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IBM Responds to SCO's Motion to Partly Reopen SCO v. IBM and a New Judge Assigned ~pj Updated
Thursday, November 24 2011 @ 02:48 AM EST

IBM has filed its Memorandum in Opposition [PDF] in opposition to SCO's motion to partly reopen SCO v. IBM. SCO would like to go forward with its side of the case, the little bits it thinks are left on the table after the whipping SCO got at Novell's hands. SCO wants IBM's hands to remain bound by the bankruptcy stay while it tries to beat it up. IBM seems to think that would be unfair. And it believes that the Novell ruling has killed off all of SCO's claims anyway, but it indicates an interest in pursuing its counterclaims. It taunts SCO, suggesting it should just ask the bankruptcy court to lift the stay so all the claims and counterclaims can be litigated together.

And a new presiding judge has been assigned, the Honorable Clark Waddoups (here is a little bit of background for you), because Chief Judge Tena Campbell has recused herself. She assumed senior status in January, which means the judge qualifies for retirement but instead of walking off into the sunset volunteers to stay around with a greatly reduced case load instead. I couldn't help but smile when I saw her caption on the order [PDF] about her recusal and the case being sent to Judge Waddoups. It reads "Caldera Systems and SCO Group v. IBM". Caldera Systems is what they were calling themselves until 2003, many moons ago, but they haven't used that name for years and years.

This makes judge number 3 since this litigation began in 2003. Well, actually it would be judge number 5.

SCO, then calling itself Caldera International, or just Caldera, at least according to its own version of its history on its website in 2003 (where it pretends it is both Santa Cruz Operation and Caldera Systems, joined as Caldera International in 2001), originally filed its complaint in 2003 in state court in Utah as "Caldera Systems, a Delaware corporation d/b/a THE SCO GROUP", in the Third Judicial District of Salt Lake County, then IBM got it moved to Federal District Court in Salt Lake City, Utah. There it was assigned to the Hon. Paul Cassell, who recused himself [PDF] and later retired.

[Update 2014: Judge Cassell retired and then went to work as a law professor and as "Special Counsel" at the law firm of Hatch, James and Dodge, according to footnote one of the Internal Attorney General's Report on the Marc Jenson case (also at one time represented by Hatch James, which you can read about here and updating of developments here.

For the Darl McBride connection, begin at page 26:

L. Shurtleff’s Meeting With Darl McBride After Returning From Pelican Hill.

On May 8, 2009, immediately after Shurtleff’s initial trip to Pelican Hill, Shurtleff and Darl McBride met at Mimi’s Café on State Street in Sandy City.

The subject of their discussion related to Jenson. By way of background, several months before McBride and Shurtleff met at Mimi’s Café, McBride had filed a lawsuit against Mark Robbins. McBride and Robbins had a falling out over a business venture and McBride alleged that Robbins owed him money. McBride had also established a website disparaging Robbins. Robbins was a major supporter and campaign contributor of Shurtleff. At the May 8, 2009, meeting with McBride, Shurtleff proposed using Jenson to help Robbins resolve his differences with McBride. McBride recorded the conversation, and later provided a copy of the recording to the Federal Bureau of Investigation. Shurtleff asked McBride, "What can I do?"

McBride told Shurtleff that he needed $2 million. Shurtleff asked him if he knew Jenson and stated that he believed Robbins was not good for the money but Jenson was.

Shurtleff offered to get Jenson to pay McBride the $2 million because he had a “weird relationship” with Jenson. “He’s got every motivation in the world.” “I’m going to shut down my team on him [Jenson].”

Shurtleff told McBride that if he got the money he had to promise that would be the end of it.

Shurtleff also acknowledged at that this meeting that he knew that Lawson used his name and told people that he represented the Attorney General. Shurtleff stated “he’ll use me for different things.”

M. Shurtleff’s Second Trip To Pelican Hill.

According to Jenson, Shurtleff made a second trip to Pelican Hill in about June 2009.

During the course of our investigation, we found a posting by Jenson’s wife, Stori Jenson, on the social media website Twitter that supports Jenson’s allegation regarding a June 2009 trip. Her posting, more commonly known as a “tweet,” is dated June 8, 2009. Her June 8, 2009 , tweet states “. . . so so funny! crazy weekend here. Church with Michele and natalie and shurtluff [sic]! What planet is this?”

Consistent with this tweet, Jenson also told us that, during one of his visits, Shurtleff decided to attend church at the same church that Jenson attended. Jenson claimed Shurtleff said something along the lines of “We can’t be seen together, so we’ll sneak in separately.” But then, while they drove to church separately, Shurtleff and his wife came in and sat right next to Jenson and his wife (Stori Jenson). Someone then came up to Shurtleff and said hi, and Shurtleff responded that he had come down to see the Jensons. As Jenson recounted to us, Shurtleff’s visit to the church essentially became a “campaign stop.” Shurtleff started handing out campaign buttons. He also apparently had a picture taken of him and Stori.

The bottom line, according to Jenson, was that Shurtleff and Swallow were there to “meet money guys.” Jenson also expressed to us his frustration at being in this situation. As he described it, he was a sophisticated business person who had been in legal trouble before. He had always hired legal counsel to deal with such situations. But now he had the Attorney General who was prosecuting him also using him personally to campaign. “Nothing was normal anymore,” said Jenson.

Jenson says that Swallow was also at Pelican Hill during Shurtleff’s second trip, but we have seen no corroboration. Jenson told us that, during this second trip, Shurtleff and Swallow were more aggressive in demanding money. Shurtleff told him that he had to give $2 million to Lawson to pay off McBride so that the problem McBride had with Robbins would go away. When Jenson protested that he did not have the money, Shurtleff told him to get it from his investors. Jenson replied that he had to pay restitution, whereupon Shurtleff told him not to worry about restitution since he (Jenson) was looking at the Attorney General and the next Attorney General. According to Jenson, Shurtleff said “You’ve got cover.”

And Jenson also claims that he told Shurtleff that he was going to pay the restitution he owed on the very last day of the three-year abeyance period.

At that point, Jenson said that Shurtleff asked Swallow to excuse himself and then told Jenson that he was under investigation by U.S. Attorney Brett Tolman and asked Jenson to have Paul Nelson contact Tolman, who is Nelson’s cousin. Jenson claims that Shurtleff told him something to the effect of, “If you can get me out of this, you’ll never have another problem with the State of Utah.”

Following that meeting, Jenson or Lawson called Paul Nelson. According to a sworn declaration from Nelson, in around June 2009, he received a call from Lawson. Lawson explained that Tolman was investigating Shurtleff and requested Nelson to reach out to Tolman and try to get him to drop the investigation. Lawson suggested that if that could happen, it would be very good for Jenson and a way might be found to drop the $4 million restitution obligation. If Nelson did not make the call, Lawson suggested that things would get worse for Jenson, including a potential investigation of the Mt. Holly project.

Nelson told us in an interview that Jenson had said Shurtleff was “breaking down” because of the investigation by Tolman. Nelson said that he placed a call to Tolman, but that he did not really want to talk to him. Nelson said it was never really clear to him whether there was actually an investigation by Tolman of Shurtleff.

Jenson stated that he later received three texts from Shurtleff, confirming some sort of contact between Nelson and Tolman and/or “Tolman’s guy” (presumably a reference to an attorney in the U.S. Attorney’s office). Jenson claims that these texts indicated that Shurtleff was euphoric.

Jenson also stated that Lawson confirmed an arrangement that, if Nelson could get Tolman to back off, then Jenson would not have to pay any restitution. We have seen no texts and no evidence that Nelson attempted to have any influence on Tolman.

It appears that on about July 5 and 6, 2009, Swallow again visited Jenson at Pelican Hill, this time without Shurtleff, and again Jenson paid all his expenses. On July 10 and 11, 2009, Swallow returned again to Pelican Hill, this time bringing his wife. It should be noted that Swallow was a private attorney, not an OAG employee. According to Jenson, however, when Swallow felt that he had been stood up by some wealthy golfers with whom Jenson had arranged a game, Swallow said to Jenson something to the effect of: “You have no idea who you are dealing with. You had better respect me. I shape your future.”

Jenson understood this to be a reference to the fact that Swallow was Shurtleff’s heir apparent. On July 30, 2009, Shurtleff admitted in an email to undisclosed (redacted) recipients that McBride had asked him in May to try and convince Mark Robbins to pay McBride money that McBride claimed Robbins owed him.

Shurtleff said that he tried, but Robbins refused to even consider it because McBride had said so many derogatory things on McBride’s website.

Torgensen had asked Shurtleff if he ever met with McBride on behalf of Mark Robbins and, if so, why. Shurtleff responded in an email dated July 18, 2012, denying that he ever acted as go- between for McBride.

For the footnotes, see the original. - End update]

Then it was assigned to the Hon. Dale A. Kimball. After the appeals court ruled in the first appeal in SCO v. Novell that the case should go to a jury, Judge Kimball recused himself [PDF] from both that case and this one, and the IBM case was assigned to Chief Judge Tena Campbell. Now she has recused herself, and it lands in the lap of Judge Waddoups. I wonder if he can find a way to escape too? Maybe if he can stretch it out long enough, he'll get to retire too, and we can finish up our SCO v. IBM decade with SCO's case still dragging on.

Joke. Joke. I'm sure he's thrilled SCO is his baby now. He was a trial lawyer before he was a judge, and litigators are not like you and me. He may even be looking forward to this.

SCO Group doesn't even exist any more. They are now calling themselves TSG Group, Inc. So much has changed. But Groklaw is still here. We promised we'd cover this case from soup to nuts, and so we shall.

