Here's SCO's Reply Memorandum in Support of its Motion to Amend its December 2005 Submission [PDF], as text. This is where SCO tries once again to get the opportunity to redraw its case through experts reports, something that the Magistrate Judge Brooke Wells has already told them it can't do, but it still wants to do.

The court firmly ruled that SCO must limit its claims to those on the table by the court deadline. Who cares? Not SCO. They now try a new tack. If they can only litigate over items on that list, could they amend the list to include the new stuff? What do schedules matter now, SCO devilishly argues? After all, Judge Kimball has set aside the trial date, so why should it matter if SCO sticks to the schedule now?

It's like SCO hasn't heard the point the court keeps making, which is that it isn't fair, that it is almost like SCO is trying to create an uneven playing field, by hiding from IBM what SCO's case was until too late for IBM to do adequate discovery and for IBM's experts to respond appropriately. So, we can do more discovery, SCO argues. Lordy, do they never get enough? Remember: If SCO had just shown its hand by the deadline, as ordered, none of this fancy legal dancing would have been necessary.

Frankly, if gaming is the only way to win a case, you probably don't have one. You don't see IBM pulling any such pranks, do you? What might that tell an unbiased observer?

For context, let's review a little of the arguments so far. SCO filed its Motion to amend their December 2005 Final Submission back on January 9th, with a Memorandum in Support [text]. IBM opposed [PDF] [text] on February 16th, and this is SCO's reply. SCO also filed Objections to the Wells order.

Here's the essence of SCO's argument in its original memorandum in support of its motion:

SCO seeks to amend its December 2005 Submission of “misused material” to incorporate certain evidence and analysis from SCO’s expert reports filed in May 2006. As the Court is aware, a dispute exists between the parties over whether certain theories and evidence relied upon in the expert reports was required to have been presented in the disclosure of alleged misused material submitted in December 2005. SCO has filed, contemporaneously with this Motion to Amend, its Objections to the Magistrate Judge’s Order granting IBM’s Motion to Confine SCO’s Claims to, and Strike Allegations in Excess of, the Final Disclosures. The Court recently vacated the February 2007 trial date in this matter. The trial date has not been reset and the Court has made clear this matter will not be tried prior to the September 2007 trial in the SCO v. Novell action. Thus, it is entirely appropriate that this dispute over whether certain expert theories needed to be identified in the December 2005 Submission instead of the May 2006 expert reports be rendered moot by the Court allowing this amendment to the December Submission and granting IBM any reasonable additional discovery necessary to defend against this additional material.

Here's part of what IBM's Opposition Memo said in return, summarizing IBM's position, which in a sentence is that SCO is attempting an end run around the court orders and in spite of a stipulation that SCO agreed to, by attempting to allege massive copyright infringement way beyond anything they listed on their allegedly misused materials disclosure, and only doing so after discovery is over and IBM has already submitted its experts reports:

Long after the deadline for disclosing its allegations, SCO sought by indirection to change them. In yet another effort to circumvent the Court’s orders, SCO attempted to reinvent its case through its expert reports. Magistrate Judge Wells ruled that SCO could not do so and granted IBM’s motion to confine SCO’s claims to, and strike allegations in excess of, its Final Disclosures. SCO now both objects to the Order and seeks to end run it, by amending its Final Disclosures. SCO’s objections and its motion to amend are baseless and should be rejected.

In three of its expert reports, SCO alleged the misuse of material nowhere identified in its Final Disclosures, the very purpose of which was to fix the parties’ allegations once and for all as of December 22, 2005....

Magistrate Judge Wells ruled that SCO could not proceed with respect to allegedly misused material not specifically identified by it in its Final Disclosures....

SCO’s claims as to the material it sought to sneak in by way of its expert reports had no more merit than its claims as to the material set out in its Final Disclosures. But allowing SCO to ignore the Court’s orders and reinvent its case at that juncture would have been unduly prejudicial to IBM and contrary to the public interest. SCO’s thirteenth-hour allegations would have forced the re-opening of discovery and significantly extended the litigation. The resulting delay would itself have prejudiced IBM and undermined the public interest because it would have allowed SCO further to perpetuate fear, uncertainty and doubt about IBM, Linux and IBM’s products and services.

