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A Groucho Marx Imitation in SCO v. IBM & SCO's Memo in Support of Objections to Order on Spoliation
Thursday, May 03 2007 @ 03:01 AM EDT

Some more filings in SCO v. IBM including one that has to be our winner for best Marx Brothers imitation. And as you know, there is heavy competition for that crown. But I do think we have the victorious entry. It's SCO who is requesting more time to respond to an IBM filing, to which IBM has agreed, and SCO phrases its stipulated request like this:
The parties, through their counsel of record, hereby stipulate and jointly move the Court for an Order enlarging the deadline for SCO to file its sur-surreply to IBM's Sur-Reply Memorandum in Further Opposition to SCO's Objections to the Magistrate Judge's Order on IBM's Motion to Confine and SCO's Motion to Amend its December 2005 Submission, on or before May 11, 2007.

Top that, Groucho!

Of course, as a reader reminds me, Groucho had a sanity clause, whereas -- dare I say it? -- with SCO, there ain't no sanity clause. Not that IBM isn't kicking itself now for not thinking of having a sanity clause inserted in its contract back in 1985. Well, you live and learn.

Surely these sur-sur-replies (how often does one need two hyphens in one word?) to sur-reply memoranda are at least in spirit harmonious with the famous contract scene in A Night at the Opera:

Driftwood: All right. It says the, uh, "The first part of the party of the first part shall be known in this contract as the first part of the party of the first part shall be known in this contract" - look, why should we quarrel about a thing like this? We'll take it right out, eh?

Fiorello: Yeah, it's a too long, anyhow. (They both tear off the tops of their contracts.) Now, what do we got left?

Driftwood: Well, I got about a foot and a half. Now, it says, uh, "The party of the second part shall be known in this contract as the party of the second part."

Fiorello: Well, I don't know about that...

Driftwood: Now what's the matter?

Fiorello: I no like-a the second party, either.

Driftwood: Well, you should've come to the first party. We didn't get home 'til around four in the morning... I was blind for three days!

Fiorello: Hey, look, why can'ta the first part of the second party be the second part of the first party? Then a you gotta something.

Driftwood: Well, look, uh, rather than go through all that again, what do you say?

Fiorello: Fine. (They rip out a portion of the contract.)

Driftwood: Now, uh, now I've got something you're bound to like. You'll be crazy about it.

Fiorello: No, I don't like it.

Driftwood: You don't like what?

Fiorello: Whatever it is. I don't like it.

Driftwood: Well, don't let's break up an old friendship over a thing like that. Ready?...

Fiorello: OK! (Another part is torn off.) Now the next part, I don't think you're gonna like.

Driftwood: Well, your word's good enough for me. (They rip out another part.) Now then, is my word good enough for you?

Fiorello: I should say not.

Driftwood: Well, that takes out two more clauses. (They rip out two more parts.) Now, "The party of the eighth part..."

Fiorello: No, that'sa no good. (more ripping.) No.

Driftwood: "The party of the ninth part..."

Fiorello: No, that'sa no good, too. (they rip the contracts again until there's practically nothing left.) Hey, how is it my contract is skinnier than yours?

Driftwood: Well, I don't know. You must've been out on a tear last night. But anyhow we're all set now, aren't we?

Fiorello: Oh sure.

Driftwood (offering his pen to sign the contract): Now just, uh, just you put your name right down there and then the deal is, uh, legal.

Fiorello: I forgot to tell you. I can't write.

Driftwood: Well, that's all right, there's no ink in the pen anyhow. But listen, it's a contract, isn't it?

Fiorello: Oh sure.

Driftwood: We got a contract...

Fiorello: You bet.

Driftwood: No matter how small it is...

Fiorello: Hey, wait, wait. What does this say here? This thing here.

Driftwood: Oh, that? Oh, that's the usual clause. That's in every contract. That just says uh, it says uh, "If any of the parties participating in this contract is shown not to be in their right mind, the entire agreement is automatically nullified."

Fiorello: Well, I don't know...

Driftwood: It's all right, that's, that's in every contract. That's, that's what they call a 'sanity clause'.

Fiorello: Ha ha ha ha ha! You can't fool me! There ain't no Sanity Clause!

I think SCO is up to about the party of the eighth part in its quest to overturn all of Judge Wells' recent decisions. All joking aside, SCO is fighting for its litigious life, and maybe the lawyers are fighting to avoid sanctions too. Who knows? You'll remember IBM's scathing Sur-Reply with the attached "Copyright Principles", the one that began by accusing SCO, saying that "SCO’s reply papers distort Judge Wells’ order, misstate IBM’s position and mischaracterize the applicable law and evidence." That is the one SCO would like more time to answer.

