/IBM document, titled "Genus: An IBM/SCO UNIX Project Marketing Plan Development", outlined the parties' intent to create a "family" of UNIX products "UnixWare (IA32), AIX (PPC [Power]) and new [Monterey] IA64 product)". These products, including specifically UnixWare/SVR4 and AIX for Power, were to be "significantly enhanced by cross pollination of technologies, middleware and applications from other family members". (Shaughnessy Decl. Ex. 3, at SCO1233397 (emphasis added).)

  • A November 4, 1998 presentation created by Santa Cruz regarding Project Monterey stated explicitly that the plan was to create "a single UNIX product line that spans IA-32 [UnixWare/SVR4], IA-64 [Monterey] and IBM Power processors [AIX for Power]". (Shaughnessy Decl. Ex. 4, at SCO1311081.)

    7

    Among other things, Santa Cruz would be "supplying IBM with UnixWare 7 APIs and technologies for [inclusion in] AIX [for Power]". (Id, at SCO1311082 (emphasis added); see also id. at SCO1311085 (noting that the parties intended to create "AIX with UnixWare++" for "Power PC" (emphasis added).))

  • On February 19, 1999, Santa Cruz and IBM together issued Version 1.0 of the "Monterey-64 Release 1 Product Requirement Specification" ("PRS").(See Shaughnessy Decl. Ex. 5.) The PRS states unambiguously that one of the principal objectives of Project Monterey was the development of a "family" of compatible UNIX products, including the jointly-developed "Monterey-64" product, Santa Cruz's "Unixware 7 for IA-32" and IBM's "AIX for Power PC", and that the Monterey-64 product would "maximize the amount of common source code shared with AIX PPC". (Id. at SCO1235277 (emphasis added).)[5]

Perhaps even more telling are the documents within SCO's possession concerning the AIX for Power product in particular, which expressly state that certain UnixWare/SVR4 code was included in AIX for Power:

  • A September 2, 1998 document titled "IBM-SCO Family Unix Technical Proposal" sets forth specific "Technology from U[nix]W[are]" intended by the parties to be incorporated into AIX for Power. (Shaughnessy Decl. Ex. 7, at SCO1310626 (emphasis added).)

  • An October 1999 presentation prepared by Miles Barel, IBM's UNIX Marketing Program Director, noted the Project Monterey partners' intent to "aggressively grow and enhance [the] AIX - Power offering" by including "[c]ontributions from SCO's UnixWare". (Shaughnessy Decl. Ex. 8, at SCO1230472 (emphasis added).)

    8

  • In a February 2000 presentation prepared for the Santa Cruz Partner Conference, Tamar Newberger of Santa Cruz stated that as part of the Project Monterey strategy, "[e]nhancements from SCO's UnixWare" would be included to "aggressively grow and enhance [the] AIX-Power offering". (Shaughnessy Decl. Ex. 9, at SCO1352694 (emphasis added).)

  • In an August 10, 2000 e-mail, John Boland of Santa Cruz distributed internally a press release prepared by IBM concerning AIX 5L, the release of AIX that included technology from UnixWare/SVR4. The press release makes clear that AIX 5L for Power, like AIX 5L for IA-64, contained "key technologies" from "UnixWare" and "UNIX System 5 [SVR4]". (Shaughnessy Decl. Ex. 10, at SCO1374969-70 (emphasis added).) In particular, the release noted that "[a]mong the UNIX System V [SVR4] technologies to be incorporated in this release is the SVR4 printing subsystem". (Id. at SCO1374970.)

  • A May 2, 2001 print-out of the webpage for AIX 5L, which was jointly sponsored by IBM, Santa Cruz and Intel, states that AIX 5L "for both Intel Itanium- and IBM POWER-based systems" combines IBM's AIX product "with the best technologies from Santa Cruz's UnixWare operating system". (Shaughnessy Decl. Ex. 11 (emphasis added).)

  • An undated joint Santa Cruz/IBM document summarizing the differences between AIX for Power and AIX for IA-64 notes that the two products have in "common" the "[UnixWare] SVR4 print subsystem". (Shaughnessy Decl. Ex. 12, at SCO1242161 (emphasis added).)