Nuts is certainly le mot juste. And the cast keeps changing. I can't believe that here it is, the US holiday of Thanksgiving, 2011, and I'm still sitting here, writing about SCO. I think I speak for the entire inhabited earth when I say, we'd like SCO to stop. Say you're sorry. And stop. Well. Pay what you owe. Then disappear into the history books. No one who hasn't lived this saga will believe it when they read about it in years to come. Law students, I can just imagine, will be asking their professors, "OK. They did that. But *why*?" To control Linux, IBM answers. It's a common affliction, that unholy dream, and Microsoft still suffers from it. Barnes & Noble in its antitrust complaint about Microsoft pointed out recently, as an example, that Microsoft funded SCO, making it possible to sue and sue and sue: "Microsoft provided financial support to SCO, enabling it to file and litigate several infringement suits targeting open source software." Now Microsoft has joined in, no longer behind the curtain, using patents. What an ugly thing.

Magistrate Judge Brooke C. Wells has been reassigned to the case, however, so there will be some continuity there. She certainly knows what she is dealing with here. She was the magistrate when Judge Kimball was the presiding judge. Then, when SCO filed for bankruptcy in 2007 and the case was administratively closed, she was no longer assigned to it. But now she is again. How thrilled must *she* be? She can certainly fill Judge Waddoups in on all the details about this crazy, creepy case.

IBM's lawyers are the same, the steady and effective David R. Marriott in the lead, with Evan R. Chesler, both of Cravath, Swaine & Moore, and the same troupe from Snell & Willmer.

Boies Schiller, having foolishly (or cunningly) agreed to keep representing SCO through all appeals in this case without further payment after they were paid a lump sum in advance, are still here, doing what they do. They claim they have long been in the red on this case. Yet onward they must march. No Darl, though. The TSG's representative now is the Chapter 11 Trustee, and having claimed to the bankruptcy court that he thought SCO's claims had merit, he's following through.

But so is IBM. It's not possible to shake IBM off, or Cravath either. They don't get tired, or excitable, or sloppy.

IBM now tells the court that at some point, this case will probably have to be reopened, but to do it piecemeal makes no sense. IBM's counterclaims are so intertwined with SCO's claims, it would be counterproductive to separate them -- if any of SCO's claims survived the jury's decision in 2010 that SCO doesn't own the copyrights it was suing IBM and the world over, and Judge Ted Stewart's final decision [PDF], affirmed in a second appeal in SCO v. Novell -- and IBM says it doesn't believe any of them did.

IBM suggests waiting until the stay is lifted for both parties. It says it would be easy for SCO to ask the bankruptcy court to lift the stay, if it would like to hurry this up. IBM has no objection to that. Then IBM sets out a proposed schedule to quickly but officially lop off the claims SCO has admitted were negated by the Novell ruling, and then IBM proposes to make a motion for summary judgment, within 45 days of the reopening of the case, "addressing the impact of the Novell Judgment on all remaining claims (including IBM's counterclaims)", with IBM arguing that will deep-six all SCO's claims, and then what? Did you imagine that IBM was just going to drop this mess and forget about it, just because SCO's claims die? Guess again:

34. Once the Court has determined the effect of the Novell Judgment, we propose it require the parties to submit a scheduling order to govern the balance of this proceeding. If the Court were to deny the summary judgment motion that IBM proposes to make concerning the impact of the Novell Judgment on SCO's tortious interference and unfair competition claims, then it would be necessary for the Court to wade into the pending summary judgment motions concerning those claims. But before doing so, it will likely be advisable (depending in part of the nature of the Court's ruling as to the scope of the Novell Judgment) for the parties to supplement the existing briefing, and the Court may want to hear additional argument. Not only does the Novell Judgment affect these claims in important respects, but also the pending motions were made nearly five years ago and the body of relevant case law has grown.

35. Even if the Court were to grant IBM's proposed summary judgment motion (as to the impact of the Novell Judgment) in its entirety, it will make sense for the parties to submit a proposed scheduling order based upon that decision. While the Novell Judgment had a significant impact of the claims and counterclaims in this case, it did not resolve all of IBM's counterclaims. For example, while the Novell Judgment strengthens IBM's counterclaims concerning SCO's campaign to create fear, uncertainty and doubt about IBM's products and services, it does not completely resolve all of those claims. Thus, the Court will need to address certain of the pending motions, which may also require supplemental briefing and argument.

Once SCO's last claims are shut down, IBM intends to seek justice. I gather it would enjoy to pummel SCO into the ground with counterclaims. That will require "supplemental briefing and argument" -- a note to Boies Schiller and Hatch & Dodge, who are also still around, and who will not get paid for that extra work, while Cravath and Snell & Wilmer will. And by that point, there will be nothing for SCO to even try to win, no gold at the end of any rainbow, just a mighty vengeance coming right at it. IBM has more cases to use now, it indicates, that it would like to bring to the court's attention. And besides I think it wants to chop SCO's corpse up into little bits and feed it to the dogs. Metaphorically speaking. Here's the polite way IBM puts it:
39. In summary, IBM supports the expeditious resolution of this case. But the best way to bring that about is not to proceed piecemeal as to three of SCO' s claims, especially where, as here, those claims are intimately related to IBM's counterclaims, which remain stayed due to SCO's bankruptcy filing, and are barred by the Novell Judgment. We respectfully submit that the most sensible way to proceed here is for the Court to enter an order (i) providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay of IBM's counterclaims has been lifted, which SCO should be able to accomplish expeditiously; (ii) stating that the claims that SCO concedes are foreclosed by the Novell Judgment will be dismissed when the case is reopened; (iii) directing that, within 45 days of the reopening of the case, any party may make a motion for summary judgment addressing the impact of the Novell Judgment on all remaining claims; and (iv) ordering the parties jointly to submit, within 10 days of the entry of an order of the Court determining the impact of the Novell Judgment, a proposed scheduling order to govern the balance of the case.
One thing IBM makes clear to the judge: to the extent this is just SCO trying to "sell" its story to this new judge, IBM states categorically that it denies that it ever did anything improper or hurtful to SCO. It was decidedly the other way around:
IBM does not believe the present motion is the place to argue the alleged merits of SCO's claims. That has been done extensively in the pending motions for summary judgment, and this is a procedural motion. But insofar as SCO's motion to reopen seeks to sell its claims, we wish at least to make one thing crystal clear: not only are SCO's claims barred by the Novell Judgment, but they are also without merit for multiple reasons independent of the Novell Judgment. As explained at length in IBM's pending motions for summary judgment, IBM did nothing to injure SCO; rather, it is SCO that undertook -- with much fanfare -- a multi-year campaign to profit off of the thousands of persons and entities, including IBM, who have contributed to the development of Linux.
Don't forget the bullying.

As for SCO's claims about Project Monterey and what a meanie IBM allegedly was, IBM says this:

38. Similarly, in touting its unfair competition claim, SCO accuses IBM of abandoning Project Monterey (a venture between IBM and The Santa Cruz Operation, Inc., not SCO), only to misappropriate source code to which IBM was given access during the project. In fact, IBM did not abandon Project Monterey; Santa Cruz did. Rather than meet its obligations on the project, Santa Cruz sold the very Unix assets involved in the project to a Linux company called Caldera Systems, which later changed its name to The SCO Group, Inc. It was only then that IBM exercised its undisputed right to terminate the project, which had simply not progressed as originally hoped. Nor did IBM misappropriate any source code in connection with Project Monterey; it simply used the code to which it was given access and which it had a contractual right to use. Absent from SCO's description of its claim is any mention of the fact that (i) SCO was not a party to the joint development agreement relating to Project Monterey (the "JDA") and thus does not have the right to seek redress of rights relating to that contract; (ii) even if SCO could pursue a claim relating to the JDA, the JDA contains a two-year limitations provision, under which SCO's unfair competition claim would be untimely; (iii) the crux of SCO's claim -- that IBM used Project Monterey as a pretext to misappropriate source code -- is pre-empted by federal copyright law; (iv) the conduct about which SCO complains does not constitute unfair competition under well-established law; and (v) SCO cannot show that alleged unfair competition resulted in damages to SCO, which would in any case be limited to $5 million under the terms of the JDA. These flaws in SCO's claims are further described in detail in IBM's summary judgment motion, the transcript of the oral argument on that motion and the demonstrative exhibits submitted at oral argument.
Here's where you can find that IBM motion and the memorandum in support and here's the oral argument transcript. We don't have the demonstrative exhibits, but here's Groklaw's report from the court that day, which will give you a pretty good idea of what they were about. All the pending summary judgment motions are here.

Here are all the latest filings:

Filed: 11/09/2011
Entered: 11/10/2011
Add and Terminate Judges
Docket Text: Judge Clark Waddoups added. Judge Tena Campbell no longer assigned to case. (alt)

1099 - Filed: 11/09/2011
Entered: 11/10/2011
Order of Recusal
Docket Text: ORDER OF RECUSAL: Judge Tena Campbell recused. Case reassigned to Judge Clark Waddoups for all further proceedings. Case number is now 2:03cv00294 CW. Signed by Judge Tena Campbell on 11/8/11 (alt)

1100 - Filed & Entered: 11/21/2011
Memorandum in Opposition to Motion
Docket Text: Defendant's MEMORANDUM in Opposition re [1095] MOTION to Reopen Case filed by Defendant International Business Machines Corporation. (Sorenson, Amy)

Because there's been so much water under the bridge, and because this is a judge new to this litigation, IBM spends most of the memorandum telling him what has happened so far. Perhaps you are new to the saga as well, so I did two versions of IBM's memorandum, as text. The first is plain and simple, exactly what IBM filed. But it's followed by a second version of it, with my annotations in brackets and links to all filings referenced, so you can get up to speed or refresh your memory. The judge has access to all the documents, and you can too, except for a few that were under seal, but mostly we have redacted versions of those. And frankly, the way SCO "redacts" documents, even the sealed documents are pretty much out in the sunlight. There are many more documents in our SCO v. IBM Timeline, so dig as deeply as you wish.

