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Red Hat Tells the Court All About SCO's Woes
Tuesday, September 18 2007 @ 10:56 AM EDT

Here's the Red Hat letter as text, where they inform the judge in Delaware, Sue Robinson, all about SCO's woes in Utah. If you want to know where everything stands currently in all the cases, this is a very good summary.

YOUNG CONAWAY STARGATT & TAYLOR, LLP

JOSY W. INGERSOLL (No. 1088)
[address, phone, fax, email]
[company contact details]

September 17, 2007

BY E-FILE

The Honorable Sue L. Robinson
United States District Court
[address]

Re: Red Hat, Inc. v. SCO Group, Inc.;
Civil Action No. 03-772-SLR

Dear Judge Robinson:

Pursuant to the Court's April 6, 2004 Order requesting a quarterly report on the status of various related litigation matters, Red Hat, Inc. ("Red Hat") submits this letter as an update to its previous letter, dated June 20, 2007. Although Red Hat is not a party to these other related cases, Red Hat offers the following summary based upon publicly available information.

Red Hat understands that, SCO Group Inc., ("SCO") filed a Chapter 11 Voluntary Petition in the United States Bankruptcy Court for the District of Delaware on September 14, 2007 (the "Petition"). Red Hat is aware that the filing of the Petition may implicate the automatic stay provision under 11 U.S.C. 362(a). Red Hat merely provides this report to the Court as a courtesy to, and at the request of, the Court and does not do so in any attempt to prosecute this action at this time. Red Hat will seek relief from the automatic stay to the extent necessary before further prosecuting the action.

1. SCO v. Novell, Inc.

In a Memorandum Decision and Order dated August 10, 2007, the Court held that Novell is the rightful owner of the copyrights covering the UNIX operating system (the UNIX and UnixWare copyrights). More specifically, the Court:

  • Dismissed SCO's First Claim for Relief (Slander of Title);
  • Dismissed the copyright ownership portions of SCO's Second Claim for Relief (Breach of Implied Covenant of Good Faith and Fair Dealing);
  • Dismissed SCO's Third Claim for Relief (Breach of Contract);
  • Dismissed the copyright ownership portions of SCO's fifth Claim for Relief (Unfair Competition);
  • Denied SCO's cross-motion for summary judgment on its own claims for:

1

YOUNG CONAWAY STARGATT & TAYLOR, LLP
The Honorable Sue L. Robinson
September 17, 2007
Page 2

  • Denied SCO's cross-motion for summary judgment on its own claims for:
    (a) slander of title,

    (b) breach of contract, and

    (c) unfair competition;

  • Denied SCO's motion for summary judgment on Novell's slander of title claim;
  • Granted Novell's motion for partial summary judgment on Novell's Fourth Claim for Relief (Declaratory Judgment), and denied SCO's cross-motion for summary judgment on the same claim; and
  • Dismissed Novell's Ninth Claim for Relief (Accounting).

The Court also issued a Memorandum Decision and Order setting the case for a 21-day jury trial to begin on September 17, 2007.

Shortly thereafter, on August 17, 2007, the parties submitted a joint report regarding the effect of the summary judgment decision. The joint report stated the following with regard to SCO's claims:

  • SCO's Claims One (Slander), and Three (Breach of Contract) are dismissed in their entirety;
  • SCO's Claims Two (Breach of Contract), and Five (Unfair Competition) are dismissed to the extent that they concern the UNIX and UnixWare copyrights that the Court held were retained by Novell; and
  • SCO's Claim Four (Copyright Infringement) is stayed by the Court's August 21, 2006 Order pending resolution of the SuSE arbitration.

The joint report also provided that Novell intends to pursue many, but not all, of its claims at trial.

On August 31, 2007, SCO filed a motion for reconsideration or clarification of the Court's Memorandum Decision and Order dated August 10, 2007.

On September 7, 2007, the Court issued an Order regarding several pretrial motions. The Court concluded as follows:

2

YOUNG CONAWAY STARGATT & TAYLOR, LLP
The Honorable Sue L. Robinson
September 17, 2007
Page 3

  • The Court denied SCO's Rule 54(b) Motion for Entry of Final Judgment with respect to those claims which were fully and completely resolved by the Court's Memorandum Decision and Order dated August 10, 2007;
  • The Court granted Novell's motion to strike SCO's jury demand on the grounds that the only remaining claims are equitable in nature;
  • The Court granted Novell's motion to voluntarily dismiss its Third Claim for Relief (Breach of Contract) on the grounds that it was duplicative of Novell's other remaining claims that sought the same relief,
  • The Court held as moot SCO's motion in limine to exclude all evidence related to other litigation;
  • The Court granted Novell's Motion in Limine No. 1, which sought to preclude SCO from challenging questions already decided as a matter of law in the Court's Memorandum Decision and Order dated August 10, 2007;
  • The Court granted Novell's Motion in Limine No. 2, which sought to preclude SCO from contesting the existence of certain licenses;
  • The Court held as moot in part, and denied in part, SCO's motion in limine, which sought an order instructing Novell to refrain from stating to the jury that Novell is entitled to certain revenue; and
  • The Court denied Novell's Motion in Limine No. 3, which sought to preclude SCO from introducing new evidence and argument regarding an apportionment of certain revenue.

On September 14, 2007, the Court denied SCO's motion for reconsideration of the Court's Memorandum Decision and Order dated August 10, 2007. On the same day, SCO filed a Notice of Filing for Bankruptcy with the Court.

2. SCO Group, Inc. v. International Business Machines Corp. ("IBM")

In response to a Court order, on August 31, 2007 both SCO and IBM filed individual status reports regarding the Court's Memorandum Decision and Order dated August 10, 2007 (the "Order") in SCO v. Novell. In its report, SCO stated:

  • The Order constitutes a basis for the Court's dismissal of SCO's First, Second, Third, Fourth, Fifth, or Eighth Causes of Action in its Second Amended Complaint, subject to SCO's right to pursue motions for reconsideration and appeal in both the IBM and Novell Actions;

3

YOUNG CONAWAY STARGATT & TAYLOR, LLP
The Honorable Sue L. Robinson
September 17, 2007
Page 4

  • The Order does not impact SCO's Sixth (Unfair Competition), Seventh (Interference with Contract), and Ninth (Interference with Business Relationships) Causes of Action;
  • The Order does not preclude SCO from pursuing copyright infringement claims insofar as it occupies the position of an exclusive licensee from Novell, or as the owner of the post-1995 UnixWare copyrights; and
  • The Order does not resolve any of IBM's Counterclaims.

On the other hand, IBM stated in its report that, among other things, the Order disposes of all nine of SCO's claims.

On September 14, 2007, SCO filed a Notice of Filing for Bankruptcy with the Court.

3. SCO Group, Inc. v. AutoZone, Inc.

Since the filing of our last letter to the Court, no significant activity has occurred in this case.

Respectfully submitted,

____[signature]____
Josy W. Ingersoll (No. 1088)

JWI:cg

cc: Clerk of the Court (by CM/ECF and hand delivery)
Mark G. Matuschak, Esquire (by e-mail)
Michelle D. Miller, Esquire (by e-mail)
Stephen N. Zack, Esquire (by e-mail)
Jack B. Blumenfeld, Esquire (by e-mail)

4


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