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Another SCO 90-Day Status Report to the AutoZone Judge
Wednesday, July 19 2006 @ 07:02 PM EDT

Here's the latest SCO letter [PDF] to the AutoZone judge. A very terse account of Judge Brooke Wells' Order. No quotable quotes about shoplifting from Neiman Marcus or about SCO seeming to be trying for an unfair advantage.

I am guessing that the settlement between SCO and Novell as to what unfair competition law SCO was thinking of, announced at the hearing on July 17 as being Utah's, must have been worked out at the very last minute. Either that or Curran and Parry didn't get the news, because their letter to the judge is also dated July 17, and it doesn't mention the matter as being settled.

I was thinking. I wonder what the District Court judge in Nevada thinks when he reads that SCO has somehow been dragged before an arbitration panel in Europe. I'll bet he's glad he stayed this case now. And what a shock it must be for the two judges getting these progress reports, AutoZone and Red Hat, to learn that IBM is winning motions, when to hear SCO tell it, their case is just swimming right along.

I note, for example, that SCO says that SuSE filed a reply to SCO's filing in the arbitration, "at the request of the Arbitration Court," which makes it sound like SCO hit some home runs calling for a reply. Maybe they did. But then, considering SCO's style of speechifying, maybe they just filed something that caused the tribunal to ask for more information on a point to clarify which side was telling the truth, or just for more evidence, something that is expressly anticipated in the ICC rules, in Article 20:

5 At any time during the proceedings, the Arbitral Tribunal may summon any party to provide additional evidence.

So that is likely all it means. But I discern that SCO at least thinks it made some points, because they bring it up. I've read enough of their letters by now to know that if they bring up a point they don't have to, it means they think they did something effective. Of course, we are required to guess, because SCO hints but does not provide specificity. So here's my guess: I guess that SCO told the panel that SUSE failed to negotiate with them prior to filing for arbitration. I get that idea from what SCO is reported to have said at the hearing. If I have guessed right, then I would imagine the tribunal would ask SUSE to reply.

Do you remember from the eyewitness reports from the hearing that there was some discussion about the wording of the arbitration clauses in the Master Transaction Agreement, which used "arising from" and the Caldera-SUSE Joint Development Contract, which I think they said says the same? SCO seemed to be arguing that "arising from" language meant it was a narrow arbitration:

Mr. Singer discussed the 10th Circuit case of Cummings vs. FedEx and how it distinguished between narrow and broad arbitration clauses. He read the arbitration clauses from Master Transaction Agreement 9.2 and the Joint Development Contracts between Caldera and SuSe. The MTA language reads: matters "arising from" these agreements, and the JDC reads differences or ... "arising from" and he noted that neither read "related to." Therefore this was a narrow arbitration clause. Judge Kimball asked Mr. Singer to define the boundaries between "arising from" and "relating to" to which he replied that he believes "relating to" indicates a broader scope.

I frankly didn't know what they were talking about, but I think I do now. Take a look at this. Here's the standard language the ICC recommends be used if you want to end up before their tribunals, and I don't think it helps SCO's argument one bit:


The ICC recommends that all parties wishing to make reference to ICC arbitration in their contracts use the following standard clause. Parties are reminded that it may be desirable for them to stipulate in the arbitration clause itself the law governing the contract, the number of arbitrators and the place and language of the arbitration. The parties' free choice of the law governing the contract and of the place and language of the arbitration is not limited by the ICC Rules of Arbitration. Attention is called to the fact that the laws of certain countries require that parties to contracts expressly accept arbitration clauses, sometimes in a precise and particular manner.

"All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules."

Sounds broad to me. That must be why Novell's attorney mentioned that the arbitration is under Swiss law.

I'm thinking the AutoZone judge may be a bit mystified by this report. Here's SCO's last letter to this judge, where it first mentioned the arbitration, and it told the judge Novell filed in Paris on April 10. Here, without a word of explanation, SCO reports that it answered *SuSE* on June 26, and on July 10, SuSE responded. But SCO never tells the judge why SuSE and not Novell or really what it's all about.

Instead of telling the judge that almost all its claims could be tossed overboard or mooted by the arbitration, it tells this poor puzzled judge that "even the allegedly arbitrable issues could preclude, at most, only a small portion of some of SCO's claims." A small portion of some of SCO's claims? Is it small if SCO can't sue SuSE or Novell for copyright infringement? I don't know how SCO measures, but to me it's not small. In any case, the report from the hearing said that both sides acknowledged that the results of the arbitration would impact SCO v. Novell. Not that the Nevada judge will ever get to know that, unless he reads Groklaw, I suppose.