Here's what IBM filed, as text, and after the double row of stars, the same text but with links:

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

Jump to Annotated Version]

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

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

Attorneys for Defendant/Counterclaim-Plaintif
International Business Machines Corporation

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.

_______________________

IBM'S MEMORANDUM RESPONDING TO
SCO'S REQUEST TO REOPEN

(ORAL ARGUMENT REQUESTED)

Civil No. 2:03CV -0294 CW

Honorable Clark Waddoups

Magistrate Judge Brooke C. Wells

______________________

Defendant/Counterclaim-Plaintiff International Business Machines Corporation ("IBM") respectfully submits this memorandum in response to the request of The SCO Group, Inc. ("SCO") (n/k/a TSG Group, Inc.) to reopen this case to pursue several of its claims against IBM while IBM's counterclaims against SCO remain stayed, despite the fact that IBM's counterclaims are inextricably intertwined with SCO's claims and litigating them separately (as SCO proposes) would be inefficient and fundamentally unfair and would ignore the preclusive effect ofthe final judgment (the "Novell Judgment") entered against SCO in its litigation with Novell (the "Novell Litigation").

Preliminary Statement

1. SCO commenced this litigation in 2003 as part of a campaign to control the Linux operating system, which was developed publicly by thousands of software developers, including developers at IBM. In response, IBM asserted a number of counterclaims against SCO for violating IBM's contractual, intellectual property and other rights.

2. After years of litigation, the parties exchanged multiple summary judgment motions, and Judge Kimball heard several days of oral argument. But before the Court could decide the motions, SCO filed a petition for relief under Chapter 11 of the Bankuptcy Code, resulting directly in an automatic stay and ultimately in closure of this case.

3. Meanwhile, in a related litigation between SCO and Novell, the Novell Litigation, a jury returned a verdict, and now Chief Judge Stewart entered a final judgment, against SCO and in favor of Novell. The Novell Judgment, which effectively forecloses SCO's claims in this case (as well as requiring a judgment in IBM's favor on several of its counterclaims), was affirmed by the Tenth Circuit on August 30, 2011.

4. Taking the view that not all of its claims are foreclosed by the Novell Judgment, SCO now asks the Court to reopen this case and to decide the summary judgment motions relating only to "SCO's unfair competition claim concerning the Project Monterey joint venture" (to which SCO was not even a party) and "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships".

5. While we expect the Court wil eventually have to reopen this case, it is premature to do so now, because IBM's eleven counterclaims against SCO (which are closely related to SCO's claims against IBM) remain stayed, and it makes no sense to litigate this case piecemeal. Doing so would waste judicial and party resources and potentially result in inconsistent rulings.

6. Nor does it make sense at this juncture for the Court to dive into the summary judgment motions IBM filed (more than four years ago) against SCO's unfair competition and tortious interference claims. While those claims have no merit (for the reasons described in IBM's motions), they are also, contrary to SCO's contention, effectively foreclosed by the Novell Judgment, which also affects IBM's counterclaims against SCO.

7. Rather, we respectfully request that the Court enter an order (i) providing that this case shall be reopened within 5 days of the fiing of a notice (by any party) that the stay concerning IBM's counterclaims has been lifted; (ii) stating that the claims that SCO concedes are foreclosed by the Novell Judgment will be dismissed when the case is reopened; (iii) directing that, within 45 days of the reopening of the case, any party may make a motion for summary judgment addressing the impact of the Novell Judgment on all remaining claims (including the IBM counterclaims resolved by the Novell Judgment); and (iv) ordering the

2

parties jointly to submit, within 10 days of the entry of an order of the Court determining the impact of the Novell Judgment, a proposed scheduling order to govern the balance of the case.

8. Proceeding in this way will minimize the risks of piecemeal litigation, prevent the Court's deciding motions concerning foreclosed claims, and put the parties and the Court in a position to bring this case to a conclusion in the most efficient manner possible. Thus, SCO's motion to reopen should be denied without prejudice.

Background

9. In early 2003, SCO attempted to profit from the UNIX and Linux operating systems by, among other things, embarking on a far-reaching publicity campaign to create the false and unsubstantiated impression that SCO had expansive rights to the UNIX and Linux operating systems and by bringing baseless legal claims against IBM and others.

10. SCO asserted nine claims against IBM: (l) four breach of contract claims (Counts I to IV); (2) one copyright infringement claim (Count V); (3) one unfair competition claim (as to a joint venture to which SCO was not a party) (Count VI); and (4) three tortious interference claims (Counts VII to IX). The crux of SCO's case was that it owned the copyrights and other rights to the UNIX operating system and that IBM and others violated SCO's alleged rights and injured SCO by contributing to the development of the Linux operating system.

11. Based on the conduct underlying SCO's attack on Linux and IBM, IBM asserted a number of counterclaims against SCO: (l) two claims for declaration of non-infringement of copyright (Counterclaims IX and X); (2) one claim for breach of contract (Counterclaim I); (3) three claims relating to SCO's copying of IBM code in Linux (Counterclaims VI to VIII); (4) four claims concerning SCO's campaign to create fear,

3

uncertainty and doubt about IBM's products and services (Counterclaims II to V); and (5) one claim for a declaration of IBM's rights under all of its other claims (Counterclaim XIV).

12. Both Judge Kimball (to whom this case was initially assigned) and Magistrate Judge Wells entered a series of orders callng SCO's claims into question and materiaily limiting SCO's case. SCO challenged these rulings in motions/objections that are fully briefed: (1) SCO's Motion for Reconsideration of the November 29,2006 Order (Doc. # 894); (2) SCO's Objections to the Magistrate Judge's Order on IBM's Motion to Confine (Doc. # 899); (3) SCO's Motion to Amend its December 2005 Submission (Doc. # 913); (4) SCO's Motion for Reconsideration by the Magistrate Court of the Order Denying SCO's Motion for Relief for IBM's Spoliation of Evidence (Doc. # 986); and (5) SCO's Objections to the Magistrate Court's Order Denying SCO's Motion for Relief for IBM's Spoliation of Evidence (Doc. # 995).

13. Thereafter, IBM filed six sumary judgment motions, seeking judgment in its favor on all of SCO' s claims and two of its own. SCO filed three summary judgment motions, seeking judgment on seven of IBM's claims and one of its own. 14. On August 10, 2007, before ruling on these motions, Judge Kimball entered an order in the Novell Litigation, rejecting the keystone of SCO's litigation campaign. Judge Kimball ruled that Novell, not SCO, owns the core UNIX copyrights and that Novell has the right, which it has exercised on IBM's behalf, to waive most of SCO's purported claims against IBM.

15. Recognizing that that ruling "significantly impacts" this case, Judge Kimball required the parties to state their views as to the effect of his Novell ruling on this case.

4

IBM believed the Novell ruling effectively rejected all of SCO's claims and effectively granted several of IBM's counterclaims. SCO took a narrower view of the ruling but did not dispute that it foreclosed no fewer than six of SCO's nine claims against IBM.

16. Shortly after the parties responded to the Court concerning the effect of the Novell ruling on this case, but before Judge Kimball ruled on the pending motions, SCO fied a petition for relief under the Bankuptcy Code in Delaware, where SCO is incorporated. The instant case was then closed (administratively) pending resolution of SCO's bankptcy case, which gave rise to an automatic stay.

17. On August 24,2009, the Tenth Circuit reversed in part Judge Kimball's summary judgment ruling in the Novell Litigation and remanded the case for trial. The Tenth Circuit ruled that there were questions of fact as to whether Novell or SCO owned the UNIX copyrights and whether Novell could waive SCO's claims against IBM.

18. Upon remand, Judge Kimball recused himself from both the Novell Litigation and this case. This case was reassigned to Judge Campell, and the Novell Litigation was reassigned to Judge Stewart.

19. On March 30, 2010, a jury returned a verdict against SCO in the Novell Litigation, finding that Novell owns the core UNIX copyrights, which lie at the heart of SCO's case against IBM. On June 10, 2010, Judge Stewart issued findings of fact and conclusions of law refusing SCO's request for specific performance and holding that Novell had the authority to waive SCO's claims against IBM. On the same day, Judge Stewart issued a final judgment embodying the jury verdict and his findings of fact and conclusions of law.

20. Shortly after SCO filed an appeal, but before the Tenth Circuit ruled on

5

the appeal, SCO requested that this Court permit it to proceed as to several of its claims against IBM (i.e., SCO's unfair competition and tortious interference claims) while IBM's counterclaims against SCO remained stayed. In an order dated September 10, 2010, Judge Campell declined to take that piecemeal approach.

21. While Judge Campell stated that either party could move to reopen this case after the Tenth Circuit issued its decision in the Novell Litigation, she expressed no view as to whether it would make sense to reopen the case while IBM's counterclaims remained stayed.

22. SCO seeks to reopen this case and to proceed piecemeal, while IBM's counterclaims remain stayed. In fact, despite the fact that it has been more than four years since SCO filed a petition for relief under the bankruptcy laws, it has not confirmed a plan of reorganization or sought relief from the stay as to IBM's counterclaims.

Argument

23. While the Tenth Circuit's affirmance of the Novell Judgment brings this case closer to the point where it should be reopened, it makes no sense to proceed with the case before the stay of IBM's counterclaims is lifted. Nor does it make any sense for the Court to dive into the summary judgment motions IBM filed against SCO's unfair competition and tortious interference claims. However, as soon as the stay is lifted as to IBM's counterclaims, the Court should (i) dismiss the claims that SCO concedes are foreclosed, (ii) determine the effect of the Novell Judgment on the remaining claims and counterclaims, and (iii) enter a scheduling order to bring this matter to an expeditious resolution.

