Shoot the breeze, anything goes.
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2015-08-17 13:25 »

Steven W wrote:
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:...

Oh dear God, now I REALLY have to know! Hahahhaa... :mrgreen:

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Steven W
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2015-08-18 04:26 »

1145, I'll comment on this after I post it.

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 SCO'S MOTION FOR SUMMARY
JUDGMENT ON IBM'S SECOND, THIRD,
FOURTH AND FIFTH COUNTERCLAIMS

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

District Judge David Nuffer



IBM's Second, Third, Fourth and Fifth Counterclaims are for violation of the Lanham Act, common law unfair competition, intentional interference with prospective economic relations and unfair and deceptive trade practices under New York General Business Law Section 349, respectively. SCO advanced three primary arguments in support of its motion for summary judgment: (1) SCO's misconduct was privileged; (2) SCO's misconduct was undertaken in good faith; and (3) IBM failed to offer evidence of damages for these counterclaims. SCO's arguments fail for the following reasons: (1) SCO's misconduct is not privileged; (2) SCO's good faith arguments are unavailing; and (3) IBM has submitted sufficient evidence of damages. Subsequent decisions confirm that the denial of SCO's motion for summary judgment is appropriate on each of those grounds.

1. SCO's Misconduct Is Not Privileged

First, as IBM previously detailed, SCO's litigation privilege arguments depend on an improper and unduly narrow construction of IBM's counterclaims.1 Courts have continued to hold that extensive out-of-court statements made to the press, such as SCO's nonlitigation misrepresentations, do not further the absolute litigation privilege's stated purpose-"to encourage candor by parties involved in litigation and to further the litigation process".2 Although courts "generally have interpreted 'during or in the course of a judicial proceeding' broadly", in Pratt v. Nelson, the Utah Supreme Court found that the "broad" interpretation did not apply "to statements made directly to the press, especially . . . where a party called a press conference and distributed various statements to the media for widespread dissemination".3 This is so because "the press generally lack[s] a connection to judicial proceedings sufficient to warrant an extension of the judicial privilege to statements made by parties to the press".4 For this reason, SCO's reliance on Tamburo v. Dworkin is misplaced.5 In Tamburo, the statements at issue were "limited in scope" and published only to those with the same narrow interest as the defendant (i.e., "the way in which the dog pedigree data was made available").6 In contrast, SCO extensively published false statements through press releases, interviews, analyst calls and conferences-a scheme more widespread and indicative of malice than that in Tamburo. Thus, SCO's statements are not protected by an absolute privilege.7

In the absence of an absolute privilege, SCO has argued for a qualified privilege.8 Recent cases confirm that statements are not protected by the qualified privilege where they are either "excessively published" or made with malice.9 In SCO Group, Inc. v. Novell, Inc., this Court confirmed that whether the privilege was lost due to excessive publication and whether the privilege was lost due to malice were questions of fact for the jury.10 Both circumstances are present here.

A communication is "excessively published" where, as here, it is "published to those who did not have a legitimate role in resolving the dispute or to persons who did not have an adequate legal interest in the outcome of the proposed litigation".11 As previously detailed, SCO repeatedly made statements to the general public through the press-not to those with an appropriate role or interest in this litigation.12 That, at a minimum, warrants denying SCO's motion for summary judgment.

Similarly, courts have made clear that the issue of malice calls into question the state of mind of the publisher and is not appropriate for resolution on summary judgment.13 Ample evidence indicates that SCO knew its public statements about IBM were false and its conduct unjustified.14 Thus, IBM's proffered evidence regarding SCO's conduct is sufficient to
create a material dispute on the issue of malice.

Second, IBM previously detailed that courts have placed the burden of proving the affirmative defense of privilege on the party seeking summary judgment.15 Again, recent case law reinforces that conclusion.16 SCO's eight allegedly undisputed facts are insufficient to satisfy SCO's burden to prove its privilege defense.17

2. SCO's Good Faith Arguments Also Fail

IBM previously explained that SCO's purported good faith is not a defense to or element of its counterclaims with the exception of common law unfair competition.18 Courts have reaffirmed that proof of intent to deceive or bad faith is not required to establish a violation of the Lanham Act for false advertising.19 Similarly, in accordance with its broad deterrent
purposes, Section 349 of the New York General Business Law "does not require that a defendant intended to defraud or mislead".20 Instead, Section 349 contemplates actionable conduct that does not necessarily "reach the level of common-law fraud".21 Finally, to prevail on a claim for tortious interference with prospective business relations, a plaintiff may show that the defendant either acted "with malice or used wrongful means", evincing that good faith alone is not dispositive of the claim.22

In any event, the available evidence introduced by IBM establishes material questions of fact regarding SCO's conduct sufficient for a reasonable jury to find bad faith. Courts have found improper activity similar to that conducted by SCO to be particularly indicative of bad faith.23 Thus, SCO has not carried its burden of establishing good faith necessary to grant its motion for summary judgment.

3. IBM Has Presented Sufficient Evidence of Damages

At a minimum, IBM has raised an issue of material fact regarding its damages sufficient to defeat summary judgment. Courts have reaffirmed that a party need only raise a question of fact that it was injured as a result of the opponent's misconduct; it need not provide an exact dollar figure for damages.24 IBM's evidence regarding its lost profits and accrued mitigation costs demonstrates the significant damage caused by SCO's conduct, thereby satisfying IBM's burden at this stage of the proceedings.25 Furthermore, courts continue to find attorneys' fees recoverable as mitigation damages.26 Recent case law also confirms that attorneys' fees are available particularly where, as here, bad faith is manifested.27

1 IBM's Mem. Opp'n SCO's Mot. Summ. J. IBM's Second, Third, Fourth & Fifth Countercls. at 21, Dkt. 865 ("IBM Opp'n").

2 D'Annunzio v. Ayken, Inc., 876 F. Supp. 2d 211, 217, 219 (E.D.N.Y. 2012).

3 164 P.3d 366, 377, 380-81 (Utah 2007).

4 Id. at 380; see also Sparto v. Hearts for Hospice, LLC, No. 2:12-CV-801 TS, 2014 WL 559536, at *3 (D. Utah Feb. 13, 2014).

5 See SCO's Mem. Additional Authority Supp. Pending Mot. Summ. J. IBM's Second, Third, Fourth & Fifth Countercls. at 3, Dkt. 1137 ("SCO Update").

6 974 F. Supp. 2d 1199, 1214-16 (N.D. Ill. 2013).

7 Amarosa v. Dr. John's Inc., No. 2:11-CV-676 DN, 2014 WL 3015312, at *2 (D. Utah July 2, 2014) (SCO Update at 2 n.4, Dkt. 1137), is distinguishable because all of the statements in that matter were made in the course of an administrative proceeding-not to the press. Id. at *1 (Nuffer, J.).