That would be the charm of the strategem, I'm guessing, from SCO's perspective. And yes, IBM is using strong language here. It is saying that SCO is gaming the system and not playing fair. Not only would there be a need for more discovery, IBM points out that all the summary judgment motions that were just argued would have to be done over.

SCO's response? SCO again argues in this Reply that procedural rules and schedules shouldn't matter, because the judge already said the trial date had to be rescheduled, and since there is no trial now set, there is no prejudice [!] to IBM if SCO gets to introduce the experts' testimony. However, IBM shouldn't be allowed another year for discovery, if SCO is granted its motion, because, SCO argues, this would be more time than IBM would have gotten under the original schedule, which IBM should adhere to.

Playground logic. I should get everything I want, and you should get nothing. If SCO's motion is successful, there would be more discovery. Groan. SCO fell in love with discovery, and it can't let go of it. As for summary judgment motions, SCO responds in footnote 5:

IBM wrongly argues that granting SCO's motion would require "redoing summary judgment briefing." IBM raised virtually every imaginable argument in connection with the Tenth Counterclaim motion, and those arguments regarding ownership of copyrights, licenses, estoppels and the like are independent of the expert opinions at issue. IBM elected not to make any arguments about non-literal infringement — but it did so even regarding non-literal infringement theories based on the items in the December Submission. With respect to the contract motion, IBM's arguments (except for new arguments raised in its reply papers) are independent of the scope of SCO's expert opinions. In addition, IBM could seek leave to file a supplemental summary judgment brief to the extent it believes the expert reports impact the summary judgment motions, but certainly the summary judgment briefing would not need to be "redone."

Breathtaking arguments, really. If one viewed the matter cynically, one might conclude that SCO just wants this litigation to cost IBM as much as possible so as to incentivize a settlement. I believe, my cynical brain might add, that SCO's lawyers get a cut of any such settlement.

SCO claims there was no bad faith on their part, but the Magistrate already found that there was certainly wilfullness with regard to the items of allegedly infringing materials that SCO failed to be specific about, so SCO is somewhat on thin ice with this particular court. They've been branded already as trying to hide their position from IBM so as to surprise them in an unfair way, so listening to their arguments in that context does give it a different flavor, however plausible it might otherwise have sounded.

As you'll remember, Judge Wells, in her December 21, 2006 order on the experts' reports question ruled as follows:

1. IBM’s motion is granted in full;

2. As provided in the Court’s order dated July 1, 2005, the parties’ Stipulation re Scheduling Order dated December 7, 2005, this Court’s order dated June 28, 2006, and Judge Kimball’s order dated November 29, 2006, SCO may not challenge as misused, by expert testimony or otherwise, any material that SCO has not specifically identified in its Final Disclosures of Material Allegedly Misused by IBM (Docket No. 591); and

3. As to what SCO has not specified as misused, it is the Court’s intent that this order shall apply to any and all allegedly misused material, including structures and sequences.

Yet here SCO comes again, for another bite of the apple. They just want to be allowed to introduce these materials into the case at what IBM calls the 13th hour, and they don't care if it's by hook or by crook. Judge Kimball is less sick of them than Brooke Wells, I would guess, because he hasn't dealt with them as much or watched their various machinations as closely as she has. So it is hard to predict whether or not SCO might bend his arm to a point, but so far, he's upheld Judge Wells' rulings.

I hope Judge Kimball understands the significance of the decision with regard to the public interest, a point IBM raises, and how badly SCO and other bad actors could abuse Linux end users and the marketplace in the future, if he lets them proceed with their unusual methods and concepts and nonliteral copying theories.

Don't ask me why they put the table of contents and table of authorities at the end instead of the beginning. They just did, so we do too.

