Shoot the breeze, anything goes.
User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-05-23 03:56 »

Got some new stuff in Pacer, I believe there are 4 new files, will verify in next post. Here's 1137
SCO'S MEMORANDUM OF ADDITIONAL AUTHORITY IN SUPPORT OF ITS PENDING MOTION FOR SUMMARY JUDGMENT ON IBM'S SECOND, THIRD, FOURTH AND FIFTH COUNTERCLAIMS as a "text of sorts" I've taken some liberties with formatting and as always, if you want complete accuracy wait for the PDFs to appear over at Groklaw. Essentially, consider all my work to get the text from these documents quick and dirty!


Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
Telephone: (801) 363-6363
Facsimile: (801) 363-6666
bhatch@hjdlaw.com
mjames@hjdlaw.com

Stuart Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Blvd., Suite 1200
Fort Lauderdale, Florida 33301
Telephone: (954) 356-0011
Facsimile: (954) 356-0022
ssinger@bsfllp.com

David Boies (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Jason Cyrulnik (admitted pro hac vice)
BOIES,SCHILLER & FLEXNER LLP
333 Main Street
Armonk, New York 10504
Telephone: (914) 749-8200
Facsimile: (914) 749-8300
dboies@bsfllp.com
enormand@bsfllp.com
jcyrulnik@bsfllp.com

Counsel for Plaintiff, The SCO Group, Inc.

----------

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

----------

THE SCO GROUP, INC. , by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS MACHINES
CORPORATION,

Defendant/Counterclaim-Plaintiff.

---------

SCO'S MEMORANDUM OF
ADDITIONAL AUTHORITY IN
SUPPORT OF ITS PENDING MOTION
FOR SUMMARY JUDGMENT ON IBM'S
SECOND, THIRD, FOURTH AND FIFTH
COUNTERCLAIMS

Case No. 2:03-cv-00294 DN
District Judge David Nuffer

----------



TABLE OF CONTENTS

TABLE OF AUTHORITIES .......... ii

I. RECENT AUTHORITY SUPPORTS THAT SCO'S CONDUCT IS
ENTITLED TO ABSOLUTE PRIVILEGE ......... 1

II. RECENT AUTHORITY SUPPORTS THAT SCO'S STATEMENTS TO THE
PRESS AND PUBLIC ARE ALSO PROTECTED BY QUALIFIED PRIVILEGE .......... 2

III. RECENT AUTHORITY SUPPORTS THAT GOOD FAITH IS A SUBSTANTIVE
DEFENSE TO IBM'S CLAIMS .......... 4

IV. RECENT AUTHORITY SUPPORTS THAT IBM HAS NO DAMAGES .......... 5



TABLE OF AUTHORITIES

Cases

Allen v. Dimeo,
2007 UT App 192 (June 1, 2007) .......... 2

Amarosa v. Dr. John's Inc.,
No. 2:11-CV-676 DN, 2014 WL 3015312 (D. Utah July 2, 2014) .......... 2

Anglin v. Sears Roebuck & Co.,
No. 93 C 3438, 1998 WL 483524 (N.D. Ill. Aug. 10, 1998) .......... 4

Art Line, Inc. v. Universal Design Collections, Inc.,
966 F. Supp. 737 (N.D. Ill. 1997) .......... 4

BaliJewel, Inc. v. John Hardy Ltd.,
No. 07 CV 3819, 2008 WL 4425886 (N.D. Ill. Sept. 24, 2008) .......... 4

Brehany v. Nordstrom, Inc.,
812 P.2d 49 (Utah 1991) .......... 3

Campbell v. Castle Stone Homes , Inc.,
No. 2:09-CV-250 TS, 2011 WL 902637 (D. Utah Mar. 15, 2011) .......... 1, 2

Dadd v. Mount Hope Church,
780 N.W.2d 763 (Mich. 2010) .......... 5

Farberware Licensing Co., LLC v. Meyer Mktg. Co.,
428 F. App'x 97 (2d Cir. 2011) ........... 5

Helena Chem. Co. v. Uribe,
281 P.3d 237 (N.M. 2012) .......... 2

Krouse v. Bower,
20 P.3d 895 (Utah 2001) .......... 1

Lawson v. Stow,
327 P.3d 340 (Colo. App. 2014) .......... 2

Nelson v. Target Corp.,
334 P.3d 1010 (Utah Ct. App. 2014) .......... 3

Norman v. Borison,
17 A.3d 697 (Md. 2011) .......... 2

Offen v. Brenner,
402 Md. 191, 935 A.2d 719 (Md. 2007) .......... 2

Pratt v. Nelson,
164 P.3d 366 (Utah 2007) .......... 2

Samiento v. World Yacht Inc.,
883 N.E.2d 990 (N.Y. 2008) .......... 5

Stevens-Henager Coll. v. Eagle Gate Coll.,
248 P.3d 1025 (Utah Ct. App. 2011) .......... 5

Sybersound Records, Inc. v. UAV Corp.,
517 F.3d 1137 (9th Cir. 2008) .......... 4

Tamburo v. Dworkin,
974 F. Supp. 2d 1199 (N.D. Ill. 2013) .......... 3, 4

Westmont Maint. Corp. v. Vance,
313 P.3d 1149 (Utah Ct. App. 2013) .......... 2

Williams v. Cont'l Airlines, Inc.,
943 P.2d 10 (Colo. App. 1996) .......... 2



Plaintiff, SCO, respectfully submits this Memorandum of Additional Authority in Support of SCO's Motion for Summary Judgment on IBM's Second, Third, Fourth, and Fifth Counterclaims (Docket No. 776), pursuant to the Court's April 15, 2015, Order.

SCO seeks summary judgment dismissing four IBM counterclaims (Counts II, III, IV, and V) that are all based on IBM's allegations that "SCO has disparaged IBM; made false and misleading statements to the press and IBM's customers... and abused and misused its
intellectual property rights."1 Each of those claims fails as a matter of law based on the applicable privileges, SCO's good faith, and IBM's lack of damages. Case law decided since SCO's Litigation Privilege Motion was fully briefed on January 12, 2007, further supports SCO's entitlement to summary judgment on IBM's second, third, fourth, and fifth counterclaims.

I. RECENT AUTHORITY SUPPORTS THAT SCO'S CONDUCT IS ENTITLED TO
ABSOLUTE PRIVILEGE

IBM's second, third, fourth, and fifth counterclaims are based on statements made by SCO "during or in the course of a judicial proceeding" with "some reference to the subject matter of the proceeding,"2 and are therefore protected by the absolute litigation privilege. Cases decided since the motion was originally briefed have further confirmed that (a) the requirement "that the statement be made during or in the course of a judicial proceeding" must be "interpreted broadly"; (b) the statements at issue "need not be relevant or pertinent from an evidentiary point of view, but only have 'some relationship to the cause or subject matter involved'"; and (c) a statement is not "excessively published" so as to render the privilege inapplicable so long as the statement is communicated only to people with an "interest in the outcome" of the litigation.3 Accordingly, SCO's alleged conduct is non-actionable under the absolute litigation privilege.4

II. RECENT AUTHORITY SUPPORTS THAT SCO'S STATEMENTS TO THE PRESS AND PUBLIC ARE ALSO PROTECTEDBY QUALIFIED PRIVILEGE

Even if SCO's statements to the press did not fall within the absolute litigation privilege,
moreover, they are still protected by the qualified privilege that applies where a party "seeks to
vindicate or further an interest regarded as being sufficiently important to justify some latitude
for making mistakes."5

In 2013, in Tamburo v. Dworkin, the District Court for the Northern District of Illinois granted summary judgment for a defendant on qualified privilege grounds (in the alternative) on similar facts. The defendant was a dog breeder and computer programmer who had "spent almost five years creating an extensive database of dog pedigrees, which she made freely available for use by fellow breeders through her web site."6 Plaintiff harvested the pedigree database and attempted to sell [it] to dog breeders for a profit." Defendant was "outraged" and "reached out to the dog breeding community, through emails and online messages, for assistance in responding to the plaintiffs' misappropriation of her work."7 Plaintiff sued for tortious interference with potential economic advantage, among other things.8 Among the statements that formed the basis for plaintiff's claims, defendant stated: "You cannot simply copy my database into yours without permission....I have copyright statements on my site to boot." The court held that the statements were not actionable, noting that whether the plaintiff "could successfully assert a copyright interest is beside the point." The court held that "the statements are protected by the qualified privilege" regardless, and that the plaintiff was required to "point to evidence" that defendant "made the statement with a reckless disregard as to its truth" in order to defeat the qualified privilege at the summary judgment stage:

[A]buse of a qualified privilege cannot simply be asserted to defeat a motion for summary judgment. Plaintiff has the burden to provide sufficient evidence to create a genuine issue of material fact; absent such evidence, summary judgment is appropriate.9

IBM failed to proffer any such evidence sufficient to create a genuine issue of fact demonstrating that SCO acted with "reckless disregard" for the truth when it asserted rights to UNIX.

III. RECENT AUTHORITY SUPPORTS THAT GOOD FAITH IS A SUBSTANTIVE DEFENSE TO IBM'S CLAIMS

As SCO explained in its reply brief, there is a "special requirement of proof of bad faith" for Lanham Act claims where they involve a defendant's "claims of infringement of federally protected intellectual property."10 Subsequent authority further bears out SCO's point. For example, in a 2008 case involving Lanham Act claims based on copyright infringement letters, the Northern District of Illinois recognized that a copyright holder "has the right to defend himself against infringement and to warn purchasers from the alleged infringer that they, too, might be liable to him."11 Actions taken to defend against infringement are only actionable if they contain false statements or are issued in bad faith.12 IBM has offered no evidence of false statements or bad faith by SCO.

With respect to IBM's claim under New York General Business Law Section 349 (Count 5), New York's highest court addressed a Section 349 claim in 2008 and held: "In order to assert a prima facie cause of action under General Business Law § 349, a plaintiff must be able to establish that a defendant intended to deceiveits customers to the customers' detriment and was successful in doing so."13 Thus, SCO's good faith independently defeats all of IBM's claims, separate and apart from the protective effect of any absolute or qualified privilege. In addition, the application of the qualified privilege imposes on IBM the burden of establishing that SCO acted "acted with malice"-IBM has offered no evidence of malice.14

IV. RECENT AUTHORITY SUPPORTS THAT IBM HAS NO DAMAGES

IBM must establish its damages "with reasonable certainty"-that is, "with sufficient certainty that reasonable minds might believe from a preponderance of the evidence that the damages were actually suffered."15 Accordingly, the courts in decisions reached after the initial
briefing on this point have made clear that where the testimony of a plaintiff's executives "does little more than reiterate the categories of damages identified in the complaint and the initial disclosures," the claim should be dismissed as a matter of law because "more is required in response to a motion for summary judgment."16 IBM's executives and experts have not merely failed to articulate damages with sufficient certainty; they have admitted that IBM's business was not harmed.17


1 IBM Opp. to Litigation Privilege Motion at 1, Docket No. 865, filed November 10, 2006.

2 Campbell v. Castle Stone Homes, Inc., No. 2:09-CV-250 TS, 2011 WL 902637, at *12 (D. Utah
Mar. 15, 2011)(quoting Krouse v. Bower, 20 P.3d 895, 898 (Utah 2001)).

3 Id. at *13 (quoting Krouse, 20 P.3d at 898); see also Westmont Maint. Corp. v. Vance, 313 P.3d
1149, 1153 (Utah Ct. App. 2013)(statements that "relate broadly to the overall dispute" are protected by
litigation privilege); Allen v. Dimeo, 2007 UT App 192 (June 1, 2007) ("The requirement that a statement
be made in the course of a judicial proceeding is interpreted broadly.... The requirement that a
statement has some reference to the judicial proceeding is broadly construed.").

4 See Amarosa v. Dr. John's Inc., No. 2:11-CV-676 DN, 2014 WL 3015312, at *2 (D. Utah July 2,
2014)(Nuffer, J.) ("[T]he judicial proceeding privilege is an absolute privilege, rather than a conditional
privilege....").

In a 2007 defamation action involving allegations against a polygamist group and its members,
the Utah Supreme Court held that certain statements made to the press fell outside the absolute litigation
privilege. Pratt v. Nelson, 164 P.3d 366, 381 (Utah 2007). That case is distinguishable from the facts
here because of the court's holding that the press in that case had no legitimate interests in the litigation at
issue and at most "were acting only in the capacity of concerned citizens." Id. at 380. The court reached
that conclusion with respect to a press conference that Mary Ann Nelson and her lawyers held concerning
her allegations that she was forced to marry her uncle when she was sixteen years of age, and that roughly
240 defendants belonging to the polygamist group had "failed to prevent or report the abuses." Id. at 370-
71. One of Nelson's attorneys commented at the press conference that they were trying to "punish and
'make an example of them.'" Id. On the facts of that case, the court concluded that the reporters at the
press conference did not have legitimate interests in the litigation at issue. Id. at 380. Consequently, the
court held that the absolute litigation privilege did not apply.