SCO has therefore known (or should have known) for more than three years and certainly before the February 2004 deadline for amending pleadings that IBM copied at least certain UnixWare/SVR4 technology into the AIX for Power product. Even if SCO were not imputed with Santa Cruz's knowledge (which it should be, since SCO claims to be Santa Cruz's successor-in-interest to the UNIX assets and the above-cited documents were produced to IBM by SCO), if SCO had exercised any diligence during and upon its acquisition of Santa Cruz's assets in 2001, it would have uncovered the facts it now claims it only learned upon review of IBM's document production in this case. Given that Santa Cruz understood at least as early as August 2000 that IBM had copied UnixWare/SVR4 code into AIX for Power, there is plainly no good cause for SCO to have waited until October 2004 to attempt to assert a claim against IBM relating to such actions.

9

Second, numerous publicly-available product announcements and industry reports issued years ago also plainly reflect the inclusion of UnixWare/SVR4 code in AIX for Power specifically AIX 5L, the release of AIX for Power (and for the Intel IA-6A processor) that contained technology from UnixWare/SVR4.

For example:

  • An August 2000 report (which, incidentally, was produced by SCO in this litigation) prepared by IDC on the beta release of AIX 5L lists the [UnixWare] SVR4 printing subsystem as one of the features included in the release. (Shaughnessy Decl. Ex. 13, at SCO1294140.)

  • An August 8, 2000 article in The Register noted that AIX 5L, which ran on both Intel and Power processors, included contributions from "SCO UnixWare and UNIX System V [UnixWare/SVR4] standard technologies".(Shaughnessy Decl. Ex. 14.)

  • An August 10, 2000 article in InfoWorld discussing AIX 5L expressly stated that the product would be offered for both the IA-64 and Power platforms and contained "Unix System 5 [UnixWare/SVR4] support, including the SVR4 printing subsystem". (Shaughnessy Decl. Ex. 15.)

  • A June 2001 industry report prepared by the Andrews Consulting Group evaluating the newly-released AIX 5L described the product as "a single UNIX for both PowerPC and IA-64." (Shaughnessy Decl. Ex. 16, at 12.) In describing the features of AIX 5L, the report states: "AIX 5L supports a number of Unix System V Release 4 (SVR4) commands and utilities, especially in the printing subsystem." (Id. at 17.)

  • A September 24, 2001 article in VNU Net discussing AIX 5L noted that the operating system "can be used with both IBM PowerPC processors and the emerging Intel IA-64 Itanium chips" and that AIX 5L included a "SVR4-compatible printing subsystem". (Shaughnessy Decl. Ex. 17.)

The product announcements and manuals published openly by IBM concerning the AIX for Power product are equally explicit regarding the inclusion of UnixWare code in the product:

  • IBM's April 17, 2001 Software Announcement introducing AIX 5L for Power expressly states that UnixWare/SVR4 file spooling subsystem and packaging commands were part of the product. (Shaughnessy Decl. Ex. 18, at 3.)

    10

  • IBM provided still more information about the UnixWare/SVR4 Printing Subsystem and Packaging Commands that were included in AIX 5L for Power in the "Announcement Supplemental Information" document also issued by IBM on April 17, 2001. (Shaughnessy DecI. Ex. 19, at 8.)

  • The 2001 "Release Notes" for "AIX 5L for POWER Version 5.1" specifically reference the inclusion of the "System V [UnixWare/SVR4] Printing Subsystem" in AIX. (Shaughnessy Decl. Ex. 20, at 17-18.)

  • The March 2001 "Printing for Fun and Profit under AIX 5L" publication, which is available on IBM's website, is devoted in large part to discussing the operation of the System V [UnixWare/SVR4] print subsystem in AIX 5L. (Shaughnessy Decl. Ex. 21.)

  • The June 2001 "AIX 5L Differences Guide" publication, which is available on IBM's website, specifically notes that "[t]he System V [UnixWare/SVR4] print subsystem was ported from SCO's UnixWare 7 to AIX 5L". (Shaughnessy Decl. Ex. 22, at 206 (emphasis added).)

