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SCO's Memo in Opposition to Novell's Motion for a More Definite Statement
Sunday, May 28 2006 @ 10:38 PM EDT

SCO met its Friday deadline, and it has filed its Memorandum in Opposition to Novell's Motion for a More Definite Statement [PDF]. It also filed a Memorandum in Opposition to Novell's Motion to Stay, with a long tail of exhibits, which I'll put up next.

In its opposition to Novell's Motion for a More Definite Statement [PDF], SCO says in plain English to the court, we don't have to tell Novell in our complaint which unfair competition law we think they violated. We told them enough facts to meet the pleading requirements. Novell can find out in discovery which law or laws we have in mind. And we don't have to yet narrow ourselves down to a particular legal theory either. Specifically SCO states it this way in its introduction:

First, SCO is not required under the Federal Rules of Civil Procedure to specify statutory provisions or advance a particular legal theory for its unfair-competition claim. Second, SCO has met the requirements for pleading a claim under Federal Rule 8(a). Discovery is the appropriate means for Novell to probe SCO's claim.

So there. They'd prefer to keep their options open. Here's Rule 8, by the way, so you can follow along.

You'll note that there is a link on that page to Rule 11, which states:

(b) Representations to Court.

By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,--

(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;

(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;

(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

(c) Sanctions.

If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation....

I can't help but wonder if this Rule might not inspire a measure of vagueness, particularly in a lawyer who is relying on discovery for any hope of evidence in support of a claim and which he therefore doesn't wish to commit to with specificity until he hopefully has something in hand to avoid sanctions with. Not saying that this is what is happening, but just pointing out all the possibilities. Or maybe it's just about delay again. We've all seen how speedily discovery played out in SCO v. IBM, thanks to what I would describe as SCO's preference for the slowest boat to China. SCO here in Novell would like the judge to approve the same method of transport, so it can step on board that old rowboat once again.

However, SCO does provide, as you'll see, some hints, mentioning that it "modeled its claim on Utah's unfair-competition law." But which one? Yarro's law? The unfair competition law SCO's Chairman of the Board Ralph Yarro sponsored that was passed in Utah in 2004? If so, which part of it? Here's how it reads in part:

(4) (a) Except as provided in Subsection (4)(b), "unfair competition" means an intentional business act or practice that:
(i) (A) is unlawful, unfair, or fraudulent; and
(B) leads to a material diminution in value of intellectual property; and

(ii) is one of the following:

(A) cyber-terrorism;
(B) infringement of a patent, trademark, or trade name;
(C) a software license violation; or
(D) predatory hiring practices.

(b) Notwithstanding Subsection (4)(a), "unfair competition" does not include the departure and hiring of an employee by a competitor.

If it's Utah's law, and they don't specify A, B, C etc., Novell doesn't know if it is being accused of cyberterrorism or infringing a trademark. Don't assume. Remember SCO accused IBM of violating the Computer Fraud and Abuse Act just for downloading Linux software from SCO's website so it could use it as evidence. It's not wise to assume anything is too ridiculous or too low-down for SCO to try.

"Modeling" a claim on Utah's common law, as SCO says it has, isn't the same thing as picking a law and saying, That is the one. SCO is instead saying, so far as I can understand what they are saying, that at least Novell is guilty of unfair competition under Utah state law, and that having mentioned one, they've met any necessary threshold.

There is another issue, though, according to SCO, a threshold question it wants the court to settle before it ties itself to any particular state's law, namely which state is the appropriate one.

I note footnote one:

1. Contrary to Novell's assertion (at 2) that SCO has not alleged "where and when the alleged misappropriation took place," SCO has clearly alleged that the misppropriation took place "worldwide" when Novell "began distributing" Linux. (2d Am. Compl. 46.)

Well, that narrows it down nicely. To hear SCO tell it, Novell has potentially broken every unfair competition law on Planet Earth. So, Novell, defend yourself!

This may explain why Novell is asking precisely which law in which state(s) in which country(ies) on what continent(s) they are alleged to have been unfair to SCO, so they can analyze how to respond after studying the various law(s) and cases, because Novell's position is that unless it knows more than it currently does, it may omit certain affirmative defenses it otherwise would list. The thing is, there are certain affirmative defenses you only get to raise the first time you respond to a complaint. SCO's suggestion? Just put in a general denial, denying the facts SCO has set forth, and let's get on with discovery.

They do so love discovery.