In the case of SCO's statements, by contrast, the members of the press
to whom the statements were made had a legitimate interest in the intellectual property issues concerning Linux and at the center
of SCO's claims against IBM, because anyone who works with computers has such an interest. See
Norman v. Borison, 17 A.3d 697, 717 (Md. 2011) (comments to press that "[w]e're talking about bad
people" who were "out stealing the equity in people's homes" protected by absolute privilege because
they were made "while promoting public awareness of their proposed class action claim and, thus, while
participating in the course of the proceeding"); Helena Chem. Co. v. Uribe, 281 P.3d 237, 245 (N.M.
2012)("[T]he most economical and feasible method of informing potential litigants of prospective
litigation affecting their interests may be through the press."); see also Lawson v. Stow, 327 P.3d 340,
346 (Colo. App. 2014)("Where a statement relates to a matter of public concern, the speaker's
communication is subject to a qualified privilege.... Generally, a matter is of public concern...when
the public may reasonably be expected to have a legitimate interest in what is being published.") (quoting
Williams v. Cont'l Airlines, Inc., 943 P.2d 10, 17 (Colo. App. 1996)) (internal quotation marks omitted);
Offen v. Brenner, 402 Md. 191, 199, 935 A.2d 719, 724 n.2 (Md. 2007).

5 Nelson v. Target Corp., 334 P.3d 1010, 1018 (Utah Ct. App. 2014)(quoting Brehany v.
Nordstrom, Inc.,812 P.2d 49, 58 (Utah 1991)).

6 Tamburo v. Dworkin, 974 F. Supp. 2d 1199, 1204 (N.D. Ill. 2013).

7 Id. at 1204.

8 Id. at 1209-10.

9 Id. at 1216-19(quoting Anglin v. Sears Roebuck & Co.,No. 93 C 3438, 1998 WL 483524, at *8
(N.D. Ill. Aug. 10, 1998)).

10 Litigation Privilege Motion Reply Brief at 13, Docket No. 944, filed January 12, 2007.

11 BaliJewel, Inc. v. John Hardy Ltd., No. 07 CV 3819, 2008 WL 4425886, at *3 (N.D. Ill. Sept. 24,
2008) (quoting Art Line, Inc. v. Universal Design Collections, Inc.,966 F. Supp. 737 (N.D. Ill. 1997));
see also Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir. 2008) (declining to
construe the Lanham Act to "cover misrepresentations about copyright licensing status").

12 BaliJewel, 2008 WL 4425886, at *3.

13 Samiento v. World Yacht Inc., 883 N.E.2d 990, 996 (N.Y. 2008) (emphasis added).

14 See, e.g., Dadd v. Mount Hope Church, 780 N.W.2d 763, 767 (Mich. 2010)("[T]he defense of
'qualified privilege' is of considerable value to a defendant because it: (1) rebuts the inference of malice
from the defamatory statements, (2) clothes the defendant in a presumption of good faith, and
(3) increases the plaintiff's burden by requiring the plaintiff to show that the defendant acted with malice,
instead of merely negligence."); cf. Farberware Licensing Co., LLC v. Meyer Mktg. Co., 428 F. App'x
97, 99 (2d Cir. 2011)("[P]laintiff's failure to prevail on its claims, standing alone, is not enough to
anchor a claim of bad faith.").

15 Stevens-Henager Coll. v. Eagle Gate Coll., 248 P.3d 1025, 1033 (Utah Ct. App. 2011).

16 Id. at 1035.

17 See Litigation Privilege Motion Brief at 12-13, Docket No.776, filed September 25, 2006.


DATED this 22nd day of May, 2015.

By: /s/ Brent O. Hatch

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

BOIES, SCHILLER & FL
EXNER LLP
David Boies
Stuart H. Singer
Edward Normand
Jason Cyrulnik

Counsel for Plaintiff, The SCO Group, Inc.

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-05-23 05:22 »

Yep, 4 documents this time around. Again, consider this quick and dirty and for accuracy wait for the PDF files from Groklaw. Here's 1138:

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
Telephone: (801) 363-6363
Facsimile: (801) 363-6666
bhatch@hjdlaw.com
mjames@hjdlaw.com

Stuart Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Blvd., Suite 1200
Fort Lauderdale, Florida 33301
Telephone: (954) 356-0011
Facsimile: (954) 356-0022
ssinger@bsfllp.com

David Boies (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Jason Cyrulnik (admitted pro hac vice)
BOIES,SCHILLER & FLEXNER LLP
333 Main Street
Armonk, New York 10504
Telephone: (914) 749-8200
Facsimile: (914) 749-8300
dboies@bsfllp.com
enormand@bsfllp.com
jcyrulnik@bsfllp.com

Counsel for Plaintiff, The SCO Group, Inc.

----------

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

----------

THE SCO GROUP, INC. , by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS MACHINES
CORPORATION,

Defendant/Counterclaim-Plaintiff.

---------

SCO'S MEMORANDUM OF
ADDITIONAL AUTHORITY IN
SUPPORT OF ITS PENDING MOTION
FOR SUMMARY JUDGMENT
ON IBM'S SIXTH, SEVENTH, AND
EIGHTH COUNTERCLAIMS
Case No. 2:03-cv-00294 DN
District Judge David Nuffer

----------

TABLE OF CONTENTS

I. RECENT AUTHORITY SUPPORTS THAT SCO DID NOT BREACH THE GPL .......... 1

II. RECENT AUTHORITY CONFIRMS THAT SCO DID NOT REPUDIATE THE GPL .......... 3

III. RECENT AUTHORITY SUPPORTS THAT IBM HAS NOT DEMONSTRATED THAT SCO'S ALLEGED BREACHES CAUSED ANY COMPENSABLE HARM TO IBM ........... 4

IV. IBM'S REQUEST FOR INJUNCTIVE RELIEF IS NOW MOOT .......... 5

TABLE OF AUTHORITIES

Cases

Brown Rudnick, LLP v. Surgical Orthomedics, Inc.,
No. 13-CV-4348 JMF, 2014 WL 3439620 (S.D.N.Y. July 15, 2014) ........... 4

Diesel Props S.r.l. v. Greystone Bus. Credit II LLC,
631 F.3d 42 (2d Cir. 2011) ........... 4

In re Best Payphones, Inc.,
432 B.R. 46 (S.D.N.Y. 2010) .......... 3

Moretti v. Bank of N.U Mellon,
---Fed. App'x ----, 2015 WL 1036450 (6th Cir. Mar. 11, 2015) .......... 3

Parkway Hosp. v. Shah,
460 F. App'x 21 (2d Cir. 2012) ........... 5

Other Authorities

Spiros V. Bazinas, Intellectual Property Financing Under the Supplement to the UNCITRAL
Legislative Guide on Secured Transactions, 43 UCC L. J. Issue 2 (Apr. 2011) .......... 2



SCO respectfully submits this Memorandum of Additional Authority in Support of SCO's Motion for Summary Judgment on IBM's Sixth, Seventh, and Eighth Counterclaims, pursuant to the Court's April 15, 2015, Order.

SCO seeks summary judgment dismissing three IBM counterclaims (Counts VI, VII, and VIII) that are all based on IBM's allegations that SCO "repudiated and breached"1a license granting rights to distribute Linux, known as the GNU General Public License and Lesser Public License (the "GPL"). Each of those claims fails as a matter of law with respect to the question of whether SCO breached the GPL and where IBM failed to demonstrate a genuine issue of fact with respect to the required element of damages. Case law decided since SCO's License Motion was fully briefed on January 12, 2007, further supports SCO's entitlement to summary judgment on IBM's sixth, seventh, and eighth counterclaims.

I. RECENT AUTHORITY SUPPORTS THAT SCO DID NOT BREACH THE GPL

IBM's sixth, seventh, and eighth counterclaims all stem from IBM's assertion that SCO breached the GPL by taking steps to protect SCO's own intellectual property rights to UNIX code contained in Linux. Specifically, IBM claims that SCO breached the GPL by offering third parties a license, separate and apart from the GPL, for the UNIX material contained in Linux. SCO's UNIX license was designed to protect what SCO believed to be its proprietary rights to UNIX code.2After SCO's summary judgment motion was fully briefed in 2007, a jury in the related SCO v. Novell case concluded that, contrary to SCO's view, the Asset Purchase Agreement by which Novell sold the UNIX business and source code to SCO "did not transfer the UNIX and UnixWare copyrights from Novell to SCO" and thus "SCO was not the owner of the UNIX and UnixWare copyrights."3 That verdict does not change the fact that SCO did not breach the GPL and is entitled to summary judgment on IBM's counterclaims.

As SCO explained in its License Motion briefs,4 IBM mischaracterizes the GPL as governing a single, monolithic product called "Linux." In reality, Linux is a conglomerate "open source" software made up of many different programs from many different contributors. Section 0 of the GPL makes clear that the GPL applies only to "any program or other work which contains a notice placed by the copyright holder saying it may be distributed under the terms of this General Public License."5 This makes perfect sense: The GPL could not and does not purport to grant a license to use content that has not been authorized bythe copyright holder.6 The 2010 SCO v. Novelltrial established that Novell owned the copyright to UNIX code, including any UNIX code appearing in Linux. But whether SCO or Novell owned the copyrights to UNIX is beside the point: Neither SCO nor Novell placed the requisite notice stating that the UNIX code in Linux "may be distributed under the terms of this General Public License"-a notice that the copyright holder must place in order for the code to be covered by the GPL, as set forth in Section 0. Thus, IBM's claims continue to fail as a matter of law because it did not (and could not) proffer any evidence that the copyright holder (Novell) placed the requisite notice stating that the UNIX code in Linux "may be distributed under the terms of this General Public License" as required under Section 0.

Nor can IBM survive summary judgment in light of the SCO v. Novell ruling by contending that it somehow made UNIX code subject to the GPL by placing UNIX code in Linux as part of an IBM derivative work and placing a copyright notice on that derivative work: "The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work."7 SCO's licensing efforts were focused exclusively on UNIX code - as to which Novell had posted no copyright notice and that was therefore not subject to the GPL.

II. RECENT AUTHORITY CONFIRMS THAT SCO DID NOT REPUDIATE THE GPL

IBM says that SCO's disagreement with IBM as to the applicability of the GPL to UNIX code in Linux somehow constitutes "repudiation" of the GPL. IBM is wrong, and the recent authority bears out the operative legal principle that "repudiation of a contract requires more than confusion or misunderstanding. To repudiate a contract, a party must unequivocally declare the intent not to perform."8 As detailed in SCO's License Motion briefing, far from repudiating the GPL, SCO has made its "best efforts to abide by all of the obligations of the GPL agreement."9

III. RECENT AUTHORITY SUPPORTS THAT IBM HAS NOT DEMONSTRATED THAT SCO'S ALLEGED BREACHES CAUSED ANY COMPENSABLE HARM TO IBM

SCO also sought summary judgment on IBM's breach of contract and promissory estoppel claims on the independent ground that "IBM has not incurred any compensable harm as a result of SCO's alleged conduct."10 Recent authority supports the premise of this aspect of SCO's motion as well: "Causation is an essential element of damages in a breach of contract action; and, as in tort, a plaintiff must prove that a defendant's breach directly and proximately caused his or her damages."11 IBM did not even proffer a theory, much less any evidence, as to how SCO's distribution of Linux or SCO's negotiations with certain third parties for UNIX licenses (allegedly in violation of the GPL) directly or proximately caused any harm to IBM. Instead, IBM contended that "the principal damage to IBM is the cost of defending against SCO's baseless claims to rights over Linux, in the market as well as in court," and attributed these damages broadly to "SCO's wrongful conduct."12 Recent authority rejects IBM's reliance on attorneys' fees as a damages theory:

Allowing [a party] to collect attorney's fees as damages simply by characterizing them as damages based on a breach of contract would create an exception that would swallow the 'American Rule,' as it is well-established that a party cannot recover attorney's fees from a contract-breaching opponent, even where the breach makes litigation eminently foreseeable.13


SCO is thus entitled to summary judgment on the element of breach, and the claims should be dismissed in their entirety. Even if IBM's claims did not fail as a matter of law for that threshold reason, moreover, the recent authority applied to IBM's failure to articulate any compensable harm limits IBM's claim to nominal damages at the most.

IV. IBM'S REQUEST FOR INJUNCTIVE RELIEF IS NOW MOOT

IBM claimed entitlement to injunctive relief based on "SCO's continued copying of IBM Copyrighted Works-as recently as August of [2006]."14 Even assuming for purposes of the motion that IBM's assertion was accurate at the time, August of 2006 is no longer "recent," and in light of the determination in SCO v. Novell that SCO does not own the copyright to UNIX code contained in Linux, SCO has not sought any license for UNIX in many years, and there is no threat of irreparable injury to IBM. In addition, SCO is in Chapter 7 bankruptcy. Although "chapter 7 proceedings do not axiomatically render [requested injunctive relief] moot," when considered together with the outcome of SCO v. Novell, it is clear that under the circumstances here, IBM "can no longer obtain any legally cognizable benefit from the declaratory and injunctive relief it seeks."15


1 IBM Opp. to GPL Motion at 1, Docket No. 866, filed November 10, 2006.

2 License Motion Brief at 5, Docket No. 794, filed September 25, 2006 ("SCO offered its UNIX License, beginning in August 2003, because SCO believes IBM had misappropriated SCO's proprietary material and contributed that material into Linux.").

3 Findings of Fact & Conclusions of Law at 2, SCO Grp., Inc. v. Novell, Inc., No. 2:04-CV-129 (D. Utah), Docket No. 876, filed June 10, 2010.

4 License Motion Brief ¶ 5, Docket No. 794, filed September 25, 2006; License Motion Reply at 8-10, Docket No. 930, filed January 12, 2007.

