decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
Novell's Motions in Limine #s 9, 10, 11, as text - RE: SVRX Licenses, Substantial Performance, Arbitration
Thursday, February 11 2010 @ 01:53 PM EST

Here are Novell's motions in limine #s 9, 10, and 11. There is a motion in limine to block SCO from presenting any evidence regarding matters that were sent to arbitration, which Novell lists as SCO's copyright claim and certain bits of its contract and unfair competition claims. And there is another motion in limine asking the court to rule that SCO can't sue for specific performance of the contract, because it itself failed to live up to the terms of the agreement, a prerequisite, Novell writes, for bringing such a claim to court. And the third is about blocking SCO from contesting that agreements that came after the APA can be SVRX licenses. That's the law of the case, Novell writes, and even if it were not, issue preclusion applies (see footnote 2 of the last transcript), but Novell has been around the block with SCO a few times by now, and this is a preemptive strike to avoid having to relitigate that issue.

To help you keep track, here's where the other Novell motions, the motions in limine, can be found:

All of SCO's are done as text on this page, and that's where you will find the entire list of all the motions in limine by both parties, as PDFs. The hearing is set for February 25 at 9 AM.

Here's what Novell says is stayed by Judge Kimball's orders:

Based on Judge Kimball's August 21, 2006 Order and the parties' August 17, 2007 Joint Statement, the following issues raised by the Complaint are stayed pending the SUSE arbitration:
  • Whether Novell breached APA 1.6 and TLA II.A.(2) by distributing Licensed Technology as part of SUSE Linux. (Complaint, ¶¶97-98.)

  • Whether Novell breached the covenant of good faith and fair dealing under the APA and TLA by distributing UNIX technology in SUSE Linux in violation of the APA and TLA's non-compete provisions. (Id., ¶ 99.)

  • Whether Novell infringed SCO's copyrights by copying, reproducing, modifying, sublicensing and/or distributing SUSE Linux products. (Id., ¶ 116.)

  • Whether Novell misappropriated SCO's UNIX technology in SUSE Linux. (Id., ¶ 122.)

Accordingly, any argument that (1) Novell violated the APA or TLA (or any "noncompete" provisions therein) by distributing SUSE Linux, (2) Novell's distribution of SUSE Linux infringes SCO's copyrights, or (3) Novell misappropriated SCO's UNIX technology in SUSE Linux, has been stayed pending the SUSE arbitration and should be excluded from this trial.

So you can meaningfully follow the argument, here's Judge Kimball's August 21, 2006 Memorandum and Order [as PDF] sending matters to arbitration and his August 10, 2007 order [as PDF] ruling on the parties' summary judgment motions.

I wonder if Judge Cahn now understands why this trial won't settle much of anything, since so much remains to be decided in the arbitration? I wonder if potential investors understand it too. And of course, there is the issue of the GPL, not to mention the contracts for UnitedLinux which SCO agreed to. So no matter who wins on the copyright ownership matter, the real question will be, what can the copyright owner *do* with them? If SCO were to prevail, I think the GPL distributions they made, not to mention their contributions, block them from suing any Linux end users. To see why I say that, just go to the Archives and search for Answering SCO Bit by Bit.

Here are the three motions in limine as text:

Novell's #9, 650 [PDF]:

NOVELL'S MOTION IN LIMINE NO. 9 TO PRECLUDE SCO FROM CONTESTING THAT AGREEMENTS THAT POST-DATE THE APA MAY CONSTITUTE SVRX LICENSES

Judge Kimball held, as a matter of law, that “SVRX Licenses” in the Asset Purchase Agreement (“APA”) are not limited to license agreements in existence at the time of the APA. SCO appealed this issue and the Tenth Circuit upheld Judge Kimball’s determination. Therefore, the law of the case precludes SCO from presenting any evidence or argument contrary to this ruling.

