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Report from the Courthouse March 7, Part 2
Thursday, March 08 2007 @ 05:45 AM EST

Here's Chris Brown's report on the rest of the summary judgment motions argued before Judge Kimball on March 7, 2007 in SCO v. IBM. Part 1 is here.

Three motions were argued. The first two motions of the day were argued simultaneously, IBM's Motion for Summary Judgment on its 8th Counterclaim [PDF, memo in support], which is the one where IBM accuses SCO of GPL violations and hence copyright infringement, and at the same time SCO's Motion for Summary Judgment on IBM's 6th, 7th, and 8th Counterclaims [PDF, memo in support] was argued, in which SCO is asking the court to kill IBM's copyright infringement counterclaims, the ones based on SCO's GPL violations, with the asserted defense that SCO never violated the GPL. Of course, they did, as IBM tells the court, and it asks for its day before the jury on its claims. And because the first motions in this report have to do with the GPL, you may wish to have Groklaw's GPL page handy.

The next and final motion argued had to do with IBM's counterclaims for all the trash talk Darl McBride has done "coast to coast", as IBM's Amy Sorenson puts it, SCO's Motion for Summary Judgment on IBM's Second, Third, Fourth, and Fifth Counterclaims [PDF, memo in support and IBM's memo in opposition].

It's Sorenson's first time, I think, arguing a motion in court in this litigation, as far as I can recall, and one interesting detail she provides is a money figure regarding damages. When SCO tried to claim that IBM hasn't suffered any damages from its PR campaign, she reminds the court that McBride himself at one point told the press that there had been a 20% reduction in Linux adoption, and that alone equates to a $672 million loss. Actually, she tells the court, IBM has demonstrated damages in excess of $40 million attributable to litigation fees and having to respond to SCO's public statements. SCO's defense was that all the trash talk is privileged, because it was done in connection with litigation, but Sorenson argued that Darl's letter to Congress, for one example, far exceeded any privilege or qualified privilege. And Chris Brown's report includes the detail that Sorenson told the court that there is evidence that SCO knew that their statements were false, raising the issue of bad faith.

IBM wants its Lanham Act claims to go to a jury, where McBride's state of mind when making his claims about AIX and Linux can be determined by a jury.

I know. It's so funny, to my geek brain, that his state of mind will be officially determined by a jury. Ooo, ooo, can I speak to the jury about that subject? Joke. Joke.

Chris has, as usual, done an outstanding job, and we thank you.

There is a reference in the arguments to a 2004 Fortune article, "Gunning for Linux The free operating system--backed by IBM, HP, and others-- is breaking Microsoft's monopoly. But a lawsuit by SCO, which claims to own parts of the code, could wreck the party":

In the ascetic waiting room of the SCO Group's Lindon, Utah, headquarters, the only reading matter is a stack of beige, telephone-book-sized binders. They are volumes I, II, III, and IV of the company's press clippings. For the previous month. SCO (pronounced "skoe," to rhyme with "snow") is already notorious in three insular communities.

As for many of Darl McBride's early and copious public comments, you can find them in Groklaw's Quote Database, on his page.

Yes, this is me. No. I'm not really back. I'm still sick, but I sat up long enough to do this. And now, back to sleep for me. By the way, I think our count must be off, because I see 9 summary judgment motions on our chart, and I can only account for seven (2 on March 1, 2 on March 5, and 3 on March 7). So there must have been some doubling up that our reports didn't indicate or conceivably the parties felt that no argument was required for two of them. My best guess is that we just missed some. We will be able to figure it out when the full transcripts arrive. But I have missed a lot, being more asleep than awake for the past few weeks, and so I can't parse it out currently. Forgive me if I haven't responded to emails. Same reason. I will read them and write back to you after I feel better.

Here's Chris's report:

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

IBM's Motion for Summary Judgment on IBM's 8th Counterclaim and SCO's Motion for SJ on IBM's 6th, 7th, and 8th Counterclaims

After the break Judge Kimball heard arguments on IBM's Motion for Summary Judgment on IBM's Eighth Counterclaim (#784) in conjunction with SCO's Motion for Summary Judgment on IBM's Sixth, Seventh, and Eighth Counterclaims (#777). The lawyers represented they would take 20 minutes a side.

IBM's Mr. Marriott argued first. While he handed out the nearly obligatory books (always with tabs), Judge Kimball rhetorically asked "What would we do without these books?"

Mr. Marriott said there are 16 works that are at issue in this claim of IBM works in Linux. Collectively they represent over seven hundred thousand lines of code in stark contrast to the 326 lines SCO claims IBM infringed. IBM owns the copyrights and is entitled to presumption of ownership. IBM timely registered copyrights to the sixteen works at issue.

SCO's Linux server contains each of the sixteen works at issue, he argues. SCO acknowledges it is undisputed that SCO distributed each of the copyrighted works. SCO also has stated it is undisputed that SCO's only right to distribute is under the terms of the GPL or the LGPL.

SCO lost its permission to distribute under the GPL by repudiating the terms of the GPL and when it acted in excess of the terms of the GPL.

SCO's CEO Darl McBride has declared publicly, and in this court, Marriott said, that the GPL is unenforceable, void, voidable, that it violated the US constitution, copyright, anti-trust, and export control laws. Those statements represent a repudiation of the GPL.

Putting aside repudiation, Marriott continued, SCO lost its rights by breeching several terms of the GPL in two ways: First, by restricting recipients' distribution rights. For example on SCO's website, it states that the license that SCO says is required to use Linux does not grant any rights to redistribute. Second, SCO restricted rights to distribute source code. SCO states that it grants the right to use their IP in binary format only, that it does not grant rights to use the source code. SCO stated the same in press releases.