  • The January 2002 "Problem Solving and Troubleshooting in AIX 5L" publication, which is available on IBM's website, devoted an entire section to "Troubleshooting for System V [UnixWare/SVR4] printing". (Shaughnessy Deci. Ex. 23, at 389-402.)

Thus, even ignoring the fact that IBM was given a license to include UnixWare/SVR4 code in its AIX for Power product, and even if SCO were permitted to ignore all of the documents in its own possession that expressly reference IBM's use of UnixWare/SVR4 code in AIX for Power, the most basic of investigations of publicly available documents relating to AIX for Power would have revealed that IBM had copied UnixWare/SVR4 code into the product.

***

In sum, SCO has failed abjectly to demonstrate good cause for its untimely filing of the instant motion. In light of the extensive information contained in SCO's own files and from publicly available sources that IBM had copied UnixWare/SVR4 technologies into AIX for Power, SCO's contention that it "did not know (and could not reasonably have determined) that IBM had improperly converted SCO's [UnixWare/SVR4] code and incorporated that code in

11

IBM's AIX for Power product" until it reviewed discovery produced by IBM (SCO Mem. at 16) is unquestionably and demonstrably false. The "new" facts that SCO claims only recently to have discovered are in reality nothing of the sort. It is plain that SCO knew (or at least with due diligence should have known) the facts that it claims form the basis of its new copyright infringement claim well before it even filed its original lawsuit against IBM. SCO's motion should therefore be denied.

II. SCO'S MOTION SHOULD ALSO BE DENIED UNDER RULE 15(a).

Even if SCO could satisfy the requirements of Rule 16(b) which it cannot SCO's motion for leave to amend its complaint should still be denied under Rule 15(a). Although Rule 15(a) provides that leave to amend "shall be freely given when justice requires", the Court may deny a motion to amend where there is a showing of (1) undue delay, (2) undue prejudice to the opposing party, (3) bad faith or dilatory motive on the part of the movant or (4) futility of the proposed amendment. See Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993) (affirming denial of motion to amend for untimeliness where movant filed motion four months after deadline and knew or should have known facts underlying amendment). In this case, all four factors weigh against SCO's motion.

A. SCO Has Delayed Unduly In Making This Motion.

As discussed above (at 4-11), SCO has plainly delayed unduly in making the instant motion. SCO brought this motion more than 19 months after it filed its original complaint and eight months after the deadline imposed by the Court for amending pleadings. As SCO cannot articulate a credible or justifiable reason for this substantial delay since, as discussed above (at 4-11), SCO has known (or should have known) of the facts purportedly supporting its new claim for copyright infringement since before it even filed its original complaint the delay alone is reason to deny the motion. See U.S. West, 3 F.3d at 1365-66 ("It is well-settled in this circuit

12

that untimeliness alone is a sufficient reason to deny leave to amend, especially when the party filing the motion has no adequate explanation for the delay." (citations omitted)); see also Las Vegas Ice and Cold Storage Co. v. Far West Bank, 893 F.2d 1182, 1185 (10th Cir. 1990) ("Where the party seeking amendment knows or should have known of the facts upon which the proposed amendment is based but fails to include them in the original complaint, the motion to amend is subject to denial.").

Courts in similar circumstances have denied motions for leave to amend when the plaintiff has unreasonably delayed in bringing its motion. See, e.g., U.S. West, 3 F.3d at 1365-66 (affirming denial of motion to amend made four months after deadline); Panis v. Mission Hills Bank, N.A., 60 F.3d 1486, 1494-95 (10th Cir. 1995) (affirming denial of motion to amend made six months after the deadline); Pallottino v. City of Rio Rancho, 31 F.3d 1023, 1026 (10th Cir. 1994) (affirming denial of motion to amend made eight months after original complaint was filed and more than five months after previous amended complaint); Woolsey v. Marion Labs, 934 F.2d 1452, 1462 (10th Cir. 1991) (affirming denial of motion to amend made 17 months after filing of original complaint); Heard v. Bonneville Billing and Collections, Inc., 1998 U.S. Dist. LEXIS 23035, at *4-*7 (D. Utah Nov. 30, 1998) (denying motion to amend where movant should have been aware of facts giving rise to amendment at outset of action but waited until discovery nearly complete to file motion) (attached hereto as Exhibit A).

