1 To be Argued by or To be Submitted by

198 Pages·2016·1.55 MB·English

by  Geoffrey Butson

Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 1
Docket No. 16-4040

In the
United States Court of Appeals
for the
Tenth Circuit

THE SCO GROUP, INC., a Delaware corporation,
Plaintiff Counterclaim Defendant-Appellant,
– v. –
INTERNATIONAL BUSINESS MACHINES CORPORATION,
Defendant Counterclaimant-Appellee.
_____________________________
Appeal from a Decision of the United States District Court for the District Of Utah, Salt
Lake City, Case No. 2:03-cv-00294-DN, Honorable David O. Nuffer, U.S. District Judge

SEALED OPENING BRIEF OF PLAINTIFF COUNTERCLAIM
DEFENDANT-APPELLANT
Oral Argument Is Requested

STUART H. SINGER EDWARD NORMAND
BOIES, SCHILLER & FLEXNER LLP JASON C. CYRULNIK
401 East Las Olas Boulevard, Suite 1200 BOIES, SCHILLER & FLEXNER LLP
Ft. Lauderdale, Florida 33301 333 Main Street
[phone] Telephone Armonk, New York 10504
[phone] Facsimile [phone] Telephone
[email protected] [phone] Facsimile
[email protected]
[email protected]

BRENT O. HATCH
MARK F. JAMES
HATCH, JAMES & DODGE, P.C.
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
[phone] Telephone
[phone] Facsimile
[email protected]
[email protected]
Attorneys for Plaintiff Counterclaim Defendant-Appellant
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CORPORATE DISCLOSURE STATEMENT
Appellant, The SCO Group, Inc., is not owned by a parent corporation. No
publicly held corporation owns 10% or more of SCO’s stock. On September 14,
2007, SCO filed a petition for reorganization under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware. On
August 25, 2009, that Bankruptcy Court appointed former United States District
Judge Edward N. Cahn as Chapter 11 Trustee for SCO.
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TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT ......................................................... i
TABLE OF AUTHORITIES .....................................................................................v
STATEMENT OF PRIOR OR RELATED CASES ............................................. viii
GLOSSARY OF TERMS ........................................................................................ ix
JURISDICTIONAL STATEMENT ..........................................................................1
ISSUES ON APPEAL ...............................................................................................1
STATEMENT OF THE CASE ..................................................................................1
PROCEDURAL HISTORY .......................................................................................3
STATEMENT OF FACTS ........................................................................................6
I. SCO’S STRONG UNIX-ON-INTEL PRESENCE AND IBM’S
INCENTIVE TO PARTNER WITH SCO ...................................................... 6
II. PROJECT MONTEREY AND IBM’S SECRET ABANDONMENT OF
PROJECT MONTEREY .................................................................................9
III. THE SHAM RELEASE OF THE PROJECT MONTEREY IA-64
PRODUCT .....................................................................................................13
IV. IBM’S TORTIOUS INTERFERENCE WITH SCO’S BUSINESS
RELATIONS IN THE UNIX-ON-INTEL MARKET ..................................14
V. IBM’S USE OF SCO’S SVR4 IN IBM PRODUCTS ..................................15
VI. IBM’S EFFORTS TO PREVENT SCO FROM ASSERTING
INTELLECTUAL PROPERTY RIGHTS ....................................................16
VII. IBM’S INTERFERENCE WITH SPECIFIC
BUSINESS RELATIONSHIPS ....................................................................19
A. Computer Associates, Oracle, and Intel ..............................................19
ii
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B. Hewlett-Packard ..................................................................................22
SUMMARY OF ARGUMENT ...............................................................................23
STANDARD OF REVIEW .....................................................................................25
A. Summary Judgement ...........................................................................25
B. Leave to Amend ..................................................................................25
ARGUMENT ...........................................................................................................26
I. THE DISTRICT COURT ERRED IN GRANTING IBM’S
MOTION FOR SUMMARY JUDGMENT ON SCO’S
UNFAIR COMPETITION CLAIM ..............................................................26
A. The District Court Misapplied the Independent Tort Doctrine ...........29
B. The District Court Misapprehended IBM’s Duties to SCO ................35
II. THE DISTRICT COURT ERRED IN GRANTING IBM’S
MOTION FOR SUMMARY JUDGMENT ON SCO’S
TORTIOUS INTERFERENCE CLAIMS .....................................................39
A. SCO Has Ample Evidence that IBM Intentionally Interfered with
SCO’s Economic Relationships ..........................................................39
B. SCO’s Claims for Indirect Interference with Potential Customers
Are Actionable ....................................................................................44
C. SCO Has Evidence of the Causal Link Between IBM’s Acts and
SCO’s Injury ........................................................................................45
III. THE DISTRICT COURT ABUSED ITS DISCRETION IN DENYING
SCO’S MOTION FOR LEAVE TO AMEND ..............................................49
A. SCO’s Motion for Leave to Amend Was Timely and Was
Made in Response to IBM’s Belated Disclosure of Documents
Showing Its Infringement ....................................................................51
1. Overview of Initial and Amended Pleadings ............................51
iii
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2. March and April 2004: IBM Discloses Documents for the
First Time that Show It Infringed SCO Copyrights ..................52
3. SCO Promptly Sought Leave to Amend to Add a Claim for
IBM’s Newly Discovered Copyright Infringement, and
Had Good Cause for Its Motion ................................................53
B. The District Court Abused Its Discretion in Artificially Narrowing
IBM’s Counterclaim So It Could Find that SCO’s Proposed
Copyright Claim Would “Expand” the Litigation ..............................56
CONCLUSION ........................................................................................................59
ORAL ARGUMENT STATEMENT ......................................................................60

