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Tuesday, September 2, 2003

Solving the Puzzle --
Why Did SCO SayThey Had No
Plans to Sue Linux Companies?

When I first read Sam Varghese's article quoting a SCO spokesman as saying that SCO "never planned to sue any Linux companies, had no concrete plans to sue anyone and also no current plans to take a commercial Linux customer to court", I didn't put it up on Groklaw, because the Huh? factor was too high.

Instead I wrote to him and asked him to confirm that he was sure that was what they had said. He answered that he stood by the story, that he had it in writing, and that the source was Blake Stowell himself; Stowell by then had said his words had been "misinterpreted" or something to that effect.

Naturally, I laughed at SCO's persistent Keystone Kops imitation, and you probably did too. But in the back of my mind, I started mulling it over, and at 4 AM this morning, I suddenly got it, I think. Here's my theory. It all involves a legal issue that I believe will be turning up in the Red Hat case, in SCO's answer. The operative words appear to be "concrete" and "immediate". Why would that be so? And why would it make any difference?

Red Hat is asking the court for, among other things, a declaratory judgment. In order to get one, you must be a party to an actual case or controversy. I wrote about this in a different context back in June, and I'm going to repeat part of it here, to start the discussion off, because you probably don't scour the SCO Archives and therefore probably haven't read it. It also ties in with my theory and has some links that are useful. If you've already read it, just skip the italicized segment:

"Let's imagine the CEO of a company has been going around telling the media that it intends to sue you. Some time goes by, and the threats get louder and more frequent. Yet, the company doesn't file any case but keeps saying it is going to eventually. Then you get a threatening letter, notifying you that you are infringing on his IP rights and saying you'd better pay for a license. You don't want to do that, and you don't think you are infringing. In this hypothetical situation, do you have to just sit and wait for the other shoe to drop or can you take the initiative and go to court yourself, rather than waiting to be sued?

"In certain limited circumstances, you can take the initiative. There is something called a declaratory judgment. You go to court and in essence say to the judge: This company is going to sue me and I need our rights with respect to this dispute settled asap, so this cloud over my company's head doesn't ruin my business. If the judge accepts the dispute as one he wants to settle, he can, and after hearing both sides he can issue a declaratory judgment, in which he "declares" what is what and exactly what each party's rights are.

"While there are no enforcement powers associated with a declaratory judgment, sometimes that doesn't matter. For example, Roe v. Wade involved a declaratory judgment that ended up with abortion statutes being declared unconstitutional. Yes, that Roe v. Wade. A pregnant woman (Roe) brought a class action, challenging the constitutionality of Texas' abortion law. A doctor who was facing two state abortion prosecutions under the statute also intervened. The court said they were entitled to declaratory relief, and the court declared the abortion statute void. It was appealed and the rest, as they say, is history.

"Now, a judge doesn't have to hear a request for a declaratory judgment. He has discretion. It's an enabling statute, not one that confers rights on you, the litigant. Your case has to fit into the confines of the Declaratory Judgment Act, 28 U.S.C. §§2201 -02. States have equivalent statutes, such as Calif.Code.Civ.Proc. § 1060-1062.5.

"What confines? First, you have to have an actual 'controversy' in the constitutional sense. Basically, that means it isn't a hypothetical problem and it isn't moot, meaning the court must be able to settle your problem with a declaratory judgment. And you must have a real controversy, meaning you really have a reasonable apprehension of being sued. If you fit within those confines, and your lawyer can tell you if you seem to -- it's the 'actual controversy' part that can be tricky -- your lawyer can ask the court for a declaratory judgment that declares that you are not guilty of infringing the hypothetical CEO's precious hypothetical IP.

Here's US Code Title 28, Ch 151, Sec 2201, the Declaratory Judgment Act. And here is the definition from Cornell or you can just click on the link to Law. com's dictionary, on the left. Here's a tutorial on declaratory judgments."

From this you probably see where I'm headed. SCO was given more time to file their answer to Red Hat's complaint, so they are likely in the midst of writing it as we speak, so it's probably very much on their minds, such as they are. One way to defeat your opponent's request for a declaratory judgment is to demonstrate that there is no current case or controversy.

