...Xinuos Inc. has agreed to drop antitrust claims against IBM Corp. and its subsidiary Red Hat Inc. but will preserve its right to appeal the court’s grant of summary judgment to IBM on its copyright claim.

Software company Xinuos Inc. has agreed to drop antitrust claims against IBM Corp. and its subsidiary Red Hat Inc. but will preserve its right to appeal the court’s grant of summary judgment to IBM on its copyright claim.

The parties filed a stipulation of voluntary dismissal of the noncopyright claims in the US District Court for the Southern District of New York, asking the court to close the case and enter final judgment.

Xinuos, Inc., Plaintiff,
v.
IBM Corp. et al., Defendants.
No. 22-cv-09777-CS-VR.

United States District Court, S.D. New York.
April 1, 2025.

ORDER

VICTORIA REZNIK, Magistrate Judge.

Defendants filed two letter motions requesting leave to file documents under seal concerning two separate discovery disputes. Although the Court resolved the underlying discovery disputes, the sealing requests remain pending. For the reasons described below, both motions to seal are GRANTED.[1]

BACKGROUND

On January 17, 2025, Plaintiff filed a renewed motion seeking to compel Defendants to produce Defendant IBM's source code. (ECF No. 225). When Defendants timely opposed the motion, (ECF No. 234), they contemporaneously moved for leave to file under seal one exhibit annexed to their opposition papers. (ECF No. 231). The exhibit was a series of slides from an IBM presentation given internally at the company that discussed testing requirements, marketing strategies, and product release schedules, among other things, for some of IBM's server operating system products. (ECF Nos. 232-1, 233-1).[2]

While the source code dispute was pending, Defendants moved separately to compel Plaintiff to supplement its responses to three of Defendants' interrogatories, (ECF No. 227), and submitted ten exhibits in support of that motion. (ECF No. 228).[3] Defendants then moved contemporaneously for leave to file under seal six of those ten exhibits and to redact portions of their motion papers. (ECF No. 226). Specifically, Defendants sought to seal one exhibit containing an unredacted letter from Defendants to Plaintiff detailing the deficiencies in Plaintiff's interrogatory responses (ECF No. 230-4), three exhibits containing Plaintiff's responses to Defendants' interrogatories (ECF Nos. 230-5, 7-8), one containing a portion of private notes taken by one of Plaintiff's employees (ECF No. 230-9), and one with internal correspondence among Plaintiff's employees. (ECF No. 230-10).[4] The redacted portions of Defendants' deficiency letter (ECF Nos. 228-4; 230-4) and their motion papers (ECF Nos. 227; 229) refer to details provided by Plaintiff in response to Defendants' interrogatories, which included information about Plaintiff's purported customers and revenue.

By order entered February 28, 2025, Defendants' motion to compel was granted in part and denied in part, and Plaintiff was directed to provide supplemental responses to the three interrogatories from Defendants. (ECF No. 241). At a discovery conference on March 7, 2025, Plaintiff's motion to compel was granted to the extent that Defendants would produce IBM's source code after the parties met and conferred to generate a "tailored proposal for the production." (ECF No. 243). But Defendants' motions for leave to file documents under seal are still pending. (ECF Nos. 226, 231).

DISCUSSION

"Under both the common law and the First Amendment, there is a strong presumption of public access to judicial documents." In re New York Times, 799 F. App'x 62, 65 (2d Cir. 2020). To overcome that presumption, and allow for the continuous, indefinite sealing of a document, a court must make specific findings that "sealing is necessary to preserve higher values and only if the sealing order is narrowly tailored to achieve that aim." Brown v. Maxwell, 929 F.3d 41, 47 (2d Cir. 2019) (quotation marks and citations omitted). Courts in this District have repeatedly permitted parties to seal or redact commercially sensitive information to protect a company's financial information and its competitive interests. See Rubik's Brand Ltd. v. Flambeau, Inc., No. 17-CV-6559 (PGG) (KHP), 2021 WL 1085338, at *1 (S.D.N.Y. Mar. 22, 2021) (granting motion to seal because documents contained confidential information related to marketing strategies and specific terms of contractual agreements, which could harm party's ability to compete if disclosed); Graczyk v. Verizon Commc'ns, Inc., No. 18 Civ. 6465 (PGG), 2020 WL 1435031, at *9 (S.D.N.Y. Mar. 24, 2020) (similar).