8 SCO's Mem. Supp. Mot. Summ. J. IBM's Second, Third, Fourth & Fifth Countercls. at 7, Dkt. 810.

9 See Sparto, 2014 WL 559536, at *3; Fordham v. Islip Union Free Sch. Dist., 662 F. Supp. 2d 261, 276 (E.D.N.Y. 2009).

10 No. 2:04-CV-139 TS, 2010 WL 691710, at *1 (D. Utah Feb. 22, 2010).

11 Sparto, 2014 WL 559536, at *3 (internal quotation marks omitted); see also Davis v. Garrity, No. 2:13-CV-349 DS, 2013 WL 5745554, at *2 (D. Utah Oct. 23, 2013); Pratt, 164 P.3d at 377.

12 IBM Opp'n at 24, Dkt. 865. SCO's argument that the press "had a legitimate interest in the intellectual property issues concerning Linux . . . because anyone who works with computers has such an interest" (see SCO Update at 2 n.4, Dkt. 1137) overstates the interest at issue here in an attempt to link the press to the outcome of the litigation.

13 McDonald v. Wise, 769 F.3d 1202, 1220 (10th Cir. 2014); SCO Grp., Inc., 2010 WL 691710, at *2.

14 IBM Opp'n at 26, Dkt. 865.

15 IBM Opp'n at 22-23, Dkt. 865.

16 See, e.g., Wilcox v. Newark Valley Cent. Sch. Dist., 904 N.Y.S.2d 523, 527 (App. Div. 3d Dep't 2010).

17 IBM Opp'n at 17-20, Dkt. 865.

18 IBM Opp'n at 28-29, Dkt. 865.

19 See, e.g., CGS Indus., Inc. v. Charter Oak Fire Ins. Co., 720 F.3d 71, 83 (2d Cir. 2013); Gerffert Co. v. Dean, No. 09-CV-266 (PKC), 2014 WL 2616893, at *4 n.9 (E.D.N.Y. June 12, 2014).

20 UPS Store, Inc. v. Hagan, --- F. Supp. 3d ---, 2015 WL 1456654, at *9 (S.D.N.Y. Mar. 24, 2015); In re Scotts EZ Seed Litig., 304 F.R.D. 397, 409 (S.D.N.Y. 2015); Valentine v. Quincy Mut. Fire Ins. Co., 1 N.Y.S.3d 161, 164-65 (App. Div. 2d Dep't 2014).

21 Ward v. TheLadders.com, Inc., 3 F. Supp. 3d 151, 168 (S.D.N.Y. 2014); Karastathis v. FXDirectDealer, LLC (FXDD), No. 112956/11, 2014 WL 957021, at *1 (N.Y. Sup. Ct. Mar. 3, 2014); see also People v. H&R Block, Inc., No. 401110/2006, 2007 WL 2330924, at *6 (N.Y. Sup. Ct. July 9, 2007).

22 Cardiocall, Inc. v. Serling, 492 F. Supp. 2d 139, 152 (E.D.N.Y. 2007).

23 See, e.g., Lyons P'ship, L.P. v. D&L Amusement & Entm't, Inc., 702 F. Supp. 2d 104, 115-16 (E.D.N.Y. 2010).

24 See, e.g., Lewin v. Lipper Convertibles, 756 F. Supp. 2d 432, 439-40 (S.D.N.Y. 2010).

25 E.g., Memdata, LLC v. Intermountain Health Care, Inc., No. 2:08-CV-190 TS, 2010 WL 1529275, at *5 (D. Utah Apr. 15, 2010) (discussing lost profit damages and concluding sufficient evidence on damages was introduced to defeat summary judgment).

26 See, e.g., Jung Sun Laundry Grp. Corp. v. Laundry, Dry Cleaning, & Allied Workers Joint Bd., No. 10-Civ-468 (RMB) (JLC), 2010 WL 4457135, at *6 (S.D.N.Y. Nov. 1, 2010).

27 Maas v. Spencer Leasing Corp., No. 12-CV-02951 (ADS) (AKT), 2013 WL 5308859, at *17 (E.D.N.Y. Sept. 18, 2013) (awarding attorneys' fees under § 349(h)); Klein-Becker USA, LLC v. Englert, No. 2:06-CV-378 TS, 2011 WL 147893, at *16 (D. Utah Jan. 18, 2011) (awarding attorneys' fees under the Lanham Act).



DATED this 5th 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

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Steven W
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2015-08-18 04:48 »

I love this section in the first paragraph of the above document:

...Courts have continued to hold that extensive out-of-court statements made to the press, such as SCO's nonlitigation misrepresentations, do not further the absolute litigation privilege's stated purpose-"to encourage candor by parties involved in litigation and to further the litigation process".2 Although courts "generally have interpreted 'during or in the course of a judicial proceeding' broadly", in Pratt v. Nelson, the Utah Supreme Court found that the "broad" interpretation did not apply "to statements made directly to the press, especially . . . where a party called a press conference and distributed various statements to the media for widespread dissemination".3 This is so because "the press generally lack[s] a connection to judicial proceedings sufficient to warrant an extension of the judicial privilege to statements made by parties to the press".4 For this reason, SCO's reliance on Tamburo v. Dworkin is misplaced...


Sometimes these documents can be a bit dull, but every now and then an attorney puts forth an argument that pretty much everyone can understand. To me, this is one of those arguments. IBM contends that just because someone is a party in a lawsuit they can't go out and say anything they want to the press. The case they cite, decided in the Utah Supreme Court, says that is particularly true when a party calls a press conference. Sounds to me as though common sense prevailed that day. If you read the entire paragraph in the document above and pay attention to footnote 7, you'll see that the paragraph was ended by citing a decision from Judge Nuffer. In my eyes that's another nice touch.