B. SCO Has Brought This Motion Solely In An Attempt Further To Delay The Resolution Of The Case.

SCO's motion should further be denied because the motion has plainly been brought only to seek further delay in the resolution of this case. As we have described in other filings and will not repeat again here, it has been SCO's strategy from the outset of this litigation to seek to delay

13

the proceedings, apparently to further the fear, uncertainty and doubt that SCO has created concerning Linux and IBM's products and services.[6]

The instant motion is just part and parcel of SCO's delay tactics. In particular, this motion seems crafted specifically to evade the Court's admonition in its June 10, 2004 Order that the scheduling order in this case would not be modified again "absent extremely compelling circumstances". (6/10/04 Order at 3.) Since the issuance of the Court's Order, SCO has been regularly noting in briefs its dissatisfaction with the current discovery schedule and its intention to bring yet another motion to amend the scheduling order. Most recently, SCO argued on September 24, 2003 in support of its ironically-titled motion to "enforce" the scheduling order that "a modification of the schedule will inevitably become necessary" and that SCO intended to "make an appropriate motion to this Court" after Magistrate Judge Wells ruled on certain discovery issues. (See SCO's Consolidated Reply Mem. at 18.) Instead of making any properly-supported motion to amend the scheduling order (or waiting for Judge Wells to rule for that matter), however, SCO has instead attempted to help itself to an extension by simply filing a motion to assert a claim against IBM that requires new and different discovery just a few months before discovery is supposed to end. If SCO's instant motion to amend were granted, it would no doubt be followed immediately by a motion from SCO seeking to extend discovery in this case.

The timing of SCO's motion is particularly instructive. SCO filed this motion on October 14, 2004, just two weeks after the Court denied SCO's emergency request for a

14

scheduling conference, at which SCO by its own admission intended to propose an extension of discovery. This timing is not coincidental. It is clear from SCO's actions (even setting aside IBM's license to use UnixWare/SVR4 code in its AIX for Power product and SCO's long-term knowledge of that use) that at least as of August 2004, SCO was in possession of the very IBM internal documents that it has appended to the instant motion indeed, it was disclosing the substance of those documents (we believe improperly) to the media. (See Shaughnessy Decl. Exs. 24 & 25 (reporting that SCO executives had discussed IBM documents produced during discovery with the press).) Yet, notably, SCO did not seek to amend its pleadings based on such documents until after this Court denied SCO's attempt informally to amend the scheduling order.

The facts and circumstances surrounding SCO's motion suggest that SCO's true motivation is merely to support its effort to delay unnecessarily the proceedings of this case. That is not proper, and SCO's motion should be denied. This Court has previously held that a party may not use the amendment process as a tactic for obtaining expanded discovery. See Proctor & Gamble Co. v. Haugen, 179 F.R.D. 622, 631 (D. Utah 1998), rev'd on other grounds, 222 F.3d 1262 (10th Cir. 2000) (denying motion to amend complaint where movant admitted that it only sought to amend in order to obtain discovery court had previously denied). Other courts have also denied motions to amend in similar circumstances. See, e.g., Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518-19 (10th Cir. 1990) (affirming denial of motion to amend where court determined that attempt to amend after deadline was tactical decision by attorneys); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139-40 (5th Cir. 1993) (affirming denial of motion to amend where the motion appeared to have been brought as a tactic to delay summary judgment); Hughes Aircraft Co. v. Nat'l Semiconductor Corp., 857 F. Supp. 691, 701 (N.D. Cal. 1994) (denying motion to amend where movant should have known about facts underlying amendment at time suit was filed and prior litigation tactics suggested bad faith).

15

C. The Addition Of Another New Claim To The Case Would Unduly Prejudice IBM.

SCO's motion should also be denied because allowing SCO to amend at this late date would unduly prejudice IBM. IBM has long stated its interest in having the important issues presented by this lawsuit resolved promptly, so that IBM and other Linux users may go about their business without any of the fear, uncertainty and doubt concerning Linux that SCO (in part through its multiple lawsuits) has fostered in the marketplace. Despite SCO's assertions to the contrary, the new claim SCO seeks to add at the eleventh hour will in fact expand the scope of the case and prejudice IBM's entitlement to a prompt resolution.

