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Eyewitness Reports from Today's SCO v IBM Status Hearing - Updated 4Xs
Wednesday, August 11 2010 @ 07:29 PM EDT

First word has arrived from today's status hearing that SCO requested in SCO v. IBM, but we had more than one reporter there today, so there will be updates later tonight.

SCO in its motion had asked that two of IBM's motions for summary judgment on some of SCO's claims, long on ice because of the SCO bankruptcy, be revived and allowed to go forward so SCO could pursue claims not affected, in SCO's view, by SCO's loss in the SCO v. Novell case. IBM, of course, opposed on several grounds. First, it makes no sense to go forward until SCO's appeal is decided. Second, IBM wasn't crazy about SCO's idea of being allowed to go forward piecemeal, with IBM standing there tied up, so to speak, while SCO gets to kick them in the shins. IBM's position as well is that all SCO's claims are off the table, due to its loss in the Novell case, so unless it wins on appeal, there's nothing to go forward on. What a waste of judicial resources.

Oddly, SCO, as it turned out, at the conference asked to proceed on only one of the motions, #782, IBM's Motion for Summary Judgment on SCO’s Unfair Competition Claim (SCO’s Sixth Cause of Action). Probably they read IBM's memorandum in opposition. Argument was heard, and the judge, the Hon. Tena Campbell, has taken it under advisement.

Our first report, from cpeterson:

SCO is only asking to proceed on #782; I was under the impression they wanted #783 as well.

They say it can be done independent of all other matters.

Short version:

IBM: No, it can't.

SCO: can too.

IBM: can *not*.

Judge Campbell asks how it's efficient to have a separate trial for this issue, and another for everything else.

We don't want a trial on this, says Normand. We just want it resolved.

Judge Campbell has taken the matter under advisement.

More later...

Resolved? SCO doesn't want a trial, just wants it resolved? Resolved how? And then what? I wonder if our reporter misheard. This implies to me that either SCO expects to lose on the motion or it thinks it can win on IBM's summary judgment motion in such a thorough way that no trial will be needed. But what if IBM loses on summary judgment because the judge thinks there are facts in dispute that need to go to trial? Then what? It doesn't want a trial then? Surely it does, so that's why I confess, until we hear more, I'm in the dark about SCO's thinking.

Is Boies Schiller still under the illusion that IBM will settle if SCO is sufficiently annoying? Surely not. Or is it hoping to lose so there are no more loose strings and they don't have to do this any more? I have no idea. It's a big mystery.

So let's wait for more information before drawing any definite conclusions. Just put a marker there, so to speak, and as more information arrives, we'll likely get to understand more. For sure, we'll eventually get the transcripts. But I knew you'd want to hear as soon as I heard anything at all. And the first word that is certain is that the judge didn't rule from the bench but has taken it under advisement. And that, from the question from her, it looks favorable for IBM's argument.

If you'd like to try to parse out SCO's strategy yourself, the two motions that SCO said in its motion could go forward were these two:

6. IBM’s Motion for Summary Judgment on SCO’s Unfair Competition Claim (SCO’s Sixth Cause of Action), dated September 25, 2006, Docket No. 782.

7. IBM’s Motion for Summary Judgment on SCO’s Interference Claims (SCO’s Seventh, Eighth, and Ninth Causes of Action), dated September 25, 2006, Docket No. 783.

Here is #783 [PDF], if you'd like to see what SCO dropped. And here's a chart showing all the documents for the pending summary judgment motions, from both parties.

Here's the meat of SCO's 6th Cause of Action:

183. IBM has engaged in a course of conduct that is intentionally and foreseeably calculated to undermine and/or destroy the economic value of UNIX anywhere and everywhere in the world, and to undermine and/or destroy plaintiff’s rights to fully exploit and benefit from its ownership rights in and to UNIX System V Technology, the Unix Software Code, SCO OpenServer, UnixWare and their derivatives, and thereby seize the value of UNIX System V Technology, the Unix Software Code, SCO OpenServer, UnixWare and their derivatives directly for its own benefit and indirectly for the benefit of its Linux distribution partners. 184. In furtherance of its scheme of unfair competition, IBM has engaged in the following conduct:
a) Misappropriation of source code, methods, trade secrets and confidential information of plaintiff;

b) Breach of contract;

c)Violation of confidentiality provisions running to the benefit of plaintiff;

d) Inducing and encouraging others to violate confidentiality provisions;

e)Contribution of protected source code and methods for incorporation into one or more Linux software releases, intended for transfer of ownership to the general public;

f) Use of deceptive means and practices in dealing with plaintiff with respect to its software development efforts; and

g) Other methods of unlawful and/or unfair competition.