IBM owns the copyrights, SCO distributed, and SCO breached the GPL. SCO lost their rights.

SCO's turn:

SCO's Edward Normand presented next. He stated that IBM's three counterclaims are merely retaliation against SCO for its efforts to enforce its intellectual property rights.

Linux is an unauthorized derivative of Unix, he claimed. SCO has not breached the GPL. IBM has unclean hands. IBM's only damages are for legal fees.

SCO allegedly breached by issuing licenses, he argued. The Unix property in Linux was never under the GPL. The GPL applies to code released with a notice that it's under the GPL. To place code under the GPL the copyright holder must place a copyright notice and copy permissions in each source code file.

The "Unix Material" is not part of the "Program" (Linux).

We may have been a licensee under the GPL, but we were not a licensor of the GPL.

SCO considered contributing the Unix material under the GPL, but never decided to do so. Ransom Love stated that had they done so, it would likely have been done under a more commercially friendly license.

SCO has not placed any GPL notice in any of its Unix code.

A licensee makes no assertion as a licensor of GPL when distributing GPL software.

Regarding GPL section six, each time you redistribute the program, the recipient receives a license from the original licensor. SCO has not sold or attempted to sell a license to any recipient who received a Linux distribution from SCO.

Pertaining to Section 2 of the GPL, SCO did not modify Linux.

SCO has not repudiated the GPL, Normand claimed. SCO has done no such thing. A repudiation occurs when a party refuses to perform and communicates that refusal to the other party. IBM quotes Darl McBride's testimony which, at most, constitutes misgivings about the GPL, a view shared by many commentators, but does not indicate a refusal to perform.

SCO's license states it is for SCO's intellectual property, not the whole of Linux.

Linux is an unauthorized derivative work of SCO's Unix technology, he continued. Copyright case law is clear that no part of an unauthorized derivative is eligible for copyright protection.

IBM has unclean hands by inappropriately contributing code to Linux such as JFS, Normand continued. Additionally, IBM "hacked into" SCO's website to improperly obtain evidence.

IBM responds:

IBM's Mr. Marriott responded. He asserted there was no "hacking" of SCO's website.

With respect to repudiation, SCO claims that Darl McBride simply expressed "misgivings" about the GPL. SCO has presented sworn testimony that the GPL is void, unconstitutional, unenforceable, etc. "If that's not a repudiation, I don't know what is."

Mr. Normand replied again, but I don't have notes of what he said.

This concluded oral arguments on these motions.

SCO's Motion for Summary Judgment on IBM's 2nd, 3rd, 4th and 5th Counterclaims

Next the court heard argument on SCO's Motion for Summary Judgment on IBM's Second, Third, Fourth, and Fifth Counterclaims.

Brent Hatch argued for SCO, first stating that SCO's CEO Mr. McBride was hired to re-energize SCO because he had experience in this kind of business, not because he has litigation experience.

Responding to customer's requests that something be done to allow use of Unix technology in Linux, SCO approached companies with their licensing program. SCO had broad support including from companies such as HP. There was only one business that balked: IBM. "SCO was attempting to work with the Linux community. IBM was just looking out for IBM."

IBM's Jim Stallings, in 2003, said that he hasn't seen any evidence the market has slowed down, Hatch said. Again in 2004, he stated that despite the litigation, Linux adoption has accelerated. In 2005 (some other person) said Linux adoption is accelerating and that this lawsuit is the best thing to have happened to Linux.

SCO's statements are protected by absolute or qualified privilege as they were made in conjunction with the lawsuits.

There is a dispute whether Linux is a derivative of Unix. SCO's saying there are millions of lines of code in those products is a good-faith statement.

Official IBM internal documents talk about derivative work, he started to say, but IBM's Amy Sorenson pointed out to Judge Kimball that the document Mr. Hatch was discussing is marked confidential. There was a brief discussion, during which Judge Kimball started to clear the courtroom, though then it was determined both that Judge Kimball can read and Mr. Hatch can refer to the document. It seemed to be referring to as SCO's alleged violation number 134, and it was noted that IBM claims it is irrelevant and hearsay.

IBM's turn:

IBM's Amy Sorenson argued next. She said that despite what SCO's arguments suggested, IBM's concern isn't solely about statements made in the judicial proceedings. IBM's actual counterclaims are for violation of the Lanham Act, disparagement, unfair competition, misappropriation of AIX and Linux products... SCO engaged in nothing short of a PR campaign against IBM over years from coast to coast.

The representations made to the press do not match up, and never will match up, to its claims.

Ms. Sorenson quoted Judge Kimball's statement about SCO's "plethora of public statements," Mr. McBride's letter to Congress stating that Linux is a threat to our nation's economy and its security and she argued that the letter far exceeds any qualified privilege. Describing SCO's volume of over-publication, she quoted a 2004 "Fortune" magazine article that starts with describing SCO's waiting room reading material is volume 1, 2, 3, & 4 of telephone book-size compilations of press releases over the previous month.

There is evidence that SCO's statements are in fact bad faith in that they knew their statements were and are false, Sorenson argued.

Mr. McBride's state-of-mind in making his claims of ownership of AIX is not amenable to summary judgment.

She referred to Mr. McBride's public assertion to the press of a twenty percent reduction in Linux adoption, which SCO would like to disavow now, would equate to $672 million in loss. IBM has demonstrated damages in excess of $40 million in litigation fees and responding to SCO's public statements.

SCO's Brent Hatch responded with a few sentences and rested.

Judge Kimball speaks:

Judge Kimball indicated he would take all the arguments under advisement and rule when he can. His last words were "Thank you, it's been so good to spend these three afternoons with you all."


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