But that suggestion doesn't resolve the important issue Novell has raised about affirmative defenses. What you might use as an affirmative defense against cyberterrorism, after all, wouldn't be useful as an affirmative defense against a trademark violation.

I don't know how much Novell will be able to pry out of SCO in discovery, anyway. It kind of reminds me of the way SCO told every court but the IBM court that it should go first, the "anywhere but here" strategy, as one of IBM's lawyers, Evan Chesler, described it. Remember that farce about how Autozone should go first? Around that same time period, September of 2004, I wrote that I thought I discerned their strategy: "I detect a water-torture strategy as well. Drip, drip, drip, more memoranda, more motions, more words until we all wave our little white flags from the parapet and beg them to stop at any cost. One thing is for sure. They can't appeal on the grounds that they didn't get to tell the court every last thought they could possibly dream up."

As for discovery, Novell's memorandum in support of its motion alleges that SCO won't tell them which unfair competition law SCO is thinking of in discovery either, because they've already asked them more than once and received only what Novell felt was a nonanswer. So the runaround begins.

As a reminder, this is the claim that the parties are talking about, from SCO's Second Amended Complaint:

FIFTH CLAIM FOR RELIEF (Unfair Competition)

121. SCO re-alleges and incorporates all prior paragraphs as if fully set forth herein.

122. Novell has knowingly, intentionally, and in bad faith engaged in a pattern of conduct aimed at depriving SCO of the value of its UNIX technology. Among other things, Novell has falsely claimed ownership of SCO's copyrights in UNIX and UnixWare, misappropriated SCO's UNIX technology in Linux and forced SCO to compete in the marketplace against its own intellectual property, and has wrongfully attempted to thwart SCO's rights and efforts to bring legal claims in defense of its UNIX intellectual property.

123. Novell's misconduct is likely to result in confusion, and in fact has resulted in confusion in the marketplace concerning UNIX, Linux, and other products.

124. As a direct result of Novell's unfair competition, SCO has and will continue to suffer damage to its business, reputation, and goodwill in an amount to be proved at trial.

125. Because Novell's misconduct is intentionally and maliciously designed to destroy SCO's valuable rights to the copyrights and further destroy SCO's business livelihood, this Court should impose punitive damages against Novell in an amount to be determined at trial.

126. SCO is entitled to and seeks restitutionary, injunctive, and other remedies as may be available under the applicable unfair-competition law.

Restitution means moolah, injunctive relief would be such things as making Novell stop saying it owns the copyrights to UNIX, etc., but it's the "other remedies that may be available under the applicable unfair-competition law" that Novell would most particularly like clarified. Which law is applicable?

As you'll recall, in Novell's Memorandum in Support of its Motion for a More Definite Statement, Novell revealed the following correspondence, beginning with a Dear Ted letter from Novell's outside attorney Kenneth Brakebill to SCO's Edward Normand:

We cannot tell from SCO's newest complaint what unfair competition law SCO is asserting against Novell. Paragraph 126, for example, simply references "the applicable unfair-competition law." Could you please clarify this so that Novell can avoid seeking such clarification through court briefing? Thanks.

He doesn't get an answer, so he asks again. Finally, nearly a month later, Normand sends him this answer:

Ken --

With respect to your question regarding choice of law, generally SCO had in mind the common law and statutory law of Utah with respect to unfair competition in its Second Amended Complaint, but in SCO's view the decision of which jurisdiction's law applies is a legal question for the Court to resolve, and therefore I cannot say that SCO has taken a position on the issue. If you are asking me now which jurisdiction's law of unfair competition SCO believes "should" apply to the claim, that is a different question and one the parties would address in any briefing in which the issue arises. If you are asking me your question in consideration of Novell's Answer, SCO's view is that Novell need not take a position in its Answer with respect to which jurisdiction's law applies. If Novell wants to take such a position, moreover, it can do so independent of any views SCO has on the issue. Please call me to discuss if you would like.

Does that sound like SCO would like Novell to pick a law and go first? Or that it would like Novell to try all the discovery methods, like interrogatories, requests for admission, depositions, etc., before it can find out what law they have allegedly broken? With what SCO alludes to as "briefing"? That means motion practice. So when SCO now tells the court Novell's remedy for finding out which law is being relied on is by discovery, does it seem a tad disingenous? After all, it's been a long three years of discovery in IBM and we still don't know what code is allegedly misused. Is there a similar strategy unfolding here too?