5 Ex. 128 to T. Shaughnessy Decl. (Sept. 25, 2006).

6 Cf. Spiros V. Bazinas, Intellectual Property Financing Under the Supplement to the UNCITRAL Legislative Guide on Secured Transactions, 43 UCC L. J. Issue 2 (Apr. 2011) ("As is the case with any other type of asset, the grantor of a security interest in a future intellectual property right must have rights in the intellectual property right and cannot encumber more rights than the grantor actually has (nemo dat quod non habetor nemo plus juris transferre potest quam ipse habet).").

7 17 U.S.C. § 103

8 Moretti v. Bank of N.U Mellon, ---Fed. App'x ----, 2015 WL 1036450, at *4 (6th Cir. Mar. 11, 2015) (internal quotation marks and alterations omitted); see also In re Best Payphones, Inc., 432 B.R. 46, 56 (S.D.N.Y. 2010)("Courts apply a stringent standard in determining whether the test for repudiation is met, and have generally required repeated insistence on extra-contractual terms; repeated, definite and absolute expressions of an unwillingness to perform; use of language such as 'termination,' which conveys finality; or conduct by the allegedly repudiating party that has rendered performance impractical or impossible."), aff'd, 450 F. App'x 8 (2d Cir. 2011).

9 License Motion Reply Brief at 11, Docket No. 930, filed January 12, 2007 (quoting deposition transcript of SCO Vice President Christopher Sontag (IBM Ex. 300) at 213).

10 License Motion Brief at 7 n.1, Docket No. 794, filed September 25, 2006.

11 Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52-53 (2d Cir. 2011)(internal quotation marks omitted).

12 License Motion Opp. Brief at 33, Docket No. 866, filed November 10, 2006.

13 Brown Rudnick, LLP v. Surgical Orthomedics, Inc., No. 13-CV-4348 JMF, 2014 WL 3439620, at *14 (S.D.N.Y. July 15, 2014) (citations and internal quotation marks omitted).

14 License Motion Opp. Brief at 34, Docket No. 866, filed November 10, 2006.

15 Parkway Hosp. v. Shah, 460 F. App'x 21, 23 (2d Cir. 2012).


DATED this 22nd day of May, 2015.

By: /s/ Brent O. Hatch
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
David Boies
Stuart H. Singer
Edward Normand
Jason Cyrulnik
Counsel for Plaintiff, The SCO Group, Inc.

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-05-23 06:48 »

Here's the quick and dirty text for 1139:

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
Telephone:(801) 363-6363
Facsimile:(801) 363-6666
bhatch@hjdlaw.com
mjames@hjdlaw.com

Stuart Singer (admitted pro hac vice)
BOIES,SCHILLER & FLEXNER LLP
401 East Las Olas Blvd., Suite 1200
Fort Lauderdale, Florida 33301
Telephone:(954) 356-0011
Facsimile:(954) 356-0022
ssinger@bsfllp.com

David Boies (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Jason Cyrulnik (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
333 Main Street
Armonk, New York 10504
Telephone:(914) 749-8200
Facsimile:(914) 749-8300
dboies@bsfllp.com
enormand@bsfllp.com
jcyrulnik@bsfllp.com

Counsel for Plaintiff, The SCO Group, Inc.

----------

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

----------

THE SCO GROUP, INC. , by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,

Plaintiff/Counterclaim-Defendant,
v.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
,
Defendant/Counterclaim-Plaintiff.

SCO'S MEMORANDUM OF
ADDITIONAL AUTHORITY IN
SUPPORT OF ITS PENDING
SPOLIATION MOTION
Case No. 2:03-cv-00294 DN
District Judge David Nuffer

----------

TABLE OF CONTENTS

TABLE OF AUTHORITIES .......... ii

I. RECENT AUTHORITY ON SPOLIATION SUPPORTS SCO'S MOTION .......... 1

II. RECENT AUTHORITY SUPPORTS THAT SCO WAS PREJUDICED BY IBM'S DELIBERATE SPOLIATION OF EVIDENCE .......... 3

III. RECENT AUTHORITY SUPPORTS THE IMPOSITION OF A STRONG REMEDY, INCLUDING AN ADVERSE INFERENCE, TO REDRESS IBM'S MISCONDUCT .......... 4

TABLE OF AUTHORITIES

Cases

FatPipe Networks India Ltd. v. XRoads Networks, Inc.,
No. 2:09-CV-186 TC DN, 2012 WL 192792 (D. Utah Jan. 23, 2012) .......... 3

Jordan F. Miller Corp. v. Mid-Continent Aircraft Service, Inc.,
No. 97-5089, 1998 WL 68879 (10th Cir. Feb.20, 1998) .......... 3

Medcorp, Inc. v. Pinpoint Techs., Inc.,
No. 08-cv-00867-MSK-KLM, 2010 WL 2500301 (D. Colo. June 15, 2010) .......... 4

Novick v. Axa Network, LLC,
No. 07-CV-7767 AKH KNF, 2014 WL 5364100 (S.D.N.Y. Oct. 22, 2014) .......... 4

Philips Elecs. N. Am. Corp. v. BC Technical,
773 F. Supp. 2d 1149 (D. Utah 2011) ........... 2, 3, 4

Phillip M. Adams & Assocs., L.L.C. v. Dell, Inc.,
621 F. Supp. 2d 1173 (D. Utah 2009) .......... 2

SCO respectfully submits this Memorandum of Additional Authority in Support of SCO's Objections to the Magistrate Court's Order Denying SCO's Motion for Relief for IBM's Spoliation of Evidence (Docket No. 995 [S]) (the "Spoliation Motion"), pursuant to the Court's April 15, 2015, Order.

This motion concerns IBM's indisputable destruction of salient evidence shortly after SCO filed this lawsuit. After the magistrate court denied the relief SCO was requesting, SCO filed Objections to the magistrate court's order, which Objections are pending before this Court. SCO seeks an adverse inference that the lost evidence would be damaging to IBM's case.

On March 6, 2003, SCO filed a complaint against IBM for "misusing and misappropriating SCO's proprietary software."1 Just one month later, on April 8, 2003, IBM's Open Source Steering Committee - which includes IBM executives and lawyers - directed its Linux developers to "purge" key software from their machines:

One important thing that came out of today's meeting... For all Linux developers who have had their CMVC and DFS AIX source access removed, we also need to communicate to them that the need to purge any old AIX source (sandboxes, etc.) from their machines.2


Case law decided since SCO's Spoliation Motion was fully briefed on May 27, 2007, further supports SCO's entitlement to an adverse inference against IBM for its intentional destruction of highly relevant source code.

I. RECENT AUTHORITY ON SPOLIATION SUPPORTS SCO'S MOTION

IBM's conduct in deliberately "purging" key data after SCO commenced litigation against it is similar to the misconduct confronted by the courts in this District in the 2011 case, Philips Electronics v. BC Technical: "BCT executives and employees purposefully deleted, then wiped, shredded, and overwrote files from their computer hard drives after learning of the court's order compelling BCT to produce its ESI and/or just before the computers were turned in to be imaged by Lighthouse."3

In analyzing bad faith, the magistrate court in Philips stated: "Bad faith, or culpability, 'may not mean evil intent, but may simply signify responsibility and control.... because BCT had control and responsibility over the five laptops, that alone is enough to establish that BCT acted with bad faith in the spoliation of the evidence.'"4 The district court in Philips stated that the magistrate's Report and Recommendation was "thorough and carefully reasoned," and endorsed it in its entirety.5 Here, IBM indisputably had "responsibility and control" over the computers at issue, and in fact directed the spoliation, in writing.

The magistrate court in Philips also considered "other factors that have contributed to the court's finding of bad faith," including "the timing of the deletions at issue" and "the lack of effective communication BCT had with its employees regarding their duty to preserve evidence."6 These factors likewise compel a finding of bad faith by IBM. The timing of IBM's deletions reflect IBM's bad faith: SCO had filed its complaint just one month prior to IBM disseminating its "purge" directive to its programmers and executives, so IBM, a sophisticated party, was on full notice of its obligation to preserve documents and of the issues at stake in this action. In addition, not only did IBM fail to communicate to its employees "their duty to preserve evidence" - IBM affirmatively directed its employees to "purge" their machines of plainly relevant evidence.7

II. RECENT AUTHORITY SUPPORTS THAT SCO WAS PREJUDICED BY IBM'S DELIBERATE SPOLIATION OF EVIDENCE

IBM's spoliation deprived SCO of centrally relevant evidence that cannot be replicated. "Prejudice by loss of evidence must be measured in light of 'other evidence available.'"8 Recent authority in Utah supports SCO's position on prejudice. In FatPipe Networks India Ltd. v. XRoads Networks, Inc., No. 2:09-CV-186 TC DN, 2012 WL 192792, at *6 (D. Utah Jan. 23, 2012) (Nuffer, J.), this Court held that "XRoads is prejudiced by FatPipe's failure to protect and preserve these logs because the evidence of such testing is unreliable. Without the log information, XRoads is effectively deprived of the opportunity to examine and verify the purported testing, inspection or other uses and results of the XRoads devices allegedly performed by FatPipe."

The evidence here is comparable to that in XRoads Networks: The spoliated source code in Linux developers' sandboxes was the fundamental record of the particular AIX or Dynix/ptx code that the Linux programmers chose to retain on their systems while programming for Linux. IBM's willful spoliation put that fundamental record beyond SCO's reach, such that SCO "is effectively deprived of the opportunity to examine and verify" what specific source code IBM's Linux developers had at their fingertips.9 IBM is wrong that the entire AIX or Dynix/ptx source code is an adequate substitute. If a murder suspect destroyed his carefully curated scrapbook of newspaper clippings about the victim, a neatly folded pile of uncut newspapers from the same time period would not be adequate substitute evidence. The same principle applies here.

III. RECENT AUTHORITY SUPPORTS THE IMPOSITION OF A STRONG REMEDY, INCLUDING AN ADVERSE INFERENCE, TO REDRESS IBM'S MISCONDUCT

The recent authority confirms that IBM's conduct in this case merits an adverse inference. Indeed, IBM's conduct in this case - "intentionally destroying evidence by... wiping out computer hard drives" - is recognized as among "the most egregious cases," justifying the harshest possible "terminating sanctions" (entry of default judgment or dismissal).10

Thus, for example, in the Philips case, where executives "purposefully deleted, then wiped, shredded, and overwrote files from their computer hard drives,"11 the court adopted the magistrate judge's recommendation to strike the spoliator's answer, dismiss its counterclaims, and enter default judgment against it as to liability.12 Even where courts decline to impose the "extreme sanction" of striking the defendant's pleadings, recent authority is clear that an adverse inference is warranted where, as here, the defendant had an obligation to preserve material, the material was "spoliated with a culpable state of mind," and the material is "relevant to the plaintiff's claims such that a reasonable trier of fact could find that they would support his claims."13


1 Ex. 1 to Shaughnessy Decl. (Sept. 25, 2006) ¶ 4.a.

2 Ex. 3 to James Decl. (Mar. 16, 2007).

3 Philips Elecs. N. Am. Corp. v. BC Technical, 773 F. Supp. 2d 1149, 1211 (D. Utah 2011).

4 Id. at 1203, 1207 (citation omitted; quoting Phillip M. Adams & Assocs., L.L.C. v. Dell, Inc., 621 F. Supp. 2d 1173, 1193 (D. Utah 2009) (Nuffer, J.)).

5 Philips Elecs., 773 F. Supp. 2d at 1155, 1158-59.

6 Id. at 1207.

7 See Phillip M. Adams, 621 F. Supp. 2d at 1190 ("[A] litigant's duty to preserve evidence arises when 'he knows or should know [it] is relevant to imminent or ongoing litigation.'") (quoting Jordan F. Miller Corp. v. Mid-Continent Aircraft Service, Inc., No. 97-5089, 1998 WL 68879, at *5 (10th Cir. Feb.20, 1998)); Philips Elecs., 773 F. Supp. 2d at 1203("As a litigant in this case, BCT also had the responsibility to take measures to preserve evidence, including ESI. Under the federal rules, in addition to this court's discovery orders, BCT and its counsel were expected to take the necessary steps to ensure that relevant records - including ESI- were preserved when this litigation was reasonably anticipated or began, and that those records were collected, reviewed, and produced to Philips during the discovery process.").

8 Phillip M. Adams, 621 F. Supp. 2d at 1195.

9 XRoads Networks, 2012 WL 192792, at *6.

10 FatPipe Networks, 2012 WL 192792, at *7 (quoting Medcorp, Inc. v. Pinpoint Techs., Inc., No. 08-cv-00867-MSK-KLM, 2010 WL 2500301, at *2 (D. Colo. June 15, 2010)).

11 Philips Elecs., 773 F. Supp. 2d at 1211.

12 Id. at 1158-59, 1216.

13 Novick v. Axa Network, LLC, No. 07-CV-7767 AKH KNF, 2014 WL 5364100, at *8 (S.D.N.Y. Oct. 22, 2014).


DATED this 22nd day of May, 2015.

By: /s/ Brent O. Hatch
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
David Boies
Stuart H. Singer
Edward Normand
Jason Cyrulnik

Counsel for Plaintiff, The SCO Group, Inc.

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-05-23 08:37 »

Finally, 1140 and this one's from IBM.

SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Amy F. Sorenson (8947)
15 West South Temple, Suite 1200
Salt Lake City, Utah 84101-1004
Telephone: (801) 257-1900
Email: asullivan@swlaw.com
asorenson@swlaw.com

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Email: echesler@cravath.com
dmarriott@cravath.com

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC., by and through
the Chapter 7 Trustee in Bankruptcy,
Edward N. Cahn,

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff.