There are more filings -- two IBM motions seeking to file two overlong memoranda in opposition to another attempt by SCO to overturn another Wells decision, the spoliation one. IBM has filed both as sealed documents. These are about SCO's attempt to pin IBM with a charge of spoliation of evidence, something the court has already ruled IBM didn't do. But you know SCO. If at first you don't succeed, file lotsa motions asking the court to start all over again.

At first glance, Docket entry 1039 and 1040 appear to be identical. However, if you read them, you'll notice that first IBM asked to file 31 pages of legal argument in opposition to SCO's Motion for Reconsideration of the Order Denying SCO's Motion for Relief for IBM's Alleged Spoliation of Evidence, and after that it filed again, only this time it asks for only 16 pages of legal argument, and this is the Memorandum in Opposition to SCO's Objections to the Magistrate Judge's Order Denying SCO's Motion for Relief for IBM's Alleged Spoliation of Evidence. Whew. Just figuring out where they are in the stream of filings takes an hour to be sure you've got the right SCO motion on your desk in front of you. Part of the problem is that SCO filed two motions regarding the same order, one asking the judge to reconsider, and the other objecting to the order. And in the motion requesting more time, it got complex because SCO asked for alternative relief, and then we went into overtime, with sur-replies. So the names of the filings just get longer and longer. Like Pinocchio's nose.

Whatever made me think of that?

Even the clerk seems to have given up. Usually the clerk puts a number notation showing what a memo in opposition is opposing. Not here. But I believe 986 is SCO's motion for reconsideration, with 1009 SCO's redacted memorandum in support of its motion for reconsideration. 987 is SCO's Objections to that same Wells order, and 1002 SCO's memorandum in support of its objections. See what I mean about the party of the 8th part? If I got it wrong, don't sue me, please.

Here are the Docket entries:

1039 - Filed & Entered: 04/27/2007
Terminated: 04/30/2007
Motion for Leave to File Excess Pages
Docket Text: MOTION for Leave to File Excess Pages for Memorandum in Opposition to SCO's Motion for Reconsideration of the Order Denying SCO's Motion for Relief for IBM's Alleged Spoliation of Evidence filed by Defendant International Business Machines Corporation, Counter Claimant International Business Machines Corporation. (Attachments: # (1) Text of Proposed Order) Motions referred to Brooke C. Wells.(Sorenson, Amy)

1040 - Filed & Entered: 04/27/2007
Terminated: 04/30/2007
Motion for Leave to File Excess Pages
Docket Text: MOTION for Leave to File Excess Pages on Memorandum in Opposition to SCO's Objections to the Magistrate Judge's Order Denying SCO's Motion for Relief for IBM's Alleged Spoliation of Evidence filed by Defendant International Business Machines Corporation, Counter Claimant International Business Machines Corporation. (Attachments: # (1) Text of Proposed Order) Motions referred to Brooke C. Wells.(Sorenson, Amy)

1041 - Filed & Entered: 04/30/2007
Order on Motion for Leave to File Excess Pages
Docket Text: ORDER granting [1039] Motion for Leave to File Excess Pages. Signed by Judge Dale A. Kimball on 4/30/07. (blk)

1042 - Filed & Entered: 04/30/2007
Order on Motion for Leave to File Excess Pages
Docket Text: ORDER granting [1040] Motion for Leave to File Excess Pages. Signed by Judge Dale A. Kimball on 4/30/07. (blk)

1043 - Filed: 04/27/2007
Entered: 04/30/2007
Sealed Document
Docket Text: **SEALED DOCUMENT** MEMORANDUM IN OPPOSITION re [986] MOTION FOR RECONSIDERATION BY THE MAGISTRATE COURT OF THE ORDER DENYING SCOS MOTION FOR RELIEF FROM IBMS SPOLIATION OF EVIDENCE filed by Defendant International Business Machines Corporation. Note: No document attached. This document will be retained in the Clerk's Office sealed room for viewing by authorized persons only. (blk)

1044 - Filed: 04/27/2007
Entered: 04/30/2007
Sealed Document
Docket Text: **SEALED DOCUMENT** MEMORANDUM IN OPPOSITION re [899] Objection to Magistrate Judge Decision to District Court filed by Defendant International Business Machines Corporation. Note: No document attached. This document will be retained in the Clerk's Office sealed room for viewing by authorized persons only. (blk)