Maybe. SCO writes this:

In Dethmers, 23 F.Supp. 2d 974, for example, the plaintiff included a cause of action that claimed "statutory" misappropriation of a trade secret, without identifying a particular statute. Id. at 1007. When the defendant moved for a more definite statement, the plaintiff argued that the legal question of "what state's law is applicable to the claim" was a "threshold question" that required resolution by the court prior to any discussion of repleading. Id. Only after the court resolved the "threshold question" of choice of law did it conclude that a more definite statement of the claim was necessary. Id. at 1008. Like the plaintiff in Dethmers, SCO pleaded a claim of unfair competition under applicable state law. SCO is willing to address the issue of choice of law at a more appropriate time, 2 and understands that once the "threshold question" of choice of law is resolved, it may need to amend its unfair-competition claim.

When is a more appropriate time than now? SCO's answer seems to be that first Novell should answer, they should both do some discovery, and then when SCO knows where it wishes to plant its flag, it will ask the court to rule on the matter, after which it will ask to replead, and then Novell will find out.

Do you notice the similarity to the language Normand used in his email to Novell's attorney, Brakebill? I do too, and that tells me SCO is following some strategy in not providing specificity in this issue yet, a strategy it has worked out carefully in advance of that email from legal research on what they believe they can do. At a minimum, it wants the court to settle the "threshold question" of choice of law before it tells Novell exactly which law it will be trying to use. But I don't see it asking the court this exact minute to decide that question. It's like it wants Novell to commit itself first. But if it is a threshold question, why not settle it first?

I can't help but remember how hard SCO fought to have its slander of title complaint decided in state, not federal, court. We know, therefore, that SCO cares which court handles its litigation. It lost that battle. But which state? Is it wishing to apply the laws of some other state but Utah? Or is it a matter of state or federal? Can SCO really mean worldwide? I can't see how, legally, unless it just means it is free to pick any place, once it decides. Something is up, but all I can do is flag it as odd. They know what they have in mind, and we'll just have to stay in suspense for now, unless the judge grants Novell's motion. My best guess is that they indeed plan to use Utah's law, but until they get to root around in discovery, they'd prefer not to have to say which part or parts of it they wish to allege, so for now they say they are talking about facts alleged, sort of modeled on Utah's statute but they also mention Utah's common law.

I do find the Dethmer case a funny one to use. It got into some trouble in litigation, losing some patent claims, due to a lack of specificity. Maybe the part SCO likes is that Dethmer filed a complaint in 1996 and the date the case was terminated was 2004. You find in Pacer entries that read like this: "MOTION by plaintiff Dethmers Mfg Co for leave to file a third supplemental amended complaint (w/proposed amended complaint attached) assigned to Magistrate Judge Paul A. Zoss KFS." Imagine how that must make SCO glow: a third supplemental amended complaint!

Novell detailed further its efforts to get specificity from SCO in its Memorandum, referencing this correspondence:

As a result of these ambiguities, there are numerous potentially "applicable" unfair competition laws, each with their own set of elements, rules, standards and affirmative defenses. Yet SCO's Complaint provides no clue as to what the "applicable" law is.

After SCO filed its motion to amend its Complaint, Novell requested SCO's clarification of the applicable law. (Brakebill Decl. Ex. 2, Letter from Kenneth Brakebill to Edward Normand dated Jan. 24, 2006.) When SCO ignored this request, Novell again asked for clarification. (Brakebill Decl. Ex. 3, Letter from Kenneth Brakebill to Edward Normand dated Feb. 8, 2006.) Two weeks later, SCO responded with an evasive answer. Although SCO "generally" "had in mind" Utah law, SCO had not "taken a position on the issue" of "choice of law" and the question of "which jurisdiction's law of unfair competition SCO believes 'should' apply to the claim" should be addressed "in any briefing in which the issue arises." (Brakebill Decl. Ex. 4, E-mail message from Edward Normand to Kenneth Brakebill dated Feb. 19, 2006.) This circuitous response leaves Novell in the same position as no response at all. SCO has had several months to provide Novell with adequate notice of the laws it is seeking to use against Novell. By all appearances, SCO would like Novell to guess what unfair competition laws it has violated and to frame a response accordingly. As a result, Novell is left with no choice but to ask this court for an order requiring a more definite statement. ...