IBM'S CASE LAW UPDATE WITH RESPECT
TO ITS MOTION FOR SUMMARY
JUDGMENT ON SCO'S UNFAIR
COMPETITION CLAIM (SCO'S SIXTH
CAUSE OF ACTION) AND ITS MOTION
FOR SUMMARY JUDGMENT ON SCO'S
INTERFERENCE CLAIMS (SCO'S SEVENTH
AND NINTH CAUSES OF ACTION)

Civil No. 2:03-cv-00294-DN

District Judge David Nuffer1

UNFAIR COMPETITION (SCO'S SIXTH CAUSE OF ACTION)

IBM advanced three primary arguments related to unfair competition, each providing independent grounds for summary judgment: (1) SCO's unfair competition claim was untimely; (2) SCO failed to allege unfair competition adequately; and (3) SCO's unfair competition claim was preempted by federal copyright law. Subsequent decisions confirm that the summary judgment is appropriate on each of these grounds.

1. SCO's Unfair Competition Claim Was and Is Untimely

First, as IBM previously detailed, under both New York and Utah law, parties to a contract are afforded significant latitude to alter the otherwise applicable limitations period.2 Numerous recent decisions have upheld agreements to shorten an otherwise applicable limitations period. For example, in the New York Appellate Division's 2014 decision in John v. State Farm Mutual Automobile Insurance Co., the court reversed the decision below and granted summary judgment on the basis of the one-year limitations period included in the parties' contract.3 Likewise, the New York Appellate Division has also recently reaffirmed that it is "well settled that parties may provide in their contract for a different date of accrual" for an action in a contract.4 The broad latitude of contracting parties to alter the applicable limitations period has been repeatedly recently affirmed by state and federal courts in New York5 and Utah.6

SCO has attempted to evade this contractual bar by asserting that the "'continuing tort' doctrine applies to unfair competition claims".7 That doctrine does not apply, however. For instance, the New York court in Enzo Biochem, Inc. v. Amersham PLC recently explicitly held that "unfair competition is not a continuing tort".8

The legal flaws fatal to SCO's attempt to justify equitable estoppel have been likewise reinforced by recent case law. For example, in 2014 the Second Circuit rejected a plaintiff's attempt to avoid the statute of limitations on the basis of equitable estoppel, explaining that "[b]ecause the act of concealment underlying the estoppel claim is the same act which forms the basis of plaintiff's underlying substantive cause of action, equitable estoppel is not applicable in this case".9 That conclusion-equally applicable here-has been reached in a number of recent federal and state court decisions.10

Second, IBM previously detailed that courts have broadly interpreted language similar to Section 22.3, which governs "[a]ny legal or other action related to a breach of this agreement", as including noncontractual claims such as unfair competition.11 Again, recent case law reinforces that conclusion. For example, in 2014 the New York Appellate Division concluded that the argument that a contractual clause governing "any and all actions arising out of or related to the Agreement" did not govern a related tort action was "without merit".12 Likewise, the Utah Supreme Court held in 2014 that a clause covering "any dispute, controversy or claim arising out of or related to" the contract reached noncontractual claims, observing that "the use of the term 'any,' does not support a distinction between contract claims and tort claims" and the claims "clearly 'relate to' the contract".13

SCO Failed to Allege Unfair Competition Adequately First, as IBM previously detailed,14 courts have continued to hold that plaintiffs cannot establish a tort claim relying on contractual duties. For example, in 2012 a district court rejected a plaintiff's attempt to plead unfair competition under New York law explaining that it is "well-settled" that parties to a contract must prove a noncontractual duty existed to sustain a tort claim-a concept "equally applicable where, as here, the unfair competition claim is also premised on the same factual allegations underlying" the contract claim.15 A similar result has been recently reached on multiple occasions by federal and state courts.16 Indeed, though SCO contends that IBM owed SCO independent fiduciary duties, such arguments have also been rejected in numerous recent decisions. For instance, in 2014 a New York court rejected a plaintiff's attempt to read fiduciary duties into a contractual relationship, observing that "normally where there is a contract between the parties, no fiduciary duty beyond the terms of the contract will be found".17 Indeed, here the parties were explicit that there was no joint venture.18

Second, SCO has asserted that unfair competition is a sweeping tort designed to "broadly encompass[] all forms of 'commercial immorality'", focused on whether "conduct is 'fair or unfair'".19 The New York courts, however, have reaffirmed that "[a] claim of unfair competition requires more than a showing of 'commercial unfairness'".20 Indeed, unfair competition is a narrow tort. The New York Court of Appeals has explained that New York only recognizes two theories of unfair competition, palming off and misappropriation,21 neither of which applies here. New York courts have also recently recognized that while previously "Second Circuit dicta broadly
construed the cause of action for unfair competition, it is now clear that the tort is not all-encompassing."22 Further, both theories require a showing of bad faith,23 absent here.

Similarly, the Utah Supreme Court held that unfair competition includes at least passing off, palming off, imitating and conduct causing or likely to cause confusion or deception.24 This Court has interpreted that precedent as holding that unfair competition requires a seller mislead a purchaser into believing that the seller's goods were actually made by a rival.25 In short, the tort does not cover SCO's allegations.

3. SCO's Unfair Competition Claim Is Preempted by Federal Copyright Law

New York and Utah courts have also reaffirmed that, as detailed in IBM's prior briefs,26 SCO's claim is preempted by the Copyright Act. SCO has previously explained its claim as being based on IBM's purported use of SCO's code in a method different from what SCO intended. In Gordon v. Albums, Inc., the New York court rejected as preempted an analogous tort claim by a photographer contending that the defendant used his work for an unapproved purpose, noting that "the Court of Appeals has similarly dismissed claims for unfair competition" as "essentially actions to enforce rights equivalent to those under the copyright laws".27 Similarly, this Court concluded that an analogous claim for unfair competition arising from unauthorized distribution of a plaintiff's product was also preempted, adding "Courts regularly find this type of unfair competition claim to be preempted by the Copyright Act".28 While this Court suggested
in dicta that an unfair competition claim for "passing off" might not be preempted,29 recent Tenth Circuit precedent makes clear that passing off is not applicable here.30

INTERFERENCE (SCO'S SEVENTH AND NINTH CAUSES OF ACTION)

With respect to alleged interference, IBM again advanced three primary arguments, each of which provided independent grounds for summary judgment: (1) SCO failed to show interference in any of the identified relationships; (2) SCO failed to show that IBM acted with the requisite improper purpose or improper means and instead pointed to a motive that was privileged under existing law; and (3) SCO failed to show that IBM caused SCO any injury adequately. Again, subsequent decisions confirm that summary judgment is appropriate on each of these independent grounds. Indeed, any remaining ambiguity was further resolved by the Utah Supreme Court's 2015 decision in Eldridge v. Johndrow, further restricting the scope of an interference claim by holding that a showing of improper purpose no longer suffices and that a showing of improper means is a necessary element of the claim.31 The Court made clear that interference is not a catchall tort that punishes "bad" acts. To the contrary, it explained that "[a]nger and even malice are commonplace human emotions, and it would be neither possible nor desirable to treat every angry or malicious action as a tort."32

1. SCO Failed to Show that IBM Interfered in Any of the Identified Relationships

IBM previously explained that Utah does not recognize a claim for "indirect" interference because an entity that "indirectly" interferes lacks the requisite intent.33 SCO attempted to evade this requirement by arguing that the intent requirement "relates merely to whether IBM knew that its conduct, whether taken for an improper purpose or through use of an improper means, would cause SCO harm".34

SCO's proposed version of the intent requirement is directly contradicted by Eldridge, however. In Eldridge, the Utah Supreme Court concluded that "in the tort context, 'intent' means a desire to bring about certain consequences".35 That is, intent is not shown because IBM took action knowing that it "would cause" harm, but rather intent is only shown if IBM took action with "a desire to bring about certain consequences". The inapplicability of SCO's "indirect" theory was also clear in this Court's 2010 explanation that the "elements of [interference] focus on A doing something to directly interfere with B and C's business deal".36

2. SCO Failed to Show that IBM's Conduct Was "Improper"

IBM previously explained that SCO could not show the requisite improper purpose or improper means.37 Under Eldridge, an improper purpose-even assuming, arguendo, that SCO could demonstrate one-would no longer meet SCO's burden.38 SCO previously argued that it has shown improper means through its other causes of action-which, for the reasons already discussed, are not viable-and an inference that IBM committed "an intentional attack on SCO's UNIX business strategy".39 Recent decisions highlight fatal flaws in that reasoning, however.

(a) Breach of Contract Must Be Committed for the Immediate Purpose of Injuring the Other Contracting Party to Constitute Improper Means

IBM previously explained that the Utah courts have concluded that a breach of contract provides the requisite improper means when it was "committed for the immediate purpose of injuring" the other contracting party, and SCO has offered no evidence of such an immediate purpose.40 Recent decisions confirm the limited set of breaches of contract that can satisfy this requirement. For example, in Mona Vie, LLC v. FVA Ventures, Inc., this Court observed that while a breach of contract for the immediate purpose of injury could satisfy this element of the cause of action, the Court dismissed a claim that was supported only by conclusory allegations that defendants intended to interfere with plaintiff's business.41

(b) Actions Taken for Legitimate Competitive Purposes Are Privileged

An "intentional attack on SCO's UNIX business strategy" for competitive purposes also remains privileged under recent case law. Specifically, the Utah Supreme Court clarified in 2014 that competitive behavior retains robust protection against interference claims, even when the improper means prong remains effective. In Keith v. Mountain Resorts Development, L.L.C., the Court reaffirmed that even if defendants "harbored ill will towards" the plaintiff, where its statements were made "in pursuit of its own economic interest" the plaintiff "failed as a matter of law to establish improper purpose or improper means" and summary judgment was properly granted.42

3. SCO Failed to Show that IBM Caused It Any Injury

IBM has previously detailed that SCO failed to allege a causal relationship between IBM and any injury SCO suffered.43 Utah continues to require plaintiffs to prove that the defendant's actions caused their injuries in interference actions.44 Indeed, the Utah Supreme Court has held that summary judgment is proper when a plaintiff relies only on an affidavit that lacks foundation to allege causation.45

Here, SCO failed to identify losses caused by IBM. Indeed, IBM previously detailed SCO's inability to avoid summary judgment on this point, among others, based on its submission of a counterstatement of facts that failed to adduce specific evidence that is admissible under Federal Rule of Civil Procedure 56, and therefore explained that SCO did not satisfy Local Rule DUCivR 56-1.46 DUCivR 56-1 continues to require that a
party opposing summary judgment cite to "material facts of record meeting the requirements of Fed. R. Civ. P. 56".47 In fact, as recently as September 2014 this Court has deemed a defendant's statement of material facts to be admitted by a plaintiff because of the plaintiff's defective failure to comply with DUCivR 56-1 in purporting to respond to those facts.48 Similarly, IBM previously explained,49 and this Court reaffirmed in Moradian v. Deer Valley Resort Co., that "speculation, conjecture, and surmise" are insufficient to defeat summary judgment.50

In fact, SCO has not merely failed to identify losses caused by IBM, but has failed to respond to multiple discovery requests regarding those theories. Specifically, IBM has detailed SCO's refusal to comply with three orders of this Court to respond fully and in detail to IBM's discovery requests regarding SCO's damages theory and IBM's resulting entitlement to summary judgment.51 Recent case law further strengthens that conclusion. For example, in 2011 in Lee v. Max International, LLC ¸ the Tenth Circuit considered a district court's dismissal of a case as a sanction for plaintiffs' decision to ignore two orders compelling production of requested materials. The Court held that "no one, we hold, should count on more than three chances to make good a discovery obligation".52 Even more recently, in 2013, the Tenth Circuit upheld a district court's discretion to prohibit a plaintiff from using certain documents in his case-in-chief and to permit the defendants to use them in rebuttal because of the plaintiff's failure to produce the documents in a timely fashion in response to requests and orders.53

* * *

For these reasons and those previously detailed, IBM respectfully requests that the Court grant summary judgment on SCO's interference and unfair competition claims.


1 IBM's submission is in response to the Court's order entered on April 15, 2015 (Dkt. 1136). IBM notes that the order appears to have inadvertently misidentified the
movants. IBM is the movant in Docket Nos. 782 and 783 and SCO is the movant in Docket Nos. 776 and 777. Docket No. 775 refers to SCO's motion for summary judgment on its third cause of
action, which was dismissed with prejudice in the Court's July 10, 2013 order (Dkt. 1123).

2 IBM's Memorandum in Support of its Motion for Summary Judgment on SCO's Unfair Competition Claim (SCO's Sixth Cause of Action) at 12-15, Dkt. 806 ("Unfair
Competition Br.").

3 983 N.Y.S.2d 883, 884 (App. Div. 2d Dept. 2014).

4 Putrelo Const. Co. v. Town of Marcy, 964 N.Y.S.2d 812, 813 (App. Div. 4th Dept. 2013).

5 E.g., Cardi's Dep't Store Inc. v. FedEx Trade Networks Transp. & Brokerage, Inc., No. 11-CV-5024 (DLI) (MDG), 2014 WL 3809811, at *3-4 (E.D.N.Y. July 31, 2014); Hunt v. Raymour & Flanigan, 963 N.Y.S.2d 722, 724 (N.Y. App. Div. 2d Dept. 2013).