I wondered if SCO might have been referring to counterclaims, but I don't think so, because the rules specify in Article 5 that if the respondent -- that would be SCO -- files counterclaims, the claimant -- that would be SuSE -- has 30 days to file a response, and the tribunal doesn't summon anybody to do that. It's automatic:

4 A copy of the Answer and the documents annexed thereto shall be communicated by the Secretariat to the Claimant.

5 Any counterclaim(s) made by the Respondent shall be filed with its Answer and shall provide:

a) a description of the nature and circumstances of the dispute giving rise to the counterclaim(s); and
b) a statement of the relief sought, including, to the extent possible, an indication of any amount(s) counterclaimed.

6 The Claimant shall file a reply to any counterclaim within 30 days from the date of receipt of the counterclaim(s) communicated by the Secretariat. The Secretariat may grant the Claimant an extension of time for filing the reply.

So while we can only guess what SCO means here, which is, I suppose, the intent, it looks like no counterclaims were filed. Certainly AutoZone, when it files its next progress report, won't be able to fill us in. They know pretty much what we know and in any case they can't reasonably report on proceedings they aren't a party to, unless they read about it in the funny papers.

So that's the latest from Lake AutoZone, ladies and gentlemen, where all SCO's claims are above average.


(Curran & Parry letterhead)

July 17, 2006


The Honorable Robert C. Jones
United States District Judge
District of Nevada

Re: The SCO Group, Inc. v. AutoZone, Inc., CV-S-04-0237-RCJ-LRL

Dear Judge Jones:

Pursuant to this Court's August 6, 2004 Order, The SCO Group, Inc. ("SCO") respectfully submits this 90-day status report to apprise the Court of events that have transpired since our last update (on April 17, 2006) in certain other actions.

1. The SCO Group, Inc. v. International Business Machines Corporation, Case No. 2:03CV0294 DAK (D. Utah)

On June 28, 2006, after full briefing and oral argument on IBM's motion to limit SCO's claims related to allegedly misused material, the Magistrate Judge issued an Order granting the motion in part. On July 13, SCO filed objections to that Order with the District Judge.

On May 19, 2006, the parties served their respective expert reports. On June 8, IBM filed a Motion to Confine SCO's Claims to, and Strike Allegations in Excess of, the Final Disclosures, arguing that SCO's reports identified allegedly misused material not identified in SCO's Final Disclosures. In its opposition brief, filed on June 19, SCO countered that its Final Disclosures fully complied with the Court's orders and its expert reports properly set forth evidence and analysis without expanding the scope of the case. IBM filed its reply brief on June 26, but the Court has not set a hearing date for this motion.

2. The SCO Group, Inc. v. Novell, Inc., Case No. 2:04CV00139 (D. Utah)

As last reported, on April 10, 2006, Novell filed its Answer and Counterclaims to SCO's Second Amended Complaint restating its counterclaims in part. On May 1, SCO filed its Answer to the restated counterclaims.


On May 26, 2006, SCO filed its opposition to Novell's Motion for a More Definite Statement of SCO's Unfair Competition Cause of Action. SCO argued that its unfair-competition claim meets the pleading requirements of the Federal Rules, which also do not require that SCO specify statutory provisions or advance any legal theory for its claims.

Also on May 26, SCO filed its opposition to Novell's Motion to Stay Claims Raising Issues Subject to Arbitration. SCO argued that Novell had waived any right to a stay because (among other reasons) it had twice moved to dismiss SCO's original claim, obtained almost all discovery from SCO on the claims and defenses at issue, expanded the scope of the case by introducing seven counterclaims, and answered SCO's Second Amended Complaint. SCO also argued that is claims are not arbitrable and that, in any event, the Court should deny the motion because even the allegedly arbitrable issues could preclude, at most, only a small portion of some of SCO's claims. Novell filed its reply memorandum on June 19, and the Court has scheduled a hearing for July 17.

On June 27, 2006, SCO submitted its Reply to SuSE Linux GmbH Request for Arbitration to the International Chamber of Commerce International Court of Arbitration in Paris. On July 6, at the request of the Arbitration Court, SuSE filed a response to SCO's Reply.

3. Red Hat, Inc. v. The SCO Group, Inc., Case No. 03-772-SLR (D. Del)

As Your Honor knows, the Court in the Red Hat case has stayed that action sua sponte. Since our last letter to this Court, the parties in that case have submitted additional 90-day updates to that Court.

Respectfully submitted,
Stanley W. Parry, Esq.


cc: James Pisanelli, Esq. (via hand-delivery)
David S. Stone, Esq. (via facsimile)


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