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Steven W
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2015-08-18 04:54 »

"the press generally lack[s] a connection to judicial proceedings sufficient to warrant an extension of the judicial privilege to statements made by parties to the press"


:clap: :clap: :clap:

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Steven W
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2015-08-23 01:28 »

1146:

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 MEMORANDUM IN OPPOSITION TO
SCO'S MOTION FOR SUMMARY JUDGMENT
ON IBM'S SIXTH, SEVENTH AND EIGHTH
COUNTERCLAIMS

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

District Judge David Nuffer



IBM advanced three primary arguments why SCO is not entitled to summary judgment on IBM's Sixth, Seventh and Eighth Counterclaims: (1) SCO breached the GPL; (2) SCO infringed IBM's copyrights; and (3) SCO's violations of the GPL harmed, and continue to harm, IBM. Recent case law confirms that each argument provides independent grounds for denying SCO's motion for summary judgment.1

1. SCO Breached the GPL

First, as IBM previously explained, the plain and unambiguous language of the GPL forecloses SCO's argument that SCO could charge license fees for, and impose restrictions on other licensees' use of, Linux.2 SCO's interpretation is based on an isolated reading of specific provisions of the GPL.3 Recent Utah and New York cases affirm that contracts must be interpreted as a whole, and each provision must be read in the context of all others to give effect to the contract's general purpose.4 The unequivocal language of the GPL leaves no doubt about its purpose-to ensure Linux is free for all users.5 Moreover, SCO's interpretation of the GPL is impermissible because it results in an unreasonable and inequitable sanction of SCO's charges for and restriction of Linux licenses.6

Second, SCO repeatedly repudiated and breached the GPL. As IBM previously explained, a challenge to the viability of a license "constitutes a distinct and unequivocal refusal to perform under the license, thus causing a . . . repudiation, of the contract".7 Recent case law reinforces that conclusion.8 Consequently, SCO's repeated challenges to the GPL's validity, as well as its untenable interpretation and refusal to perform under the terms of the GPL,9 constitute a clear repudiation of the license. SCO relies on the jury's finding in SCO Group, Inc. v. Novell, Inc.-that SCO did not own the copyrights to UNIX-to argue that it did not breach the GPL.10 That argument is unavailing. It is undisputed that, at a minimum, SCO restricted licensees' use of Linux.11 Therefore, SCO breached the GPL.12 Current interpretations of the GPL support this position.13

2. SCO Infringed IBM's Copyrights

First, as IBM previously detailed, SCO's attempt to license Linux outside the express terms of the GPL automatically terminated SCO's rights to IBM's copyrighted works.14 Again, recent case law affirms IBM's contention that as "an experienced participant in the software industry", SCO knew or should have known that its license terminated and that it was infringing IBM's copyrights.15 For example, the court in Marshall v. Marshall considered "whether the infringer had experience with previous copyright ownership . . . or work[ed] in an industry where copyright is prevalent", in determining whether an infringer knew or should have known of the infringement.16 Additional case law confirms that SCO must-but cannot-prove it had a license to use IBM's copyrighted works outside of the GPL.17

Second, SCO seeks to justify its continued copying and distribution of IBM's copyrighted materials following the termination of its license by claiming it had continuing obligations to its customers.18 As IBM previously explained-and recent decisions confirm-an infringer's intent is not relevant to the question of copyright infringement.19 The only relevant questions are whether IBM owns a valid copyright and whether SCO copied protected elements of IBM's copyrighted works.20 SCO does not dispute either that IBM owns a valid copyright or that SCO copied and distributed IBM's copyrighted works.21 Furthermore, SCO's claim that IBM's interpretation of the GPL interferes with SCO's intellectual property rights is baseless in light of the ruling in SCO v. Novell that Novell, not SCO, owned the copyright to the UNIX code.22

3. SCO's GPL Violations Harmed, and Continue to Harm, IBM

First, IBM previously detailed that it has suffered compensable harm and is entitled to nominal damages.23 Utah and New York courts have continued to find that a party is entitled to nominal damages for breach of contract.24 Additionally, IBM asserted that it has incurred significant litigation costs and is entitled to compensation for those costs as mitigation damages, a proposition supported by recent authority.25 IBM also explained-and recent case law again confirms-that when construed in the light most favorable to IBM, the evidence and IBM's expert's reliable opinion "create a genuine issue of material fact as to IBM's damages".26

Second, IBM remains entitled to injunctive relief. SCO concedes that Chapter 7 proceedings, like those in which SCO is involved, "do not axiomatically render [requested injunctive relief] moot".27 IBM's previous delineation of the elements required for injunctive relief is consistent with recent case law.28 IBM has already demonstrated actual success on the merits.29 Further, this Court and other federal courts have maintained that irreparable harm is established where, like here, the harm and ensuing damages are difficult to measure.30 Recent authority also supports IBM's argument that SCO would not suffer any harm from an injunction, that any harm SCO might suffer is irrelevant because of SCO's infringement and that the public interest favors an injunction.31 Because IBM meets all of the requirements for injunctive relief, its claim is not moot.



1 Pursuant to the Court's order dated May 28, 2015, the authority cited in this submission is limited to authority not already provided in IBM's Case Law Update with Respect to Its Memorandum in Support of Its Motion for Summary Judgment on Copyright Infringement (Eighth Counterclaim), Dkt. 1143, which is incorporated by reference herein.

2 IBM's Mem. Opp'n SCO's Mot. Summ. J. IBM's Sixth, Seventh & Eighth Countercls. at 21-24, Dkt. 866 ("IBM Opp'n").

3 SCO's Mem. Supp. Mot. Summ. J. IBM's Sixth, Seventh & Eighth Countercls. at 12, Dkt. 794 ("SCO Mem.").

4 Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 210 P.3d 263, 267 (Utah 2009); Beal Sav. Bank v. Sommer, 865 N.E.2d 1210, 1213-14 (N.Y. 2007).

5 IBM Opp'n at 23, Dkt. 866 (quoting the GPL's Preamble); see Jacobsen v. Katzer, 535 F.3d 1373, 1379 n.2 (Fed. Cir. 2008) ("[T]he [GPL] . . . prohibits downstream users from charging for a license to the software.").

6 Flood v. ClearOne Commc'ns, 634 F. Supp. 2d 1257, 1264 (D. Utah 2009) ("[A]n equitable and fair result will prevail over a harsh and unreasonable result . . . ."), vacated as moot, No. 2:08-CV-00631-CW, 2012 WL 192709 (D. Utah Jan. 23, 2012); Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 920 N.E.2d 359, 363 (N.Y. 2009); IBM Opp'n at 24, Dkt. 866.

7 IBM Opp'n at 25, Dkt. 866 (internal quotation marks omitted).

8 See, e.g., Paramount Pictures Corp. v. Puzo, No. 12 Civ. 1268 (AJN), 2012 WL 4465574, at *4 (S.D.N.Y. Sept. 26, 2012) ("[R]epudiation occurs when a party advances an untenable contract interpretation to avoid its contractual obligations or when it refuses to perform its contractual obligations . . . .").

9 IBM Opp'n at 21-25, Dkt. 866.

10 SCO's Mem. Additional Auth. Supp. Mot. Summ. J. on IBM's Sixth, Seventh & Eighth Countercls. at 1-3, Dkt. 1138 ("SCO Mem. Additional Supp.").