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

Brent O. Hatch (5715)
HATCH, JAMES & DODGE, PC
[address]
[phone]
[fax]

Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Devan V. Padmanabhan (admitted pro hac vice)
John J. Brogan (admitted pro hac vice)
DORSEY & WHITNEY LLP
[address]
[phone]
[fax]

Stephen N. Zack (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Stuart Singer (admitted pro hac vice) BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Attorneys for Plaintiff, The SCO Group, Inc.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

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PRELIMINARY STATEMENT

SCO has filed both this Motion to Amend Its December 2005 Submission and Objections to the Order Granting IBM's Motion to Confine. Although IBM seeks to downplay the differences between the two Motions, and has even responded to both in the same opposition brief, they involve different standards. The propriety of the Magistrate Judge's Order on IBM's Motion to Confine is not at issue on this Motion. Rather, SCO filed this Motion because the trial date has been vacated in this matter, and therefore, permitting the amendment at issue would serve the well-established public interest in having cases resolved on their merits, while avoiding any prejudice to IBM in responding on the merits. Accordingly, SCO respectfully requests that the Motion to Amend be granted.

ARGUMENT

I. IBM'S EFFORT TO AVOID THE MERITS OF SCO'S MOTION TO AMEND ON PROCEDURAL GROUNDS SHOULD BE REJECTED.

In opposition to SCO's Motion to Amend, IBM argues (at 12) that "SCO does not identify any legal basis for its motion to amend, which is by itself fatal to SCO's application." SCO does identify the legal basis for the instant Motion, as well as the standard to be applied, in accordance with Local Rule DUCivR 7-1(b)(1). SCO cites case law throughout its Opening Memorandum supporting the relief sought in the Motion. See, e.g., United States v. Golyansky, 291 F.3d 1245, 1250 (10th Cir. 2002) (holding that the "concept of prejudice" to a defendant opposing such a motion "does not encompass the expense of additional trial preparation" and that prejudice should be found only where there is some evidence that a delayed disclosure impacted a party's ability to prepare its case); Hertz v. Luzenac Am., Inc., No. CIVA04CV1961LTBCBS, 2006 WL 994431, at *21 (D. Colo. April 13, 2006) ("The

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absence of a fixed trial date affords a greater ability to cure any prejudice to the parties and minimizes the possibility of future disruption of the District Court's docket."); Scott v. IBM Corp., 196 F.R.D. 233, 247 n.9 (D.N.J. 2000) (holding that, "simply because [evidence] was untimely discovered and turned over does not warrant its exclusion," and permitting such evidence where the plaintiff had shown no bad faith in the revelation of the additional evidence); cf. Wolfson v. Lewis, 168 F.R.D. 530, 533 (E.D. Pa. 1996) (granting motion to amend where defendant would suffer no prejudice due to continuance of trial date); Karbon v. Turner, No. 91-C-337, 1991 WL 319976, at *2 (E.D. Wis. Dec. 16, 1991) (unpublished decision) (holding that "relaxation of the scheduling order" would not unduly prejudice defendants or interfere with the administration of justice because the trial date was six months away and the parties had adequate time to complete discovery); Pub. Serv. Co. of N.H. v. Westinghouse Elec. Corp., 685 F. Supp. 1281 (D.N.H. 1988). Under these decisions, a party should be permitted to rely on additional evidence at trial where the delayed disclosure was not in bad faith, where it did not prejudice the opposing party, and where the moving party would be prejudiced by its exclusion — particularly where there is no set trial date or the trial schedule had already been extended.¹

Aside from a passing reference (at 31) to the decision in Scott v. IBM (which IBM does not even mention by name), IBM makes no effort either to distinguish these decisions or otherwise explain why they should not apply to SCO's Motion to Amend. Instead, IBM argues

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(at 31) that SCO must present "extremely compelling reasons" because the Court's scheduling order provides that the schedule will not be modified except in such circumstances. This argument overlooks the fact that the scheduling order has already been modified; that SCO's Motion to Amend is a response to that modification; and that SCO's Motion to Amend would not require any further extension of the trial date other than what has already occurred. Accordingly, SCO's motion to amend is not a "modification" of the scheduling order, and thus, would not require a showing of "extremely compelling circumstances."² In addition, as set forth below, even if the motion were subject to this standard, SCO has demonstrated extremely compelling reasons for the motion to be granted.