24. The Court should not reopen this case to proceed piecemeal; it should reopen the case when the stay has been lifted as to IBM's counterclaims. In seeking to

6

reopen this case now, SCO scarcely makes mention of IBM's counterclaims. But, as stated, IBM has eleven counterclaims against SCO: (1) two claims for declaration of non-infringement of copyright (Counterclaims IX and X); (2) one claim for breach of contract (Counterclaim I); (3) three claims relating to SCO's copying of IBM code in Linux (Counterclaims VI to VIII); (4) four claims concerning SCO's campaign to create fear, uncertainty and doubt about IBM's products and services (Counterclaims II to V); and (5) one claim for a declaration of IBM's rights under all of its other claims (Counterclaim XIV).

25. IBM's counterclaims are closely related to SCO's claims, including its unfair competition claim (Count VI) and its tortious interference claims (Count VII-IX).1 IBM's counterclaims accuse SCO of (i) breaching the same UNIX contracts IBM is alleged by SCO to have breached (Counterclaim I); (ii) infringing IBM copyrights and violating the General Public License with respect to the same Linux operating system that SCO claims IBM improperly supported (Counterclaims VI, VII, VIII); (iii) orchestrating a campaign of fear, uncertainty and doubt about IBM's products and services -- the very course of conduct with which it claims IBM interfered (Counterclaims II, III, IV, and V); (iv) falsely asserting claims of copyright

7

infringement with respect to the same copyrights referenced by SCO in its claims (Counterclaim IX and X); and (v) interfering with IBM's relationships with the same customer base that SCO accuses IBM of interfering with (Counterclaim IV).

26. Given the connection between SCO's claims and IBM's counterclaims, proceeding with SCO's claims alone has nothing to recommend it. If SCO's claims are to be litigated, they should be litigated with IBM's counterclaims, as they were for years prior to SCO's bankuptcy filing. SCO's claims and IBM's counterclaims concern the same course of conduct and intellectual property. Litigating them separately, and potentially conducting two separate trials, would make no sense.

27. Thus, we respectfully submit that the Court should enter an order providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay has been fully lifted concerning IBM's counterclaims (except as to the enforcement of any money judgment that IBM obtains against SCO). IBM does not object to lifting the stay, and, as the debtor, SCO should be able to obtain an order lifting it in short order.

28. After the stay has been lifted and this case has been reopened, the Court should first dismiss the claims that SCO concedes are foreclosed. SCO admits that at least five (and perhaps six) of its claims against IBM, and part of another of its claims, are foreclosed by the Novell Judgment. Specifically, SCO clearly concedes that its four claims for breach of contract (Counts I-IV) and its copyright claim (Count V) are barred by the Novell Judgment; it also acknowledges that the branches of its unfair competition claim unrelated to Project Monterey are barred. The Tenth Circuit affirmed the final judgment entered by Judge Stewart providing that Novell (not SCO) owns the copyrights SCO claimed to have been

8

infringed and that Novell was authorized to waive SCO's claims against IBM for alleged breaches of contract. Thus, these claims should be dismissed as soon as the case is reopened. The Court need not decide IBM's summary judgment motions to resolve these claims. 29. While SCO's motion to reopen is not entirely clear on the subject, we expect SCO will also concede that, when the case is reopened, judgment should be entered in favor of IBM with respect to SCO's claim (Count VIII) that IBM induced Novell to assert copyright and waiver rights that SCO argues Novell does not have under the Asset Purchase Agreement between SCO and Novell (the "APA"). Again, in affirming the Novell Judgment, the Tenth Circuit ruled that Novell owned the copyrights and properly exercised the waiver rights in question. Under these circumstances, SCO's tortious interference claim concerning Novell is untenable, as SCO acknowledged in its response to Judge Kimball's Notice of Decision and Request for Status Update dated August 10, 2007.

30. Once the Court has dismissed the claims that SCO concedes are foreclosed, we suggest it should determine the impact of the Novell Judgment on the parties' remaining claims and counterclaims. While SCO concedes that the Novell Judgment forecloses its four contract claims (Counts I-IV) and its copyright claim (Count V), SCO claims that the Novell Judgment does not bar "SCO's unfair competition claim concerning the Project Monterey joint venture" (to which SCO was not a party) (Count VI) and "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships"

31. "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships" (Counts VII and IX) depend on the proposition that

9

IBM acted improperly in contributing its own source code to Linux. Specifically, Count VII alleges IBM interfered with SCO's business relationships with "its market" (175 companies besides Novell) by urging them to use Linux (instead of SCO's UNIX products) while knowing that such use would violate SCO's UNIX licenses. Count IX alleges that IBM interfered with SCO's business relationships with six other entities by urging them not to do business with SCO because of SCO's efforts to protect the UNIX code allegedly misappropriated by Linux. However, the Novell Judgment precludes SCO from challenging IBM's contributions of its own code to Linux: the Novell Judgment expressly affirms Judge Stewart's judgment that Novell properly waived any such claim and that Novell, not SCO, owns the copyrights in (and thus has the right to reproduce and distribute) the allegedly misused code.

32. SCO's unfair competition claim (Count VI), which is a mix of SCO's other causes of action, is likewise foreclosed. Insofar as the claim concerns the alleged misconduct underlying SCO's breach of contract and copyright infringement claims, it is plainly foreclosed by the Novell Judgment, as SCO seems to concede, because Novell waived the alleged breaches and owns the relevant copyrights. The only branch of its unfair competition claim that SCO appears to seek to assert relates to "Project Monterey". But 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 Inc., not SCO, during Project Monterey) by copying the code into IBM's AIX for POWER product. SCO has never properly identified any such code that is not covered by copyrights determined in the Novell Litigation to be owned by Novell. Nor did SCO make the disclosures required by IBM's discovery requests and the Court's orders with respect to the "Project Monterey" code on which it would seek to base its

10

claim. Thus, SCO's Monterey allegations are untenable following the Novell Judgment.2 (SCO's Monterey allegations are also untenable for the reasons discussed in paragraph 38 below.)

33. IBM thus proposes to make a motion for summary judgment, within 45 days of the reopening of the case, addressing the impact of the Novell Judgment on all remaining claims (including IBM's counterclaims). If we are correct about the impact of the Novell Judgment, it will be unnecessary for the Court to decide a number of the pending summary judgment motions to resolve these claims.

34. Once the Court has determined the effect of the Novell Judgment, we propose it require the parties to submit a scheduling order to govern the balance of this proceeding. If the Court were to deny the summary judgment motion that IBM proposes to make concerning the impact of the Novell Judgment on SCO's tortious interference and unfair competition claims, then it would be necessary for the Court to wade into the pending summary judgment motions concerning those claims. But before doing so, it will likely be advisable (depending in part of the nature of the Court's ruling as to the scope of the Novell Judgment) for the parties to supplement the existing briefing, and the Court may want to hear additional argument. Not only does the Novell Judgment affect these claims in important respects, but also

11

the pending motions were made nearly five years ago and the body of relevant case law has grown.

35. Even if the Court were to grant IBM's proposed summary judgment motion (as to the impact of the Novell Judgment) in its entirety, it will make sense for the parties to submit a proposed scheduling order based upon that decision. While the Novell Judgment had a significant impact of the claims and counterclaims in this case, it did not resolve all of IBM's counterclaims. For example, while the Novell Judgment strengthens IBM's counterclaims concerning SCO's campaign to create fear, uncertainty and doubt about IBM's products and services, it does not completely resolve all of those claims. Thus, the Court will need to address certain of the pending motions, which may also require supplemental briefing and argument.3

36. Finally, lest there be any doubt about it, IBM disputes SCO's allegations of misconduct. IBM does not believe the present motion is the place to argue the alleged merits of SCO's claims. That has been done extensively in the pending motions for summary judgment, and this is a procedural motion. But insofar as SCO's motion to reopen seeks to sell its claims, we wish at least to make one thing crystal clear: not only are SCO's claims barred by the Novell Judgment, but they are also without merit for multiple reasons independent of the Novell Judgment. As explained at length in IBM's pending motions for summary judgment, IBM did nothing to injure SCO; rather, it is SCO that undertook - with much fanfare - a multi-year campaign to profit off of the thousands of persons and entities,

12

including IBM, who have contributed to the development of Linux.

37. In touting its tortious interference claims, SCO neglects to mention that, while it has identified numerous relationships with which IBM purportedly interfered, SCO alleges nothing more than "indirect interference" as to the overwhelming majority of them (175 of 182); SCO accuses IBM of "direct interference" with only seven entities. However, SCO's allegations of "indirect interference" are untenable as a matter of law, and each of the entities with whom IBM allegedly "directly interfered" has testified that no such interference occurred or, in any event, that they did not change their relationships with SCO as a result of any IBM conduct. Moreover, (i) IBM's allegedly tortious acts were not undertaken with an improper purpose or by improper means, and (ii) there is no causal link between any act of IBM and any specific injury to SCO. These flaws in SCO's claims are described in detail in IBM's summary judgment motion, the transcript of the oral argument on that motion and the demonstrative exhibits submitted at oral argument.