A review of the documents submitted by Defendants for both motions reveals that they contain commercially sensitive information that could harm Defendants and Plaintiff if disclosed. ECF Nos. 230-5, 7, and 8 disclose Plaintiff's customers and revenue. The unredacted portions of ECF Nos. 229 and 230-4, which were redacted in ECF Nos. 227 and 228-4, respectively, then refer to those customers and revenue specifically. ECF No. 230-9 discloses private notes from Plaintiff's employee about Plaintiff's assessment of its competitors and its own business strategies. ECF No. 230-10 discloses internal correspondence among Plaintiff's employees regarding their business strategies. Lastly, ECF No. 233-1 contains information about IBM's internal testing requirements, marketing strategies, and product release scheduling. All of these documents contain confidential and commercially sensitive business and marketing information that could harm each of the parties' competitive standing if publicly disclosed.

Based on this Court's review of the filings, sealing the unredacted versions of Defendants' initial letter motion to compel and their deficiency letter are justified, sealing the documents highlighted by Defendants is similarly justified, and sealing the documents in their entirety is the most narrowly tailored means of sealing them. Thus, this Court finds that ECF Nos. 229, 230-4, 5, 7, 8, 9, 10, and 233-1 should remain sealed.

CONCLUSION

For the foregoing reasons, Defendants' motions to seal are GRANTED. The Clerk of Court is respectfully directed to maintain ECF Nos. 229, 230-4, 230-5, 230-7, 230-8, 230-9, 230-10, and 233-1 under seal and only viewable to "selected parties." Finally, the Clerk of Court is respectfully directed to close out the gavels associated with ECF Nos. 226, 229, and 231.

SO ORDERED.

[1] The Court recognizes that the parties recently filed a stipulation of dismissal of this case. But these outstanding motions must still be addressed, even if largely viewed as a housekeeping matter.

[2] ECF No. 232-1 contains a placeholder page indicating that the corresponding document was filed under seal. ECF No. 233-1 contains the actual document.

[3] The ten exhibits contained within ECF No. 228 are labelled ECF Nos. 228-1 through 228-10. But ECF No. 228-4 contains redactions and ECF Nos. 228-5, 7, 8, 9, and 10 all contain a placeholder page indicating that the respective document was filed under seal.

[4] ECF No. 230 contains all ten exhibits contained in ECF No. 228, but ECF Nos. 230-4, 5, 7, 8, 9, and 10 are the actual documents Defendants sought to seal.

ix. all of Seller’s claims, causes of action and other legal or equitable rights and remedies
(A) against Buyer with respect to the transactions contemplated by this Agreement and
(B) relating to all rights and interests in all litigation claims pending or that may be
asserted in the future, against International Business Machines Corporation, Novell, Inc.,
SUSE Linux GmbH or others, and (C) relating to every claim of any nature whatsoever,
known or unknown that has been or may be asserted against RedHat, Inc. or others
relating to or arising from all licensing, covenant not to sue rights, releases or other
claims relating to any allegations that Linux violates SCO’s Unix or UnixWare
intellectual property, contract or other rights;

09/09/2021 1509 Objection of Xinuos, Inc., to the Motion of the Chapter 7 Trustee Pursuant to Fed. Bankr. P. 9019 for Entry of an Order Approving the Settlement and Release Agreement By and Between the Trustee and International Business Machines Corporation (related document(s)[1501]) Filed by Xinuos, Inc. (Attachments: # (1) Certificate of Service) (Palacio, Ricardo) (Attachments: # (1) Certificate of Service) (Schorling, William)

