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SCO's Memo in Opposition to Novell's Motion to Stay Claims - Updated
Monday, May 29 2006 @ 11:58 PM EDT

As I promised, here is SCO's Memorandum in Opposition to Novell's Motion to Stay Claims Raising Issues Subject to Arbitration [PDF]. There is also an Ex Parte Motion for Leave to File Overlength Memorandum [PDF] and there are quite a few exhibits, and here they are, except for the ones that are printed-out cases:
  • Exhibit 1 - Scheduling Order and Order Vacating Hearing
  • Exhibit 2 - Novell's First Set of Requests for Production to The SCO Group, Inc.
  • Exhibit 3 - Plaintiff's First Request for Documents and First Set of Interogatories
  • Exhibit 4 - Cover letters as SCO delivers CDs of discovery materials
  • Exhibit 5 - Attorney Correspondence - Emails regarding protective order language
  • Exhibit 6 - Letter from Morrison & Foerster's David E. Melaugh to Boies Schiller's Edward Normand, dated May 27, 2006 regarding discovery
  • Exhibit 7 - SCO's CEO Darl McBride's May 12, 2003 letter to Novell CEO Jack Messman
  • Exhibit 8- Stipulated Protective Order

Exhibit 9 is the decision in United International Holdings, Inc. v. Wharf Holdings, Limited.
Exhibit 10 is Kafka v. Bellevue Corporation.
Exhibit 11 is Altresco Philippines, Inc. v. CMS Generation Company.
Exhibit 12 is Meyer v. Doerge.
Exhibit 13 is Turner v. Bain & Company, Inc.

The discussion is all about arbitration. SCO's position has three prongs:

1. Novell waited too long to bring up the arbitration issue. By participating in two years of litigation, including discovery, Novell has waived its rights to a stay for arbitration. Novell claims SCO's Second Amended Complaint creates a new situation, but they didn't oppose SCO filing it, and if they thought it raised arbitrable issues, Novell could have opposed it being filed.

2. None of SCO's claims is arbitrable. SCO's claims don't "arise from" the UL contracts. They have to do with earlier contracts long before the UL agreements. They also arise from federal copyright law and state law. SCO's claims don't become arbitrable just because Novell has a defense to a claim based on a contract with an arbitration clause. (But then SCO finishes up the section like this: "Under the well-established precedent, the arbitration and federal litigation should proceed concurrently." In other words, SCO argues against arbitration, but here it reveals that it knows it won't prevail on that, so it asks that at least the rest go forward at the same time.)

3. Where SCO's claims are not arbitrable, there is no basis to stay them.

The problem SCO has with this otherwise very reasonable argument is, if SCO has no copyrights or if it has no legal right under the UL contracts to sue Novell for copyright infringement, well, I am sure you can see the futility of going forward. Worse, you could end up with two decisions that are not harmonious. I am trying to think of what claims SCO has raised that do *not* depend upon them having the copyrights. Cyberterrorism under Utah's unfair competition act? Joke. Joke. They haven't said they intend to use that. Of course, they haven't exactly said what unfair competition law they have in mind. It's all a big threshold-question mystery.

I'll write more about all this after I have time to read it all carefully and research, but I didn't want you to have to wait to read it. If anyone has time to do a plain text or HTML of any of this, it would be gratefully accepted. Don't forget to leave a comment letting everyone know which one you can do, so we don't duplicate. Thank you.

Meanwhile, you can find Novell's filings that this memorandum opposes either on our Novell Timeline page or here's Novell, Inc.'s Motion to Stay Claims Raising Issues Subject to Arbitration and the Memorandum in Support, which we posted earlier (also here), and here's the Declaration of Michael A. Jacobs in Support of Novell's Motion to Stay . They are all PDFs, and the Jacobs one is very, very long. And we need to get those done as text too.

Update: An eagle-eyed reader notices that Exhibit 7 appears to be messed up. Page one of the exhibit is the McBride letter to Novell CEO Jack Messman, but page two is page one of SCO's letter to the Fortune 1000, which was mailed the same day, and then page 3 of the exhibit is page two of the Fortune 1000 letter, which is identical to the ending of the letter to Messman, except for one paragraph, which now is missing from the exhibit since page two of the Messman letter is missing. No doubt that is how SCO got confused, and when you have so many exhibits to pull together, things like this happen. It's not a significant error, and I doubt it's deliberate, but I don't want you to end up confused. You can put the puzzle pieces together by comparing Exhibit 7 with the letter to Messman and the McBride letter to the Fortune 1000. As you can see if you do that, the paragraph that is missing from the Messman letter is this:

As a consequence of Linux's unrestricted authoring process, it is not surprising that Linux distributors do not warrant the legal integrity of the Linux code provided to customers. Therefore legal liability that may arise from the Linux development process may also rest with the end user.

My, that brings back memories of SCO's salad days, when it was the bully on the block. The way SCO uses Exhibit 7 in its memorandum is by means of this sentence on page 13: "In the first part of 2003, moreover, SCO put Novell and others on notice that it believed Linux violated SCO's copyrights and that SCO intended to enforce those copyrights. (Exhibit 7)" The likely intent was to put both pages of both letters sent that day, the one to Messman and the one to the Fortune 1000, in that exhibit, as proof of that assertion.

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