I. UNDISPUTED FACTS

In October 2006, Novell moved for summary judgment on its claims for breach of fiduciary duty and conversion based on SCO’s retention of certain payments SCO received under its 2003 license agreements with Sun Microsystems and Microsoft Corporation that Novell contended constituted “SVRX Royalties” under the APA. (Mem. ISO Novell’s Mot. for Partial Summ. J. or Preliminary Inj., Dkt. No. 155 (under seal).) In its opposition and cross motion for partial summary judgment, SCO argued that Novell’s interest in SVRX Royalties was limited to SVRX Licenses in existence at the time of the APA. (Mem. In Opp’n to Mot. for Partial Summ. J. or Preliminary Inj. at 35-37, Dkt. No. 183 (under seal).) Novell replied that there is no basis in the APA for any temporal limitation on SVRX Licenses. (Novell’s Reply to Opp’n at 4-5, Dkt. No. 205 (under seal).) In August 2007, Judge Kimball granted summary judgment for Novell on its claims for breach of fiduciary duty and conversion. (Order at 96, Dkt. No. 377.) Judge Kimball considered SCO’s argument that the term “SVRX Licenses” refers only to licenses in existence at the time of the APA and rejected it as a matter of law, concluding that “there is no limitation in the APA to ‘then-existing’ SVRX Licenses.” (Id. at 90-93.) SCO appealed this issue and the Tenth Circuit affirmed Judge Kimball’s ruling with respect to SCO’s liability from its 2003 agreement with Sun. In so doing, the Tenth Circuit “agree[d] with the district court that agreements that post-date the APA may constitute SVRX Licenses.” The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1227 (10th Cir. 2009). Under the 10th Circuit’s limited mandate, the only issue to be resolved regarding “SVRX Licenses” is whether that term refers to “all three types of agreements bearing upon the licensing of SVRX technology — software agreements, sublicensing agreements, and product supplement agreements (or Product Schedule Licenses) — or just to product supplement agreements.” SCO Group, 578 F.3d at 1219.

II. SCO SHOULD BE PRECLUDED FROM CONTESTING THAT SVRX LICENSES MAY INCLUDE POST-APA AGREEMENTS

The law of the case doctrine precludes SCO from contesting matters that have been decided as a matter of law. Mason v. Texaco, Inc., 948 F.2d 1546, 1553 (10th Cir. 1991) (“[W]hen a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case”) (quoting Arizona v. California, 460 U.S. 605, 618 (1983)). This principle applies to all “issues previously decided, either explicitly or by necessary implication.” Rohrbaugh v. Celotex Corp., 53 F.3d 1181, 1183 (10th Cir. 1995) (citation omitted).

In this case, Judge Kimball explicitly decided that SVRX Licenses are not limited to agreements in existence at the time of the APA. The Tenth Circuit affirmed this ruling, leaving open only the issue of whether SVRX License includes all three types of agreements bearing on the licensing of SVRX technology, or are instead limited to just product supplement agreements.

Therefore, the Court should preclude SCO from contesting that license agreements that post-date the APA may constitute “SVRX Licenses.”

Novell's #10, 635 [PDF]:

NOVELL'S MOTION IN LIMINE
NO. 10 TO PRECLUDE SCO FROM
PRESENTING ARGUMENT
RELATING TO ISSUES STAYED
PENDING ARBITRATION

Judge Kimball has ruled that the portions of SCO's claims that relate to SUSE Linux, GmbH ("SUSE") are stayed pending arbitration. The parties have stipulated that the arbitration stay applies to SCO's copyright infringement claim, and to portions of SCO's breach of contract and unfair competition claims. SCO should be precluded from presenting argument on issues that relate to the portions of its claims that are stayed pending the SUSE arbitration.

I. UNDISPUTED FACTS

In April 2006, Novell moved for an order staying the claims raised in SCO's Second Amended Complaint ("Complaint") pending the resolution of an arbitration proceeding that was instituted on April 10, 2006, by SUSE against SCO in the International Chamber of Commerce. (Dkt. No. 106). Judge Kimball ruled on Novell's motion on August 21, 2006, ordering that "the portions of [SCO's] claims relating to SUSE should be stayed in this court pending SUSE's arbitration." (Ex. 10A (Dkt. No. 139) at 8.)