09/09/2021 1511 Objection TO THE MOTION OF THE CHAPTER 7 TRUSTEE PURSUANT TO FED. R. BANKR. P. 9019 FOR ENTRY OF AN ORDER APPROVING THE SETTLEMENT AND RELEASE AGREEMENT BY AND BETWEEN THE TRUSTEE AND INTERNATIONAL BUSINESS MACHINES CORPORATION (related document(s)[1501]) Filed by Darl McBride (Attachments: # (1) Certificate of Service) (Schorling, William)

d. Trustee’s Release. In consideration of IBM’s obligations and releases under
this Settlement Agreement, the Trustee, for the Debtors’ bankruptcy estates,
its agents, attorneys, employees, officers, directors, shareholders, assigns,
and affiliates, hereby irrevocably and unconditionally releases and discharges
IBM, its past and present officers, directors, shareholders, agents, insurers
and reinsurers, attorneys, predecessors, affiliates and employees, and each of
their respective successors, assigns, heirs and representatives (collectively,
the “IBM Released Persons”), from any and all claims, rights, demands,
injuries, debts, liabilities, omissions, accounts, contracts, agreements, causes
of action, suits and damages whatsoever, in law or equity, and whether based
on contract, tort, or otherwise, known or unknown, suspected or unsuspected,
of every kind and nature, which the Debtors’ bankruptcy estates, or its,
affiliates, successors, assigns, heirs, and representatives at any time had, now
have, or hereafter can or may have against IBM for, upon or by reason of any
matter, cause or thing whatsoever, from the beginning of the world to the date
of this release, concerning, related to, arising out of, or arising from the Utah
Litigation, the Proof of Claim or IBM’s relationship with the Debtors or their
estates (or their predecessors), Project Monterey, or IBM’s relationship with
the Debtors or their estates. In an avoidance of doubt, the foregoing includes
causes of action and other legal or equitable rights and remedies relating to
(1) all rights and interests in all litigation claims pending or that may be
asserted in the future against IBM and Red Hat, and (2) any allegations that
Linux violates SCO’s Unix or Unixware intellectual property, contract or
other rights, which, pursuant to the Asset Purchase Order and the Bankruptcy
Court’s order authorizing the same, the Trustee has the sole authority to bring
against IBM, Red Hat, or others. Notwithstanding the foregoing, this release
does not release IBM from its representations and obligations under this
Settlement Agreement.

So ... what do they propose to sell to unXis for this? I see that they will get all post-1995 copyrights. Also contract rights:

(a) Pursuant to the Sale Order, and subject to the terms and conditions of this Agreement, Seller shall sell, transfer, assign and convey to Buyer, free and clear of any and all Encumbrances and Retained Obligations, and Buyer shall, as of the Closing Date, acquire and purchase, free and clear of any and all Encumbrances and Retained Obligations, all of Seller’s right, title and interest in and to all of the assets of the Business, except for the Excluded Assets set forth in Schedule 2.1(c) hereof (the “Acquired Assets”), including but not limited to, the following:

(i) All of Seller’s assets (tangible or intangible), including those assets set forth on Schedule 2.1(a), all Intellectual Property, including all copyrights developed after 1995, customer lists, purchase orders, customer reference manuals, databases and goodwill related thereto;

(ii) The Assumed Contracts, whether or not listed on Schedule 2.1(a);

(iii) Seller’s Contract Rights under the Assumed Contracts and all end user license agreements and maintenance contracts between Seller and customers relating to the Acquired Assets, excluding Contract Rights under (A) this Agreement and any other Contracts entered into by Seller with Buyer in connection with the transactions contemplated by this Agreement; (B) any Assumed Contracts requiring a Consent that is not obtained on or before the Closing Date or is not otherwise assigned to Buyer pursuant to the Sale Order (“Non-Assignable Contract(s)”) and (C) any and all employment agreements, labor contracts, stock option plans, retirement plans, Seller’s 401(k) plan, pension plans, agreements relating to the voting of shares in the company, agreements with employees, officers and/or shareholders and any and all other agreements relating to or otherwise concerning the foregoing.