11 IBM Opp'n at 8, 13, 16, 26, Dkt. 866.

12 See IBM Opp'n at 25-27, Dkt. 866.

13 R. Michael Azzi, Note, CPR: How Jacobsen v. Katzer Resuscitated the Open Source Movement, 2010 U.ILL.L.REV. 1271, 1280-81 ("To ensure that GPL-licensed software remains 'free,' the license requires that any GPL software mixed with non-GPL software be subject to the terms of the GPL. . . . [W]orks sold . . . must include full, unfettered access to the source code of the program.").

14 IBM Opp'n at 27-28, Dkt. 866; see Yamini Menon, Jacobsen Revisited: Conditions, Covenants and the Future of Open-Source Software Licenses, 6 WASH.J.L.TECH.&ARTS 311, 337 (2011) ("This 'automatic termination' provision is particularly important because it makes it unequivocally clear that failing to abide by the [GPL's] conditions results in a termination of the license. . . . [T]ermination of the license would expose a user to potential copyright liability if he uses any code licensed under [the] GPL . . . .").

15 IBM Opp'n at 29, Dkt. 866.

16 No. 08 CV 1420 (LB), 2012 WL 1079550, at *25 (E.D.N.Y. Mar. 30, 2012), aff'd, 504 F. App'x 20 (2d Cir. 2012).

17 E.g., Baisden v. I'm Ready Prods., Inc., 693 F.3d 491, 499 (5th Cir. 2012).

18 SCO Mem. at 5-6, Dkt. 794.

19 Storagecraft Tech. Corp. v. Kirby, No. 2:08-CV-921, 2011 WL 2837440, at *6 (D. Utah July 14, 2011) ("[D]efendant is liable even for 'innocent' or 'accidental' infringements. Even where the defendant believes in good faith that he is not infringing a copyright, he may be found liable." (internal quotation marks omitted)).

20 Paycom Payroll, LLC v. Richison, 758 F.3d 1198, 1204 (10th Cir. 2014).

21 IBM Opp'n at 27, 30, Dkt. 866.

22 SCO Grp., Inc. v. Novell, Inc., 721 F. Supp. 2d 1050, 1072 (D. Utah 2010), aff'd, 439 F. App'x 688 (10th Cir. 2011); SCO Mem. at 13, Dkt. 794; SCO Mem. Additional Supp. at 2, Dkt. 1138.

23 IBM Opp'n at 31-32, Dkt. 866.

24 Water Servs. v. Zoeller Co., No. 2:212-CV-723 TS, 2013 WL 5964457, at *3 (D. Utah Nov. 7, 2013); Acumen Re Mgmt. Corp. v. Gen. Sec. Nat'l Ins. Co., No. 09 CV 01796 (GBD), 2012 WL 3890128, at *11 (S.D.N.Y. Sept. 7, 2012) ("[E]ven if the breach of contract caused no loss or if the amount of loss cannot be proved with sufficient certainty, the injured party is entitled to recover [] nominal damages . . . .").

25 See, e.g., Meador v. Albanese Law Office, No. 5:08-CV-562, 2010 WL 3807163, at *5 (N.D.N.Y. Sept. 23, 2010) ("A plaintiff's damages may include litigation expenses incurred in an attempt to avoid, minimize, or reduce the damage caused by [the defendant]."); IBM Opp'n at 33, Dkt. 866.



DATED this 5th 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
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2015-08-23 03:37 »

I was trying to wrap my mind around SCO's and IBM's arguments regarding the claims that IBM make about SCO violating and/or repudiating the GPL and was comparing and contrasting 1138 and 1146. I was getting ready to type out a long comment here, when I decided to look at Dkt. 866 as referred to by IBM. I'm glad that I did. Went over to Groklaw and noticed it was sealed, but Dkt. 881 is a redacted version of it. Well, instead of just pulling up the PDF, I went to PJ's article about:

http://groklaw.net/article.php?story=20061123091221786

Good Lord! Can that woman write an article or what? That was a nice trip down Memory Lane and a good refresher about IBM's position. SCO's too. I had completely forgotten about the Daniel Wallace litigation, but it will be 9 years ago in November since the article was written. I think I'll forgive myself. I often preface things that I say with a small statement. This time I'm going to point out that I AM NOT A LAWYER. Now that that's out of the way, I think a bit more effort could have gone into 1146 (see above). Anyway, if you're following along with the case, I'd suggest PJ's article link to above.

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Steven W
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2015-08-23 08:26 »

1147 is provides IBM's position on "SCO'S OBJECTIONS TO MAGISTRATE JUDGE WELLS' ORDER DENYING SCO'S MOTION FOR RELIEF FOR IBM'S ALLEGED SPOLIATION OF EVIDENCE". Say that quickly ten times. :lol: I'm running a little behind with my postings and already know from 1150 that SCO's motion to reconsider is found to be moot:

Court found the motion to reconsider [986] moot based on the discussion with counsel that SCO relies on its objection [995] . Court instructed counsel that its review of the magistrates ruling underlying the objections [995] will be on the existing record and not on any new record.


It's nice when there's rulings. Most of the time the Titanic sinks a little further. I found some items regarding the so-called spoliation over at Groklaw that helped me wrap my mind around the arguments a little better and will point to them after this post and add some thoughts. I must say that tying what's happening now with what was happening back in 2006-2007 (perhaps even earlier) helps me quite a bit. After all, we're dealing with stuff that was filed back then. It also reminds me of how ridiculous this whole lawsuit has been from the very beginning.

***I'll point to the stuff at Groklaw tomorrow, just finished formatting this entry and I'm freaking tired!***



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 SCO'S OBJECTIONS TO MAGISTRATE
JUDGE WELLS' ORDER DENYING SCO'S
MOTION FOR RELIEF FOR IBM'S ALLEGED
SPOLIATION OF EVIDENCE

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

District Judge David Nuffer



On March 2, 2007, Magistrate Judge Wells entered an order denying SCO's spoliation motion (the "Order"). After careful scrutiny of the record, Magistrate Judge Wells ruled: (1) SCO could not "show that any evidence was lost or destroyed"; (2) "[t]he evidence . . . when seen in context, does not show that IBM acted in bad faith"; and (3) "nor does the evidence show that [SCO] has been prejudiced because the evidence . . . has been and is reasonably available".1 In opposition to SCO's objections to the Order, IBM offered three independent reasons why the Order should be affirmed: (1) SCO failed to show that IBM acted in bad faith; (2) SCO failed to show prejudice; and (3) SCO waived any argument concerning the sufficiency of IBM's document production.2 Subsequent decisions not only confirm IBM's contentions but also demonstrate that SCO's motion is moot

1. SCO's Motion Is Moot

By its spoliation motion, SCO seeks an adverse inference that the AIX and Dynix/ptx source code allegedly destroyed by IBM developers would be damaging to IBM's case.3 The purportedly deleted code relates to claims (SCO's contract claims and IBM's claim for a declaration of non-infringement) or aspects of a claim (the non-Monterey elements of SCO's unfair competition claim) that are no longer in the case. This Court entered summary judgment against SCO and in favor of IBM on SCO's contract claims, IBM's claim for a declaration of non-infringement and the non-Monterey aspects of SCO's unfair competition claim.4 Thus, SCO's spoliation motion is moot.