And here's part of IBM's response:

17. SCO's claim that this case should proceed now as to SCO's unfair competition and tortious inference claims turns on the proposition that those claims do not depend on the outcome of the appeal in the Novell Litigation. That is wrong. Not only do those claims depend on the outcome of SCO's appeal, but also they are precluded if Judge Stewart's judgment is affirmed.

18. SCO's unfair competition claim (Count VI) is a mix of SCO's other causes of action, including the breach of contract and copyright infringement claims that SCO concedes are dependent on the outcome of the Novell Litigation. For example, SCO's unfair competition claim accuses IBM of misappropriating source code, breaching contracts and contributing source code to Linux. The code at issue on those claims is covered by the

copyrights Judge Stewart ruled are owned by Novell (not SCO), and Judge Stewart found Novell had the right to waive the alleged breaches of contract. Thus, SCO's unfair competition claim necessarily depends on the outcome of the Novell Litigation.

19. SCO's unfair competition claim would depend on the outcome of the Novell Litigation even if the claim related solely to "Project Monterey". The crux of SCO's Monterey allegations is that IBM exceeded the scope of its license to certain UNIX SVr4 code (licensed to IBM by The Santa Cruz Operation during Project Monterey) by copying the code into IBM's AIX for POWER product. But SCO has never properly identified any such code that is not covered by copyrights determined in the Novell Litigation to be owned by Novell.1 Thus, if the judgment against SCO in the Novell Litigation is affirmed, SCO's Monterey allegations are untenable. At an absolute minimum, the outcome of the Novell Litigation will affect the shape of SCO's Monterey allegations.

And speaking of mysteries, here's the latest docket entry from the Supreme Court docket on Novell's petition for writ of certiorari:
Aug 11 2010 Motion to dismiss the petition for a writ of certiorari pursuant to Rule 46 received.
If any of you are in the Washington, DC area and would be willing to go in person to the US Supreme Court to pick up what is presumably a SCO filing, can you please email me and I'll let you know what is involved? A motion to dismiss before the court has decided whether or not to hear the case. Hmm. Here's Rule 46 of the US Supreme Court rules:
Rule 46. Dismissing Cases

* 1. At any stage of the proceedings, whenever all parties file with the Clerk an agreement in writing that a case be dismissed, specifying the terms for payment of costs, and pay to the Clerk any fees then due, the Clerk, without further reference to the Court, will enter an order of dismissal.

* 2. (a) A petitioner or appellant may file a motion to dismiss the case, with proof of service as required by Rule 29, tendering to the Clerk any fees due and costs payable. No more than 15 days after service thereof, an adverse party may file an objection, limited to the amount of damages and costs in this Court alleged to be payable or to showing that the moving party does not represent all petitioners or appellants. The Clerk will not file any objection not so limited.

(b) When the objection asserts that the moving party does not represent all the petitioners or appellants, the party moving for dismissal may file a reply within 10 days, after which time the matter will be submitted to the Court for its determination.

(c) If no objection is filed—or if upon objection going only to the amount of damages and costs in this Court, the party moving for dismissal tenders the additional damages and costs in full within 10 days of the demand therefor—the Clerk, without further reference to the Court, will enter an order of dismissal. If, after objection as to the amount of damages and costs in this Court, the moving party does not respond by a tender within 10 days, the Clerk will report the matter to the Court for its determination.

* 3. No mandate or other process will issue on a dismissal under this Rule without an order of the Court.

Update: Chris Brown has now filed his report on the day's events from the courtroom:
Judge Tena Campbell in her first appearance in these cases gave the impression she has a lot of homework still ahead of her on the case history.