iv
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TABLE OF AUTHORITIES
Cases
Aegis Ins. Servs., Inc. v. The Port Auth. of N.Y. & N.J.,
435 F. App’x 18 (2d Cir. 2011) ..................................................................... 33, 34
Apple Records, Inc. v. Capitol Records, Inc.,
529 N.Y.S.2d 279 (N.Y. App. Div. 1988) ............................................................33
Astroworks, Inc. v. Astroexhibit, Inc.,
257 F. Supp. 2d 609 (S.D.N.Y. 2003) ........................................................... 26, 36
Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC,
692 F.3d 42 (2d Cir. 2012) ...................................................................................30
Big Vision Private Ltd. v. E.I. du Pont de Nemours & Co.,
610 F. App’x 69 (2d Cir. 2015) ............................................................................28
Bradford v. DANA Corp.,
249 F.3d 807 (8th Cir. 2001) ................................................................................53
Clark-Fitzpatrick, Inc. v. Long Island R.R. Co.,
516 N.E.2d 190 (N.Y. 1987) ......................................................................... 29, 31
Cook Assocs., Inc. v. Warnick,
664 P.2d 1161 (Utah 1983) ..................................................................................47
Culp Constr. Co. v. Buildmart Mall,
795 P.2d 650 (Utah 1990) ....................................................................................34
Dime Sav. Bank of N.Y., FSB v. Skrelja,
642 N.Y.S.2d 84 (N.Y. App. Div. 1996) ....................................................... 30, 32
Doty v. Elias,
733 F.2d 720 (10th Cir. 1984) ..............................................................................38
Duane Reade v. Reva Holding Corp.,
818 N.Y.S.2d 9 (N.Y. App. Div. 2006) ................................................................34
Equilease Corp. v. State Fed. Sav. & Loan Ass’n,
647 F.2d 1069 (10th Cir. 1981) ............................................................................29
v
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Foman v. Davis,
371 U.S. 178 (1962) ...................................................................................... 50, 58
Gull Labs, Inc. v. Diagnostic Tech., Inc.,
695 F. Supp. 1151 (D. Utah 1988) .......................................................................45
Hafen v. Strebeck,
338 F. Supp. 2d 1257 (D. Utah 2004) ..................................................................37
Hammer v. Amazon.com,
No. CV 03-4238, 2005 WL 2467046 (E.D.N.Y. Sept. 27, 2005) ........................29
Hargrave v. Oki Nursery, Inc.,
636 F.2d 897 (2d Cir. 1980) .......................................................................... 29, 31
In re Lone Star Indus., Inc. Concrete R.R. Cross Ties Litig.,
19 F.3d 1429 (Table), 1994 WL 118475 (4th Cir. Apr. 7, 1994) ........................53
In re Sept. 11 Litig.,
640 F. Supp. 2d 323 (S.D.N.Y. 2009) ..................................................................33
In re Shulman Transp. Enters., Inc.,
744 F.2d 293 (2d Cir. 1984) .................................................................................38
Jacobsen v. Deseret Book Co.,
287 F.3d 936 (10th Cir. 2002) ..............................................................................55
Journal Publ’g Co. v. Am. Home Assur. Co.,
771 F. Supp. 632 (S.D.N.Y. 1991) .......................................................................54
Kling v. Hallmark Cards Inc.,
225 F.3d 1030 (9th Cir. 2000) ..............................................................................55
Koch v. Koch Indus.,