6 E.g., Barajas v. Myriad Genetic Labs., Inc., No. 2:13-cv-997-DN, 2014 WL 5681691, at *2 (D. Utah Nov. 4, 2014) ("the Utah courts have repeatedly emphasized that parties are entitled to contract on their own terms"); Deer Crest Assocs. I, LC v. Silver Creek Dev. Grp., LLC, 222 P.3d 1184, 1187-88 (Utah Ct. App. 2009).

7 SCO's Memorandum in Opposition to IBM's Motion for Summary Judgment on SCO's Unfair Competition Claim (SCO's Sixth Cause of Action) at 30, Dkt. 909 ("Unfair Competition Opp.").

8 981 F. Supp. 2d 217, 227 (S.D.N.Y. 2013) (citing Sporn v. MCA Records, Inc., 451 N.Y.S.2d 750, 751 (App. Div. 1st Dept. 1982)).

9 Corporate Trade, Inc. v. Golf Channel, 563 F. App'x 841, 842 (2d Cir. 2014) (internal quotation marks and citations omitted).

10 E.g., Wells Fargo Bank, N.A. v. JPMorgan Chase Bank, N.A., No. 12-Civ.-6168 (MGC), 2014 WL 1259630, at *5 (S.D.N.Y. Mar. 27, 2014); 3636 Greystone Owners, Inc. v. Greystone Bldg. Co., 857 N.Y.S.2d 121, 122 (App. Div. 1st Dept. 2008).

11 Unfair Competition Br. at 14, Dkt. 806.

12 Couvertier v. Concourse Rehab. and Nursing, Inc., 985 N.Y.S.2d 683, 683-84 (App. Div. 2d Dept. 2014) (internal brackets omitted).

13 Energy Claims Ltd. v. Catalyst Inv. Grp. Ltd., 325 P.3d 70, 82 (Utah 2014); see also Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc., 567 F.3d 1191, 1199 & n.9 (10th Cir. 2009) ("relating to" carries a "broad" meaning).

14 Unfair Competition Br. at 18-19, Dkt. 806.

15 Dorset Indus. Inc. v. Unified Grocers, Inc., 893 F. Supp. 2d 395, 414 (E.D.N.Y. 2012).

16 E.g., Taizhou Zhongneng Imp. and Exp. Co., Ltd. v. Koutsobinas, 509 F. App'x 54, 57 (2d Cir. 2013); Bd. of Managers of Soho N. 267 W. 124th St. Condominium v. NW 124 LLC, 984 N.Y.S.2d 17, 18-19 (App. Div. 1st Dept. 2014).

17 Zorbas v. US Trust Co., N.A., 48 F. Supp. 3d 464, 479 (E.D.N.Y. 2014).

18 IBM's Reply Memorandum in Further Support of its Motion for Summary Judgment on SCO's Unfair Competition Claim (SCO's Sixth Cause of Action) at 14, Dkt. 947 ("Unfair Competition Reply Br.").

19 Unfair Competition Opp. at 43-44, Dkt. 909.

20 Miller v. Walters, 997 N.Y.S.2d 237, 246 (Sup. Ct. 2014) (citing Ruder & Finn v. Seaboard Sur. Co., 422 N.E.2d 518, 522 (N.Y. 1981) (holding that "'unfair competition' is not to be equated with the far more amorphous term 'commercial unfairness'")).

21 ITC Ltd. v. Punchgini, Inc., 850 N.E.2d 366, 372 (N.Y. 2007); see also Roche Diagnostics GmbH v. Enzo Biochem, Inc., 992 F. Supp. 2d 213, 222-23 (S.D.N.Y. 2013).

22 Roche, 992 F. Supp. 2d at 223 n.7 (internal quotation marks, brackets and citations omitted).

23 E.g., Akiro LLC v. House of Cheatham, Inc., 946 F. Supp. 2d 324, 342 (S.D.N.Y. 2013).

24 Overstock.com, Inc. v. Smartbargains, Inc., 192 P.3d 858, 863 (Utah 2008).

25 Framed Wall Art, LLC v. PME Holdings, LLC, No. 2:08CV781DAK, 2008 WL 5205822, at *3 n.5 (D. Utah Dec. 12, 2008).

26 Unfair Competition Br. at 23-26, Dkt. 806

27 851 N.Y.S.2d 857, 859-61 (Sup. Ct. 2008).

28 Wilcox v. Career Step, LLC, No. 2:08-CV-998-CW, 2010 WL 624863, at *1-3, *7 (D. Utah Feb. 19, 2010).

29 Id. at *8.

30 R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133, 1148 (10th Cir. 2009) ("passing off" is pled when Party A asserts that Party B is selling Party B's goods and telling purchasers that they are Party A's goods).

31 345 P.3d 553, 561 (Utah 2015).

32 Id.

33 IBM's Memorandum in Support of its Motion for Summary Judgment on SCO's Interference Claims (SCO's Seventh, Eighth and Ninth Causes of Action) at 47-50, Dkt. 803 ("Interference Br.").

34 SCO's Memorandum in Opposition to IBM's Motion for Summary Judgment on SCO's Interference Claims (SCO's Seventh, Eighth and Ninth Causes of Action) at 35, Dkt. 910 ("Interference Opp.").

35 345 P.3d at 565.

36 See Ecosure Pest Control, Inc. v. Eclipse Mktg., Inc., No. 2:09-CV-1108, 2010 WL 3363071, at *2 (D. Utah Aug. 23, 2010) (emphasis added); see also World Enters. v. Aquila, Inc., No. 2:12-cv-00021-DN, 2013 WL 4592204, at *8 (D. Utah Aug. 28, 2013).

37 Interference Br. at 51-58, Dkt. 803.

38 345 P.3d at 561.

39 Interference Opp. at 39-40, Dkt. 910.

40 IBM's Reply Memorandum in Further Support of its Motion for Summary Judgment on SCO's Interference Claims (SCO's Seventh, Eighth and Ninth Causes of Action) at 29-30, Dkt. 946 ("Interference Reply Br.") (quoting Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 309 (Utah 1982)).

41 No. 2:12-CV-151 TS, 2012 WL 1952496, at *4 (D. Utah May 30, 2012).

42 337 P.3d 213, 227 (Utah 2014).

43 Interference Br. at 58-63, Dkt. 803.

44 E.g. Keith, 337 P.3d at 226.

45 Mountain W. Surgical Ctr., L.L.C. v. Hospital Corp. of Utah, 173 P.3d 1276, 1278 (Utah 2007).

46 Interference Reply Br. at 2-3, Dkt. 946.

47 DUCivR 56-1(c).

48 Stevenson v. Salt Lake Cnty., No. 2:12-cv-44-PMW, 2014 WL 4851873, at *1-2 (D. Utah Sept. 29, 2014) ("Given Plaintiff's failure to abide by civil rule 56-1, the court concludes, pursuant to that rule, that Defendants' statement of material facts is deemed admitted.").

49 Interference Reply Br. at 7-8, Dkt. 946.

50 No. 2:10-cv-00615-DN, 2012 WL 3544820, at *4 (D. Utah Aug. 16, 2012).

51 Interference Br. at 59, Dkt. 803; Interference Reply Br. at 33-36, Dkt. 946.

52 Lee v. Max Intern., LLC, 638 F.3d 1318, 1320 (10th Cir. 2011).

53 Dale K. Barker Co., P.C. v. Valley Plaza, 541 F. App'x. 810, 816 (10th Cir. 2013).


DATED this 22nd day of May, 2015.

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
1 North Castle Drive
Armonk, New York 10504
(914) 765-1900

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

User avatar
!
30%
Posts: 3259
Joined: 2013-02-25 18:36

2015-05-24 17:19 »

Imagine being the lawer for these cases. Probably lots of juicey stuff going on in behind the scenes. Although, I think it would be a really tough work to do. :???:

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-08-15 07:49 »

Sorry I haven't been around for a while. Anyway, there's been some things up with the case, such as the Judge making the parties go before a Magistrate Judge for the purpose of attempting Mediation. The end result:

..not all parties amenable to a settlement conference at this time. Accordingly, the success of reaching a settlement at this time is highly unlikely, even if a settlement conference was ordered. That said, a settlement conference may well be useful to the parties after resolution of the pending dispositive motions, and this court remains available to help facilitate settlement at that time, if the parties mutually agree that a settlement conference would be useful...


It's worth noting that the initial idea for Mediation came during Status Conference held on 6/11/2015. The transcript of which is "Restricted Document" because the court's giving the parties time to redact information. Supposedly, the transcript will be available in the middle of September. At this same Conference "Counsel were ordered to reconcile facts on the [782] motion within 30 days".

Well, SCO filed a Statement and IBM apparently refused to "proceed with".

SCO recognizes that this Court's Orders of June 12, 2015, and July 14, 2015, directed the parties to furnish the Court with a single, joint submission. However, despite SCO's persistent, good-faith effort to reach agreement with IBM as to the form of a joint submission, IBM informed SCO today that IBM was unwilling to proceed with filing a Joint Statement that included the three sections set forth in the Court's July 14, 2015, Order for the reasons set forth in the accompanying letter of Jason Cyrulnik.


It's funny, from that description one might get the impression that the accompanying letter might have been IBM's reasons for refusing to go along with the joint submission. Au contraire! The accompanying letter tells the court how naughty IBM has been by refusing to play along and offers what I would describe as SCO's interpretation of IBM's actions.

Well if you want to read 1158, it's available over at Groklaw:

http://www.groklaw.net/staticpages/inde ... 6162215566

If you do, I think you'll find what I've been saying regarding the Monterey contract is true. An easy way to settle much of this is to determine whether Caldera retained rights/interests in Santa Cruz's contract with IBM, despite the provisions of that contract. A reading of the contract would settle that in my opinion.

User avatar
!
30%
Posts: 3259
Joined: 2013-02-25 18:36

2015-08-15 23:54 »

Steven W wrote:Sorry I haven't been around for a while...

Yeah, I hope everything is alright at your end in life.

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-08-16 04:23 »

Non Hic wrote:
Steven W wrote:Sorry I haven't been around for a while...

Yeah, I hope everything is alright at your end in life.


Things have been interesting! I might say more later, but not at the moment. :silent:

I've decide to go one putting these documents up in the format I've been using, I stopped with 1140 going to pick up with 1142. I kinda jumped ahead with the previous post. Don't take me out back and shoot me!

http://www.groklaw.net/articlebasic.php ... 5195402823


1141 is ERRATA to [1137]. I think the DOCKET TEXT ORDER (1142) covers those corrections. Let's start there:

[1142] 28-May-2015

DOCKET TEXT ORDER No attached document
[1136] Docket Text Order incorrectly listed pending motions as follows: SCO was listed as the movant in [782], [783], and [986], while IBM was listed as the movant in [775] and [776] . The corrected listing of pending motions is as follows: SCO is the movant in [776], [777], and [986]; IBM is the movant in [782], [783], and [784]. [1136] Docket Text Order granted the parties' request to apprise the court of relevant case law decided since the pending motions were filed. With the corrected addition of [784] to the list of pending motions, IBM may file no more than five pages of additional authority in support of [784] on or before Wednesday, June 3, 2015, and SCO may respond (in no more than five pages) on or before Monday, June 8, 2015. However, this supplemental briefing on [784] is limited to authority not already provided in the supplemental briefing on [777], also regarding IBM's eighth counterclaim.
Signed by Judge David Nuffer on 4/15/2015. (mec) (Entered: 05/28/2015)


Obviously not much here. One word to describe the boo-boos in 1136? Oops covers it, don't ya think? I kinda like the Judge's order to keep the relevant case law decided since the pending motions were filed to no more than five pages and reminding the parties the don't need to cover stuff that they already have. Nice.

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-08-16 05:13 »

1143:

SNELL & WILMER L.L.P.
Alan L. Sullivan (3152)
Amy F. Sorenson (8947)
15 West South Temple, Suite 1200
Salt Lake City, Utah 84101-1004
Telephone: (801) 257-1900
Email: asullivan@swlaw.com
asorenson@swlaw.com

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Email: echesler@cravath.com
dmarriott@cravath.com

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC., by and through
the Chapter 7 Trustee in Bankruptcy,
Edward N. Cahn,

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff.

IBM'S CASE LAW UPDATE WITH RESPECT
TO ITS MOTION FOR SUMMARY JUDGMENT
ON ITS CLAIM FOR COPYRIGHT
INFRINGEMENT (IBM'S EIGHTH
COUNTERCLAIM)

Civil No. 2:03-cv-00294-DN

District Judge David Nuffer



IBM advanced four primary arguments related to SCO's copyright infringement, each providing grounds for summary judgment: (1) IBM owns the copyrights to the IBM copyrighted works; (2) SCO lacked permission or a license to copy or distribute the IBM copyrighted works; (3) SCO illegally copied and distributed the IBM copyrighted works; and (4) SCO should be enjoined from further violating IBM's copyrights.1 Subsequent decisions confirm that summary judgment is appropriate on each of those grounds

As IBM previously explained, to prevail on a copyright infringement claim, a copyright holder must demonstrate ownership of a valid copyright to the allegedly infringed work and that the defendant violated one or more of the holder's exclusive rights.2 Recent case law affirms that, having established both ownership and SCO's violation of its exclusive rights, IBM is entitled to summary judgment on its copyright infringement counterclaim and to injunctive relief proscribing SCO from further infringement.