1045 - Filed & Entered: 05/02/2007
Motion for Extension of Time to File Response/Reply
Docket Text: Stipulated MOTION for Extension of Time to File Response/Reply to IBM's Sur-Reply Memorandum in Further Opposition to SCO's Objections to the Magistrate Judge's Order on IBM's Motion to Confine and SCO's Motion to Amend its December 2005 Submission filed by Plaintiff SCO Group. (Attachments: # (1) Text of Proposed Order) Motions referred to Brooke C. Wells.(Normand, Edward)

And the beat goes on. Here, to help us all keep this straight, is SCO's Memorandum in Support of its Objections, as text, thanks to caecer. You can open two browsers and put it side by side with SCO's memorandum in support of its motion for reconsideration if you wish to see SCO in the fullness of its position. The latter is all about misapprehensions of law and fact SCO thinks Judge Wells made. SCO in that motion asks Magistrate Judge Wells to reconsider after hearing all the mistakes SCO thinks she made and change her mind as to the outcome. But at the same time, SCO also filed Objections, which would be up to the presiding judge, Judge Dale Kimball, whereby if Judge Wells doesn't change her mind, SCO asks him to change it for her. Who goes first will be up to them to sort out. SCO just files 'em. It's up to the rest of us to try to keep it all straight.

I find this document particularly illogical, because SCO argues, as best I can make out, that IBM employees deleted AIX and Dynix/ptx code from their sandboxes prior to beginning work on a Linux project, and that because they did that, valuable evidence was lost, so SCO should win, even though it has failed to provide any evidence of infringement.

The illogical part is that any AIX and Dynix code would have been taken from the code repositories, and on deletion by individuals who checked it out, that identical code which is stored in the repositories would still be there, intact. That's the thing about digitalization -- you can copy without depleting the original. SCO's argument? If there had been no deleting that code, SCO could have found out "whether that code had been retained on programmers' systems when they transitioned to work on Linux, or what particular subparts or versions of the operating system had been retained."

Does that make sense? SCO claims that they did delete it, so on what basis does SCO claim that in fact they retained some or all of it? What makes them think that they did? What evidence is there for this theoretical? And if they did, wouldn't it still be available? And if they didn't, what would be the problem, since there would be nothing improper retained. See how illogical? It wants IBM punished for not figuring out that SCO might reason like this. But without any evidence that anybody did retain code (and if they did, it should still be there), SCO creates only what I would call a theoretical alleged spoliation, because spoliation is about evidence, and where is there any proof that anything SCO is imagining ever actually happened? All of SCO's cases fail on that same illogical point.

And can you imagine what SCO would have done if IBM had had its employees retain AIX code on their computers while they worked on Linux? That'd be about the end of the world in sinfulness to SCO, I think. So IBM is in a no-win circumstance with SCO claiming they are evil no matter what they did. Kind of like trial by drowning in the Middle Ages, where suspected witches were tied up and thrown into a body of water. If they floated, they were guilty and killed. If they drowned, they were innocent.

As usual with SCO, it isn't possible to be positive if they don't understand how software is written or if they are pretending not to. But IBM has already told the court that the simple truth is that SCO hasn't accused any of the engineers who allegedly were told to delete code of donating any improper code to Linux. There is no code match to any of the guys, so what difference does it make what was on their computers? And IBM has told the court that nothing was deleted anyway. So what is all this about? You tell me, folks. Maybe SCO makes stuff up?

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

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE
[address]
[phone]
[fax]

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

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

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

Attorneys for The SCO Group, Inc.



IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff.
SCO'S MEMORANDUM IN SUPPORT
OF ITS OBJECTIONS TO THE
MAGISTRATE COURT'S ORDER
DENYING SCO'S MOTION FOR
RELIEF FOR IBM'S SPOLIATION OF
EVIDENCE

FILED IN REDACTED FORM
[ORIGINALLY FILED UNDER SEAL]


Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE
[address]
[phone]
[fax]

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

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

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

Attorneys for The SCO Group, Inc.



IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff.
SCO'S MEMORANDUM IN SUPPORT
OF ITS OBJECTIONS TO THE
MAGISTRATE COURT'S ORDER
DENYING SCO'S MOTION FOR
RELIEF FOR IBM'S SPOLIATION OF
EVIDENCE

FILED UNDER SEAL]


Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

TABLE OF CONTENTS

Page
PRELIMINARY STATEMENT 1
BACKGROUND 1
STANDARD OF REVIEW 4
ARGUMENT 5
I. IBM INSTRUCTED LINUX PROGRAMMERS TO "PURGE" OR "DELETE" CODE FROM THEIR SANDBOXES, AND THESE INSTRUCTIONS WERE FOLLOWED. 5
II. THE EVIDENCE DESTROYED BY IBM IS NOT AVAILABLE THROUGH CHANGE CONTROL MANAGEMENT SYSTEMS, SUCH AS CMVC OR RCS. 8
III. SCO WAS PREJUDICED BY IBM'S DESTRUCTION OF EVIDENCE. 10
IV. IBM DESTROYED THE EVIDENCE IN BAD FAITH. 11
CONCLUSION 16

i

TABLE OF AUTHORITIES

Page
Cases
Adams v. Gateway, Inc.,
No. 2:02-CV-106 TS, 2006 WL 2563418 (D. Utah 2006)
13
Brown & Williamson Tobacco Corp. v. Jacobson,
644 F. Supp. 1240 (N.D. Ill. 1986)
14
Brown & Williamson Tobacco Corp. v. Jacobson,
827 F.2d 1119 (7th Cir. 1987)
14
Cabinetware, Inc. v. Sullivan,
No. Civ. S. 90-313, LKK 1991 WL 327959 (E.D. Cal. 1991)
11
Computer Associates Int'l, Inc. v. Am. Fundware, Inc.,
133 F.R.D. 166 (D. Colo. 1990)
13, 14
Harvey by Blankenbaker v. United Transp. Union
878 F.2d 1235 (10th Cir. 1989)
5
Hollern v. Wachovia Secs.,
Nos. 05-1253, 05-1300, 2006 WL 2361627 (10th Cir. Aug. 16, 2006)
4
In re Napster, Inc. Copyright Litig.,
462 F. Supp. 2d 1060 (N.D. Cal. 2006)
13

ii

Plaintiff, The SCO Group, Inc. ("SCO"), by and through undersigned counsel, respectfully submits this Memorandum in Support of its Objections to the Magistrate Court's Order Denying SCO's Motion for Relief for IBM's Spoliation of Evidence.

PRELIMINARY STATEMENT

On September 25, 2006, SCO filed its Motion for Relief for IBM's Spoliation of Evidence. In the Motion, SCO demonstrated that, shortly after SCO filed suit against IBM, IBM executives and lawyers directed multiple IBM Linux programmers to destroy source code on their computers that would have been highly relevant to SCO's claims. SCO's motion for relief from this spoliation was referred to the Magistrate Court in this Court's November 29, 2006 Order (at 4 n.2), heard on January 18, 2007 ("January Hearing") (Ex. 1), and denied by the Magistrate Court on March 2, 2007 ("March Order") (Ex. 2). The order of reference provided that the Court would apply a de novo standard of review if the Magistrate Court's decision was appealed. SCO respectfully submits that upon such review, the Magistrate Court's denial of this Motion should be reversed. SCO is contemporaneously filing a motion for reconsideration with the Magistrate Court, addressing misapprehensions of fact and law in the Magistrate Court's March Order.

BACKGROUND

In early April 2003, shortly after the filing of SCO's lawsuit, IBM cut off its Linux programmers' access to Dynix/ptx and AIX code1 and then directed numerous Linux

1

programmers to "purge" or "delete" source code from their "sandboxes" and personal computers. An April 8, 2003 email from an IBM executive stated:

REDACTED

(Ex. 3.) A "sandbox" is a private computer workspace in which programmers can draft and test source code they are developing without impacting the entire operating system.

The destruction of evidence from these sandboxes or computer workspaces has prejudiced SCO. The evidence destroyed in the purging of the sandboxes would have provided further support for SCO's claims or led to the discovery of additional relevant evidence. Namely, it would have demonstrated that IBM's Linux programmers possessed at their fingertips the very AIX and Dynix/ptx code IBM contends those programmers did not access or use in developing Linux, and it would have shown what specific parts of those operating systems the programmers chose to retain on their computers. This evidence is highly probative and should not have been destroyed. Therefore, SCO is entitled, at minimum, to an adverse inference from this destruction of evidence that began one month after the case was filed.

The facts and context of IBM's conduct shows that IBM destroyed this evidence in bad faith. In March 2003, SCO brought a significant lawsuit against IBM, which plainly contested IBM's use of UNIX-derived operating systems in developing Linux. Following that lawsuit, IBM promptly cut off its Linux programmers' access to those operating systems and instructed them to purge code from their sandboxes and computers. In discovery in this case, an IBM witness admitted that such an order had been received and acted upon. In response to SCO's

2

spoliation motion these same witnesses changed their testimony in an attempt to deny what is clear from the foregoing facts. This is not the innocent misunderstanding that IBM would now have this Court believe.

