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IBM's Memorandum in Support of Motion to Strike - as text
Saturday, December 27 2003 @ 07:54 PM EST

Here is IBM's Memorandum in Support of its Motion to Strike three of SCO's Affirmative Defenses, literally titled DEFENDANT/COUNTERCLAIM PLAINTIFF IBM'S MEMORANDUM IN SUPPORT OF MOTION TO STRIKE AFFIRMATIVE DEFENSES. You can find the PDF here. The unpublished cases IBM attached to this Memorandum in Support are here. This motion has not yet been ruled on by the judge. Once more, our thanks to Henrik Grouleff for his remarkable effort in making so many documents available as searchable text.

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



SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address, phone, fax]

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT OF UTAH

THE SCO GROUP, INC.

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS MACHINES CORPORATION

Defendant/Counterclaim-Plaintiff

DEFENDANT/COUNTERCLAIM PLAINTIFF
IBM'S MEMORANDUM IN SUPPORT OF MOTION
TO STRIKE AFFIRMATIVE DEFENSES

Civil No. 2:03CV0294 DAK

Honorable Dale A. Kimball
Magistrate Judge Brooke Wells

Defendant/Counterclaim-Plaintiff International Business Machines Corporation ("IBM") respectfully submits this memorandum in support of its motion to strike the Fifth, Fifteenth and Nineteenth Affirmative Defenses asserted by Plaintiff/Counterclaim-Defendant The SCO Group, Inc. ("SCO") in its Answer to IBM's Amended Counterclaims.

Preliminary Statement

In response to IBM's counterclaims, SCO asserts three affirmative defenses based on fraud--SCO's Fifth, Fifteenth, and Nineteenth Affirmative Defenses.(1) In disregard of Rule 9(b) of the Federal Rules of Civil Procedure, however, SCO pleads no supporting facts whatsoever. That is insufficient pleading, and SCO's affirmative defenses should be stricken.


Allegations of fraud, because of their seriousness, are not to be made lightly. Accordingly, Rule 9(b) provides that any such allegations, including those asserted as affirmative defenses, must be pled with particularity so that a "defending party [can] prepare an effective response to charges of fraud, and . . . protect itself from unfounded charges of wrongdoing which might injure its reputation and good will". Universal Premium Acceptance Corp. v. Oxford Bank & Trust, 277 F. Supp. 2d 1120, 1130 (D. Kan. 2003). SCO may not properly accuse IBM of fraud in the hope that it may be able to cobble together some evidence of alleged wrongdoing during discovery.

ARGUMENT

SCO'S AFFIRMATIVE DEFENSES BASED ON FRAUD ARE IMPROPERLY PLED AND SHOULD BE STRICKEN.

Under Rule 12(f), the Court "may order stricken from any pleading any insufficient defense". Fed. R. Civ. P. 12(f). Since SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses - which allege fraud and inequitable conduct - are improperly pled under Rule 9(b), they should be stricken.

Rule 9(b) is intended to safeguard against reflexive allegations of fraud. The rule requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity".(2) This means that a party alleging fraud must at least "set forth the time, place and contents of the false representation[s], the identity of the party making the false statements and the consequences thereof". Koch v. Koch Indus., Inc., 203 F.3d 1202, 1236 (10th Cir. 2000) (quoting Lawrence Nat'l Bank v. Edmonds, 924 F.2d 176, 180 (10th Cir. 1991)); see also Anderson v. First Sec. Corp., 157 F. Supp. 2d 1230, 1236 (D. Utah 2001).

Consistent with SCO's apparent strategy of trying to keep IBM in the dark as to its contentions - IBM has been required twice to move to compel responses to its discovery requests - SCO sets forth affirmative defenses based on fraud that fall far short of these requirements. For its Fifth Affirmative Defense, SCO alleges only that:

IBM's claims are barred by fraud, illegality, collusion, conspiracy and/or lack of clean hands.

This statement does not give any indication of the fraud IBM is alleged to have committed. SCO does not identify the "time, place and contents" of any false statements allegedly made by IBM, or who is alleged to have made such statements. Because it fails to provide IBM with "fair notice of[SCO's] claims and the factual ground[s] upon which they are based", SCO's Fifth Affirmative Defense should be stricken. Koch, 203 F.3d at 1236 (10th Cir. 2000) (quoting Farlow v. Peat, Marwick, Mitchell & Co., 956 F.2d 982, 987 (10th Cir. 1992)).