38. Similarly, in touting its unfair competition claim, SCO accuses IBM of abandoning Project Monterey (a venture between IBM and The Santa Cruz Operation, Inc., not SCO), only to misappropriate source code to which IBM was given access during the project. In fact, IBM did not abandon Project Monterey; Santa Cruz did. Rather than meet its obligations on the project, Santa Cruz sold the very Unix assets involved in the project to a Linux company called Caldera Systems, which later changed its name to The SCO Group, Inc. It was only then that IBM exercised its undisputed right to terminate the project, which had simply not progressed as originally hoped. Nor did IBM misappropriate any source code in connection with Project Monterey; it simply used the code to which it was given access and which it had a contractual

13

right to use. Absent from SCO's description of its claim is any mention of the fact that (i) SCO was not a party to the joint development agreement relating to Project Monterey (the "JDA") and thus does not have the right to seek redress of rights relating to that contract; (ii) even if SCO could pursue a claim relating to the JDA, the JDA contains a two-year limitations provision, under which SCO's unfair competition claim would be untimely; (iii) the crux of SCO's claim -- that IBM used Project Monterey as a pretext to misappropriate source code -- is pre-empted by federal copyright law; (iv) the conduct about which SCO complains does not constitute unfair competition under well-established law; and (v) SCO cannot show that alleged unfair competition resulted in damages to SCO, which would in any case be limited to $5 million under the terms of the JDA. These flaws in SCO's claims are further described in detail in IBM's summary judgment motion, the transcript of the oral argument on that motion and the demonstrative exhibits submitted at oral argument.

39. In summary, IBM supports the expeditious resolution of this case. But the best way to bring that about is not to proceed piecemeal as to three of SCO' s claims, especially where, as here, those claims are intimately related to IBM's counterclaims, which remain stayed due to SCO's bankruptcy filing, and are barred by the Novell Judgment. We respectfully submit that the most sensible way to proceed here is for the Court to enter an order (i) providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay of IBM's counterclaims has been lifted, which SCO should be able to accomplish expeditiously; (ii) stating that the claims that SCO concedes are foreclosed by the Novell Judgment will be dismissed when the case is reopened; (iii) directing that, within 45 days of the reopening of the case, any party may make a motion for summary judgment addressing the impact of the Novell Judgment

14

on all remaining claims; and (iv) ordering the parties jointly to submit, within 10 days of the entry of an order of the Court determining the impact of the Novell Judgment, a proposed scheduling order to govern the balance of the case.

Conclusion

For the foregoing reasons, IBM respectfully submits that the Court should decline SCO's request to proceed piecemeal; the Court should proceed instead as outlined above.

DATED this 21st of November 2011

SNELL & WILMER L.L.P.

/s/ Amy F. Sorenson Alan L. Sullivan
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
Alec S. Berman
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

______________________
1 SCO's tortious interference claims accuse IBM of (i) inducing Novell to assert copyright and waiver rights that SCO argues Novell does not have under the APA (Count VIII) (though SCO seems to recognize this claim is barred by the Novell Judgment); (ii) interfering with SCO's business relationships with 175 companies (besides Novell) by urging them to use Linux (instead of SCO's UNIX products) while knowing that such use would violate their UNIX licenses (Count VII); and (iii) interfering with SCO's business relationships with six other entities by urging them not to do business with SCO because of SCO's efforts to protect the UNIX code allegedly misappropriated by Linux (Count IX). SCO's unfair competition claim (Count VI) purports to be a catch-all count, accusing IBM of a variety of alleged misconduct, such as breaches of contracts, misappropriation of source code, and infringement of copyrights, including with respect to certain UNIX SVr4 code (licensed to IBM by The Santa Cruz Operation, Inc. during "Project Monterey"); SCO admits branches of this claim are barred.

2 In addition to disposing of the only claims that SCO seeks to pursue, the Novell Judgment had a significant impact on IBM's counterclaims. For example, the Tenth Circuit's affirmance of the Novell Judgment (1) requires the entry of judgment in favor of IBM on its Counterclaims IX and X, which seek declarations of non-infringement, as SCO cannot show IBM infringed copyrights SCO does not own; (2) requires the entry of summary judgment in favor of IBM on its Counterclaim I, insofar as it rejects the premise on which SCO purported to terminate an IBM license; and (3) precludes SCO's primary defenses as to IBM's three claims relating to SCO's copying of IBM code in Linux (Counterclaim VI, VII and VIII).

3 Depending on what remains in the case following the Court's ruling concerning the the Novell Judgment, and the pending summary judgment motions, the Court may also need to decide the motions/objections referenced in paragraph 12 above, in the event SCO elects to pursue them.

15

CERTIFICATE OF SERVICE

I hereby certify that a true and accurate copy of the foregoing was electronically fied on the 21st day of November, 2011 with the Clerk of the Court and delivered by CM/ECF system to the following:

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

David Boies
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

Stuart Singer
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Amy F. Sorenson

And here's my annotated version, with links to all the events and filings referenced:

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

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

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

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

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.

_______________________

IBM'S MEMORANDUM RESPONDING TO
SCO'S REQUEST TO REOPEN

(ORAL ARGUMENT REQUESTED)

Civil No. 2:03CV-0294 CW

Honorable Clark Waddoups

Magistrate Judge Brooke C. Wells

______________________

Defendant/Counterclaim-Plaintiff International Business Machines Corporation ("IBM") respectfully submits this memorandum in response to the request of The SCO Group, Inc. ("SCO") (n/k/a TSG Group, Inc.) to reopen this case to pursue several of its claims against IBM while IBM's counterclaims against SCO remain stayed, despite the fact that IBM's counterclaims are inextricably intertwined with SCO's claims and litigating them separately (as SCO proposes) would be inefficient and fundamentally unfair and would ignore the preclusive effect of the final judgment (the "Novell Judgment") entered against SCO in its litigation with Novell (the "Novell Litigation").

Preliminary Statement

1. SCO commenced this litigation in 2003 as part of a campaign to control the Linux operating system, which was developed publicly by thousands of software developers, including developers at IBM. In response, IBM asserted a number of counterclaims against SCO for violating IBM's contractual, intellectual property and other rights.

2. After years of litigation, the parties exchanged multiple summary judgment motions, and Judge Kimball heard several days of oral argument. But before the Court could decide the motions, SCO filed a petition for relief under Chapter 11 of the Bankruptcy Code, resulting directly in an automatic stay and ultimately in closure of this case.

3. Meanwhile, in a related litigation between SCO and Novell, the Novell Litigation, a jury returned a verdict, and now Chief Judge Stewart entered a final judgment [PDF], against SCO and in favor of Novell. The Novell Judgment, which effectively forecloses SCO's claims in this case (as well as requiring a judgment in IBM's favor on several of its counterclaims), was affirmed by the Tenth Circuit on August 30, 2011.

4. Taking the view that not all of its claims are foreclosed by the Novell Judgment, SCO now asks the Court to reopen this case and to decide the summary judgment motions relating only to "SCO's unfair competition claim concerning the Project Monterey joint venture" (to which SCO was not even a party) and "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships".

5. While we expect the Court will eventually have to reopen this case, it is premature to do so now, because IBM's eleven counterclaims against SCO (which are closely related to SCO's claims against IBM) remain stayed, and it makes no sense to litigate this case piecemeal. Doing so would waste judicial and party resources and potentially result in inconsistent rulings.

6. Nor does it make sense at this juncture for the Court to dive into the summary judgment motions IBM filed (more than four years ago) against SCO's unfair competition and tortious interference claims. While those claims have no merit (for the reasons described in IBM's motions), they are also, contrary to SCO's contention, effectively foreclosed by the Novell Judgment, which also affects IBM's counterclaims against SCO.

7. Rather, we respectfully request that the Court enter an order (i) providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay concerning IBM's counterclaims has been lifted; (ii) stating that the claims that SCO concedes are foreclosed by the Novell Judgment will be dismissed when the case is reopened; (iii) directing that, within 45 days of the reopening of the case, any party may make a motion for summary judgment addressing the impact of the Novell Judgment on all remaining claims (including the IBM counterclaims resolved by the Novell Judgment); and (iv) ordering the

2

parties jointly to submit, within 10 days of the entry of an order of the Court determining the impact of the Novell Judgment, a proposed scheduling order to govern the balance of the case.

8. Proceeding in this way will minimize the risks of piecemeal litigation, prevent the Court's deciding motions concerning foreclosed claims, and put the parties and the Court in a position to bring this case to a conclusion in the most efficient manner possible. Thus, SCO's motion to reopen should be denied without prejudice.

Background

9. In early 2003, SCO attempted to profit from the UNIX and Linux operating systems by, among other things, embarking on a far-reaching publicity campaign to create the false and unsubstantiated impression that SCO had expansive rights to the UNIX and Linux operating systems and by bringing baseless legal claims against IBM and others.

10. SCO asserted nine claims against IBM: (l) four breach of contract claims (Counts I to IV); (2) one copyright infringement claim (Count V); (3) one unfair competition claim (as to a joint venture to which SCO was not a party) (Count VI); and (4) three tortious interference claims (Counts VII to IX). The crux of SCO's case was that it owned the copyrights and other rights to the UNIX operating system and that IBM and others violated SCO's alleged rights and injured SCO by contributing to the development of the Linux operating system.

11. Based on the conduct underlying SCO's attack on Linux and IBM, IBM asserted a number of counterclaims against SCO: (l) two claims for declaration of non-infringement of copyright (Counterclaims IX and X); (2) one claim for breach of contract (Counterclaim I); (3) three claims relating to SCO's copying of IBM code in Linux (Counterclaims VI to VIII); (4) four claims concerning SCO's campaign to create fear,

3

uncertainty and doubt about IBM's products and services (Counterclaims II to V); and (5) one claim for a declaration of IBM's rights under all of its other claims (Counterclaim XIV).

