U.S. Tenth Circuit - The FindLaw 10th Circuit Court of Appeals Opinion Summaries Blog

IBM Loses Appeal in Ancient Linux Case

In a case that's proving eerily spooky to the tech community, the claims of Caldera International, now Santa Cruz Operation Inc. (a.k.a. SCO) against IBM over a 2001 software release have been brought back to life thanks to an order of the Tenth Circuit Court of Appeals issued on October 30, 2017. The nearly fifteen year old case has just been revived and sent back down to the federal district court to proceed as to one rather big claim against the industry titan: misappropriation.

Originally filed in 2003, this case has been litigated thoroughly, and has a record long enough to prove it. Prior to this Tenth Circuit appeal, the three remaining claims in the matter had been dismissed on summary judgment less than a couple years ago.

The Misappropriation Claim Survives

Thanks to bad faith (something lawyers rarely get to say) differentiating the misappropriation claim enough from a code copyright claim under federal law, the appellate court found that the state law based misappropriation claim was actually colorable and deserving of a chance at trial. At the heart of this case is a piece of code written by SCO and used by IBM, without SCO's permission, despite SCO being cooperative in some joint coding enterprise.

The opinion details the extensive discovery done throughout the case, discussing some rather damning pieces of evidence against IBM on this claim. In summary, IBM knowingly led SCO down a primrose path, then at the last minute pulled the rug out from under them, stole their code, and basically said: "Hey little fish in the pond, we're going to crush you in court." Okay, so maybe that's a bit of fanciful hyperbole at the end there, but the facts laid out by the court really don't look great for IBM.

Other Claims Properly Dismissed

After reviewing what the appellate court had to say about the misappropriation claim, it is almost shocking that the tortious interference claim was not also revived. However, the court did not find any error in the district court's dismissing these claims as there was no evidence of direct tortious interference, and the evidence of indirect tortious interference was not strong enough to state a claim under Utah state law.

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