Here is a deeper explanation of the case or controversy requirement, from Professor Smith's Remedies Tutorial:

"The United States Constitution (Article III, Section 2) limits the exercise of the judicial power to 'cases' and 'controversies.'  The Declaratory Judgment Act in its limitation to 'cases of actual controversy,' refers to the constitutional provision and is operative only in respect to controversies which are such in the constitutional sense.  A justiciable controversy is thus distinguished from a difference or dispute of a hypothetical or abstract character; from one that is academic or moot. The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937).  For adjudication of constitutional issues 'concrete legal issues, presented in actual cases, not abstractions' are requisite.  The power of courts to pass upon the constitutionality of acts of Congress arises only when the interests of litigants require the use of the judicial authority for their protection against actual interference. A hypothetical threat is not enough.  United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754 (1947)."

So, you can't go to a judge and ask him to rule on whether the sun rises in the east, or invent some hypothetical legal issue you've always wondered about and ask him to declare if you are right. You must demonstrate that you actually are threatened with a lawsuit, or will be, if you put out a product that someone claims is infringing, for example. Here's another case that says that, Hernandez v. ACE USA [7/3/03] 2003 MTWCC 47:

"There must be an actual case and controversy between the parties for a declaratory judgment to lie. An issue which affects only non-parties is not justiciable."

Here are a couple of examples involving patents, where companies reacted to perceived threats by asking for a declaratory judgment, just to show you the kinds of circumstances that might cause a company to head to court asking for a declaratory judgment. Here's one not involving patents. As puts it in its definition of "declaratory judgment", it can "nip controversies in the bud. Examples: a party to a contract may seek the legal interpretation of a contract to determine the parties' rights, or a corporation may ask a court to decide whether a new tax is truly applicable to that business before it pays it." says:

"in law, a judicial judgment intended to fix or elucidate litigants' rights that were previously uncertain or doubtful."

It's a kind of preemptive strike, as was pointed out in this case, Japan Gas Lighter Ass'n v. Ronson Corp. , 257 F.Supp. 219, 237 (D.N.J. 1966), and quoted in the EFF's complaint in the case involving Ed Felton and the DMCA:

"The Declaratory Judgment Act was designed to relieve potential defendants from the Damoclean threat of impending litigation which a harassing adversary might brandish, while initiating suit at his leisure -- or never. The Act permits parties so situated to forestall the accrual of potential damages by suing for a declaratory judgment, once the adverse positions have crystallized and the conflict of interests is real and immediate."

It's the "real and immediate" part that SCO may be trying to counter by making the statement it did. If my theory is correct, then their soon-to-be-filed answer to Red Hat's complaint will present this argument.

Now I'm a paralegal, not a lawyer, and as far as Groklaw is concerned, I'm acting as a reporter, not even as a paralegal, but you don't need to be a lawyer or a paralegal or a rocket scientist, for that matter, to see that it is likely to be of value to collect all the public statements we can find where SCO clearly did threaten to sue Linux companies, and particularly Red Hat by name. I noticed that the Red Hat complaint has some such listed (and they may have others in hand) but it'd be good to add more such press reports. The complaint addresses the issue specifically in paragraphs 9-11, 13, 42, 50-52, and 77.

If you posted some urls on this before as comments to other articles, please repost here or email me, so I don't lose any by trying to find all the scattered comments myself. Let's get it all in one handy and convenient place. Once I have them all collected, I'll put it all up as a complete article.

Speaking of lists, you might find this one of interest, on what to do if you receive a SCO invoice. My personal favorite is: "Frame a copy of the invoice and put it in a time capsule as a relic from The Dark Ages of IP." A lawyer friend mentioned one other for those who might be customers who bought Caldera's OpenLinux: ask for your money back or that SCO declare that the license you bought it under in good faith, the GPL, is valid, at their choice. As always, speak to your own lawyer before you do anything.

comment [] 6:34:49 PM    

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