12. Both Judge Kimball (to whom this case was initially assigned) and Magistrate Judge Wells entered a series of orders calling SCO's claims into question and materialy limiting SCO's case. SCO challenged these rulings in motions/objections that are fully briefed: (1) SCO's Motion for Reconsideration of the November 29, 2006 Order (Doc. # 894 [redacted version of sealed 894); (2) SCO's Objections to the Magistrate Judge's Order on IBM's Motion to Confine (Doc. # 899); (3) SCO's Motion to Amend its December 2005 Submission (Doc. # 913 [PDF]) [Memorandum in Support]; (4) SCO's Motion for Reconsideration by the Magistrate Court of the Order Denying SCO's Motion [PDF] for Relief for IBM's Spoliation of Evidence (Doc. # 986 [PDF]); and (5) SCO's Objections to the Magistrate Court's Order Denying SCO's Motion for Relief for IBM's Spoliation of Evidence (Doc. # 995) [redacted version of 995, because 995 is sealed].

13. Thereafter, IBM filed six summary judgment motions, seeking judgment in its favor on all of SCO's claims and two of its own. SCO filed three summary judgment motions, seeking judgment on seven of IBM's claims and one of its own. [All the summary judgment motions are here, and IBM filed hundreds of exhibits in support, which you can find here, or in a chart, showing which motion each exhibit supports, here.] 14. On August 10, 2007, before ruling on these motions, Judge Kimball entered an order in the Novell Litigation, rejecting the keystone of SCO's litigation campaign. Judge Kimball ruled that Novell, not SCO, owns the core UNIX copyrights and that Novell has the right, which it has exercised on IBM's behalf, to waive most of SCO's purported claims against IBM.

15. Recognizing that that ruling "significantly impacts" this case, Judge Kimball required the parties to state their views as to the effect of his Novell ruling on this case.

4

IBM believed the Novell ruling effectively rejected all of SCO's claims and effectively granted several of IBM's counterclaims. SCO took a narrower view of the ruling but did not dispute that it foreclosed no fewer than six of SCO's nine claims against IBM.

16. Shortly after the parties responded to the Court concerning the effect of the Novell ruling on this case, but before Judge Kimball ruled on the pending motions, SCO filed a petition for relief under the Bankruptcy Code in Delaware, where SCO is incorporated. The instant case was then closed (administratively) pending resolution of SCO's bankruptcy case, which gave rise to an automatic stay.

17. On August 24, 2009, the Tenth Circuit reversed in part Judge Kimball's summary judgment ruling in the Novell Litigation and remanded the case for trial. The Tenth Circuit ruled that there were questions of fact as to whether Novell or SCO owned the UNIX copyrights and whether Novell could waive SCO's claims against IBM.

18. Upon remand, Judge Kimball recused himself from both the Novell Litigation and this case [PDF]. This case was reassigned to Judge Campbell [PDf], and the Novell Litigation was reassigned [PDF] to Judge Stewart.

19. On March 30, 2010, a jury returned a verdict against SCO in the Novell Litigation, finding that Novell owns the core UNIX copyrights, which lie at the heart of SCO's case against IBM. On June 10, 2010, Judge Stewart issued findings of fact and conclusions of law refusing SCO's request for specific performance and holding that Novell had the authority to waive SCO's claims against IBM. On the same day, Judge Stewart issued a final judgment embodying the jury verdict and his findings of fact and conclusions of law.

20. Shortly after SCO filed an appeal, but before the Tenth Circuit ruled on

5

the appeal, SCO requested that this Court permit it to proceed as to several of its claims against IBM (i.e., SCO's unfair competition and tortious interference claims) while IBM's counterclaims against SCO remained stayed [IBM's Memorandum in opposition]. In an order dated September 10, 2010, Judge Campell declined to take that piecemeal approach.

21. While Judge Campell stated that either party could move to reopen this case after the Tenth Circuit issued its decision in the Novell Litigation, she expressed no view as to whether it would make sense to reopen the case while IBM's counterclaims remained stayed.

22. SCO seeks to reopen this case and to proceed piecemeal, while IBM's counterclaims remain stayed. In fact, despite the fact that it has been more than four years since SCO filed a petition for relief under the bankruptcy laws, it has not confirmed a plan of reorganization or sought relief from the stay as to IBM's counterclaims [SCO bankruptcy timeline].

Argument

23. While the Tenth Circuit's affirmance of the Novell Judgment brings this case closer to the point where it should be reopened, it makes no sense to proceed with the case before the stay of IBM's counterclaims is lifted. Nor does it make any sense for the Court to dive into the summary judgment motions IBM filed against SCO's unfair competition and tortious interference claims. However, as soon as the stay is lifted as to IBM's counterclaims, the Court should (i) dismiss the claims that SCO concedes are foreclosed, (ii) determine the effect of the Novell Judgment on the remaining claims and counterclaims, and (iii) enter a scheduling order to bring this matter to an expeditious resolution.

24. The Court should not reopen this case to proceed piecemeal; it should reopen the case when the stay has been lifted as to IBM's counterclaims. In seeking to

6

reopen this case now, SCO scarcely makes mention of IBM's counterclaims. But, as stated, IBM has eleven counterclaims against SCO: (1) two claims for declaration of non-infringement of copyright (Counterclaims IX and X); (2) one claim for breach of contract (Counterclaim I); (3) three claims relating to SCO's copying of IBM code in Linux (Counterclaims VI to VIII); (4) four claims concerning SCO's campaign to create fear, uncertainty and doubt about IBM's products and services (Counterclaims II to V); and (5) one claim for a declaration of IBM's rights under all of its other claims (Counterclaim XIV).

25. IBM's counterclaims are closely related to SCO's claims, including its unfair competition claim (Count VI) and its tortious interference claims (Count VII-IX).1 IBM's counterclaims accuse SCO of (i) breaching the same UNIX contracts IBM is alleged by SCO to have breached (Counterclaim I); (ii) infringing IBM copyrights and violating the General Public License with respect to the same Linux operating system that SCO claims IBM improperly supported (Counterclaims VI, VII, VIII); (iii) orchestrating a campaign of fear, uncertainty and doubt about IBM's products and services -- the very course of conduct with which it claims IBM interfered (Counterclaims II, III, IV, and V); (iv) falsely asserting claims of copyright

7

infringement with respect to the same copyrights referenced by SCO in its claims (Counterclaim IX and X); and (v) interfering with IBM's relationships with the same customer base that SCO accuses IBM of interfering with (Counterclaim IV).

26. Given the connection between SCO's claims and IBM's counterclaims, proceeding with SCO's claims alone has nothing to recommend it. If SCO's claims are to be litigated, they should be litigated with IBM's counterclaims, as they were for years prior to SCO's bankuptcy filing. SCO's claims and IBM's counterclaims concern the same course of conduct and intellectual property. Litigating them separately, and potentially conducting two separate trials, would make no sense.

27. Thus, we respectfully submit that the Court should enter an order providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay has been fully lifted concerning IBM's counterclaims (except as to the enforcement of any money judgment that IBM obtains against SCO). IBM does not object to lifting the stay, and, as the debtor, SCO should be able to obtain an order lifting it in short order.

28. After the stay has been lifted and this case has been reopened, the Court should first dismiss the claims that SCO concedes are foreclosed. SCO admits that at least five (and perhaps six) of its claims against IBM, and part of another of its claims, are foreclosed by the Novell Judgment. Specifically, SCO clearly concedes that its four claims for breach of contract (Counts I-IV) and its copyright claim (Count V) are barred by the Novell Judgment; it also acknowledges that the branches of its unfair competition claim unrelated to Project Monterey are barred. The Tenth Circuit affirmed the final judgment entered by Judge Stewart providing that Novell (not SCO) owns the copyrights SCO claimed to have been

8

infringed and that Novell was authorized to waive SCO's claims against IBM for alleged breaches of contract. Thus, these claims should be dismissed as soon as the case is reopened. The Court need not decide IBM's summary judgment motions to resolve these claims. 29. While SCO's motion to reopen is not entirely clear on the subject, we expect SCO will also concede that, when the case is reopened, judgment should be entered in favor of IBM with respect to SCO's claim (Count VIII) that IBM induced Novell to assert copyright and waiver rights that SCO argues Novell does not have under the Asset Purchase Agreement between SCO and Novell (the "APA"). Again, in affirming the Novell Judgment, the Tenth Circuit ruled that Novell owned the copyrights and properly exercised the waiver rights in question. Under these circumstances, SCO's tortious interference claim concerning Novell is untenable, as SCO acknowledged in its response to Judge Kimball's Notice of Decision and Request for Status Update dated August 10, 2007.

30. Once the Court has dismissed the claims that SCO concedes are foreclosed, we suggest it should determine the impact of the Novell Judgment on the parties' remaining claims and counterclaims. While SCO concedes that the Novell Judgment forecloses its four contract claims (Counts I-IV) and its copyright claim (Count V), SCO claims that the Novell Judgment does not bar "SCO's unfair competition claim concerning the Project Monterey joint venture" (to which SCO was not a party) (Count VI) and "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships"

31. "SCO's tortious interference claims alleging that IBM interfered with SCO's market and business relationships" (Counts VII and IX) depend on the proposition that

9

IBM acted improperly in contributing its own source code to Linux. Specifically, Count VII alleges IBM interfered with SCO's business relationships with "its market" (175 companies besides Novell) by urging them to use Linux (instead of SCO's UNIX products) while knowing that such use would violate SCO's UNIX licenses. Count IX alleges that IBM interfered with SCO's business relationships with six other entities by urging them not to do business with SCO because of SCO's efforts to protect the UNIX code allegedly misappropriated by Linux. However, the Novell Judgment precludes SCO from challenging IBM's contributions of its own code to Linux: the Novell Judgment expressly affirms Judge Stewart's judgment that Novell properly waived any such claim and that Novell, not SCO, owns the copyrights in (and thus has the right to reproduce and distribute) the allegedly misused code.