1. IBM Owns the Copyrights to the IBM Copyrighted Works

As IBM previously detailed, the holder of a timely filed copyright registration statement is entitled to a presumption of ownership under 17 U.S.C. § 410(c).3 Recent decisions reinforce that conclusion.4 IBM's copyright registrations were filed with the United States Copyright Office within five years after the first publication of the relevant work.5 IBM's registrations constitute prima facie evidence of copyright validity.6 It is thus incumbent upon SCO to demonstrate some infirmity in the claimed copyright.7 To defeat summary judgment, SCO's evidence must give rise to more than simply a "metaphysical doubt" as to the fact of IBM's ownership of these copyrights.8 SCO's prior argument that Linux as a whole is an infringing derivative work is foreclosed by this Court's decision in SCO v. Novell, in which it was determined that SCO does not own the copyrights it claims to be infringed by Linux.9 Moreover, SCO ignores-and offers no evidence disputing-IBM's claims of infringement for sixteen individual original works.10 As a result, IBM's motion should be granted.

2. SCO Acted Without Permission

As IBM previously explained, SCO lacked permission or a license to copy or distribute the IBM copyrighted works because it repudiated and disclaimed the GPL as a source of legal rights, and SCO breached the GPL in its attempts to license Linux.11 Recent case law confirms that SCO's assertions disclaiming and denying the enforceability of the GPL result in a repudiation of the contract.12 For example, in Velocity Press, Inc. v. Key Bank, N.A., this Court clarified that under Utah law, "language that under a fair reading amounts to a statement of intention not to perform except on conditions which go beyond the contract constitutes a repudiation".13 SCO's contention that the GPL "is unenforceable, void and/or voidable" therefore suffices as a repudiation of the GPL.14 As a result, SCO cannot rely on the GPL or claim to be a beneficiary of a license to copy, modify and distribute the IBM copyrighted works. Moreover, SCO breached the terms and overarching purpose of the GPL specifically, to preclude a licensee such as SCO from imposing a license fee on others.15 SCO's breach of the GPL automatically terminated any rights it previously had under the agreement and subjects SCO to a copyright infringement claim.16 Furthermore, the use of copyrighted work absent, or outside the scope of, the license supports IBM's claim for copyright damages.17

3. SCO Copied the IBM Copyrighted Works

IBM has not only shown that it holds a valid copyright, but also that SCO unlawfully appropriated protected portions of IBM's copyrighted work. First, as IBM previously explained, there is no material dispute that SCO repeatedly copied and distributed the IBM copyrighted works.18 Recent case law affirms that SCO's misconduct-its unauthorized copying, modifying and sublicensing of the IBM copyrighted material-amounts to copyright infringement.19 For example, in granting the plaintiff's motion for summary judgment on its copyright infringement claim, the court in Engenium Solutions, Inc. v. Symphonic Technologies, Inc. held that "[a] party infringes on the owner's exclusive right to reproduce the copyrighted work when the party copies computer code without the owner's authorization".20

Second, SCO's claim that it "had to" make infringing copies of the IBM copyrighted works in order to fulfill its own contractual obligations to its customers is unsupportable.21 Recent case law affirms that SCO is liable for copyright infringement regardless of its purpose or intent: "[c]opyright infringement is a strict liability wrong".22

Thus, the undisputed facts establish that IBM holds valid copyrights in its copyrighted works, and SCO has infringed IBM's copyrights through its widespread distribution of its commercial Linux products and its use of the copyrighted material in its own internal development and support work.23

4. IBM Is Entitled to Summary Judgment Granting a Permanent Injunction

IBM previously demonstrated that it is entitled to injunctive relief to ensure that SCO does not further violate its copyrights.24 Although SCO is currently in Chapter 7 proceedings, IBM's claim for a permanent injunction remains viable. A case is not moot simply because "the means for repeating the wrong no longer exist[]".25 Rather, "the court's power to grant injunctive relief survives [even] discontinuation of the illegal conduct".26 SCO has not proven that the challenged conduct will not resume, and the need for IBM to protect itself against further infringement through an injunction remains.

Here, IBM has satisfied the requisite elements for a permanent injunction.27 The preceding analysis demonstrates IBM's ability to prove actual success on the merits of its copyright infringement claim. A finding of irreparable harm is appropriate because the damage caused by infringement is not entirely compensable in monetary terms.28 The threatened injury to IBM outweighs any harm that the injunction may cause SCO.29 Finally, the injunction, if issued, will advance, not harm, the public interest.30


1 Pursuant to the Court's order dated May 28, 2015, this supplemental briefing is limited to authority not provided in IBM's supplemental briefing on Dkt. 777, also regarding IBM's eighth counterclaim, which will be filed June 5, 2015, and is incorporated by reference herein.

2 Lumos, Inc. v. LifeStrength, LLC, No. 2:12-cv-1196-TC, 2014 WL 4355451, at *1 (D. Utah Sept. 3, 2014).

3 IBM's Mem. Supp. Mot. Summ. J. Claim Copyright Infringement (IBM's Eighth Countercl.) at 17, Dkt. 801 ("IBM Mem.").

4 See Lumos, Inc., 2014 WL 4355451, at *2.

5 See IBM Mem. at 7-8, Dkt. 801.

6 Lumos, Inc., 2014 WL 4355451, at *2.

7 Id. (finding the plaintiff owned a valid copyright and the defendant had not met its burden).

8 See, e.g., Denenberg v. LED Techs., LLC, No. 11-CV-03155-RBJ, 2012 WL 4478970, at *3 (D. Colo. 2012).

9 See 721 F. Supp. 2d 1050, 1072 (D. Utah 2010); see also Mem. Decision & Order Granting Part & Den. Part IBM's Mot. Summ. J. Basis Novell J. at 1, Dkt. 1132 (granting summary judgment on IBM's counterclaims seeking a declaration of noninfringement of the copyrights to pre-1996 UNIX source code).

10 IBM's Reply Mem. Further Supp. Mot. Summ. J. Claim Copyright Infringement at 3-5, Dkt. 945 ("IBM Reply").

11 IBM Mem. at 17, Dkt. 801.

12 See OLP, LLC v. Burningham, 185 P.3d 1138, 1149 (Utah Ct. App. 2008).

13 No. 2:09-CV-520 TS, 2010 WL 5300903, at *6 (D. Utah Dec. 21, 2010) (internal quotation marks omitted) (finding a reasonable jury could conclude the defendant breached the agreement at issue by repudiation).

14 IBM Mem. at 18, Dkt. 801.

15 IBM Mem. at 19-20, Dkt. 801; IBM Reply at 6, Dkt. 945.

16 See Adobe Sys. Inc. v. Bea's Hive LLC, No. 14-81102-CIV, 2014 WL 4672453, at *9 (S.D. Fla. 2014).

17 See Bean v. Pearson Educ., Inc., 949 F. Supp. 2d 941, 945 (D. Ariz. 2013) ("A licensee can infringe a copyright by exceeding the scope of a license.").

18 IBM Mem. at 20, Dkt. 801.

19 See, e.g., Lumos, Inc., 2014 WL 4355451, at *1; Bean, 949 F. Supp. 2d at 953 (granting summary judgment on the plaintiff's copyright infringement claim when the defendant's repeated copying exceeded the scope of a license); see also XimpleWare Corp. v. Versata Software, Inc., No. C13-05160 SI, 2014 WL 490940, at *2 (N.D. Cal. Feb. 4, 2014) (denying a motion to dismiss the plaintiff's copyright infringement claim when the alleged infringer "without authorization, copied, reproduced, distributed, and re-implemented" copyrighted work in violation of the relevant GPL).

20 924 F. Supp. 2d 757, 789 (S.D. Tex. 2013) (internal quotation marks omitted).

21 IBM Reply at 10-11, Dkt. 945.

22 Faulkner v. Nat'l Geographic Soc'y, 576 F. Supp. 2d 609, 613 (S.D.N.Y. 2008).

23 IBM Reply at 11, Dkt. 945.

24 IBM Mem. at 21, Dkt. 801.

25 ClearOne Commc'ns, Inc. v. Chiang, 608 F. Supp. 2d 1270, 1278 (D. Utah 2009) (internal quotation marks omitted); see also Fresh Del Monte Produce Inc. v. Del Monte Foods Co., 933 F. Supp. 2d 655, 661 (S.D.N.Y. 2013).

26 ClearOne Commc'ns, Inc., 608 F. Supp. 2d at 1278 (internal quotation marks omitted).

27 Klein-Becker USA, LLC v. Englert, 711 F.3d 1153, 1164 (10th Cir. 2013) (listing the factors for issuing a permanent injunction).

28 Klein-Becker USA, LLC v. Englert, No. 2:06-CV-378 TS, 2011 WL 147893, at *17 (D.Utah Jan. 18, 2011).

29 See Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1229 (10th Cir. 2007).

30 Harris Research, Inc. v. Lydon, 505 F. Supp. 2d 1161, 1169 & n.24 (D. Utah 2007).


DATED this 3rd day of June 2015.

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
1 North Castle Drive
Armonk, New York 10504
(914) 765-1900

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

User avatar
Steven W
VIP
Posts: 2863
Joined: 2013-08-10 22:40

2015-08-16 09:31 »

1144:

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
Telephone:(801) 363-6363
Facsimile:(801) 363-6666
bhatch@hjdlaw.com
mjames@hjdlaw.com

Stuart Singer (admitted pro hac vice)
BOIES,SCHILLER & FLEXNER LLP
401 East Las Olas Blvd., Suite 1200
Fort Lauderdale, Florida 33301
Telephone:(954) 356-0011
Facsimile:(954) 356-0022
ssinger@bsfllp.com

David Boies (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Jason Cyrulnik (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
333 Main Street
Armonk, New York 10504
Telephone:(914) 749-8200
Facsimile:(914) 749-8300
dboies@bsfllp.com
enormand@bsfllp.com
jcyrulnik@bsfllp.com

Counsel for Plaintiff, The SCO Group, Inc.

----------

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

----------

THE SCO GROUP, INC. , by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,

Plaintiff/Counterclaim-Defendant,
v.
INTERNATIONAL BUSINESS MACHINES
CORPORATION,

Defendant/Counterclaim-Plaintiff.

SCO'S RESPONSE TO IBM'S CASE LAW
UPDATE WITH RESPECT TO ITS
MOTION FOR SUMMARY JUDGMENT
ON SCO'S UNFAIR COMPETITION
CLAIM (SCO'S SIXTH CAUSE OF
ACTION) AND ITS MOTION FOR
SUMMARY JUDGMENT ON SCO'S
INTERFERENCE CLAIMS (SCO'S
SEVENTH AND NINTH CAUSES OF
ACTION)

Case No. 2:03-cv-00294 DN

District Judge David Nuffer

----------



TABLE OF CONTENTS


TABLE OF AUTHORITIES..........ii


UNFAIR COMPETITION (SCO'S SIXTH CAUSE OF ACTION)..........1

I. SCO TIMELY FILED ITS UNFAIR COMPETITION CLAIM .........1

A. The Continuing-Tort Doctrine Defeats IBM's Motion..........1

B. The JDA's Two-Year Provision Does Not Apply to SCO's Unfair Competition Claim..........2

C. The Limitations Period Did Not Start Prior to April 2001..........3

II. IBM'S CONDUCT CONSTITUTES ACTIONABLE UNFAIR COMPETITION..........4

A. IBM's Deceptive Misappropriation Is Textbook Unfair Competition ..........4

B. IBM Continues to Misstate the Independent-Tort Doctrine ..........4

III. SCO'S UNFAIR COMPETITION CLAIM IS NOT PREEMPTED..........5

INTERFERENCE (SCO'S SEVENTH AND NINTH CAUSES OF ACTION)...........6

I. SCO'S COMPLAINT AND THE SUBMITTED EVIDENCE ESTABLISH IBM'S ACTIONABLE INTERFERENCE WITH SPECIFIC BUSINESS RELATIONSHIPS....6

II. IBM'S CONDUCT WAS IMPROPER..........7

A. IBM Interfered Through Improper Means..........7

B. IBM's Improper Conduct Is Not Privileged ..........8

III. SCO HAS ADDUCED SUFFICIENT EVIDENCE THAT IBM'S TORTIOUS INTERFERENCE INJURED SCO ..........8



TABLE OF AUTHORITIES

Cases

Abercrombie v. Andrew Coll., 438 F. Supp. 2d 243 (S.D.N.Y. 2006)..........3

Andrew Greenberg, Inc. v. Svane, Inc., 830 N.Y.S.2d 358 (3d Dep't 2007)..........1

Barbagallo v. Marcum LLP, 820 F. Supp. 2d 429 (S.D.N.Y. 2011)..........4

Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012).......... 4, 5

Beverage Mktg. USA, Inc. v. S. Beach Beverage Co., 799 N.Y.S.2d 242 (2d Dep't 2005).......... 4

Cardi's Dep't Store, Inc. v. FedEx Trade Networks Transp. & Brokerage, Inc., No. 11-CV-5024 DLI MDG, 2014 WL 3809811 (E.D.N.Y. July 31, 2014).......... 2

Clark-Fitzpatrick, Inc. v. Long Island R. Co., 516 N.E.2d 190 (N.Y. 1987).......... 4

Cook Assocs., Inc. v. Warnick, 664 P.2d 1161 (Utah 1983).......... 10

Corporate Trade, Inc. v. Golf Channel, 563 F. App'x 841 (2d Cir. 2014).......... 3

Couvertier v. Concourse Rehab. & Nursing, Inc., 985 N.Y.S.2d 683 (2d Dep't 2014).......... 2, 3