SCO's new claim, among other things, raises issues relating to the negotiation, execution and performance of the JDA between Santa Cruz and IBM and the specific contents of IBM's AIX for Power product issues which are not currently part of this case. To add this claim at this point in the discovery process, when there are just a few months left to go, would require (and has already required) IBM to divert time and resources away from the claims that are currently part of this case in order to conduct additional discovery and undertake additional motion practice relating to the new claim. SCO's attempt belatedly to inject another issue into the case is particularly prejudicial to IBM given that discovery on the claims in the case is nearly complete and IBM has already moved for summary judgment on SCO's principal claims and certain of IBM's counterclaims.

Although SCO contends that its proposed claim for copyright infringement could not be prejudicial on the grounds that it does not raise any issues beyond those already in the case, SCO's argument is based on a misreading of IBM's Ninth Counterclaim. The Ninth Counterclaim seeks only a declaration that SCO's purported termination of IBM's UNIX System V licenses the agreements specified in the first four counts in SCO's Second Amended Complaint is invalid and that SCO therefore has no claim for copyright infringement based on

16

such purported termination.[7] IBM's Ninth Counterclaim does not seek any declaration concerning any of IBM's rights and obligations under the Project Monterey JDA. Indeed, it would make little sense for IBM to bring a claim against SCO seeking a declaration of rights relating to the JDA since SCO was not a party to the JDA in the first place.

Tellingly, in support of its contention that the addition of this new copyright infringement claim would not require extensive additional discovery, SCO purports in its current motion (and in its proposed complaint) to have already analyzed its own UnixWare/SVR4 code and IBM's AIX code and identified 245,026 specific lines of "copied and derived code" from UnixWare/SVR4 in IBM's AIX for Power Version 5.1.0 and 260,785 specific lines of "copied and derived code" from UnixWare/SVR4 in IBM's AIX for Power Version 5.2.0. At the same time, of course, SCO continues to maintain both in opposition to IBM's pending motion for summary judgment on IBM's Tenth Counterclaim and in support of SCO's discovery motions pending before Magistrate Judge Wells that SCO is unable, without significant additional discovery from IBM and potentially thousands of additional man-years of expert work, to identify the specific lines of "copied and derived code" from UNIX that it claims is present in Linux. Indeed, SCO argued before this Court and Judge Wells that it could not capably perform any code comparisons between UNIX and Linux in a reasonable time frame without access to more discovery from IBM (concerning AIX no less).

Like its motions to "enforce" the scheduling order and for an emergency scheduling conference, SCO's motion for leave to amend represents just more gamesmanship. With the close of discovery fast approaching, SCO seeks to add a claim in order simply to extend discovery once more and forestall for as long as possible the resolution of its baseless claims against IBM. This last-minute request is prejudicial to IBM and should be denied.

17

D. SCO's Proposed Copyright Claim Is Futile.

SCO's motion should further be denied because the new claim SCO seeks to assert against IBM is futile in any event. It is well-settled in the Tenth Circuit that the Court "properly may deny a motion for leave to amend as futile when the proposed amended complaint would be subject to dismissal for any reason, including that the amendment would not survive a motion for summary judgment". Bauchman v. West High School, 132 F.3d 542, 562 (10th Cir. 1997). Here, SCO's new claim is futile because it has been brought in the wrong forum and is barred by a contractual statute of limitations.