32. SCO's unfair competition claim (Count VI), which is a mix of SCO's other causes of action, is likewise foreclosed. Insofar as the claim concerns the alleged misconduct underlying SCO's breach of contract and copyright infringement claims, it is plainly foreclosed by the Novell Judgment, as SCO seems to concede, because Novell waived the alleged breaches and owns the relevant copyrights. The only branch of its unfair competition claim that SCO appears to seek to assert relates to "Project Monterey". But 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 Inc., not SCO, during Project Monterey) by copying the code into IBM's AIX for POWER product. SCO has never properly identified any such code that is not covered by copyrights determined in the Novell Litigation to be owned by Novell. Nor did SCO make the disclosures required by IBM's discovery requests and the Court's orders with respect to the "Project Monterey" code on which it would seek to base its

10

claim. Thus, SCO's Monterey allegations are untenable following the Novell Judgment.2 (SCO's Monterey allegations are also untenable for the reasons discussed in paragraph 38 below.)

33. IBM thus proposes to make a motion for summary judgment, within 45 days of the reopening of the case, addressing the impact of the Novell Judgment on all remaining claims (including IBM's counterclaims). If we are correct about the impact of the Novell Judgment, it will be unnecessary for the Court to decide a number of the pending summary judgment motions to resolve these claims.

34. Once the Court has determined the effect of the Novell Judgment, we propose it require the parties to submit a scheduling order to govern the balance of this proceeding. If the Court were to deny the summary judgment motion that IBM proposes to make concerning the impact of the Novell Judgment on SCO's tortious interference and unfair competition claims, then it would be necessary for the Court to wade into the pending summary judgment motions concerning those claims. But before doing so, it will likely be advisable (depending in part of the nature of the Court's ruling as to the scope of the Novell Judgment) for the parties to supplement the existing briefing, and the Court may want to hear additional argument. Not only does the Novell Judgment affect these claims in important respects, but also

11

the pending motions were made nearly five years ago and the body of relevant case law has grown.

35. Even if the Court were to grant IBM's proposed summary judgment motion (as to the impact of the Novell Judgment) in its entirety, it will make sense for the parties to submit a proposed scheduling order based upon that decision. While the Novell Judgment had a significant impact of the claims and counterclaims in this case, it did not resolve all of IBM's counterclaims. For example, while the Novell Judgment strengthens IBM's counterclaims concerning SCO's campaign to create fear, uncertainty and doubt about IBM's products and services, it does not completely resolve all of those claims. Thus, the Court will need to address certain of the pending motions, which may also require supplemental briefing and argument.3

36. Finally, lest there be any doubt about it, IBM disputes SCO's allegations of misconduct. IBM does not believe the present motion is the place to argue the alleged merits of SCO's claims. That has been done extensively in the pending motions for summary judgment, and this is a procedural motion. But insofar as SCO's motion to reopen seeks to sell its claims, we wish at least to make one thing crystal clear: not only are SCO's claims barred by the Novell Judgment, but they are also without merit for multiple reasons independent of the Novell Judgment. As explained at length in IBM's pending motions for summary judgment, IBM did nothing to injure SCO; rather, it is SCO that undertook - with much fanfare - a multi-year campaign to profit off of the thousands of persons and entities,

12

including IBM, who have contributed to the development of Linux.

[PJ: For anyone new, here are some examples of the fanfare:

  • SCOsource, Wayback's copy of the June 22, 2003 SCOsource webpage, showing SCO claiming rights to UNIX: "Through a series of mergers and acquisitions, SCO has acquired ownership of the patents, copyrights and core technology associated with the UNIX System." The jury ruled the copyrights were not SCO's, but even back in 2003, SCO had reason to know it never owned any patents.

  • Darl McBride, then President and CEO, SCO Group, gave a speech, "There's No Free Lunch or Free Linux", on November 18, 2003 [audio, about an hour], given as the keynote address at Jupitermedia's cdXpo November 2003 conference.

  • SCO's earnings calls and press conferences, audio and transcripts when available, on Groklaw.

  • SCO media events, such as Darl McBride's talk at Harvard Law School in 2004.
If you look through the early Groklaw articles in our Archives, you can find many, many more examples.]

37. In touting its tortious interference claims, SCO neglects to mention that, while it has identified numerous relationships with which IBM purportedly interfered, SCO alleges nothing more than "indirect interference" as to the overwhelming majority of them (175 of 182); SCO accuses IBM of "direct interference" with only seven entities. However, SCO's allegations of "indirect interference" are untenable as a matter of law, and each of the entities with whom IBM allegedly "directly interfered" has testified that no such interference occurred or, in any event, that they did not change their relationships with SCO as a result of any IBM conduct. Moreover, (i) IBM's allegedly tortious acts were not undertaken with an improper purpose or by improper means, and (ii) there is no causal link between any act of IBM and any specific injury to SCO. These flaws in SCO's claims are described in detail in IBM's summary judgment motion, the transcript of the oral argument on that motion and the demonstrative exhibits submitted at oral argument.

38. Similarly, in touting its unfair competition claim, SCO accuses IBM of abandoning Project Monterey (a venture between IBM and The Santa Cruz Operation, Inc., not SCO), only to misappropriate source code to which IBM was given access during the project. In fact, IBM did not abandon Project Monterey; Santa Cruz did. Rather than meet its obligations on the project, Santa Cruz sold the very Unix assets involved in the project to a Linux company called Caldera Systems, which later changed its name to The SCO Group, Inc. It was only then that IBM exercised its undisputed right to terminate the project, which had simply not progressed as originally hoped. Nor did IBM misappropriate any source code in connection with Project Monterey; it simply used the code to which it was given access and which it had a contractual

13

right to use. Absent from SCO's description of its claim is any mention of the fact that (i) SCO was not a party to the joint development agreement relating to Project Monterey (the "JDA") and thus does not have the right to seek redress of rights relating to that contract; (ii) even if SCO could pursue a claim relating to the JDA, the JDA contains a two-year limitations provision, under which SCO's unfair competition claim would be untimely; (iii) the crux of SCO's claim -- that IBM used Project Monterey as a pretext to misappropriate source code -- is pre-empted by federal copyright law; (iv) the conduct about which SCO complains does not constitute unfair competition under well-established law; and (v) SCO cannot show that alleged unfair competition resulted in damages to SCO, which would in any case be limited to $5 million under the terms of the JDA. These flaws in SCO's claims are further described in detail in IBM's summary judgment motion, the transcript of the oral argument on that motion and the demonstrative exhibits submitted at oral argument.

39. In summary, IBM supports the expeditious resolution of this case. But the best way to bring that about is not to proceed piecemeal as to three of SCO' s claims, especially where, as here, those claims are intimately related to IBM's counterclaims, which remain stayed due to SCO's bankruptcy filing, and are barred by the Novell Judgment. We respectfully submit that the most sensible way to proceed here is for the Court to enter an order (i) providing that this case shall be reopened within 5 days of the filing of a notice (by any party) that the stay of IBM's counterclaims has been lifted, which SCO should be able to accomplish expeditiously; (ii) stating that the claims that SCO concedes are foreclosed by the Novell Judgment will be dismissed when the case is reopened; (iii) directing that, within 45 days of the reopening of the case, any party may make a motion for summary judgment addressing the impact of the Novell Judgment

14

on all remaining claims; and (iv) ordering the parties jointly to submit, within 10 days of the entry of an order of the Court determining the impact of the Novell Judgment, a proposed scheduling order to govern the balance of the case.

Conclusion

For the foregoing reasons, IBM respectfully submits that the Court should decline SCO's request to proceed piecemeal; the Court should proceed instead as outlined above.

DATED this 21st of November 2011

SNELL & WILMER L.L.P.

/s/ Amy F. Sorenson Alan L. Sullivan
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
Alec S. Berman
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

______________________
1 SCO's tortious interference claims accuse IBM of (i) inducing Novell to assert copyright and waiver rights that SCO argues Novell does not have under the APA (Count VIII) (though SCO seems to recognize this claim is barred by the Novell Judgment); (ii) interfering with SCO's business relationships with 175 companies (besides Novell) by urging them to use Linux (instead of SCO's UNIX products) while knowing that such use would violate their UNIX licenses (Count VII); and (iii) interfering with SCO's business relationships with six other entities by urging them not to do business with SCO because of SCO's efforts to protect the UNIX code allegedly misappropriated by Linux (Count IX). SCO's unfair competition claim (Count VI) purports to be a catch-all count, accusing IBM of a variety of alleged misconduct, such as breaches of contracts, misappropriation of source code, and infringement of copyrights, including with respect to certain UNIX SVr4 code (licensed to IBM by The Santa Cruz Operation, Inc. during "Project Monterey"); SCO admits branches of this claim are barred.

2 In addition to disposing of the only claims that SCO seeks to pursue, the Novell Judgment had a significant impact on IBM's counterclaims. For example, the Tenth Circuit's affirmance of the Novell Judgment (1) requires the entry of judgment in favor of IBM on its Counterclaims IX and X, which seek declarations of non-infringement, as SCO cannot show IBM infringed copyrights SCO does not own; (2) requires the entry of summary judgment in favor of IBM on its Counterclaim I, insofar as it rejects the premise on which SCO purported to terminate an IBM license; and (3) precludes SCO's primary defenses as to IBM's three claims relating to SCO's copying of IBM code in Linux (Counterclaim VI, VII and VIII).

3 Depending on what remains in the case following the Court's ruling concerning the the Novell Judgment, and the pending summary judgment motions, the Court may also need to decide the motions/objections referenced in paragraph 12 above, in the event SCO elects to pursue them.