SCO's affirmative defenses alleging inequitable conduct are similarly defective and should also be stricken for failing to comply with Rule 9(b).(3) SCO's Fifteenth Affirmative Defense asserts:

On information and belief, one or more of the copyrights at issue is, or may be, unenforceable by reason of IBM's inequitable conduct, acts or omissions before the United States Patent and Trademark Office [sic].(4)

SCO's Nineteenth Affirmative Defense asserts:

On information and belief, the '746 Patent or one or more of the other patents at issue, is, or may be, unenforceable by reason of IBM's inequitable conduct, acts or omissions before the United States Patent and Trademark Office.

Both of these defenses fall short of the pleading requirements of Rule 9(b), as they fail to identify the inequitable conduct, acts or omissions IBM is alleged to have committed, let alone the "time, place and contents" of any such conduct.

Courts have stricken affirmative defenses drafted nearly identically to SCO's. For example, in Moore U.S.A., Inc. v. Standard Register Co., 139 F. Supp. 2d 348, 359 (W.D.N.Y. 2001), the court struck an affirmative defense that alleged that the patent at issue "may be unenforceable due to inequitable conduct during the original prosecution of the patent application". Similarly, in Treatch v. Nextel Communications. Inc., 1999 WL 33283820, at *2 (D. Ariz. Aug. 13, 1999), the court struck allegations in an answer that: "On information and belief, the '052 patent is unenforceable due to inequitable conduct during prosecution of the underlying application."(5) Based upon the generality of its pleading, it is fair to assume that SCO has no facts to support its affirmative defenses, but rather asserted them to "launch[] . . . a 'fishing expedition', allowing [it] to embark on wide-ranging discovery upon a thimble-full of facts", Chiron Corp. v. Abbott Labs., 156 F.R.D. 219, 221 (N.D. Cal. 1994). This, however, is exactly what Rule 9(b) was designed to prevent. As this Court has put it, allegations of fraud should not be made "as a pretext for the discovery of unknown wrongs". Anderson, 157 F. Supp. 2d at 1236. SCO cannot sustain the defenses at issue on the theory that it "has not yet discovered the information it needs to make specific allegations". Moore, 139 F. Supp. 2d at 360.

SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses fail to meet Rule 9(b)'s requirements and do not belong in this case. As one court has acknowledged, "[d]efending against an allegation of inequitable conduct can consume enormous resources, particularly if the allegation fails to pinpoint the precise offending conduct", Chiron, 156 F.R.D. at 221. IBM should not have to expend any effort in this case defending against SCO's claims of fraud or inequitable conduct, when SCO has not offered even the barest of specifics about its allegations.

CONCLUSION

For the foregoing reasons, IBM respectfully requests that the Court strike SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses.

DATED this 10th day of November, 2003.

SNELL & WILMER L.L.P.

[signature]
Alan L. Sullivan
Todd M. Shaughnessy
Amy F. Sorenson

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler
David R. Marriott

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

Of counsel:

INTERNATIONAL BUSINESS MACHINES CORPORATION
Donald J. Rosenberg
Alec S. Berman
[address,phone]

Attorneys for Defendant/Counterclaim-Plaintiff International Business Machines Corporation

CERTIFICATE OF SERVICE

I hereby certify that on the 10th day of November, 2003, a true and correct copy of the foregoing DEFENDANT IBM'S MEMORANDUM IN SUPPORT OF MOTION TO STRIKE AFFIRMATIVE DEFENSES was hand delivered to the following:

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

and sent by U.S. Mail, postage prepaid, to the following:

Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER LLP
[address]

[signature]

(1) A copy of IBM's Amended Counterclaims is attached hereto as Exhibit 1. A copy of SCO's Answers to IBM's Amended Counterclaims is attached hereto as Exhibit 2.

(2) Rule 9(b) applies with equal force to allegations made in affirmative defenses. See, e.g., Zic v. Italian Gov't Travel Office, 130 F. Supp. 2d 991, 998 (N.D. III. 2001); Midwest Grain Prods., Inc. v. Envirofuels Mktg., Inc., 1995 WL 769265, Civ. A. No. 95-2355, at *2 (D. Kan. Dec. 4, 1995); Yunnan Design, Inc. v. Chaindom Enters.. Inc., 2002 WL 31358991, No. 99 Civ. 9307, at *2 (S.D.N.Y. Sept. 30, 2002). Pursuant to DUCivR 7-2(a), copies of unpublished decisions referred to herein are attached as Exhibit 3.

