United States Court of Appeals for the Tenth Circuit
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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 (954) 356-0011 Telephone Armonk, New York 10504 (954) 356-0022 Facsimile (914) 749-8200 Telephone [email protected] (914) 749-8300 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 (801) 363-6363 Telephone (801) 363-6666 Facsimile [email protected] [email protected] Attorneys for Plaintiff Counterclaim Defendant-Appellant Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 2 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. Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 3 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 Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 4 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 Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 5 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 Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 6 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 Appellate Case: 16-4040 Document: 01019681211 Date Filed: 08/31/2016 Page: 7 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.,