To remedy IBM's spoliation of this highly relevant evidence, SCO requested in its Motion that the Magistrate Court (1) enter an order precluding IBM from contesting that it relied on AIX and Dynix/ptx source code in making contributions to Linux development, and (2) imposing adverse-inference instruction against IBM. Both of SCO's requests are consistent with the common-sense and well-established principle that a party who has notice that evidence is relevant to litigation and who proceeds to knowingly destroy it is more likely to have been threatened by that evidence than a party in the same position who does not destroy the evidence.

IBM opposed SCO's motion on essentially four grounds: First, IBM contested that it ever gave a directive to destroy source code, and further contended that even if source code was deleted from programmers' sandboxes, it was available and had been produced elsewhere to SCO, so no evidence was actually destroyed. Second, IBM argued that, in light of the "fact" that no evidence was destroyed, SCO cannot show that IBM acted in bad faith. Third, IBM contended that SCO was not prejudiced because no evidence was destroyed and, even if it was destroyed, it was not relevant to any of SCO's claims. Fourth, and finally, IBM contended that SCO waived any relief for IBM's spoliation of evidence in an earlier stipulation regarding discovery issues. SCO refuted each of these arguments in its reply brief.

At the January hearing on SCO's motion, the Magistrate Court announced that the "motion regarding spoliation and the adverse inference instruction will be denied," and explained the following bases for that decision:

3

  • "The evidence before me, as put into context . . . cannot show that any evidence was lost or destroyed. In fact, I find that it is available and has been available through CMVC."
  • "The evidence before me, when seen in context, does not show that IBM acted in bad faith nor does the evidence show that [SCO] has been prejudiced because the evidence, as I indicated, has been and is reasonably available."

(Ex. 1 at 56:2-9.) In addition, the Magistrate Court asked IBM to assist SCO in locating the evidence IBM contended and the Court concluded was still available in CMVC. (Id. at 58:12- 14.) In the written March Order, the Magistrate Court formally denied SCO's motion "for the reasons set forth by the Court at the hearing held on January 18, 2007." (Ex. 2.)

The Magistrate Court's order should be overturned for the following reasons: First the Magistrate Court's finding that the destroyed evidence is available in CMVC is wrong, and could not possibly relate to a substantial portion of the evidence SCO contends was destroyed. Second, SCO was clearly prejudiced by the destruction of highly probative evidence. Third, bad faith can and should be inferred from the timing and nature of IBM's destruction.

STANDARD OF REVIEW

SCO's Motion for Relief for IBM's Spoliation of Evidence this spoliation was referred to the Magistrate Court in this Court's November 29, 2006 Order (at 4 n.2). The order of reference provided that the Court would apply a de novo standard of review if the Magistrate Court's decision was appealed. This appropriately reflects that a mixed question of law and fact, as involved in this motion, is reviewed de novo if it "involves the application of legal principles to undisputed facts," Hollern v. Wachovia Secs., Nos. 05-1253, 05-1300, 2006 WL 2361627, at *6

4

(10th Cir. Aug. 16, 2006) (Ex. A), or if the issue is "[w]hether the district court failed to consider or accord proper weight or significance to relevant evidence," Harvey by Blankenbaker v. United Transp. Union, 878 F.2d 1235, 1244 (10th Cir. 1989).

ARGUMENT

I. IBM INSTRUCTED LINUX PROGRAMMERS TO "PURGE" OR "DELETE" CODE FROM THEIR SANDBOXES, AND THESE INSTRUCTIONS WERE FOLLOWED.

After SCO filed its lawsuit, IBM management decided to remove access by its Linux Technology Center ("LTC") programmers to AIX and Dynix/ptx source code. This decision shows that IBM well understood that SCO was claiming that IBM had misused Unix-derived works, and the significance of that code to SCO's claims. Daniel Frye, the head of IBM's LTC, testified:

REDACTED

(Ex. 4 at 91.)

On April 8, 2003 — one month after SCO's lawsuit was filed and shortly after the decision to restrict access to AIX and Dynix/ptx source code had been made -- Randal Swanberg, a senior IBM executive, sent the following email to IBM managers and team leaders relaying additional instructions:

5

REDACTED

(Ex. 3 (emphasis added).) In this email, Mr. Swanberg was referring to a decision in a meeting of IBM's Open Source Steering Committee (OSSC), which is an IBM organization charged with oversight of IBM's contributions to open-source software such as Linux. The OSSC includes IBM executives and lawyers. (Rule 30(b)(6) Deposition of Mark Brown (Mar. 10, 2006) at 15-16 (Ex. 5).)