On August 17, 2007, at the request of the Court, the parties filed a Joint Statement identifying the claims that were proceeding to trial. (Ex. 10B (Dkt. No. 379).) The parties agreed as follows with respect to the effect of the Court's August 21, 2006 Order on SCO's claims:

  • Second Claim for Breach of the Asset Purchase Agreement ("APA") and Technology License Agreement ("TLA"): The parties stipulated that issues under this claim not related to (1) UNIX and UnixWare copyrights, or (2) Novell's waiver of claims against IBM and Sequent are stayed pending the SUSE arbitration. (Id. at 2.)

  • Fourth Claim for Copyright Infringement: The parties stipulated that this claim was stayed in its entirety pending the SUSE arbitration. (Id.)

  • Fifth Claim for Unfair Competition: The parties stipulated that issues under this claim not related to (1) UNIX and UnixWare copyrights, or (2) Novell's waiver of claims against IBM and Sequent are stayed pending the SUSE arbitration. (Id. at 3.)

The SUSE arbitration is currently still pending and there have been no subsequent Court rulings or party stipulations that change any of the foregoing.

II. SCO SHOULD BE PRECLUDED FROM PRESENTING ARGUMENT
RELATING TO ISSUES THAT HAVE BEEN STAYED PENDING ARBITRATION

Based on Judge Kimball's August 21, 2006 Order and the parties' August 17, 2007 Joint Statement, the following issues raised by the Complaint are stayed pending the SUSE arbitration:

  • Whether Novell breached APA 1.6 and TLA II.A.(2) by distributing Licensed Technology as part of SUSE Linux. (Complaint, ¶¶97-98.)

  • Whether Novell breached the covenant of good faith and fair dealing under the APA and TLA by distributing UNIX technology in SUSE Linux in violation of the APA and TLA's non-compete provisions. (Id., ¶ 99.)

  • Whether Novell infringed SCO's copyrights by copying, reproducing, modifying, sublicensing and/or distributing SUSE Linux products. (Id., ¶ 116.)

  • Whether Novell misappropriated SCO's UNIX technology in SUSE Linux. (Id., ¶ 122.)

Accordingly, any argument that (1) Novell violated the APA or TLA (or any "noncompete" provisions therein) by distributing SUSE Linux, (2) Novell's distribution of SUSE Linux infringes SCO's copyrights, or (3) Novell misappropriated SCO's UNIX technology in SUSE Linux, has been stayed pending the SUSE arbitration and should be excluded from this trial.

Novell's #11, 636 [PDF]:
ovell-636.html"

NOVELL'S MOTION IN LIMINE
NO. 11 TO EXCLUDE EVIDENCE OF
SUBSTANTIAL PERFORMANCE

SCO's second and third claims for relief in its Second Amended Complaint are for breach of the covenant of good faith and fair dealing and specific performance. (Dkt. 96 at ¶¶ 99, 107.) To prevail on either claim SCO must prove that it substantially performed its own obligations under the Asset Purchase Agreement ("APA"). However, the law of this case is that SCO did not. Thus Novell moves the Court to preclude SCO from arguing or introducing evidence to the contrary.

I. ARGUMENT

To recover damages for breach of contract or obtain specific performance, SCO must show that it substantially performed its own obligations under the APA. Cal. Civ. Code § 3392 ("Specific performance cannot be enforced in favor of a party who has not fully and fairly performed"); Judicial Council of Cal. Civ. Jury Instr. 303 ("To recover damages ... for breach of contract, [plaintiff] must prove ... [t]hat [plaintiff] did all, or substantially all, of the significant things that the contract required").1 SCO never pled that it substantially performed, and as explained below, the law of this case is that it did not.