2. SCO Failed to Show that IBM Acted in Bad Faith

In deciding whether to sanction a party for the alleged spoliation of evidence, courts have considered a variety of factors, including "the degree of culpability of the party who lost or destroyed the evidence" and "the degree of actual prejudice to the [adverse] party".5

First, as IBM previously detailed, SCO failed to meet its burden to demonstrate that IBM acted in bad faith.6 Courts have continued to hold that a party must submit evidence of bad faith to warrant the "adverse inference instruction" SCO seeks with respect to spoliation.7 SCO's reference to Philips Electronics North America Corp. v. BC Technical is inapposite.8 There, the plaintiff demonstrated that the defendant had purposefully deleted and wiped files and failed to instruct employees of their duty to preserve evidence.9 No such evidence of IBM's purported "bad faith" is present here, and Magistrate Judge Wells' conclusion in that regard should be accorded deference under the "clearly erroneous" standard of review.10

Second, courts have declined to find bad faith on evidence more compelling than that presented by SCO. For example, in Wandner v. American Airlines, the court held that "[w]hen a party's actions lead to the destruction of evidence, but were not done in bad faith . . . sanctions are inappropriate".11 In fact, IBM's proffered evidence demonstrates that IBM acted in good faith by producing the equivalent of more than 40 million pages of paper.12 In Turner v. Public Service Co. of Colorado, the Tenth Circuit focused on the defendant's production of "numerous documents" in concluding that bad faith was not manifested.13 Thus, IBM's vast document production refutes SCO's assertions of bad faith, therefore precluding an adverse inference from being imposed

3. SCO Failed to Show Prejudice

As IBM previously explained, SCO's objections to the Order fail for the independent reason that SCO cannot show prejudice as a result of the alleged destruction of evidence.14 Recent case law confirms that to prevail on a spoliation motion, "[t]he burden is on the aggrieved party to establish a reasonable possibility, based on concrete evidence rather than a fertile imagination that access to the lost material would have produced evidence favorable to his cause".15 SCO's mere speculation as to the actual amount of probative evidence allegedly destroyed by IBM is fatal to its spoliation claim.16

Moreover, prejudice caused by spoliation "depends on whether other evidence addressing the same question is available to the parties".17 As IBM previously noted, SCO was provided every version of AIX and Dynix that exists, and had access to every version of UNIX System V and Linux that exists as well.18 Thus, "there is no evidence that [SCO] was actually, rather than merely theoretically prejudiced" by any lack of evidence.19 As noted, the allegedly destroyed evidence concerns claims no longer in the case, further demonstrating the absence of prejudice.

SCO's reliance on FatPipe Networks India Ltd. v. XRoads Networks, Inc. is misplaced.20 Unlike in FatPipe, SCO was not "effectively deprived of the opportunity to examine and verify" the information critical to this matter; rather, the scope of IBM's document production was such that SCO was privy to the equivalent of more than 40 million pages of source code and the names and contact information for more than 2,700 contributors to AIX and Dynix.21 SCO's claim of prejudice is also untenable because SCO failed to take steps to avoid the alleged prejudice. In particular, SCO failed to identify the specific material it contended IBM destroyed and failed to depose most of the relevant developers.22

4. SCO Waived Any Argument Concerning the Sufficiency of IBM's Document Production

Moreover, the Order should be affirmed because SCO stipulated that it did not have any dispute concerning the sufficiency of IBM's document production. Recent case law confirms that a "[w]aiver is the intentional relinquishment or abandonment of a known right".23 The concept of waiver is applicable to agreements and stipulations made by a party through counsel during the course of pending litigation.24 Before the close of fact discovery, IBM and SCO executed a stipulation that expressly provides that "there are no discovery disputes between them".25

SCO attempted to evade this outcome by arguing that the stipulation did not amount to a waiver because this motion does not involve a "discovery dispute". However, courts have reaffirmed that a motion alleging that documents were intentionally destroyed and not produced in discovery raises a "discovery dispute".26

Thus, by failing to raise this spoliation issue at the time of the stipulation, SCO waived any and all of its current arguments. As such, its motion should be denied.



1 1/18/07 Hr'g Tr. at 56.

2 IBM's Mem. Opp'n SCO's Objs. Magistrate Judge Wells' Order Den. SCO's Mot. Relief IBM's Alleged Spoliation Evidence at 2-3, Dkt. 1043 ("IBM Opp'n").

3 SCO's Mem. Additional Authority Supp. Pending Spoliation Mot. at 1, Dkt. 1139 ("SCO
Update").

4 Mem. Decision & Order Granting Part & Den. Part IBM's Mot. Summ. J. Basis Novell J. at 1-2, Dkt. 1132.

5 See Brigham Young Univ. v. Pfizer, Inc., 282 F.R.D. 566, 570 (D. Utah. 2012); Petersen v. DaimlerChrysler Corp., No. 1:06-cv-108-TC-PMW, 2011 WL 971113, at *1 (D. Utah Mar. 17, 2011) (internal quotation marks omitted).

6 IBM Opp'n at 26, Dkt. 1043.

7 Moreno v. Taos Cty. Bd. of Comm'rs, 587 F. App'x 442, 444 (10th Cir. 2014); Dalcour v. City of Lakewood, 492 F. App'x 924, 937 (10th Cir. 2012); Turner v. Pub. Serv. Co. of Colo., 563 F.3d 1136, 1149 (10th Cir. 2009); Savage v. Serco, Inc., No. 1:12-CV-176 TS, 2014 U.S. Dist. LEXIS 71028, at *10 (D. Utah May 22, 2014); Brigham Young Univ., 282 F.R.D. at 571-72.

8 See SCO Update at 1-2, Dkt. 1139.

9 773 F. Supp. 2d 1149, 1211 (D. Utah 2011).

10 IBM Opp'n at 26, Dkt. 1043; see also Aircraft Fueling Sys., Inc. v. Southwest Airlines Co., No. 08-CV-414-GFK-FHM, 2011 WL 4954250, at *1 (N.D. Okla. Oct. 18, 2011).

11 --- F. Supp. 3d ---, 2015 WL 145019, at *13 (S.D. Fla. Jan. 12, 2015).