127 F.R.D. 206 (D. Kan. 1989) ............................................................................54
LeaseAmerica Corp. v. Eckel,
710 F.2d 1470 (10th Cir. 1983) ............................................................................57
Madison v. Deseret Livestock Co.,
574 F.2d 1027 (10th Cir. 1978) ............................................................................40
vi
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McCorvey v. Utah State Dep’t of Transp.,
868 P.2d 41 (Utah 1993) ......................................................................................46
Meyers v. Waverly Fabrics, Div. of F. Schumacher & Co.,
479 N.E.2d 236 (N.Y. 1985) ......................................................................... 28, 32
Minter v. Prime Equip. Co.,
451 F.3d 1196 (10th Cir. 2006) ............................................................................49
Mullendore v. Sohio Petroleum Co.,
438 F.2d 1099 (10th Cir. 1971) ............................................................................30
Nat’l Aviation Underwriters, Inc. v. Altus Flying Serv., Inc.,
555 F.2d 778 (10th Cir. 1977) ....................................................................... 43, 44
Niagara Mohawk Power Corp. v. Stone & Webster Eng’g Corp.,
No. 88-CV-819, 1992 WL 121726 (N.D.N.Y. May 23, 1992) ............................38
Penato v. George,
383 N.Y.S.2d 900 (N.Y. App. Div. 1976) ............................................................38
Sidney Frank Importing Co. v. Beam Inc.,
998 F. Supp. 2d 193 (S.D.N.Y. 2014) ............................................... 27, 30, 31, 32
Sommer v. Fed. Signal Corp.,
593 N.E.2d 1365 (N.Y. 1992) ..............................................................................34
Steffensen v. Smith’s Mgmt. Corp.,
820 P.2d 482 (Utah Ct. App. 1992) ......................................................................46
Sweetheart Plastics, Inc. v. Detroit Forming, Inc.,
743 F.2d 1039 (4th Cir. 1984) ..............................................................................53
Too, Inc. v. Kohl’s Dep’t Stores, Inc.,
210 F. Supp. 2d 402 (S.D.N.Y. 2002) ..................................................................26
United States v. First Sec. Bank of Utah, N.A.,
208 F.2d 424 (10th Cir. 1953) ..............................................................................46
Zulawski v. Taylor,
815 N.Y.S.2d 496 (Table), 2005 WL 3823584 (N.Y. Sup. Ct. July 1, 2005)......37
vii
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Other Authorities
28 U.S.C. § 1291 ........................................................................................................1
28 U.S.C. §§ 1331 ......................................................................................................1
Fed. R. Civ. P. 16(b) ................................................................................................53

STATEMENT OF PRIOR OR RELATED CASES
The SCO Group, Inc. v. Novell, Inc.,
578 F.3d 1201 (10th Cir. 2009)
The SCO Group, Inc. v. Novell, Inc.,
439 F. App’x 688 (10th Cir. 2011)

viii
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GLOSSARY OF TERMS
IBM International Business Machines Corporation
IP Intellectual Property
ISV Independent Software Vendor
JDA Joint Development Agreement dated October 26, 1998
between IBM and Santa Cruz (A3079-3133)
Novell Novell, Inc.
OEM Original Equipment Manufacturer
PRPQ Programming Request for Price Quote, IBM’s internal name
for a beta test version
SCO The SCO Group, Inc.
SVr3.2 UNIX System V Release 3.2

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