II. SCO HAS DEMONSTRATED COMPELLING REASONS FOR THE PROPOSED AMENDMENT.

A. SCO Acted Reasonably and Without Any Bad Faith Regarding the Expert Opinions at Issue.

In its Opening Memorandum, SCO set forth the reasons for its interpretation of the scheduling order and why SCO did not include the expert opinions at issue in its December Submission. SCO further explained why that interpretation was reasonable and not made in bad faith. In response, IBM simply argues that its own interpretation of the scheduling order is correct and that the expert opinions at issue should have been disclosed in the December Submission. SCO has rebutted those arguments (in SCO's Reply in Support of Its Objections). Moreover, IBM has made no showing that SCO's interpretation was unreasonable or that SCO acted in bad faith. To the contrary, SCO has explained why it interpreted the scheduling order

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as it did, and there is no basis for IBM to say that SCO's interpretation of the scheduling order was in any way motivated by bad faith.

B. SCO's Amendment Would Not Prejudice IBM.

SCO's Motion to Amend is based on the fact that, in light of the previous trial date being vacated and the Court's expressed intent to try the SCO v. Novell matter first, the parties would have sufficient time to complete any needed (and limited) discovery. IBM addresses this argument in a single paragraph (at 25), asserting without support that preparing a defense to the material at issue "would take no less than an additional year with the benefit of fact and expert discovery." An additional year of fact discovery, however, would give IBM substantially more time than it would have had if the challenged information had been included in SCO's December Submission, when IBM contends it should have been disclosed.

Under the initial trial schedule, the December Submissions were filed on December 22, 2005; initial expert reports were due on April 14, 2006; and opposing expert reports were due on May 19, 2006. Thus, under the original schedule, IBM would have had only five months between receiving the December Submission and submitting its rebuttal expert reports addressing the material at issue.³ The Court has decided that trial in this matter will proceed after trial in the SCO v. Novell matter, which is set for September 2007. If the trial in this matter were to proceed at the earliest possible juncture, trial is at least eight months away. This gives IBM far more time than the time it would have had between receiving the December

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Submission and submitting expert reports on the material at issue, and substantially more than the five months of delay between December 2005, when IBM contends it should have received the material at issue, and May 2006, when the expert opinions at issue were incontrovertibly made known to IBM. Moreover, in addition to the time between the granting of SCO's Motion and the ultimate trial in this matter, IBM has now had nearly a year since May 2006 — during which time IBM simply chose to try to exclude SCO's evidence rather than to take discovery, respond on the merits, or seek leave for the additional time it now contends it needed to respond on the merits.⁴ These facts put some perspective on the standard IBM has in mind in claiming undue "prejudice."⁵

The remainder of IBM's arguments as to prejudice ignore the substantially altered circumstances of the changed trial schedule since the original briefing on IBM's Motion to Confine. Courts are more willing to permit the inclusion of additional evidence in a party's case when that evidence would not delay the trial schedule. See Hertz, 2006 WL 994431, at *21; cf. Karbon, 1991 WL 319976, at *2; Wolfson, 168 F.R.D. at 533; Pub. Serv. Co. of N.H., 685 F. Supp. 1281. The case cited by IBM on this point, Lynchval Systems Inc. v. Chicago

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Consulting Actuaries, Inc., No. 95-1490, 1996 WL 735586, at *9 (N.D. Ill. Dec. 19, 1996), is inapposite because the court in that case held that reopening discovery would "compound the delay until trial." Here there has been no such showing.⁶

Moreover, the Tenth Circuit has made clear that "prejudice should only be found where a delayed disclosure impacted a party's ability to prepare its case. Golyansky, 291 F.3d at 1250. Here, there is no evidence that IBM's ability to prepare a respond to this evidence has been impacted by the delay.