In its opening brief, SCO "recognize[d] that the parties' JDA for Project Monterey contains a forum-selection clause for New York courts" that applies to the new claim brought by SCO. (SCO Mem. at 5.) That provision, Section 22.3 of the JDA, provides in relevant part: "Any legal or other action related to a breach of this Agreement must be commenced no later than two (2) years from the date of the breach in a court sited in the State of New York". (Shaughnessy Decl. Ex. 1 22.3.)[8]

Under Section 22.3 of the JDA, therefore, SCO's new claim for copyright infringement is subject to dismissal because it was not brought "in a court sited in the State of New York". Moreover, SCO's new claim is also subject to dismissal because it was not brought within the

18

two-year statute of limitations provided for in Section 22.3. SCO alleges in its own proposed complaint that IBM began distributing the AIX for Power product containing the allegedly infringing code "at least by October 2000". (Third Am. Compl. 229.) Thus, even under SCO's own theory of its claim, IBM first breached the JDA (and therefore began to commit copyright infringement) at least as early as October 2000, meaning SCO was required to bring a claim against IBM by October 2002.[9] As SCO did not bring the instant claim until October 2004, the claim is barred by the applicable statute of limitations.

SCO's only argument that Section 22.3 of the JDA should not be applied in this case is that IBM, by filing its Ninth Counterclaim against SCO, has waived the right to enforce Section 22.3. This argument has no merit. Section 22.11 of the JDA provides unambiguously that "[n]o ... waiver of any provision of this Agreement shall be effective unless it is set forth in a writing which refers to the provisions so affected and is signed by an authorized representative of each Party." (Shaughnessy Decl. Ex. 1 22.11.) IBM has never executed such a writing setting forth its intention to waive Section 22.3 of the JDA, and thus cannot be held to have waived its rights under that provision.

Moreover, and as discussed above (at 16), IBM's Ninth Counterclaim does not, and was never intended to, seek a declaration concerning IBM's rights under the Project Monterey JDA with Santa Cruz. Rather, the Ninth Counterclaim seeks a declaration that IBM's continued distribution of AIX after SCO's purported termination of IBM's UNIX System V licenses with AT&T did not infringe any of SCO's purported copyrights. There is therefore no basis for the Court to infer, as SCO suggests it should, that IBM has waived its rights under Section 22.3 by asserting its Ninth Counterclaim in this case.

19

Thus, since the new copyright infringement claim SCO seeks to add to the case should be dismissed under Section 22.3 of the JDA because it was brought both in the wrong forum and after the applicable statute of limitations had expired, allowing the claim to be added to the case would be futile. SCO's motion for leave to amend should therefore be denied.

Conclusion

We respectfully submit that enough is enough. SCO should be required to complete the discovery process concerning the claims and counterclaims that were timely pled in this case. Its consistent efforts to delay and derail that process should finally be put to rest. Accordingly, IBM respectfully requests that the Court deny SCO's Motion for Leave to File a Third Amended Complaint.

DATED this 30th day of November, 2004.

SNELL & WILMER L.L.P.
(signature)
Alan L. Sullivan
Todd M. Shaughnessy
Amy F. Sorenson

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler
David R. Marriott

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

Of counsel:

INTERNATIONAL BUSINESS
MACHINES CORPORATION
Donald J. Rosenberg
Alec S. Berman
[address]
[phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

20

CERTIFICATE OF SERVICE

I hereby certify that on they 30th day of November, 2004, a true and correct copy of the foregoing was hand delivered to the following:

Brent O. Hatch
Mark F. James
HATCH, JAMES & DODGE, P.C.
[address]

and was sent by U.S. Mail, postage prepaid, to the following:

Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]

Robert Silver
Edward Normand
Sean Eskovitz
BOIES, SCHILLER & FLEXNER LLP
[address]

(signature)
Amy F. Sorenson

21

(Exhibit A, LEXIS-NEXIS reproduction not transcribed, pages 22-27 of PDF)


CERTIFICATE OF SERVICE

I hereby certify that on the 27th day of June, 2005, a true and correct copy of the foregoing was sent by U.S. Mail, postage prepaid, to the following:

Brent O. Hatch
Mark F. James
HATCH, JAMES & DODGE, P.C.
[address]

Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]

Robert Silver
Edward Normand
Sean Eskovitz
BOIES, SCHILLER & FLEXNER LLP
[address]

(signature)
Amy F. Sorenson


  1. IBM developed versions of the AIX operating system to run both on computer processors developed by Intel Corporation and "PowerPC" computer processors. "AIX for Power" is the IBM AIX operating system that runs on "PowerPC" processors.