(3) The overwhelming majority of courts that have addressed the issue have held that allegations of inequitable conduct must comply with Rule 9(b)'s pleading requirements. See Systernation, Inc. v. Engel Indus.. Inc., 183 F.R.D. 49, 51 (D. Mass. 1998) (collecting cases); Chiron Corp. v. Abbott Labs., 156 F.R.D. 219, 221-22 (N.D. Cal. 1994) (same); Xilinx v. Ahera Corp., 1993 WL 767688, No. C 93-20409, at * 1-2 (N.D. Cal. Oct. 25, 1993) (same). Indeed, Rule 9(b) should apply with particular force to allegations of inequitable conduct, given the Federal Circuit's repeated admonitions that "the habit of charging inequitable conduct in almost every major patent case has become an absolute plague", Burlington Indus.. Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed. Cir. 1988), and that "'[i]nequitable conduct' is not, or should not be, a magic incantation to be asserted against every patentee." FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 (Fed. Cir. 1987).

(4)We assume SCO is alleging inequitable conduct before the United States Copyright Office, notwithstanding its reference to the United States Patent and Trademark Office.

(5) Indeed, courts have stricken inequitable conduct defenses that contain more detailed allegations than SCO's affirmative defenses. See. e.g., Systemation, 183 F.R.D. at 50 (striking defense asserting that patents at issue "are unenforceable because during prosecution of the . . . patents, the applicant willfully or with gross negligence committed certain inequitable acts that misled the Patent and Trademark Office" and that "[i]n particular, the applicant, having knowledge of certain prior art willfully refrained from disclosing such prior art to the Patent and Trademark Office and, therefore, violated his duty of disclosure".); Point DX Inc. v. Y oxar Ltd., 2002 WL 31189696, No. Civ. 1:01CV01130, at *2 (M.D.N.C. Sept. 20, 2002) (striking defense asserting patents at issue "are unenforceable as they were obtained as a result of fraud and inequitable conduct arising from failures to disclose material information and the making of material misstatements to the United States Patent and Trademark Office ('PTO'), with the intent to deceive; including, without limitation, intentionally misleading and making material misrepresentations to the PTO in obtaining the [patents] by failing to disclose material prior art".)


  


IBM's Memorandum in Support of Motion to Strike - as text | 99 comments | Create New Account
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IBM's Memorandum in Support of Motion to Strike - as text
Authored by: SkArcher on Saturday, December 27 2003 @ 08:11 PM EST
our thanks to Henrik Grouleff for his remarkable effort in making so many documents available as searchable text.
Seconded. I hate to think what your eyesight is like after peering at some of these documents for so long. This will make explaining some aspects of this case a great deal easier, and will make the general offort to deduce what SCO are up to much faster.

[ Reply to This | # ]

IBM's Memorandum in Support of Motion to Strike - as text
Authored by: shaun on Saturday, December 27 2003 @ 08:16 PM EST
I commend all the work put into getting these documents readable and on to the
Internet. Bravo.

--Shaun

[ Reply to This | # ]

SCO's new business model
Authored by: the_flatlander on Saturday, December 27 2003 @ 08:27 PM EST
Okay. If litigation is to be SCO Group's new business model, it would seem
they'll have to improve quickly. They aren't really making a good start,
seemingly.

Although, there is a pattern in all this. They off-handedly accuse IBM of
fraud. They claim to have IP rights embedded in header files. (Some of which
have but one line, and others that simply reference another file.) They claim
copyright infringement from code, the rights to which they *never* purchased.
(See the Berkley Packet Filtering debacle.) And, it turns out, they have
publicly admitted they don't even know what they bought when they paid Novell
for the rights, (whatever they may have been), that they did acquire to
AT&T's UNIX.

They are like some bored high school student who just copied something out of
the encyclopedia instead of doing any research for their term paper.

Can they really be that lazy? All the while preaching about the rights of their
shareholders. (Who soon enough will be holding SCO Group stock certificates
printed on paper too stiff for tissue, and otherwise worthless.)

I just don't understand. There's a lot *less* here than meets the eye....

TFL

I think I may have to line my whole bedroom with tin foil.

[ Reply to This | # ]

OT: Did SCO trick the judge
Authored by: Anonymous on Saturday, December 27 2003 @ 09:18 PM EST
Did SCO trick the judge?

Check the footnote on this old SCO motion (later granted) to extend the time to
amend pleadings.

http://sco.tuxrocks.com/Docs/IBM/Doc-42.pdf


In retrospect (in light of the motions by IBM to compel discovery, and the
tricks with "electronic form" that SCO played, not to mention no
response since IBM's letter to SCO asking the basis of their complaint in early
APRIL - see IBM's exhibits on their counterclaims)...