SCO's Complaint does not provide Novell with a sufficiently definite statement of its unfair competition claims. The Complaint seeks all remedies available under "applicable unfair-competition law" (see Brakebill Decl. Ex. 1, Comp., at 126), but does not specify which of the many unfair competition laws Novell has allegedly violated. Specifically, SCO has failed to allege whether Novell has violated Federal statutory law, such as the Lanham Act, or state law. SCO has also failed to state whether, if Novell has allegedly violated state law, whether that law is the unfair competition law of Utah, California, Massachusetts, Delaware or some other state where actionable conduct may have occurred. SCO has also not stated whether its allegations are based on state common law or state statutory law.

Without knowing the answer to these questions, Novell cannot determine whether SCO's Complaint fails to state a claim upon which relief can be granted, whether SCO's claim is untimely, what facts support or oppose SCO's claims, or what affirmative defenses Novell can assert.

SCO's answer so far is not clear. It references common law, but it says it also "modeled" its claim on Utah's statute:

As SCO represented to Novell, SCO modeled its claim on Utah's unfair-competition law. (See e-mail from E. Normand to K. Brakebill (Feb. 19, 2006)(Ex. 4 to Decl. of Kenneth W. Brakebill in Supp. of Novell, Inc.'s Mot. for a More Definite Statement).) The "gravamen" of a misappropriation claim, one of two common-law unfair-competition torts recognized in Utah, is "that a defendant has seized for its own benefit something of value that the plaintiff had built up through time, money, or effort, which is then generally used to compete against the plaintiff." Proctor & Gamble Co. v. Haugen, 947 F. Supp. 1551, 1554 (D. Utah 1996) (Winder, C.J.); see also Proctor & Gample Co. v. Haugen, 222 F. 3d 1262, 1280 (10th Cir. 2000) (affirming district court's construction of unfair-competition claim). SCO has stated facts sufficient to obtain relief under Utah's construction of the common-law tort of unfair competition and has therefore, again, met the pleading requirements of the Federal Rules.

In footnote 2, SCO adds this:

2. As Novell says (at 2-3), the choice of law question could be a difficult one, and therefore would require briefing beyond the scope of the immediate motion.

It's up to the judge to decide where to draw the line, but considering that this same court has some measure of experience with SCO's behavior in discovery in the IBM litigation, I don't think the court will view SCO's position with the same generous eyes it might otherwise have done. Of course, this case has a different Magistrate Judge, so maybe he is tabula rasa. Hopefully he is reading and doing his homework.

Remember that SCO is asking for the following relief:

126. SCO is entitled to and seeks restitutionary, injunctive, and other remedies as may be available under the applicable unfair-competition law.

And here SCO tells us that Novell's "misdeeds" include the following:

The second amended complaint lists dozens of examples of SCO's copyrights and intellectual property. (See, e.g., id, at Exs. A, B.) it sets forth eleven specific ways in which Novell asserted false claims of ownership of those copyrights (id. at 37(a)-(k)), and specifically alleges Novell's unauthorized use of that intellectual property (id. at 40-52). The second amended complaint also specifically alleges that this conduct has caused confusion on the part of current SCO customers, driven potential customers away from SCO, and cast a "false cloud of ownership" over SCO's attempts to enforce its intellectual-property rights against third parties.

SCO here is referencing its SCOsource program, and SCO is blaming Novell for SCOsource's failure to date to sign up companies other than the early ones. When I look at SCO's prayer for relief in its Second Amended Complaint, I see SCO positioning itself to try to get the court to force Novell to turn over the copyrights to Unix and then tell Novell it is permanently blocked from "copying, reproducing, modifying, sublicensing, and/or distributing SCO's UNIX and UnixWare technology except as expressly provided by the TLA". Considering that SCO's castle-in-Spain thinking includes its assertion that Unix code has somehow made its way into Linux through some sort of ladder methodology SCO has yet to fully explain, what I see is SCO hoping to convince the court to stop Novell from distributing Linux, with the hope that that will sufficiently terrorize the marketplace that folks will line up to give SCO some money, honey, under the SCOsource program.

These SCO dudes never give up, do they? No matter how much the world laughs at them or hates them, they stay on message. The message I hear is that SCO would like to disrupt Linux adoption as much as it can for as long as it can. The ultimate outcome may not even realistically matter to them. Is that not what this is all about at the end of the day? If Microsoft would just get its Vista product finished and out the door, maybe legal life could go back to normal, but as it is, I guess we all have to suffer a little bit longer. If SCO has its way, it would be a lot longer.

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