(iv) Seller’s computer media, sales, advertising and marketing materials, catalogues and manuals, billing records, correspondence, data (only to the extent that such data that contains personally identifiable information that may be lawfully transferred), test software, software tools, product documentation, internal documentation, work in progress relating to the software products listed on Schedule 2.1(a), and files relating to the Acquired Assets (only to the extent that any such materials or files exist), excluding (A) Seller’s minute books, membership interest books and related organizational documents and (B) Seller’s files, books and records relating to the Excluded Assets or to Seller’s Obligations not included in the Assumed Obligations;

(v) All assignable and transferable Permits possessed by Seller necessary for the lawful ownership and operation of the Acquired Assets;

(vi) All rights and claims of Seller against any third parties, directly arising from or directly related to the Acquired Assets (which, for the avoidance of doubt, shall not include any rights and claims of Seller against any third parties, directly arising from or directly related to the Excluded Assets, any rights and claims by Seller against Buyer relating to this Agreement or any agreement entered into pursuant hereto, or any rights, claims or causes of action related to Novell, Inc., International Business Machines Corporation, Red Hat, Inc. and SUSE Linux GmbH or other similar claims); and

(vii) Subject to Section 6.4, all rights and interests of Seller in each of the Purchased Subsidiaries, provided that any intercompany receivables due from Seller to the Purchased Subsidiaries listed on Schedule 2.1(a)(vii) shall be waived at Closing.

But they don't get this:

(vi) All rights and claims of Seller against any third parties, directly arising from or directly related to the Acquired Assets (which, for the avoidance of doubt, shall not include any rights and claims of Seller against any third parties, directly arising from or directly related to the Excluded Assets, any rights and claims by Seller against Buyer relating to this Agreement or any agreement entered into pursuant hereto, or any rights, claims or causes of action related to Novell, Inc., International Business Machines Corporation, Red Hat, Inc. and SUSE Linux GmbH or other similar claims); and ...

(c) Excluded Assets. Notwithstanding anything to the contrary contained in Section 2.1(a) or elsewhere in this Agreement, the assets of Seller set forth in Schedule 2.1(c) (collectively, the “Excluded Assets”) are not part of the transactions contemplated hereunder, are excluded from the Acquired Assets and shall remain the property of Seller after the Closing.

So they can't interfere in any of the extant litigation. But they can sue the rest of SCO's old customers, I would think, if they can find some post-1995 copyright they can pretend someone somewhere stored on some old server in a closet no one has used for so long there are cobwebs hanging on the door knob.

Here are the "Acquired Assets" as per Schedule 2.1(c):

ACQUIRED ASSETS

(a) UnixWare Operating System Products

• SCO UnixWare 7 Release 7.1.4
• SCO UnixWare 7 Release 7.1.3
• SCO UnixWare 7 Release 7.1.2
• SCO UnixWare 7 LKP

(b) OpenServer Operating System Products

• SCO OpenServer Release 6.0
• SCO OpenServer Release 5.x (including all prior versions and releases)

(c) Layered Operating System Products

• SCO UnixWare and OpenServer Development Kits (all version)
• SCO Office
• SCO Open UNIX Development Kit
• SCO UnixWare 7 Online Data Manager
• SCO UnixWare 7 Disk Mirroring
• SCO UnixWare “OS Compatible” Requirements
• SCO UnixWare OpenServer Kernel Personality (OKP)

Trademarks ...

U. S. Copyright Registrations:

The following copyright registrations, except to the extent incorporating any Excluded Assets:

Title Owner - Reg. No.- Reg. Date - Status
SCO OpenServer : release 5.0.5 - SCO Group, Inc. - TX 6-008-305 - 8/31/2004 - Registered