12 IBM Opp'n at 27-28, Dkt. 1043.

13 Turner, 563 F.3d at 1150.

14 IBM Opp'n at 29, Dkt. 1043.

15 McCargo v. Tex. Roadhouse, Inc., No. 09-cv-02889-WYD-KMT, 2011 WL 1638992, at *5 (D. Colo. May 2, 2011) (internal quotation marks omitted).

16 IBM Opp'n at 30, Dkt. 1043.

17 Luna v. Am. Airlines, 676 F. Supp. 2d 192, 202 (S.D.N.Y. 2009).

18 IBM Opp'n at 34 n.19, Dkt. 1043.

19 Turner, 563 F.3d at 1150; see also Burlington N. & Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1032-33 (10th Cir. 2007) ("[A]bsent meaningful evidence that [the party] has been actually, rather than merely theoretically, prejudiced, we affirm the district court's denial of [the party's] motion for spoliation sanctions."); Lakes Gas Co. v. Clark Oil Trading Co., 875 F. Supp. 2d 1289, 1311 (D. Kan. 2012).

20 SCO Update at 3, Dkt. 1139.

21 No. 2:09-CV-186 TC DN, 2012 WL 192792, at *6 (D. Utah Jan. 23, 2012); see also IBM Opp'n at 27-28, Dkt. 1043.

22 See Lakes Gas Co., 875 F. Supp. 2d at 1311 (denying spoliation sanctions because the defendant failed to "pursue all avenues of discovery that might have helped mitigate any loss of relevant evidence"); see also IBM Opp'n at 33, Dkt. 1043.

23 Wood v. Milyard, 132 S. Ct. 1826, 1835 (2012); see also Watkins v. Ford, 304 P.3d 841, 849 n.5 (Utah 2013).

24 See, e.g., Creative Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1077 (10th Cir. 2009) (finding a waiver of the right to a jury trial through a stipulation).

25 IBM Opp'n at 36, Dkt. 1043.

26 See In re Actos (Pioglitazone) Prods. Liab. Litig., No. 6:11-md-2299, 2014 WL 2872299, at *12 (W.D. La. June 23, 2014) ("[S]poliation of evidence . . . is an evidentiary question grounded within a discovery dispute."); Gutman v. Klein, No. 03-Civ-1570 (BMC) (RML), 2010 WL 4916722, at *1 (E.D.N.Y. Nov. 24, 2010) (employing the phrase "spoliation discovery dispute").



DATED this 5th 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

2015-08-26 04:37 »

Okay, the Groklaw article I was speaking of is here:

http://www.groklaw.net/article.php?stor ... 5205100475

It's Evan Ivie's Declaration in Support of SCO's Motion for Reconsideration by the Magistrate Court of the Order Denying SCO's Motion for Relief for IBM's Spoliation. There's lots of good things to say about the article, PJ give her thoughts, you get to see the declaration, PJ got a programmer to share some of his thoughts (they're the blue text mixed in the declaration) and you get to see the text of the January 19th, 2007 hearing on SCO's original motion regarding spoliation allegedly done.

I was looking through that transcript of the hearing and just to give you an idea of how ridiculous this all is:

Your Honor, you are precisely right, they didn't make any effort to look at the information that we provided them to show that they were prejudiced. But, Your Honor, I submit that SCO isn't really interested in the evidence. What SCO is really interested in is having you make a ruling that will get them to a point that the evidence can't.

Your Honor, with respect to Paul McKenney, I will be brief because this one is truly silly. Tab six reproduces the disputed Paul McKenney testimony. As I say, I won't read through it. You see that the discussion here is all about overriding drafts and source code. Just so Your Honor can appreciate the true gravity of what it is we're talking about here, Dr. McKenney, when he writes source code, will write it and then he runs it through a little program to check to make sure it doesn't have obvious mistakes, letters or numbers transposed, things like that. If it does, then he fixes it. He doesn't create a whole new version of it, he fixes the change. It is, Your Honor, the equivalent of correcting a spelling error. It is no different than before I file a brief or before I send a brief to the printer, I run the spell-check and I correct any spelling mistakes. So we're talking here, when we are talking about overriding, talking about correcting spelling mistakes. And since no molehill isn't worth trying to dress up as a mountain, we've now got lengthy testimony and all kinds of argument about what was going on here. I won't read through the testimony, Your Honor, you can do that should you deem it necessary to do so, but what I will say, it is crystal clear, both from the testimony itself and from what Dr. McKenney has submitted in the form of his declaration, that he misheard the question. Perhaps we'll find out when a redacted 1151 is released.

And, Your Honor, if you turn to the second page of that, I direct your attention to a portion of that that appears emboldened. And, Your Honor, this doesn't appear in the written transcript of the deposition. This, however, is recorded in the audio version of the transcript, which I have included in the event the Court wishes to look at it. What you can see is that after Dr. McKenney answers these series of questions, SCO's lawyer, during the deposition, realizes that there is an inconsistency, realizes that there is some inconsistency in what the witness has just said.

What does SCO's lawyer taking the deposition do? He asks Dr. McKenney two follow-up questions. Those two follow-up questions are absolutely fatal to the arguments that SCO is making about the destruction of evidence. SCO's lawyers asked the follow-up that was necessary to clarify Dr. McKenney's deposition, and they did that, Your Honor, with full knowledge that there was some confusion in the testimony that had just occurred


I'm not saying anything further regarding that hearing, read it for yourself if you desire.

Perhaps I'm being thick, but I can't see where the Courts gave exact reason(s) for saying this is moot. I'm thinking the snippet from Minute Order (1150) has a typo. Here's the original snippet:

Court found the motion to reconsider [986] moot based on the discussion with counsel that SCO relies on its objection [995] . Court instructed counsel that its review of the magistrates ruling underlying the objections [995] will be on the existing record and not on any new record.


That sound to me as though the motion is considered moot because SCO relies on 995 in said motion. I suspect that it should actually read:

Court found the motion to reconsider [986] moot. Based on the discussion with counsel that SCO relies on its objection [995], Court instructed counsel that its review of the magistrates ruling underlying the objections [995] will be on the existing record and not on any new record.


I'm thinking that IBM was probably concerned that the redacted bits would appear in other records. I could be totally wrong.

Linux

2015-08-26 23:38 »

Lots of text but much enjoyable reading when I am on my bed. Keep it coming!

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

2015-08-27 02:50 »

Linux wrote:Lots of text but much enjoyable reading when I am on my bed. Keep it coming!