    (Back to main text)

  2. Where, as here, a court-ordered deadline to amend has passed, a court need not consider a motion to amend under Rule 15(a) unless the movant first satisfies the requirements of Rule 16(b). See E. Minerals & Chems. Co. v. Mahan, 225 F.3d 330, 340 (3d Cir. 2000) (affirming denial of motion to amend under Rule 16(b) standard where trial court concluded it need not reach Rule 15(a) argument in the absence of good cause shown); Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998) (affirming denial of motion to amend for lack of good cause even though movant had argued under more lenient Rule 15(a) standard).

    (Back to main text)

  3. SCO does not contend that it lacked knowledge of its purported ownership of the copyrights at issue prior to the deadline for amending pleadings. Notably, however, Novell, Inc. has publicly challenged SCO's ownership of such copyrights. Moreover, as stated in IBM's memoranda submitted in support of its motion for summary judgment on IBM's Tenth Counterclaim, SCO has so far failed to adduce evidence establishing SCO's ownership of the alleged copyrights.

    (Back to main text)

  4. The documents produced by SCO in this litigation have been marked with the prefix "SCO".

    (Back to the main text)

  5. Other documents created by Santa Cruz (but not produced by SCO) also reflect the understanding that UnixWare/SVR4 code was going to be included in the AIX for Power product. For example, in September 1999, Michael Orr of Santa Cruz drafted a joint statement to be issued by Santa Cruz and IBM emphasizing the parties' intent that AIX for Power would include code from Santa Cruz's UnixWare/SVR4 product. That statement provides:
    "IBM is providing [Santa Cruz] with AIX technology for inclusion in UnixWare and [Santa Cruz] is providing UnixWare technology to IBM for inclusion in AIX. Thus users should think of AIX (on PowerPC), UnixWare (on 1A32) and Monterey (on IA64) as becoming the same operating system over the next year or two. The end result of Project Monterey will be a single UNIX product line that runs on IA-32, IA-64, and PowerPC processors ..

    (Shaughnessy Decl. Ex. 6, at 181444070 (emphasis added).)

    (Back to the main text)

  6. In fact, SCO has even successfully sought to delay the deadline for amending pleadings in this case once already. The Court's original scheduling order issued on July 10, 2003 established October 1, 2003 as the deadline for the amendment of pleadings. SCO filed its First Amended Complaint on July 22, 2003 and, on September 26, 2003, filed a motion (which IBM opposed) seeking to extend the deadline for amending pleadings until February 4, 2004. The Court granted the motion and SCO filed its Second Amended Complaint on the last day permitted, February 4, 2004.

    (Back to the main text)

  7. In fact, IBM has offered to stipulate to this limitation on its Ninth Counterclaim.

    (Back to the main text)

  8. As SCO concedes, Section 22.3 of the JDA plainly applies to SCO's claim for copyright infringement because the claim is "related to" an alleged breach of the JDA. IBM could only be liable for copyright infringement if IBM exceeded the scope of the license to the purportedly copyrighted materials granted under the JDA. Thus, as is evident from SCO's opening brief and its proposed complaint, SCO's claim for copyright infringement necessarily depends on the interpretation and meaning of the JDA. In such circumstances, courts have routinely held that contractual forum selection clauses apply to other claims brought by a plaintiff, including claims for copyright infringement. See, e.g., Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600, 603 (7th Cir. 1994) (affirming application of contractual forum selection clause to trademark infringement claim when the resolution of the claim arguably depended on the construction of the agreement); Graham Tech. Solutions, Inc. v. Thinking Pictures, Inc., 949 F. Supp. 1427, 1432-33 (N.D. Cal. 1997) (applying contractual forum selection clause to copyright claim because copyright claim related to interpretation of the contract).

    (Back to the main text)

  9. SCO cannot rely on its contention that it did not discover IBM's allegedly wrongful conduct until recently to avoid Section 22.3. As an initial matter, the statute of limitations in Section 22.3 explicitly runs "from the date of the breach", not the date that such breach was discovered. Furthermore, as discussed above (at 4-11), SCO plainly was aware or should have been aware of IBM's conduct by at least October 2000.

    (Back to the main text)


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )