Judge delays Red Hat-SCO suit, pending IBM action

A U.S. District Court judge has stayed a lawsuit brought by Red Hat Inc. against The SCO Group Inc., saying that the key issues in the case are already being examined in a separate lawsuit brought by SCO against IBM Corp. in Utah.

“The core issue of whether the Linux system contains any misappropriated Unix system source code must be decided,” wrote Judge Sue L. Robinson in a ruling dated Tuesday. “It is a waste of judicial resources to have two district courts resolving the same issue.”

The judge, from the U.S. District Court for the District of Delaware, also denied SCO’s motion to dismiss the case.

Red Hat sued SCO in August of 2003 — five months after SCO launched what has become a US$5 billion lawsuit against IBM. SCO claims that IBM has violated its intellectual property rights by contributing to the Linux operating system. Red Hat maintains that SCO’s claims are untrue and that SCO has engaged in “unfair and deceptive actions.”

SCO put a positive spin on Tuesday’s order, saying that it would allow SCO to “concentrate its legal resources toward its case against IBM,” in an e-mail statement.

But one intellectual property lawyer following the case believes that Red Hat, and not SCO, is the chief beneficiary from the order. “It’s clearly better for Red Hat because there’s the opportunity that the case can go away,” said David Schlitz a partner with the Alexandria, Va., law firm Burns, Doane, Swecker & Mathis, LLP. “If it doesn’t go away, Red Hat will still be able to litigate the issue. In a sense, Red Hat will get two bites of the apple.”

SCO has also sued two Linux users, automaker DaimlerChrysler AG and auto parts retailer AutoZone Inc., in connection with its IP (intellectual property) claims and Schlitz said that judges in those cases may consider similar stays. “Courts do not like to spend their time needlessly and they do not like to create conflicting decisions,” he said.

SCO spokesperson Blake Stowell said that his company did not expect further stays to be issued, however, because the DaimlerChrysler and AutoZone cases involve separate issues from the IBM case. “The copyright infringement in end-user cases goes beyond the IBM contributions,” he said.

The IBM lawsuit is expected to go to trial in 2005, Stowell said, but last week IBM asked the Utah judge for a declaratory judgment in the suit, which would end the matter before a trial begins if the judge rules in favour of that request.

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