Wow! Someone's reading this. That's motivation! :thumbup:

Okay, let's continue with 1148:

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 ITS CLAIM FOR COPYRIGHT
INFRINGEMENT (IBM'S EIGHTH
COUNTERCLAIM)

Case No. 2:03-cv-00294 DN

District Judge David Nuffer

----------



TABLE OF CONTENTS

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

I. SCO'S USE WAS WITHIN THE SCOPE OF THE GPL..........1

II. SCO DID NOT BREACH THE GPL..........1

III. SCO DID NOT REPUDIATE THE GPL..........3

IV. ALL OF SCO'S ACTIONS WERE NON-INFRINGING...........4

V. IBM IS NOT ENTITLED TO A PERMANENT INJUNCTION ..........5



TABLE OF AUTHORITIES

Cases

Davis v. Blige, 505 F.3d 90 (2d Cir. 2007).......... 2, 4

Edgenet, Inc. v. Home Depot U.S.A., Inc., No. 09-CV-747, 2010 WL 148389 (E.D. Wis. Jan. 12, 2010).......... 3

ELM, Inc. v. M.T. Enters., Inc., 968 P.2d 861 (Utah Ct. App. 1998)............ 1

Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222 (10th Cir. 2007).......... 5

Graham v. James, 144 F.3d 229 (2d Cir. 1998).......... 1

Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749 (11th Cir.1997).......... 3

Klein-Becker USA, LLC v. Englert, No. 2:06-CV-378 TS, 2011 WL 147893 (D. Utah Jan. 18, 2011).......... 5

Latour v. Columbia Univ., 12 F. Supp. 3d 658 (S.D.N.Y. 2014).......... 1

Southwest Stainless, LP v. Sappington, 582 F.3d 1176 (10th Cir. 2009).......... 5

Stommel v. LNV Corp., No. 2:13CV821DAK, 2015 WL 417883 (D. Utah Jan. 30, 2015).......... 5

Sycamore Family LLC v. Earthgrains Baking Cos., Inc., No. 2:13-CV-00639-DN, 2014 WL 7261769 (D. Utah Dec. 18, 2014).......... 1

Walker v. Shasta Minerals & Chem. Co., 352 F.2d 634 (10th Cir. 1965).......... 3



I. SCO'S USE WAS WITHIN THE SCOPE OF THE GPL

Recent case law makes clear: "A license is a complete defense to a claim for copyright infringement. 'A copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement' and may sue only for breach of contract."1 As to the works that form the basis of IBM's copyright claim, "IBM granted SCO and others a non-exclusive license to these copyrighted contributions on the terms set out in the GPL."2 IBM's copyright claim should therefore be dismissed.

II. SCO DID NOT BREACH THE GPL

Recent case law confirms this long-standing rule: "Utilizing ordinary rules of contract construction, if a contract's terms are clear and unambiguous, the court must construe the writing according to its plain and ordinary meaning."3 The first sentence of the GPL's "Terms and Conditions for Copying, Distribution and Modification" is clear and unambiguous: "This License applies 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."4 IBM has conceded this point in its pleading: "The GPL applies to any program whose authors commit to using it."5 Critically, IBM does not dispute that "Novell had posted no copyright notice"6 in Linux. IBM's claims that SCO breached the GPL by licensing or otherwise restricting UNIX code that had been inserted into Linux therefore must fail because the GPL by its terms did not apply to the UNIX code at issue.

The law student note IBM relies on elsewhere in its briefing does not remotely say otherwise. IBM quotes the irrelevant, uncontroversial statement that code subject to the GPL does lose that protection simply because it is combined with code not subject to the GPL: "To ensure that GPL-licensed software remains 'free,' the license requires that any GPL software mixed with non-GPL software be subject to the terms of the GPL."7 The question at issue in this case is the converse: whether the license requires that non-GPL software mixed with GPL software somehow becomes subject to the terms of the GPL. Under the clear and unambiguousterms of the GPL, such non-GPL software is not covered by the GPL, nor could it be, since that would mean that a copyright holder of proprietary code could have its rights effectively stripped by any interloper who wrongfully dumped the proprietary code into an open-source software program.8

In asserting that "SCO breached the GPL in its attempts to license Linux,"9 IBM contradicts itself. That is, in order to argue that SCO did anything other than license certain UNIX code that was not subject to the GPL, IBM pretends that in licensing the UNIX code only, SCO was licensing other parts of Linux. But IBM has repeatedly conceded that Linux is an amalgam, not a monolith - indeed, IBM emphasizes that its claims are for "infringement for sixteen individual works"10 that were contributed to Linux. IBM made the same point in its original briefing: "IBM does not allege infringement of Linux as a whole; IBM alleged and has established infringement of sixteen indisputably original works on which IBM holds the copyright."11 The fallacy of IBM's position is apparent from the clear and unambiguous language of the GPL, which is fatal to IBM's claim.12

III. SCO DID NOT REPUDIATE THE GPL

IBM's theory that SCO "repudiated" the GPL follows a simple two-step strategy:

     STEP 1: IBM unreasonably interpreted the GPL to preclude SCO from taking goodfaith measures to protect its rights to certain code in Linux - even though that code was not made subject to the GPL by any copyright holder.13

     STEP 2: When SCO disputed IBM's unreasonable interpretation, IBM wrongly claimed that SCO has "repudiated" the GPL.

The claim is meritless for three independent reasons. First, IBM's attempts to show "repudiation" in reality show nothing more than SCO's meritorious disagreement with IBM as to the scope and application of the GPL, and the evidence shows that SCO has continued to honorthe terms of the GPL as a valid license.14 Second, even if SCO's interpretation of the GPL were erroneous, SCO's statements would not constitute "repudiation" of the GPL.15 Third, IBM's repudiation theory relies on SCO's statements made "[i]n this litigation,"16 and recent case law confirms that IBM cannot claim retroactive breach, termination, and infringement.17


IV. ALL OF SCO'S ACTIONS WERE NON-INFRINGING

Because SCO's copying and distribution of IBM's works was pursuant to and consistent with a valid non-exclusive license under the GPL, all of SCO's actions were non-infringing. "A valid license . . . immunizes the licensee from a charge of copyright infringement, provided that the licensee uses the copyright as agreed with the licensor."18 IBM's cited case in which a court found infringement where the defendant copied code "without the owner's authorization,"19 has no bearing here, since the GPL authorized SCO's copying and distribution of IBM's works in Linux.