IBM was represented by David Marriott and Todd Shaughnessy and for SCO were Ted Normand, Brent Hatch, and Ryan Tibbitts.

SCO's Ted Normand went first reminding Judge Campbell that SCO is in bankruptcy which obligates them to pursue claims. He said SCO was willing to let the claims in this case sit during the Novell case. However, he relates, SCO's trustee Judge Cahn asked what assets the company has available and one answer is these claims against IBM, particularly the "Monterey" claim. He says the burden is on IBM to show why not to resolve the claims. He states that the Project Monterrey claim is distinct from the copyright ownership issue currently on appeal to the 10th circuit, that it is not dependent on copyright ownership because the source code at issue in this claim is different from the source code copyrights on appeal. He says that for Project Monterey, IBM wanted its hands on post-1995 code, the newest and latest code, as opposed to the pre-1995 code which is on appeal.

Judge Campbell asks for clarification on which claim he's referring to -- it's SCO's 6th claim, the Unfair Competition, claim.

Mr. Normand says that SCO is not asking for a trial on this claim. On a questioning look from the Judge, Brent Hatch interjects that they mean they are not asking for a trial date right now, but they wish to eventually go to trial on it.

When asked by the Judge if the remaining claims SCO cited in its motion will be affected by the result of the appeal, Mr. Normand says they would be.

Then IBM's David Marriott responds saying that this case is about an attempt by SCO to take control of the Linux operating system, that SCO claims IBM took code from Unix and dumped it into Linux. Mr. Marriott says that after the combination of the trial jury and Judge Stewart both ruling in favor of Novell, all of SCO's claims against IBM are effectively forestalled and additionally the rulings are in favor of IBM on some of it's counterclaims.

Mr. Marriott says this is a complex case of 19 claims & counterclaims, tens of millions of pages of discovery (bringing a surprised expression to the Judge), and scores of witnesses deposed. He claims that to attempt to separate all the interwoven, interdependent, claims in this case would be time-consuming and a waste of judicial resources. He describes Judge Kimball's ruling, the appeal, and said that after the jury and Judge Stewart ruled, we are now back to where we were following Judge Kimball's ruling.

Mr. Marriott says there's no such claim as the "Monterey Claim." There's a claim for Unfair Competition but that it's a multi-faceted claim. He reads the various components of SCO's Unfair Competition claim, letter 'a', 'b', etc down to 'f.' This individual item 'f' is the one he presumes SCO is referring to as the "Monterey Claim." He states that the other items in the list (going up to 'g') were waived by Novell. That the one item cannot be extracted from the whole claim as those are on appeal. Mr. Marriott asks that this court wait for the 10th Circuit to rule and then come back here.

SCO's Mr. Normand responds saying that is mixing up terms (I missed which terms).

Judge Campbell asks about why SCO's not asking for a trial on that motion. Mr. Normand responds that they are just not asking for a trial date. He states that mathematically we'll get the 10th Circuit ruling before then.

Mr. Marriott responds. He says all needs to be decided, but not now. He reads from SCO's status update to Judge Kimball in this case following Judge Kimball's ruling in the Novell case, where SCO asked Judge Kimball not to proceed on these claims because they are all dependent on these other non-Monterey issues (then on appeal).

Mr. Normand said that IBM filed the motion regarding the Project Monterey part of SCO's claim, but that SCO believes it can move forward. He repeats that SCO's trustee, Judge Cahn, has looked at the company's assets/claims and addressed the likelihood of success and wants to move forward.

Judge Campbell said she will take it under advisement.

I see Judge Campbell noticed SCO saying it didn't want a trial as being as significantly odd as I did. I'd call that a blooper on SCO's part. And the other interesting part is where SCO says that bankruptcy obligates SCO to pursue all claims.

Not the frivolous ones, presumably. And not this exact minute.

Update 2: And now we have a second report from cpeterson, with more details:

Chris & I got to the courtroom just seconds ahead of Todd Shaughnessy & David Marriott. Sterling Brennan was already in the courtroom, seated in the gallery as an observer. Very shortly after we entered, Brent Hatch and Ryan Tibbitts came in. A couple of minutes later, Ted Normand.