This OSSC decision described in the Swanberg email was then carried out more broadly within IBM. Daniel Frye instructed programmers within IBM's Linux Technology Center to "purge" or "delete" AIX and Dynix/ptx source code from their local machines and sandboxes. As suggested in the Swanberg email, this deletion instruction was given in addition to the newly-implemented decision to restrict programmers' access to that source code. Dan Frye testified:

REDACTED

6

REDACTED

(Ex. 4 at 92-93 (emphasis added).) In short, programmers within the LTC -- who were specifically assigned to work on Linux, who had previously had access to AIX and Dynix/ptx code, and who had had that access removed in response to the lawsuit -- were then further instructed to purge or delete all such code from their machines and to purge and delete the contents of their sandboxes. Those programmers were not programming for AIX or Dynix/ptx when they were told to delete that code -- they were specifically assigned by IBM to program for Linux.

IBM Linux programmer (and former Dynix/ptx programmer) Paul McKenney confirmed that he deleted Dynix/ptx source code from his machine in response to such in instruction. He testified:

REDACTED

7

REDACTED2

Furthermore, Mr. McKenney's admission that he is not aware of IBM backing up the code is directly contrary to the main thrust of IBM's opposition to this motion -- that the destroyed code was available from CMVC or RCS.

II. THE EVIDENCE DESTROYED BY IBM IS NOT AVAILABLE THROUGH CHANGE CONTROL MANAGEMENT SYSTEMS, SUCH AS CMVC OR RCS.

Notwithstanding this compelling proof that evidence was destroyed, the Magistrate Court concluded: "The evidence, as put into context . . . cannot show that any evidence was lost or destroyed. In fact, I find that it is available and has been available through CMVC." The Magistrate Court's conclusion that this evidence is available through CMVC is incorrect and should be overturned. SCO has also moved for reconsideration by the Magistrate Court on this point.

8

Neither CMVC (the AIX change control system referenced by the Magistrate Court) nor RCS (the Dynix/ptx change control system) contains the evidence SCO contends IBM destroyed.3 Even if all the code that was destroyed by purging Linux programmer sandboxes and workspaces could still be located somewhere in CMVC or RCS, that does not mean that no evidence was destroyed. The code that was in the sandboxes or workstations would have demonstrated that IBM'S Linux programmers, like Mr. McKenney, retained AIX or Dynix/ptx on their systems while programming for Linux (long after they ceased work on those operating systems). Further, the particular AIX or Dynix/ptx code that a Linux programmer chose to retain on his system while programming for Linux would have provided important proof in that SCO could compare that particular code to the programmers' Linux disclosures. While IBM has contended that a change management control system, such as CMVC or RCS, shows what code had been "checked out" by programmers (Ex. 1 at 46:7), CMVC and RCS could not possibly show whether that code had been retained on programmers' systems when they transitioned to work on Linux, or what particular subparts or versions of the operating system had been retained by the programmer. The fact that some code the programmer chose to retain on his system might be duplicated somewhere on a code repository entirely misses the point.

Accordingly, the Magistrate Court's conclusion that the destroyed code is available on CMVC (or even RCS) should be overturned.

9

III. SCO WAS PREJUDICED BY IBM'S DESTRUCTION OF EVIDENCE.

The Magistrate Court's decision that SCO was not prejudiced appears to have been largely based on the erroneous conclusion that the destroyed evidence was available on CMVC (or presumably, RCS, though that was not addressed). Without that finding, the Magistrate Court's conclusion regarding prejudice cannot stand. SCO therefore has also addressed this issue in detail in its Motion for Reconsideration before the Magistrate Court.

The evidence destroyed by IBM is probative to SCO's claims and its destruction prejudiced SCO. The presence of AIX and Dynix/ptx code in the sandboxes of programmers in IBM's LTC -- at their very fingertips -- would have further refuted IBM's ongoing assertion that its Linux programmers did not access or rely on Dynix/ptx and AIX source code when they were programming code for Linux. Moreover, the destroyed evidence would have enabled SCO to provide more specific identification of the AIX or Dynix/ptx code on which the programmers' Linux disclosures was based.