UNIX system V : release 3.0 - The SCO Group, Inc. - TX 5-750-270 - 7/7/2003 - Registered
UNIX system V : release 3.1 - The SCO Group, Inc. - TX 5-750-269 - 7/7/2003 - Registered
UNIX system V : release 3.2 - The SCO Group, Inc.- TX 5-750-271 - 7/7/2003 - Registered
UNIX system V : release 3.2/386 - The SCO Group, Inc. - TX 5-750-268 - 7/7/2003 - Registered
UNIX system V : release 4.0 - The SCO Group, Inc. - TX 5-776-217 - 7/16/2003 - Registered
UNIX system V : release 4.1 - The SCO Group, Inc. - TX 5-762-234 - 7/3/2003 - Registered
UNIX system V, release 4.1ES - The SCO Group, Inc. - TX 5-705-356 - 6/30/2003 - Registered
UNIX system V : release 4.2 - The SCO Group, Inc. - TX 5-762-235 - 7/3/2003 - Registered
UNIX System V release 4.2MP - The SCO Group, Inc. - TX 5-972-097 - 6/29/2004 - Registered
UnixWare 7.1.3 - SCO Group, Inc. - TX 5-787-679 - 6/11/2003- Registered

Woah. These are not post-1995 copyrights, except for the Unixware one. This is the list of copyrights that SCO tried to register in 2003, but which Novell owns, as per the jury trial decision. Wow. For example, here's the first one [PDF] on the list. Notice that the work was completed in 1986. They do say that some on the list might be excluded assets, but if SCO were to win on appeal, and get these copyrights, unXis would have them?

Here are the excluded assets:

EXCLUDED ASSETS

i. all rights of Seller under this Agreement and all agreements contemplated hereby;

ii. all of Seller’s rights and obligations with respect to the SVRX Licenses (as defined in the Santa Cruz-Novell APA);

iii. the SCO Group 401(k) plan;

iv. all of Seller’s stock-based benefit plans, including stock option plans and the stock purchase plan;

v. the Seller’s directors and officers liability insurance policy;

vi. (a) cash and cash equivalents and marketable securities (including cash in transit and cash and marketable securities in lock boxes or on deposit with or otherwise held by any financial institution); (b) accounts receivable (including accounts receivable for services rendered through the Closing Date with respect to which invoices are mailed after the Closing Date) and other trade receivables; (c) all prepaid premiums and other prepayments and deposits with respect to Seller’s Employee Benefit Plans (if any), the Seller’s insurance policies, and any other Contracts not purchased by the Buyer; and (d) all cash held by the Purchased Subsidiaries on the Closing Date;

vii. All Receivables related to the Business and the Acquired Assets as of the Closing Date, the proceeds thereof and any security therefor;

viii. all rights of Seller in the Licensed Properties;

ix. all of Seller’s claims, causes of action and other legal or equitable rights and remedies
(A) against Buy
(B) relating to all rights and interests in all litigation claims pending or that may be asserted in the future, against International Business Machines Corporation, Novell, Inc., SUSE Linux GmbH or others, and
(C) relating to every claim of any nature whatsoever, known or unknown that has been or may be asserted against RedHat, Inc. or others relating to or arising from all licensing, covenant not to sue rights, releases or other claims relating to any allegations that Linux violates SCO’s Unix or UnixWare intellectual property, contract or other rights;

x. Seller’s historical financial and accounting records, and the accounting systems of Seller; and

xi. all documents or other data related to the litigation matters listed in Schedule 4.5 or referenced in Section 2.1(a)(vi) of the Agreement, including all litigation files, pleadings, motion practice, discovery, depositions, expert and other reports, and exhibits, backup material and the computer equipment, hard drives and databases utilized by Seller’s officers, and other materials related to or utilized in connection with such litigation matters.

Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery on a worldwide basis, providing legal financing across markets.

Since 1986, Omni Bridgeway has established a record of financing disputes and enforcement proceedings, and 2021 marks numerous anniversaries that reflect decades of delivering results for clients.

Omni Bridgeway Management (USA) LLC" (or one of its affiliates), who, upon completion of due diligence, may be willing to fork out $14.5 million, which is $0.25 million more than what the Trustee is proposing in its settlement agreement, in return for inheriting the steaming pile known as the SCO-IBM Litigation.

The only problem is that the due diligence will likely not be finished by the time of the next hearing. So Darl would like the bankruptcy court to ... delay. We've never heard that before, right?