IBM wrongly statesthat SCO has raised a defense that "it 'had to' make infringing copies" of IBM's works "to fulfill its own contractual obligations to its customers."20 This is a classic straw man. SCO never advanced that argument, and IBM cites only its own earlier briefing to evidence the argument. SCO has defended against IBM's infringement claim by demonstrating that none of SCO's actions wasin breach of the GPL, and none of SCO's actions was infringing. When SCO realized that its UNIX source code had been placed in Linux, SCO "suspended its distribution of Linux products for business reasons" because SCO wanted to "avoid the incongruity of perpetuating the unauthorized distribution of its proprietary technology that, unbeknown to SCO, IBM and others had contributed to Linux."21 SCO's suspension of its distribution was not based on any breach or repudiation of the GPL. And SCO's business decision to honor existing "obligations to users who had already purchased SCO's Linux products,"22 by making limited distributions and providing limited access to some customers, also was not infringing. SCO continued to act pursuant to and consistent with the GPL.

IBM continues to state incorrectly that SCO modified IBM's copyrighted material. As SCO made clear in its original briefing, SCO "made no modifications or additions to the Linux kernel, including the [IBM] works."23

V. IBM IS NOT ENTITLED TO A PERMANENT INJUNCTION

IBM states in conclusory fashion that its claim for injunctive relief is not moot. Recent case law confirms the well-established rule that the party seeking a permanent injunction bears the burden of proving all required factors, including "irreparable harm unless the injunction is issued."24 Recognizing that it cannot meet that burden, IBM improperly seeks to shift the burden to SCO, arguing that "SCO has not proven that the challenged conduct will not resume."25 IBM's proposition not only turns well-established law on its head, but also fails to addressthe fact - raised in SCO's earlier supplemental briefing - that "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."26

Moreover, IBM does not provide any basis for its purported "need for IBM to protect itself against further infringement through an injunction," particularly where the works at issue are, by IBM's own account, "offer[ed] to all (the 'General Public) [through a] royalty free license to use, copy, modify, and distribute."27



1 Latour v. Columbia Univ., 12 F. Supp. 3d 658, 661-62 (S.D.N.Y. 2014)(quoting Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998)).

2 IBM's Second Am. Countercls. ¶ 110, Docket No. 127, filed Mar. 29, 2004.

3 Sycamore Family LLC v. Earthgrains Baking Cos., Inc., No. 2:13-CV-00639-DN, 2014 WL 7261769, at *4 n.41 (D. Utah Dec. 18, 2014)(quoting ELM, Inc. v. M.T. Enters., Inc., 968 P.2d 861, 863 (Utah Ct. App. 1998)).

4 GPL Section 0 (Ex. 128 to T. Shaughnessy Decl. (Sept. 25, 2006)).

5 IBM Second Am. Countercls. ¶ 26, Docket No. 127, filed Mar. 29, 2004 (emphasis added).

6 SCO Mem. of Add'l Authority re Summ. J. on IBM Sixth, Seventh, & Eighth Countercls., at 3, Docket No. 1138, filed May 22, 2015.

7 IBM Case Law Update re: Opp'n to SCO's Mot. Summ. J. on IBM's Sixth, Seventh, & Eighth Countercls. at 2-3 n.13, Docket No. 1146, filed June 5, 2015 (quoting R. Michael Azzi, Note, CPR: How Jacobsen v. Katzer Resuscitated the Open Source Movement, 2010 U.ILL.L.REV. 1271, 1280-81).

8 Davis v. Blige, 505 F.3d 90, 106 (2d Cir. 2007) ("[O]ne who grants a license without holding any interest in the copyright at the time the license is granted . . . purports to exercise a right he does not - and cannot -possess.").

9 IBM Case Law Update at 2, Docket No. 1143, filed June 3, 2015.

10 Id. (emphasis added).

11 IBM Reply Brief at 4, Docket No. 945, filed Jan. 12, 2007 (emphasis added).

12 See also SCO Opp'n Brief at 23-24, Docket No. 862, filed Nov. 11, 2006 (discussing additional reasons why IBM's breach theory fails).

13 See, e.g., IBM Second Am. Countercls. ¶ 29, Docket No. 127, filed Mar. 29, 2004 ("By distributing Linux products under the GPL, SCO agreed, among other things, not to assert - indeed, it is prohibited from asserting - certain proprietary rights over any programs distributed by SCO under the terms of the GPL.") (emphasis added).

14 See SCO Opp'n Brief at 21-23, Docket No. 862, filed Nov. 11, 2006.

15 Walker v. Shasta Minerals & Chem. Co., 352 F.2d 634, 638 (10th Cir. 1965)("[A]n offer to perform made in accordance with the promisor's interpretation of the contract, if made in good faith although it may be erroneous, is not such a clear refusal to perform as to constitute an anticipatory breach.").

16 IBM Brief at 12 ¶ 42, Docket No. 801, filed Sept. 25, 2006.

17 See, e.g., Edgenet, Inc. v. Home Depot U.S.A., Inc., No. 09-CV-747, 2010 WL 148389, at *10 (E.D. Wis. Jan. 12, 2010)(breach of license "would do no more than entitle [plaintiff] to rescind the agreement and revoke its permission") (quoting Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 753 (11th Cir.1997)), aff'd, 658 F.3d 662 (7th Cir. 2011); see also SCO Opp'n Brief at 25-26, Docket No. 862, filed Nov. 11, 2006.

18 Davis v. Blige, 505 F.3d at 100 .

19 IBM Case Law Update at 2-3, Docket No. 1143, filed June 3, 2015 (quoting Engenium Solutions, Inc. v. Symphonic Techs., Inc., 924 F. Supp. 2d 757, 789 (S.D. Tex. 2013)).

20 IBM Case Law Update at 4, Docket No. 1143, filed June 3, 2015 (citing IBM Reply at 10-11, Dkt. 945).

21 SCO Opp'n Brief at 13, ¶ 47, Docket No. 862, filed Nov. 11, 2006.

22 Id. at ¶ 37.

23 Id. at 4, ¶ 7.

24 See, e.g., Stommel v. LNV Corp., No. 2:13CV821DAK, 2015 WL 417883, at *8 (D. Utah Jan. 30, 2015) ("A party requesting a permanent injunction bears the burden . . . .") (emphasis added) (quoting Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226 (10th Cir. 2007)); Klein-Becker USA, LLC v. Englert, No. 2:06-CV-378 TS, 2011 WL 147893, at *17 (D. Utah Jan. 18, 2011)("[F]or a party to obtain a permanent injunction, it must prove . . . irreparable harm unless the injunction is issued . . . .") (emphasis added) (quoting Southwest Stainless, LP v. Sappington, 582 F.3d 1176, 1191 (10th Cir. 2009)).

25 IBM Case Law Update at 5, Docket No. 1143, filed June 3, 2015.

26 SCO Mem. of Add'l Authority re Summ. J. on IBM Sixth, Seventh, & Eighth Countercls., at 5, Docket No. 1138, filed May 22, 2015.

27 IBM Brief at 3, ¶ 8, Docket No. 801, filed Sept. 25, 2006



DATED this 8th 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.



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