The prejudice to SCO from this destruction is particularly severe in light of the Magistrate Court's June 28, 2006 Order (affirmed on November 11, 2006, pending a motion for reconsideration). In its December 2005 Submission, SCO was able to identify numerous methods and concepts that IBM programmers disclosed to Linux in violation of its Dynix/ptx software license, but in many cases SCO was not able to identify the specific Dynix/ptx source code behind the methods and concepts. Those methods and concepts were stricken from SCO's case. However, the source code deleted from Linux programmer sandboxes would have substantially helped SCO identify the specific Dynix/ptx source code behind these methods and concepts.

10

The importance of the initial source code from which later drafts were developed, and the prejudice flowing from its destruction, was recognized in a similar case involving copyright infringement. In Cabinetware, Inc. v. Sullivan, No. Civ. S. 90-313 LKK 1991 WL 327959 (E.D. Cal. 1991) (Ex. B), the defendant destroyed source code after receiving a document request for such code. The magistrate judge found that "computer programs can be easily modified to disguise the copying of source codes and that a comparison of [the defendant's] initial source code with [the plaintiff's] source code is of critical importance in this case." Id. at *2. Therefore, the magistrate judge recommended that an adverse inference instruction be given. The district court agreed that the evidence that was destroyed was "essential to plaintiff's case" of copyright infringement, and entered a default judgment on the issue of liability against the defendant. Id. at *2, 4. As in the Cabinetware case, the code in IBM Linux programmers' sandboxes was important to SCO's case because computer programs can so "easily be modified to disguise the copying of source codes."

IV. IBM DESTROYED THE EVIDENCE IN BAD FAITH.

The Magistrate Court's finding that IBM did not act in bad faith appears to have been largely based on the erroneous conclusion that the destroyed evidence was available on CMVC (or RCS). Without that finding, the Magistrate Court's conclusion regarding bad faith cannot stand. This issue is also addressed in detail in SCO's motion for reconsideration before the Magistrate Court.

Bad faith can and should be inferred from the circumstances surrounding IBM's directive to purge programmer sandboxes or workspaces. As IBM became involved in Linux, IBM repeatedly and publicly boasted that its experience in and disclosures from AIX and Dynix/ptx

11

was the critical difference in evolving Linux from a hobbyist system to a commercially-hardening operating system. For example, in an interview with Linux Magazine about the state of the Linux kernel in 2001, IBM programmer Patricia Gaughen stated that Linux was "not

REDACTED

example, Dan Frye, the Director of the LTC, confirmed in an interview with the Consulting Times that the LTC "wanted skills from across IBM, and we have people from AIX, and OS2 . . . and PTX, and Research and so on." (Consulting Times, Inside IBM -- Dan Frye and the Linux Technology Center, Ex. 8.) Frye also discussed the porting of IBM's proprietary technology to Linux, stating "[IBM] just add[s] arms and legs and skills to make [projects within Linux] go faster." (Id.)

When SCO realized that IBM was improperly using these Unix-derived works in Linux, SCO confronted IBM regarding the problem without success, and then SCO filed the instant lawsuit against IBM on March 6, 2003. SCO's initial complaint against IBM made clear that the conduct of the LTC in making disclosures to Linux development was at the heart of the lawsuit.

IBM's destruction of evidence then ensued as a direct response to the lawsuit. After SCO filed its lawsuit, IBM immediately determined that access by its Linux programmers to AIX and Dynix/ptx code should be removed. This shows that there was no confusion on IBM's part as to the significance of this AIX and Dynix/ptx code to which its Linux programmers had access and the nature of the problem alleged by SCO in its complaint. However, IBM did not stop there. IBM's OSSC then decided that Linux programmers whose access had been removed should also "purge" their sandboxes or similar workspaces. That OSSC decision was then implemented in

12

IBM's Linux Technology Center -- the very organization within IBM that was tasked with developing the code for Linux that was at issue in SCO's lawsuit.

This rapid succession of events from SCO's lawsuit to the destruction of the sandbox evidence necessarily creates an inference of bad faith. IBM cannot reasonably contend that its destruction of evidence was accidental or coincidental. The destruction was an intentional act taken in response to the filing of SCO's lawsuit. This establishes willfulness and bad faith. Furthermore, IBM spent the next two years after the lawsuit resisting efforts of SCO to obtain access to the code repository systems CMVC and RCS that it now claims absolve it of any culpability for destroying evidence in 2003.