That footnote is kind of interesting

[ Reply to This | # ]

IBM's Memorandum in Support of Motion to Strike - as text
Authored by: brenda banks on Saturday, December 27 2003 @ 09:27 PM EST
thank you Henrik Grouleff for all your very hard work
it is much easier on my eyes to use this


---
br3n

[ Reply to This | # ]

Off Topic - Fun with numbers.
Authored by: Anonymous on Saturday, December 27 2003 @ 10:42 PM EST
As we all know, SCO usually claim to have 4000, or 8000,
developers depending which way the wind is blowing.

On their most recent earnings report, in their 'About SCO'
sig, they claim to have 4000 developers, they also report
under Liabilities,'Accrued payroll and accrued expenses'
of $8,506,000 for the last quarter.

So, I thought I'd have some fun with numbers to see how
well they pay their developers.

------

Lets assume SCO pays the whole $8.506,000 to only their
developers, and everyone else works for free just to get
the status that having SCO on one's resume brings.

/4000 = $2126 per quater
x4 = $8506 per year
/52 = $163.57 per week
/40 = $4.09 per hour


heheh, I suppose when they have 8000 developers they
pay them about $2.00 pr hour.

[ Reply to This | # ]

IANAL, help please
Authored by: the_flatlander on Sunday, December 28 2003 @ 07:58 AM EST
Well, I've slept on all this and while it is a great deal of fun to read, (how
big a nerd does *that* make me?), I am left with a question.

Any of you out there who are lawyers, or PJ 'cause this is your field, even if
you aren't a lawyer, what does it really mean to have your defenses
"struck"? It isn't like the case doesn't go to trial, no?

To the uninitiated, (well, to *me* anyway), this stuff reads a bit like the
Mass, it is very formal, very structured, and it includes bits that make no real
sense. Take for example, in the claims and counter-claims and responses to
those, the various paragraphs that "repeat and reallege the averments in
paragraphs 1-70"; saying it twice, or more, makes it mean more? (I know,
these documents aren't the claims and counter-claims but I went back and read
those again so I could better grasp the meaning of the defenses.)

If SCO Group's, or for that matter IBM's defenses get "struck"
does that mean that the particular charge in question is already
"proven"?

Thanks.

TFL

[ Reply to This | # ]

what is the difference?
Authored by: Anonymous on Sunday, December 28 2003 @ 10:57 AM EST
What is the difference between the last two documents, namely,
"IBM's Memorandum in Support of Motion to Strike" and "IBM's
Motion to Strike SCO's Affirmative Defenses"? They both look identical to
me.

[ Reply to This | # ]

OT, but appropriate
Authored by: PeteS on Sunday, December 28 2003 @ 11:03 AM EST
Hilarious Cartoon

User Friendly's latest cartoon

The User Friendly 2003 Toy of the Year

---
Artificial Intelligence is no match for natural stupidity

[ Reply to This | # ]

OT: Siliconvalley et al. pierce the FUD
Authored by: belzecue on Sunday, December 28 2003 @ 12:02 PM EST
One more for your prized press scrapbook, Darl!

The SCO Group, unable to compete in the marketplace, launched an ugly war against Linux, suing IBM and threatening users of the open-source operating system. Luckily, IBM, apparently acting on principle when it might have been cheaper and easier simply to buy SCO off, fought back and earned the thanks of the community. SCO's claims to be defending capitalism will go down as some of the most outrageous statements of the year.

[ Reply to This | # ]

The enemy behide the curtain
Authored by: tcranbrook on Sunday, December 28 2003 @ 01:35 PM EST
Here is an interesting article about the prime mover behind this whole fiaSCO.

"In the beginning there was Microsoft. Then it exploded"

[ Reply to This | # ]

Interesting legal case
Authored by: danfreak on Sunday, December 28 2003 @ 07:51 PM EST
I'm no lawyer, but stumbled across this old court case that has some
interesting parallels with the SCO lawsuit:

http://www.usdoj.gov/opa/pr/1997/August97/323civ.htm

About a small software company called INSLAW that tried to sue the DOJ (not a
good idea) for using software that was for the public domain, that they suddenly
claimed they had copyright to... sound familiar to anyone?

Does anyone think any of these rulings might be relevant here?

[ Reply to This | # ]

IBM's Memorandum in Support of Motion to Strike - as text
Authored by: Anonymous on Monday, December 29 2003 @ 12:42 PM EST
yes but the documents posted on the site are the same!

[ Reply to This | # ]

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