C. SCO Would Be Prejudiced if its Motion to Amend Is Not Granted.

SCO has shown that if the Magistrate Judge's Order on IBM's Motion to Confine is upheld and SCO's instant Motion is denied, SCO would be prejudiced because it would not at trial be able to present the theories of non-literal copying and other expert opinions excluded by that Order. IBM has not refuted SCO's showing of prejudice. Rather, IBM cites two sanctions cases, apparently in an attempt to show that such prejudice should nevertheless be imposed.⁷ However, these sanctions cases all turn on very different circumstances, including the requirements that the party's failure to comply with an order was in bad faith, and that the opposing party was prejudiced — factors which, as shown above, are simply not present here.

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Roadway Exp., Inc. v. Piper, 447 U.S. 752 (1980) (remanding in part because "the trial court did not make a specific finding as to whether counsel's conduct in this case constituted or was tantamount to bad faith, a finding that would have to precede any sanction under the court's inherent powers."); Starlight Int'l, Inc. v. Herlihy, 186 F.R.D. 626 (D. Kan. 1999).

D. The Information at Issue Is Fully Disclosed in SCO's Expert Reports

The Expert Opinions and analysis SCO seeks leave to add by amendment has been known to IBM since May 2006, as they were fully set forth in SCO's expert reports. If SCO's motion is granted, nothing more need be added by SCO. In response to this, IBM only takes issue with the material in Marc Rochkind's report. IBM argues (at 33): "That is also not true, as illustrated by 73 of the additional files added by Mr. Rochkind." This argument overlooks the fact that these files are not additional misused material. Rather, as SCO has made clear in its past briefing on this issue (which IBM continues to ignore), Mr. Rochkind referenced these additional materials simply to show that a contributor of challenged testing technology, which was identified in the December Submission, worked in that testing area for IBM and made substantial contributions to Linux.

E. IBM's Opposition and Claims of Prejudice Are Unreasonable Under the Circumstances

SCO submits that, considered in perspective, IBM's opposition to SCO's Motion is unreasonable. By even the most aggressive estimate, given the timing of the SCO v. Novell trial and the Court's busy schedule with many other cases, the IBM trial would not be held until the end of 2007. At bottom, then, IBM insists that it will suffer "incurable prejudice"

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sufficient to deny SCO's Motion to Amend notwithstanding that the following will be true by the time of trial:

• IBM will have been of the view that SCO alleges in this case that Linux is a derivative work of UNIX System V under the copyright laws for over four years.


• IBM will have known of the relevance of the UNIX System V system calls and Streams to the comparison of Linux and UNIX System V for two years.


• IBM will have known SCO's expert's final analysis of how Linux is a derivative work of UNIX System V under the copyright laws for over eighteen months.


• IBM will have had an opportunity to depose SCO's expert on his analysis of how Linux is a derivative work of UNIX System V over three months after IBM received that analysis.


• IBM will have had an opportunity to have its experts respond to SCO's expert on his analysis of how Linux infringes UNIX System V copyrights over three months after IBM received that analysis.


• IBM will have had an opportunity to depose, or seek further to depose, SCO's expert on his analysis of how Linux is a derivative work of UNIX System V over a year before the trial begins.


• IBM similarly will have had an opportunity to depose SCO's other experts on their analysis of allegedly "new material" over three months after IBM received those analyses and over a year before the trial begins.

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SCO submits that under such circumstances IBM's claim of undue prejudice is incorrect, is no basis for denying SCO's Motion to Amend, and finds no support in any remotely analogous cases, whether cited by IBM or not.

CONCLUSION

SCO respectfully requests, for the reasons set forth above and in SCO's Opening Memorandum, that the Court grant SCO's Motion to Amend Its December 2005 Submission.

10

CERTIFICATE OF SERVICE

Plaintiff/Counterclaim-Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing SCO'S REPLY MEMORANDUM IN SUPPORT OF ITS MOTION TO AMEND ITS DECEMBER 2005 SUBMISSION was served on Defendant/Counterclaim-Plaintiff, International Business Machines Corporation, on this 19th day of March, 2007, via electronic mail (by agreement of the parties) to the following:

David Marriott, Esq. [email address]
Cravath, Swaine & Moore LLP
[address]

Todd Shaughnessy, Esq. [email address]
Snell & Wilmer LLP
[address]

By_______________________________

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TABLE OF CONTENTS

12

TABLE OF AUTHORITIES

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