At the January hearing IBM argued that SCO has not satisfied the bad faith element because "SCO has not come forward with a shred of evidence that any member of the LTC, or Mr. Swanberg, ever entertained the thought that what they were doing by making this very simple request was destroying evidence." But this argument goes far beyond what the law requires of SCO to show bad faith. Bad faith can be inferred from circumstantial evidence, Adams v. Gateway, Inc., No. 2:02-CV-106 TS, 2006 WL 2563418, at *3 (D. Utah 2006) (Ex. C). In particular, courts have found the timing of the destruction of evidence -- whether evidence is destroyed after notice that it could be relevant in litigation -- probative to bad faith. See, e.g., In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1070, 1072-74 (N.D. Cal. 2006) (finding duty to maintain and not destroy relevant email and other documents after notice of litigation, and that destruction after notice of litigation is relevant to determination of willfulness or bad faith); Computer Associates Int'l, Inc. v. Am. Fundware, Inc., 133 F.R.D. 166, 169-70 (D. Colo. 1990) (finding deletion of source code by computer program developer in copyright action

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merited spoliation sanction of default because timing of destruction after notice of litigation); Brown & Williamson Tobacco Corp. v. Jacobson, 644 F. Supp. 1240, 1248-49 (N.D. Ill. 1986) (noting under a totality of the circumstances analysis that selective destruction after notice that a lawsuit is pending may serve as basis for finding bad faith spoliation); Brown & Williamson Tobacco Corp. v. Jacobson, 827 F.2d 1119, 1134-35 (7th Cir. 1987) (affirming jury finding in trial court on same).

The decision in Computer Associates Int'l, Inc. v. Am. Fundware, Inc., 133 F.R.D. 166, 169-70 (D. Colo. 1990), is particularly instructive. In that case, Computer Associates ("CA") alleged that the defendant, American Fundware ("AF"), improperly copied its software in violation of their agreement. As in the SCO case, CA brought these issues to AF's attention and, when a resolution could not be reached, filed suit against AF. Id. at 168. Before that time, AF had been destroying all previous versions of the software at issue, other than the current version, and AF continued this practice after the litigation had commenced. Id. CA moved for sanctions based on this spoliation of evidence. The court imposed a default judgment on AF for its destruction -- even though the court found that the practice of deleting old versions "is commonly followed in the industry, for legitimate reasons, and is not inherently wrongful." Id. The court persuasively explained: "It is inconceivable that after the October 1986 [pre-litigation] meeting, AF did not realize that the software in its possession would be sought through discovery. Certainly commencement of the action settles any doubts." at 169 (emphasis added). Therefore, the court concluded that the destruction was willful and in bad faith, and that the destruction of source code, the "best evidence" of copying, inflicted "the ultimate prejudice." Id. at 170. In this case -- where IBM actually undertook the destruction of evidence in response to

14

the litigation and with clear notice that the evidence would be relevant to SCO's claims -- bad faith should be inferred.

15

CONCLUSION

For the foregoing reasons, SCO respectfully requests that this Court overturn the Magistrate Court's Order of March 2, 2007, and grant the relief requested above for IBM's spoliation of evidence.

DATED this 16th day of March, 2007.


HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
Robert Silver
Stuart H. Singer
Stephen N. Zack
Edward Normand

By [Signature of Mark F. James]
Counsel for The SCO Group

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CERTIFICATE OF SERVICE

Plaintiff/Counterclaim-Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing REDACTED SCO's MEMORANDUM IN SUPPORT OF ITS OBJECTIONS TO THE MAGISTRATE JUDGE'S ORDER OF MARCH 2,2007 DENYING SCO's MOTION FOR RELIEF FOR IBM's SPOLIATION OF EVIDENCE was served on Defendant/Counterclaim-Plaintiff, International Business Machines Corporation, on this 20th day of March, 2007, CM/ECF to the following:


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

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

By: /s/ Mark James

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1 This clearly shows that, contrary to what it has repeatedly argued to this court, IBM understood exactly what the thrust of SCO's allegations was about IBM using AIX and Dynix technology and expertise to enhance Linux in violation of its contractual obligations.

(Referenced here)
2 The Read Copy Update (or RCU) technology is one of the major items of Dynix/ptx technology SCO contends was improperly disclosed by IBM.

(Referenced here)
3 The Magistrate Court only referenced CMVC, which is an AIX code repository. CMVC does not contain any Dynix/ptx code, so could not possibly have contained duplicates of any Dynix/ptx code that SCO contends was destroyed. Therefore, SCO also addresses herein IBM's anticipated argument that any destroyed Dynix/ptx code would have been included on the Dynix/ptx change control system, RCS, comparable to AIX'S CMVC.

(Referenced here)

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