Diversified Striping Sys., Inc. v. Kraus, 341 P.3d 932 (Utah Ct. App. 2014).......... 3

Eldridge v. Johndrow, 345 P.3d 553 (Utah 2015).......... 6, 7

Energy Claims Ltd. v. Catalyst Inv. Grp. Ltd., 325 P.3d 70 (Utah 2014).......... 3

Enzo Biochem, Inc. v. Amersham PLC, 981 F. Supp. 2d 217 (S.D.N.Y. 2013).......... 1

Francis v. Nat'l DME, --- P.3d ----, 2015 WL 2125287 (Utah Ct. App. May 7, 2015).......... 10

Greenlight Capital, Inc. v. GreenLight (Switzerland) S.A., No. 04 CIV. 3136 (HB), 2005 WL 13682 (S.D.N.Y. Jan. 3, 2005).......... 1

John v. State Farm Mut. Auto. Ins. Co., 983 N.Y.S.2d 883 (2d Dep't 2014)........... 2

Kaufman v. Cohen, 760 N.Y.S.2d 157 (1st Dep't 2003).......... 3

Keith v. Mountain Resorts Dev., LLC, 337 P.3d 213 (Utah 2014).......... 8

Kregos v. Associated Press, 3 F.3d 656 (2d Cir. 1993).......... 5

Kwan v. Schlein, 441 F. Supp. 2d 491 (S.D.N.Y. 2006)..........1

Levine v. Landy, 832 F. Supp. 2d 176 (N.D.N.Y. 2011).......... 5

Moradian v. Deer Valley Resort Co., No. 2:10-CV-00615-DN, 2012 WL 3544820 (D. Utah Aug. 16, 2012).......... 9

Muller-Paisner v. TIAA, 289 F. App'x 461 (2d Cir. 2008).......... 5

Mumford v. ITT Commercial Fin. Corp., 858 P.2d 1041 (Utah Ct. App. 1993).......... 7

Price-Orem Inv. Co. v. Rollins, Brown & Gunnell, Inc., 784 P.2d 475 (Utah Ct. App. 1989)........... 10

Putrelo Constr. Co. v. Town of Marcy, 964 N.Y.S.2d 812 (4th Dep't 2013).......... 2

Quadrille Wallpapers & Fabric, Inc. v. Pucci, No. 1:10-CV-1394 LEK/DRH, 2011 WL 3794238 (N.D.N.Y. Aug. 24, 2011).......... 5

Sampson v. Richins, 770 P.2d 998 (Utah Ct. App. 1989).......... 9

Sidney Frank Importing Co. v. Beam Inc., 998 F. Supp. 2d 193 (S.D.N.Y. 2014).......... 4

Smith v. Smith, 830 F.2d 11 (2d Cir. 1987).......... 3

Sporn v. MCA Records, Inc., 448 N.E.2d 1324 (N.Y. 1983).......... 1

Stevenson v. Salt Lake Cnty., No. 2:12-CV-44-PMW, 2014 WL 4851873 (D. Utah Sept. 29, 2014)...........9

Transaero, Inc. v. Chappell, No. 13-CV-5752 JFB GRB, 2014 WL 1783732 (E.D.N.Y. May 6, 2014).......... 4

Wachocki v. Luna, 330 P.3d 717 (Utah Ct. App. 2014).......... 10

Wakefield Kennedy LLC v. Baldwin, No. 11-CV-00604-DN-EJF, 2014 WL 2009101 (D. Utah May 16, 2014)............ 7


Other Authorities

Restatement (Second) of Torts § 768(1) & cmt. (1979).......... 8



UNFAIR COMPETITION (SCO'S SIXTH CAUSE OF ACTION)

I. SCO TIMELY FILED ITS UNFAIR COMPETITION CLAIM

A. The Continuing-Tort Doctrine Defeats IBM's Motion


IBM wrongly quotes Enzo Biochem, Inc. v. Amersham PLC for the proposition that "unfair competition is not a continuing tort."1 The Enzo Biochem court relied exclusively on Sporn v. MCA Records, Inc. in reaching that conclusion.2 Sporn in turn makes clearthat unfair competition is a continuing tort where the unfair competition is in the nature of a "continuing trespass" rather than a one-time "conversion."3 Thus, for example, a court analyzing and applying Sporn in greater depth than the Enzo Biochem court stated that an "unfair competition claim would be a 'continuing trespass' pursuant to the Sporn trespass-conversion analysis and thus be timely" where the claim was based on "the same on-going activity that underlies [plaintiff's] trademark infringement claims: that since 1998 [defendant] has used an allegedly confusingly similar name in the same industry," and "[t]here is no similar singular act of misappropriation in this case as was at issue in Sporn."4 SCO alleges IBM's continued wrongful use of SCO's code in its proprietary products is exactly such a continuing tort.

B. The JDA's Two-Year Provision Does Not Apply to SCO's Unfair Competition Claim

IBM cites a series of recent decisions that stand for the irrelevant proposition that agreements may "shorten an otherwise applicable limitations period."5 The contractual provision to which IBM appeals does not cover claims for unfair competition: Section 22.3 of the JDA shortens the limitations period only for an "action related to a breach of this Agreement."6 If the parties wanted to expand the scope of Section 22.3 to shorten the limitations period for claims related to unfair competition or other causes of action, they could have done so. For example, the contractual provision at issue in one of IBM's own cited cases provided, among other things: "For any and all other claims of any other type," an action must be filed and served "within two (2) years from the date of loss or damage."7 The parties did not reach any such agreement here, and the JDA expressly limits its shortening of the limitations period accordingly.

IBM's proffered cases also do not support its contention that the "related to a breach of this Agreement" language of the JDA should be stretched (let alone as a matter of law)to mean unfair competition claims as well. IBM first cites Couvertier, a New York case that concerned a forumselection clause covering actions "arising out of or related to" the nursing-home-admission agreement at issue8 - in stark contrast to the language the parties here used, limiting the provision to claims related to a breach of the agreement. The court in Couvertier held that claims against the nursing home for wrongful death, negligence, and violations of public health law, all "predicated on he care rendered by" the nursing home, were subject to the forum-selection clause.9 IBM's cited Utah case likewise concerns a forum-selection clause for claims "related to" a contract, rather than a breach of contract, 10 and is thus "much broader" than a clause applying only to claims related to a breach.11 IBM's continued reliance on inapposite forum-selection-clause cases further undermines its position, for the reasons articulated in SCO's opposition brief.12

C. The Limitations Period Did Not Start Prior to April 2001

IBM wrongly quotes a summary order from the Second Circuit to suggest that in this case the statute of limitations is not subject to the equitable discovery rule and equitable estoppel.13 That rule applies only where the acts of concealment warranting estoppel are the same acts that form the basis for the claim. Contrary to IBM's suggestion, the IBM acts of concealment warranting estoppel here do not form the basis of SCO's underlying cause of action. To be sure, IBM's misconduct at the center of SCO's claims involved deception and concealment, but unlike the cases relied on by the summary order in Corporate Trade, where the underlying cause of action was fraud (which has its own two-year discovery rule), 14 SCO's claim is based in large part on "IBM's misappropriation of the SVR4 code."15

II. IBM'S CONDUCT CONSTITUTES ACTIONABLE UNFAIR COMPETITION

A. IBM's Deceptive Misappropriation Is Textbook Unfair Competition


IBM's argument that "unfair competition is a narrow tort" limited to "palming off and misappropriation"16 is unavailing because, narrow or otherwise, IBM has committed misappropriation. And recent case law further confirms that unfair competition requires only a showing of misappropriation of "plaintiff's labors, skills, expenditures, or good will," with "some element of bad faith in doing so."17 Recent case law also rejects IBM's contentionsthat SCO needs to show likelihood of confusion by the public to prevail on its claim: "Likelihood of confusion by the public is not an essential element in a misappropriation-based unfair competition claim."18

B. IBM Continues to Misstate the Independent-Tort Doctrine

IBM asserts that SCO "cannot establish a tort claim relying on contractual duties."19 SCO's claim is not based on a breach of contract but instead on "IBM's pattern of deceptive and unfair conduct that exploited the access that the Project Monterey relationship provided to SCO's intellectual property."20 Recent case law confirms, moreover, that even tort duties that are "certainly 'connected with and dependent upon [a] contract'" give rise to "non-duplicative" claims where those claims "sufficiently 'spring from circumstances extraneous to, and not constituting elements of, the contract.'"21 Thus, inBayerische, where defendants represented that their "interests were aligned" with plaintiffs, and plaintiffs "reasonably relied on [defendant's] representations of contractual performance," the Second Circuit recognized that a "legal duty . . . would arise out of the independent characteristics of the relationship between" the parties, supporting an independent tort claim, even where that duty was "assessed largely on the standard of care and the other obligations set forth in the contract."22 Recent case law also confirms that the "tight partner" relationship23 though which SCO placed its "trust and confidence" in IBM gives rise to a fiduciary relationship.24

III. SCO'S UNFAIR COMPETITION CLAIM IS NOT PREEMPTED

Recent authority also confirms that SCO's unfair competition claim is not preempted by federal copyright law: "[U]nfair competition claims based upon breaches of confidential relationships, breaches of fiduciary duties and trade secrets have been held to . . . avoid § 301 preclusion."25 In Quadrille Wallpapers, for example, the court held that the defendant's "breach of the confidential relationship she had with Plaintiff as employee" and "alleged misuse of Plaintiff's trade secrets to compete with Plaintiff" were sufficient "to remove these claims from the preemptive reach of the Copyright Act."26

INTERFERENCE (SCO'S SEVENTH AND NINTH CAUSES OF ACTION)

I. SCO'S COMPLAINT AND THE SUBMITTED EVIDENCE ESTABLISH IBM'S ACTIONABLE INTERFERENCE WITH SPECIFIC BUSINESS RELATIONSHIPS

IBM relies primarily on the Utah Supreme Court's 2015 decision in Eldridge v. Johndrow, which held that improper purpose does not suffice to sustain an interference claim.27 But Eldridge does not affect SCO's claims at all - as SCO's 2006 briefing makes clear, SCO's claims have always included IBM's use of improper means(as well as improper purpose) in interfering with SCO's business:

In arguing that [its] Motion should be granted, IBM dispenses with the totality of Utah law on tortious interference, arguing instead that SCO must prove that IBM acted with improper purpose. In actuality, Utah law provides for recovery where the interference was undertaken with an improper purpose or through the use of improper means. A plaintiff is only required to prove one or the other, not both. The record evidence adduced in this case clearly shows that IBM employed improper means in interfering with SCO's business relationships. . . .28


Under Eldridge, IBM's use of improper means to interfere with SCO's business relationships establishes a tortious interference claim.29

IBM implies in its brief that all of SCO's tortious interference claims are subject to IBM's challenge of "indirect" interference.30 That isincorrect. IBM acknowledged in its 2006 briefing that as to "[s]even identified contractual or existing business relationships. . . IBM allegedly interfered by specific conduct or communication to the companies."31 IBM wrongly suggests, moreover, that the formulation of "intent" set forth in Eldridge somehow overruled, sub silentio, the well-established standard - recently reiterated by this Court - that tortious interference "is intentional 'even if the defendant does not act for the purpose of interfering or does not desire it but knows that the interference is substantially certain to occur as a result of defendant's action and is a necessary consequence thereof.'"32 When read in context, it is clear that IBM's quoted fragment of Eldridge did not purport to re-write the intent standard for tortious interference, but merely to contrast the element of "intent" from the concept of "improper purpose."33 This is hardly surprising, since the focus of Eldridge wasthe abolition of the "improper purpose" element. IBM's "intent" challenge still fails, for all the reasons stated in SCO's original briefing.34

II. IBM'S CONDUCT WAS IMPROPER

A. IBM Interfered Through Improper Means


IBM wrongly contends that "SCO has offered no evidence" that IBM's breaches of contract, to the extent such breaches partially contribute to the factual basis of SCO's interference claims, were "committed for the immediate purpose of injuring" SCO.35 IBM's proffered case on this point offers nothing new - SCO addressed this point in its 2006 briefing,36 explained that "[i]ssues of intent and knowledge in particular are appropriately proven through circumstantial evidence,"37 and set forth ample circumstantial evidence demonstrating material issues of fact as to IBM's intent to
injure SCO.

B. IBM's Improper Conduct Is Not Privileged

IBM's assertion that a "privilege" for "competitive behavior" somehow insulates it from liability for intentional interference by improper means38 is wrong, and unsupported by its proffered case, Keith v. Mountain Resorts Development, LLC. The Utah Supreme Court's decision in Keith made no mention of any privilege for competitive behavior, but instead simply affirmed the district court's grant of summary judgment that the plaintiff had "failed as a matter of law to establish improper purpose or improper means under Leigh Furniture."39 (Because it was decided before Eldridge, the Keith decision includes an analysis of improper purpose.) Because (unlike the defendant in Keith) IBM employed improper means to effect its interference, neither Keith nor IBM's asserted "competitive behavior" privilege supports IBM's summary judgment motion.40 It is black-letter law that the use of improper means defeats a privilege based on the right to compete.41

III. SCO HAS ADDUCED SUFFICIENT EVIDENCE THAT IBM'S TORTIOUS INTERFERENCE INJURED SCO

IBM's supplemental briefing as to its causation and damages arguments42 adds nothing to the arguments advanced in its original briefing.