15

CERTIFICATE OF SERVICE

I hereby certify that a true and accurate copy of the foregoing was electronically fied on the 21st day of November, 2011 with the Clerk of the Court and delivered by CM/ECF system to the following:

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

David Boies
Robert Silver
Edward Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

Stuart Singer
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Amy F. Sorenson


  


IBM Responds to SCO's Motion to Partly Reopen SCO v. IBM and a New Judge Assigned ~pj Updated | 250 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Back to Business: Same Spots, Different Darl
Authored by: DaveJakeman on Thursday, November 24 2011 @ 04:15 AM EST
The biggest difficulty for a new judge is the time it takes to learn not to give
SCO the doubtful benefit of the doubt. Hopefully the presence of Wells, who had
more than a bellyful of SCO, will expedite that. I'm sure the Boies Boyz will
reminder her in their very special prickly way.

---
When a well-packaged web of lies has been sold gradually to the masses over
generations, the truth seems utterly preposterous and its speaker a raving
lunatic.

[ Reply to This | # ]

Corrections Thread
Authored by: bugstomper on Thursday, November 24 2011 @ 04:23 AM EST
Please summarize in the Title box error->corection or s/error/correction/ to
make it easy to scan to see what errors that need correcting have already been
reported.

[ Reply to This | # ]

Off Topic threads
Authored by: bugstomper on Thursday, November 24 2011 @ 04:26 AM EST
Please stay off topic in these threads, but feel free to use HTML Formatted mode
to make your links nice and clickable.

[ Reply to This | # ]

News Picks Thread
Authored by: bugstomper on Thursday, November 24 2011 @ 04:30 AM EST
Pick your News here. Please type the title of the News Pick in the Title box of
your comment, and use HTML Formatted mode to make a clickable link to the
article for the convenience of readers once the article has scrolled off the
News Picks sidebar.

[ Reply to This | # ]

Comes transcripts here
Authored by: bugstomper on Thursday, November 24 2011 @ 04:33 AM EST
Choose an unclaimed PDF at the Comes tracking page and post the transcription here with HTML markup but posted in Plain Old Text mode so PJ can easily copy and paste it.

[ Reply to This | # ]

IBM's reply
Authored by: Anonymous on Thursday, November 24 2011 @ 04:35 AM EST
There's a stock scene in a certain type of film where someone tries to rob the
local police cafe/bar. SCO don't realise who they're casting themselves as yet,
apparently.

[ Reply to This | # ]

At least it is bleeding that ugly law firm some cash.
Authored by: Anonymous on Thursday, November 24 2011 @ 07:56 AM EST
Oh well back to the big lie.

[ Reply to This | # ]

Judge Wells
Authored by: Anonymous on Thursday, November 24 2011 @ 10:36 AM EST

Hum. The biggest problem for BSF is Judge Wells. I wonder if BSF will try
to get her off the case?

Wayne
http://madhatter.ca

[ Reply to This | # ]

How long and drawn out is this case?
Authored by: crs17 on Thursday, November 24 2011 @ 11:27 AM EST
I know many of us complain about the slowness of this case and the above article
seems to complain a lot, but I'm curious as to how this compares to other cases
in terms of its seeming endlessness. I'm not sure what cases we'd use for
comparison, but I would think we might look at other major commercial disputes
in large vibrant industries involving companies with plenty of assets. The
dispute would have to have industry-wide visibility, dealing with products or
companies that are readily recognizable to people in the appropriate field.

The case search should not be limited to software, computer, or even technology
companies.

Can anyone think of some good comparison cases and find out how long they took,
soup to nuts just like we've followed the SCO saga.

[ Reply to This | # ]

Would this cause the judge to at least raise an eyebrow?
Authored by: Anonymous on Thursday, November 24 2011 @ 12:17 PM EST

22. SCO seeks to reopen this case and to proceed piecemeal, while IBM's counterclaims remain stayed. In fact, despite the fact that it has been more than four years since SCO filed a petition for relief under the bankruptcy laws, it has not confirmed a plan of reorganization or sought relief from the stay as to IBM's counterclaims.

Italics mine. We are continually perplexed as to why Cahn didn't shut SCO down long ago, and since he didn't, why hasn't he filed a realistic reorganization plan. I think to use the word "perplexed" here is underestimating the sentiment expressed by readers, many of whom feel that only corruption could account for SCO's path of vexatious litigation under Cahn. A commentor below asks if there is a precedent for such a drawn out litigation, but I ask - is there a precedent for remaining so long under Chapter 11 without filing a sensible reorganization plan? I would suggest that to continue litigation without a reorganization plan undermines any authority the bankruptcy administration would have to proceed with that action. Without a plan, there is nowhere the administration can place their finger on the restructuring plan document and say here is where we are and this is our objective and this is how our action is intended to further us along in the restructuring.

In developing software (something I know) or probably in engineering in general, no step is taken without referring back to the design document and the original requirements to justify every action. Without such documents, there is no justification for doing anything. Without a restructuring plan, SCO is like a ship adrift at sea, with no captain at the helm. Cahn needs to be charged with gross mismanagement. He has no rational for his actions.

Gringo

[ Reply to This | # ]

Happy Thanksgiving PJ!
Authored by: BJ on Thursday, November 24 2011 @ 01:07 PM EST
And for that matter all you Americans!

from Holland,
bjd

[ Reply to This | # ]

This opera ain't over until the fat lady screams
Authored by: Anonymous on Thursday, November 24 2011 @ 03:38 PM EST

Strangled by her own tongue.

I can't believe The SCO Group is carrying this on without their being more
behind the BS&F 'freebies' on offer.

No sane law company offers its services forever for 'nuttin' - they are either
being paid via other means by another party (guaranteed work etc:) or they have
some other dog in the fight. & not named Charity :)

DSM

[ Reply to This | # ]

Thank you IBM
Authored by: Anonymous on Thursday, November 24 2011 @ 05:29 PM EST
Thank you, IBM, for carrying on this fight instead of paying
the protection money that SCO expected. The community owes
you a debt of gratitude.

I only wish that IBM could be compensated by the courts for
the horrible injustice that has been done them. The money
taken by Cahn and his company rightfully belongs to Novell,
and to IBM. It is a shame that our legal system lets
unscrupulous people like Cahn and McBride to do terrible
damage to others, then get away without just punishment.

[ Reply to This | # ]

the body of relevant case law has grown
Authored by: IMANAL_TOO on Thursday, November 24 2011 @ 07:27 PM EST
IBM: "the body of relevant case law has grown"

Can I hear IBM say "Don't push your luck"?

Is there any particular case law one should recall
immediately?




---
______
IMANAL


.

[ Reply to This | # ]

Hard Feeelings?
Authored by: rsteinmetz70112 on Thursday, November 24 2011 @ 10:40 PM EST
Boies was once a star at Cravath and represented IBM. Do you think his former
colleges are enjoying tweaking his nose and putting their hands in his pockets?

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Sword and shield?
Authored by: Khym Chanur on Friday, November 25 2011 @ 02:49 AM EST

SCO wants IBM's hands to remain bound by the bankruptcy stay while it tries to beat it up.

Isn't that known as "using ______ as both a sword and a shield", and generally a big no-no?

---
Give a man a match, and he'll be warm for a minute, but set him on fire, and he'll be warm for the rest of his life. (Paraphrased from Terry Pratchett)

[ Reply to This | # ]

How long chapter 11?
Authored by: wvhillbilly on Friday, November 25 2011 @ 09:32 PM EST
Is there any limit to how long a bankrupt company can remain in Chapter 11 and
do nothing? It would seem now that SCO has sold all its assets except
litigation rights, there's nothing left but an empty shell, and it's past time
to dismiss the case. Chapter 7 to me would seem pointless, since there are no
assets left to liquidate. I wouldn't call the litigation rights an assets,
since the Novell ruling has all but completely gutted SCO's case, and the two
possibly remaining items SCO has left have less chance of surviving than a
snowball on Death Valley sands at high noon.

Or am I missing something, or does SCO have something up its sleeve I never
heard of?

---
"It is written." always trumps, "Um, ah, well, I thought..."

[ Reply to This | # ]

A further summary of possibilities
Authored by: dmarker on Sunday, November 27 2011 @ 05:51 PM EST

On reflection, Microsoft is betting the shop on Windows 8 to open the door to
the smart phone / tablet market that it missed out on up until now.

IBM was making great headway with Linux.

Microsoft had a very strong vested interest in attacking Linux and IBM & did
so through tSCOg.

Microsoft still has a big interest in sullying Linux and IBM whilst it tries
hard to get Windows 8 out the door and into the hearts & minds of the buying
public. This may happen in 2012 but could be dragged out to 2013.

Microsoft has been building its cash reserves over the past few years & it
seems to me this would be to have a war chest for when Microsoft sallies forth
to do battle against the other competitors in rapidly expanding the smart phone

/ tablet market.

Setting up the old tSCOg so its new incarnation can carry on the litigation
despite the extra ordinary odds against any win, smacks of using the litigation
to maintain a damper on Linux & IBM. Microsoft's strength remains in the
enterprise IT depts & IBM & HP are the 2 other main companies that might
compete to Microsoft's detriment there. HP is largely neutralized due to its
slump in the market but IBM isn't. Microsoft has a strategy to compete in the
emerging smartphone / tablet market but it is running late. So, even if the
litigation is doomed to lose long term, keeping it going is a benefit to
Microsoft while it wraps up its Win 8 product.

It is interesting though, that MS of late has been promoting Win 7 & we see
Samsung signed up to provide it & promote it.

Bottom line for me is that Microsoft still has a powerful motive to keep
litigation against Linux & IBM alive even if any sensible person says the
litigation has no hope of winning *other than* to maintain the cloud of
litigation in the air for as long as possible and as long as it disadvantages
Linux and IBM.

DSM

[ Reply to This | # ]

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