That fills the roster for today's counsel. It also almost filled the available seating: Judge Campbell's courtroom, on the second floor, doesn't have as much space as Judge Stewart's. It has a very high ceiling, but only space for 3 seats each at the tables for defendant and plaintiff, and six box-style benches in the gallery that would seat about 4 persons each.

Judge Campbell is a petite lady, delicate featured, mostly but not entirely silver-haired.

In my earlier report, I said that Mr. Normand said, "We don't want a trial on this," says Mr. Normand."We just want it resolved." PJ commented, "I wonder if our reporter misheard." Well, *I* wondered if I had misheard. The more Mr. Normand explained, the more confused I got. Mr. Hatch's explanation was more straight-forward -- that they aren't asking for a trial date right now, but will later. Except, as Mr. Normand proceeded to then say, the appeal will proceed rapidly, and we'll find out what else can be tried, and there won't need to be a separate trial because the appeal will clear things up before we get to the point of a trial.

So why do this separately, thinks I, if it's fated to all end up at the same trial anyway? That was never clearly answered. It *was* clearly asked.

After the hearing, Mr. Tibbitts called out to Chris and me in the hallway to "be sure to report it accurately!" Well, this much I can report as being beyond any shadow of doubt: I was confused by Mr. Normand's pitch. I strongly believe, judging by the Judge's demeanor, that she was also.

Well, I hate to say it, but the most logical explanation is that Mr. Normand told the simple truth, but then realized by the judge's expression it wasn't an optimal revelation, and Mr. Hatch attempted to fix it with something that makes little sense. SCO's motion asked to go forward on its claims. If you are not interested in doing that yet, why ask? And as for not asking for a trial *date* yet, that makes no sense, because SCO can't ask for a trial date on IBM's motion for summary judgment, or on any summary judgment motion, and in fact no one can, because there isn't anything like that for a SJ motion. And the motion isn't yet ruled on, which is the only possible next step, prior to any trial. So there is no way I accept that this is what was meant. SCO is asking the new judge to rule on this motion, which is fully briefed and which already had oral argument. So the thing is just awkward.

And to Mr. Tibbitts, feel free to email me any report you wish to make on the day's events, or leave it as a comment on this story.

Update 3: I just realized what this is probably all about. SCO wants to go forward against IBM, using the 2004 Utah law Ralph Yarro pushed, which I've dubbed Yarro's Law. Here's an article from 2007 about IBM's redacted reply memorandum in support of its motion for summary judgment on SCO's Sixth Cause of Action, unfair competition. It will help any newcomers to understand what Yarro's Law is, and how SCO wants to use it. Of all the underhanded tricks we've had to watch in this saga, to me that was the worst of them all, getting a law passed that seems written just for SCO to use against IBM, and then actually trying to use it retroactively for actions that occurred years before the law was passed. If Cahn is desirous of going forward like this, shame. Really. Shame.

It occurs to me that to understand what Marriott said about f. being the only part referring to Project Monterey, it would also help to reread SCO's memorandum opposing IBM's motion. SCO does go on and on about Project Monterey.

And to further help you to figure out what percentage, if any, of what SCO writes in that memo is true, you should probably reread our collection of articles on Project Monterey. We actually have a page listing every article that even mentioned it from 2003-2009. But here's a short list of the ones that I think are most significant:

Update 4: We have the minutes from the status conference from the court:

08/12/2010 - 1092 - Minute Entry for proceedings held before Judge Tena Campbell: Status Conference held on 8/12/2010. Mr. Normand states there are 12 pending motions, but requests defendant's motion for summary judgment (docket #782) be decided first. The court hears from Mr. Marriott who believes motions should be decided as a whole. The court takes this matter under advisement. Attorney for Plaintiff: Brent Hatch, Esq; Ted Normand, Esq., Attorney for Defendant: Todd Shaughnessy, Esq; David R. Marriott, Esq. Court Reporter: Ray Fenlon. (tab) (Entered: 08/12/2010)

Aren't you glad we had reporters there? If they had not attended, this would be all we'd know for 90 days. So thank you from the heart to Chris and cpeterson. We really appreciate your help.

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