First, IBM wrongly asserts that SCO "did not satisfy Local Rule DUCivR 56-1"43 and impertinently relies on a case in which "Plaintiff [did] not provide '[a] response to each stated material fact' and if any fact is disputed, 'so state and concisely describe and cite with particularity the evidence on which the non-moving party relies to dispute that fact.'"44 Unlike the plaintiff in IBM's cited case, SCO set forth a detailed 39-page "Response to IBM's 'Statement of Undisputed Facts,'"45 including citations to admissible evidence as appropriate. For example, SCO responded, citing expert reports, that: "Following IBM's improper conduct and the resulting precipitous decline of revenue from Santa Cruz's UNIX operating systems, the company suffered from the impact of the loss of that revenue, including lack of funding issues. Such issues, SCO's experts concluded, were attributable to IBM's wrongful conduct . . . ."46

Second, IBM again relies on an inapposite case for the generalized principle that a claim may not be based solely on "speculation, conjecture, and surmise."47 IBM cites a case in which a plaintiff speculated that the skier who struck him on the slopes was a ski-resort employee, an allegation based solely on the skier's "green ski jacket that [plaintiff] believed was a Deer Valley ski instructor's uniform," where "Deer Valley present[ed] unrebutted facts that it sells apparel to the general public that looks like the ski instructors' uniforms."48 By contrast, SCO's causation and damages theories do not rest on speculation, but on a well-developed factual record, including multiple expert opinions. IBM does not - because it cannot - challenge the well-established principle set forth in SCO's original briefing that "[o]nce a defendant has been shown to have caused a loss, the reasonable level of certainty required to establish the amount of a loss is generally lower than that required to establish the fact or cause of a loss."49 Recent case law reinforces this point. A May 2015 decision, for example, recognized that "[p]roving the amount of damages does not require absolute precision," and "[t]he certainty requirement is met as to the amount of lost profits if there is sufficient evidence to enable the trier of fact to make a reasonable approximation."50 SCO has presented evidence of damages with more than sufficient certainty to overcome IBM's summary judgment motion.

Finally, IBM's cited cases regarding "failure to produce" have no bearing here. As SCO explained in its original briefing: "SCO's experts identified SCO's loss of partner support as a significant contributory cause of SCO's revenue losses and injury. The loss of partner support was caused . . . by IBM's unfair competition, breach of contract, and other wrongful acts comprising this claim for tortious interference."51




1 IBM Case Law Update at 2, Docket No. 1140, filed May 22, 2015 (quoting Enzo Biochem, Inc. v. Amersham PLC, 981 F. Supp. 2d 217, 227 (S.D.N.Y. 2013)).

2 451 N.Y.S.2d 750, 751 (1st Dep't 1982).

3 Sporn v. MCA Records, Inc., 448 N.E.2d 1324, 1327 (N.Y. 1983)(where defendant's actions constituted "total usurping of plaintiff's right to possess" rather than "mere interference," the tort was not
continuing for statute of limitations purposes).

4 Greenlight Capital, Inc. v. GreenLight (Switzerland) S.A., No. 04 CIV. 3136 (HB), 2005 WL 13682, at *8 & n.9 (S.D.N.Y. Jan. 3, 2005); see also Kwan v. Schlein, 441 F. Supp. 2d 491, 503 (S.D.N.Y. 2006)
(holding that plaintiff's "claim is not time-barred because unfair competition occurring over a period of time can give rise to liability as a continuing tort") (citing Greenlight Capital, 2005 WL 13682, at *7-8); cf.
Andrew Greenberg, Inc. v. Svane, Inc., 830 N.Y.S.2d 358, 362 (3d Dep't 2007) ("Inasmuch as plaintiff adequately alleged that defendants continued to use the trade secrets and develop software for the games,
establishing, if the allegations prove to be true, the existence of a continuing tort, Supreme Court properly refused to dismiss that cause of action as time barred.").

5 IBM Case Law Update at 1, Docket No. 1140, filed May 22, 2015 (emphasis added) (citing John v. State Farm Mut. Auto. Ins. Co., 983 N.Y.S.2d 883, 884 (2d Dep't 2014) (time contractually shortened to
assert claim for breach of insurance policy); Putrelo Constr. Co. v. Town of Marcy, 964 N.Y.S.2d 812, 813 (4th Dep't 2013) (time contractually shortened for accrual of plaintiff's breach of contract claim).

6 Ex. 245 to Shaughnessy Decl. (Sept. 25, 2006) (emphasis added).

7 Cardi's Dep't Store, Inc. v. FedEx Trade Networks Transp. & Brokerage, Inc., No. 11-CV-5024 DLI MDG, 2014 WL 3809811, at *3 (E.D.N.Y. July 31, 2014) (quoting Terms and Conditions of Service § 3)
(emphasis added).

8 Couvertier v. Concourse Rehab. & Nursing, Inc., 985 N.Y.S.2d 683, 683 (2d Dep't 2014).

9 Id. at 684.

10 Energy Claims Ltd. v. Catalyst Inv. Grp. Ltd., 325 P.3d 70, 82 (Utah 2014).

11 Diversified Striping Sys., Inc. v. Kraus, 341 P.3d 932, 933-34 (Utah Ct. App. 2014) (distinguishing Energy Claims and holding that forum-selection clause that "applied only to 'action[s] or proceeding[s]
seeking to interpret or enforce the provisions'" of an agreement did not apply to tort claims).

12 SCO Opp'n Brief at 33, Docket No. 861, filed Nov. 11, 2006.

13 IBM Case Law Update at 2, Docket No. 1140, filed May 23, 2015 (quoting Corporate Trade, Inc. v. Golf Channel, 563 F. App'x 841, 842 (2d Cir. 2014)).

14 Kaufman v. Cohen, 760 N.Y.S.2d 157, 167 (1st Dep't 2003)(where "the very same wrongful act . . . form[ed]the basis of both the estoppel argument and the underlying claims for fraud and breach of fiduciary
duty," court applied "the fraud discovery accrual rule" rather than equitable estoppel, and reversed prior dismissal of claims as time-barred); Abercrombie v. Andrew Coll., 438 F. Supp. 2d 243, 267 (S.D.N.Y.
2006)("[B]ecause [alleged misrepresentation] forms the basis of the fraud cause of action, it cannot serve as the grounds for finding equitable estoppel."). (Corporate Trade also cited an inapposite case involving
sexual assault triggering "post-traumatic neurosis" that prevented the plaintiff from bring suit earlier. See Smith v. Smith, 830 F.2d 11, 13 (2d Cir. 1987).)

15 SCO Opp'n Brief at 28 ¶ 76, Docket No. 861, filed Nov. 11, 2006.

16 IBM Case Law Update at 4, Docket No. 1140, filed May 23, 2015.

17 Sidney Frank Importing Co. v. Beam Inc., 998 F. Supp. 2d 193, 209 (S.D.N.Y. 2014)(quoting Barbagallo v. Marcum LLP, 820 F. Supp. 2d 429, 446 (S.D.N.Y. 2011)) (alternations omitted).

18 Sidney Frank Importing, 998 F. Supp. 2d at 209 (emphasis added);see also Transaero, Inc. v. Chappell, No. 13-CV-5752 JFB GRB, 2014 WL 1783732, at *12 (E.D.N.Y. May 6, 2014)("[W]here an
unfair competition claim is not based on trademark infringement, but misappropriation of confidential or proprietary information, the plaintiff need not establish either actual confusion or a likelihood of confusion.")
(citingBeverage Mktg. USA, Inc. v. S. Beach Beverage Co., 799 N.Y.S.2d 242, 244 (2d Dep't 2005)).

19 IBM Case Law Update at 3, Docket No. 1140, filed May 23, 2015.

20 SCO Opp'n Brief at 40, Docket No. 861, filed Nov. 11, 2006; see also id. at 39-43.

21 Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 59 (2d Cir. 2012) (quoting Clark-Fitzpatrick, Inc. v. Long Island R. Co., 516 N.E.2d 190, 194 (N.Y. 1987)); see also Sidney
Frank Importing, 998 F. Supp. 2d at 209 (refusing to dismiss unfair competition claim as duplicative of breach of contract) (citing cases).

22 Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 58-59 (2d Cir. 2012)(reversing dismissal for failure to state a claim).

23 See SCO Opp'n Brief at 36 n.6, Docket No. 861, filed Nov. 11, 2006.

24 Muller-Paisner v. TIAA, 289 F. App'x 461, 466 (2d Cir. 2008)("[A] fiduciary duty may arise in the context of a commercial transaction upon a requisite showing of trust and confidence.").
25 Quadrille Wallpapers & Fabric, Inc. v. Pucci, No. 1:10-CV-1394 LEK/DRH, 2011 WL 3794238, at *5 (N.D.N.Y. Aug. 24, 2011)(quoting Kregos v. Associated Press, 3 F.3d 656, 666 (2d Cir. 1993)); see also
Levine v. Landy, 832 F. Supp. 2d 176, 191 (N.D.N.Y. 2011)(claim preempted because it did not involve breach of confidential relationship).

26 Quadrille Wallpapers, 2011 WL 3794238, at *5.

27 See IBM Case Law Update at 6, Docket No. 1140, filed May 23, 2015 (citing Eldridge v. Johndrow, 345 P.3d 553, 561 (Utah 2015)).

28 SCO Opp'n Brief at 2, Docket No. 868, filed Nov. 11, 2006 (emphasis added) (enumerating IBM's improper means); see also id. at 39-42.

29 Eldridge, 345 P.3d at 565.

30 IBM Case Law Update at 6, Docket No. 1140, filed May 23, 2015.

31 IBM Mot. Brief at 18, ¶ 44.a, Docket No. 803, filed Sept. 25, 2006 (emphasis added).

32 Wakefield Kennedy LLC v. Baldwin, No. 11-CV-00604-DN-EJF, 2014 WL 2009101, at *3 (D. Utah May 16, 2014) (Nuffer, J.) (quoting Mumford v. ITT Commercial Fin. Corp., 858 P.2d 1041, 1044 (Utah Ct.
App. 1993)); see also IBM Case Law Update at 7 (quoting Eldridge, 345 P.3d at 565).

33 Eldridge, 345 P.3d at 565 ("Intent and motive are not synonymous; in the tort context, 'intent' means a desire to bring about certain consequences, not a person's reasons for that desire.").

34 See SCO Opp'n Brief at 31-38, Docket No. 868, filed Nov. 11, 2006.

35 IBM Case Law Update at 8, Docket No. 1140, filed May 23, 2015.

36 SCO Opp'n Brief at 28, Docket No. 868, filed Nov. 11, 2006 ("By itself, a breach of contract will not generally satisfy plaintiff's burden, but a deliberate breach for the purpose of injuring the plaintiff-even if
that is not the predominate purpose-will satisfy this element of the tort.").

37 SCO Opp'n Brief at 30, Docket No. 868, filed Nov. 11, 2006.

38 IBM Case Law Update at 8, Docket No. 1140, filed May 23, 2015.

39 Keith v. Mountain Resorts Dev., LLC, 337 P.3d 213, 227 (Utah 2014).

40 See SCO Opp'n Brief at 40, Docket No. 868, filed Nov. 11, 2006.

41Restatement (Second) of Torts § 768(1) & cmt. (1979)("One's privilege to engage in business and to compete with others" is subject to the "limitation[]" that, among other things, "the actor does not employ
wrongful means").

42 IBM Case Law Update at 9-10, Docket No. 1140, filed May 23, 2015.

43 IBM Case Law Update at 9, Docket No. 1140, filed May 23, 2015.

44 Stevenson v. Salt Lake Cnty., No. 2:12-CV-44-PMW, 2014 WL 4851873, at *1 (D. Utah Sept. 29, 2014)(quoting DUCivR 56-1(c)(2)(B)).

45 SCO Opp'n Brief at 56-99, Docket No. 868, filed Nov. 11, 2006.

46 Id. at 91-92 (citations omitted).

47 IBM Case Law Update at 10, Docket No. 1140, filed May 23, 2015.

48 Moradian v. Deer Valley Resort Co., No. 2:10-CV-00615-DN, 2012 WL 3544820, at *1, *4 (D. Utah Aug. 16, 2012) (Nuffer, J.).

49 SCO Opp'n Brief at 46, Docket No. 868, filed Nov. 11, 2006 (quoting Sampson v. Richins, 770 P.2d 998, 1007 (Utah Ct. App. 1989)).

50 Francis v. Nat'l DME, --- P.3d ----, 2015 WL 2125287, at *6 (Utah Ct. App. May 7, 2015) (quoting Price-Orem Inv. Co. v. Rollins, Brown & Gunnell, Inc., 784 P.2d 475, 478 (Utah Ct. App. 1989); Cook Assocs., Inc. v. Warnick, 664 P.2d 1161, 1167 (Utah 1983)) (internal quotation marks omitted); see also Wachocki v. Luna, 330 P.3d 717, 722 (Utah Ct. App. 2014)("Damages, to include lost profits, must be proven with reasonable certainty and the amount by a reasonable though not necessarily precise estimate . . . . some degree of uncertainty is tolerable.") (citations and internal quotation marks omitted).

51 SCO Opp'n Brief at 49, Docket No. 868, filed Nov. 11, 2006 (citations omitted); see also id. at 90 ("SCO's damages for IBM's acts of interference are subsumed within and coterminous with SCO's damages for its breach of contract claims.").




DATED this 5th day of June, 2015

By: /s/ Brent O. Hatch
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
David Boies
Stuart H. Singer
Edward Normand
Jason Cyrulnik

Counsel for Plaintiff, The SCO Group, Inc.

Post Reply