In this case, Judge Kimball found, and the Tenth Circuit affirmed, that:

SCO was required to follow the additional restrictions imposed by Amendment No. 2 on transactions that concern buy-outs. SCO did not comply with these terms. ... SCO was without authority to enter into the 2003 Sun Agreement under Amendment 2, Section B, of the APA.
(Dkt. 542 at 36.) SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1227 (10th Cir. 2009). That adjudication is now law of the case. See Midland Valley R. Co. v. Jones, 115 F.2d 508, 509 (10th Cir. 1940) ("The decision of this court in the former appeal became the law of the case as to all questions of fact or matters of law decided therein")2; see also Agostini v. Felton, 521 U.S. 203, 236, 117 S. Ct. 1997 (1997) ("Under this doctrine, a court should not reopen issues decided in earlier stages of the same litigation").

Substantial performance requires that any "departure from the terms of the contract ... be such as may be easily remedied or compensated." Posner v. Grunwald-Marx, Inc., 56 Cal. 2d 169, 186–87, 363 P.2d 313 (1961). "[U]nder certain circumstances the court should declare as a matter of law that there has been a failure of substantial performance." Austin v. Brown Bros. Co., 164 P. 95, 97 (Idaho 1917). Specifically, "where there exists no dispute as to material facts, and under those facts reasonable men may not arrive at different conclusions, the question of substantial performance becomes a matter of law for the court to decide." Lawless, Adm'x v. Merrick, 227 Md. 65, 72, 175 A.2d 27 (1961); see also Pressey v. McCornack, 84 A. 427, 428 (Pa. 1912) ("if the undisputed testimony shows a substantial variance, not authorized by the owner, and made without his knowledge or assent, it is the duty of the court to so declare as a matter of law"); cf. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1530 (9th Cir. 1993) rev'd on other grounds, 510 U.S. 517 (1994) ("whether a breach is material ... need not be left to the trier of fact where, as here, the underlying facts are undisputed and only the legal conclusion to be drawn from those facts remains in doubt").

Here, although Judge Kimball awarded some damages to prevent SCO's unjust enrichment, he concluded that "the court could not return the parties to the same position they were in prior to the 2003 Agreement" because "Sun [had] already received the benefits of the agreement [with SCO] and developed and marketed a product based upon those benefits." (Dkt. 542 at 37.) Such harms are not easily remedied by damages. See, e.g., Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1329 (Fed. Cir. 2008) ("Adding a new competitor to the market may create an irreparable harm").

Further, because SCO is now bankrupt and so cannot pay (or at least has not paid) the damages Judge Kimball awarded, the irreparability of Novell's injury is "virtually self-evident." Cf. Hendricks v. Bank of America, 408 F.3d 1127, 1141 (9th Cir. 2005) (affirming finding of irreparable injury where defendants were in "serious financial straits"). In addition to establishing that SCO did not substantially perform, and thus is precluded from obtaining any relief on its breach of contract claims, SCO's failure to pay the damages awarded by Judge Kimball is an expressly enumerated statutory bar to specific performance, in particular. See Cal. Civ. Code § 3392 ("Specific performance cannot be enforced in favor of a party who has not fully and fairly performed ... except where his failure to perform is only partial, and either entirely immaterial, or capable of being fully compensated, in which case specific performance may be compelled, upon full compensation being made for the default" [emphasis added]).

II. CONCLUSION

Because the law of this case is that SCO did not substantially perform its obligations, evidence purporting to show the contrary should be excluded.

__________

1 Section 9.8 of the APA chooses California law. For convenient reference, the cited statute and jury instruction are reproduced in Exhibit 11A hereto.

2 Some more recent Tenth Circuit opinions, apparently unaware that the issue had been decided by a prior panel, have stated: "Whether the 'law of the case' doctrine applies to questions of fact ... is unclear." See, e.g., Johnson v. Champion, 288 F.3d 1215, 1226 (10th Cir. 2002). Here, because the Tenth Circuit affirmed not just an underlying holding but Judge Kimball's judgment based thereon, even if law of the case did not apply, issue preclusion would. See Kremer v. Chemical Const. Corp., 456 U.S. 461, 466, 102 S. Ct. 1883 (1982) ("once a court decides an issue of fact or law necessary to its judgment, that decision precludes relitigation of the same issue on a different cause of action between the same parties").


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )