"We intend to be a leader in our industry by ... making IBM technologies available to the Linux and open source communities."
-- M. Chang, IBM Linux (September 2004), http://www.mindwork.com.tw/0909/sildes/3_0909%20Novell%20Linux%20Day%20- %20For%20Download.pdf, at 10 (Exh. N) (quoting Palmisano speech of Jan. 10, 2000).

When I copied and pasted the link, I first got a 404 error page in Chinese. So I searched by the quoted sentence. And it takes you here where you find two listings, one the Chinese page. I clicked on the link on that page to download the PDF. If you download it, you will find it is actually a 2004 PowerPoint presentation that IBM VP Mitchell Chang gave, and on page 10, one slide shows a picture of Mr. Palmisano and the quotation, and the date Jan 10, 2000. It wasn't a speech by Mr. Palmisano. How do I know? I clicked on the second link.

That takes you to a memo, an internal IBM memo from Palmisano dated January 10, 2000, that an IBM employee posted to a FreeBSD message board, and notice as you read it that he says in the same memo that the company will continue its support of Project Monterey and AIX:

As we look to the future, we will continue our aggressive push in the UNIX marketplace with our industry-leading RS/6000 and NUMA-Q servers, our award-winning AIX operating system and our efforts to evolve AIX in Project Monterey.

Here's the entire memo, which SCO probably should have taken the time to research more carefully, because it proves two things that don't help SCO: one, that IBM decided to back Linux because the world was starting to go mad for it and they had the smarts to realize it was going to be a player in the future and two, that they still had hopes for AIX and Project Monterey, SCO's paranoid memorandum notwithstanding. What they were trying to accomplish was to add to their offerings, not to kill anything. As Palmisano explains in the memo:

We believe we're now on the brink of another important shift in the technology world. The next generation of e-business will see customers increasingly demand open standards for interoperability across disparate platforms. Linux -- a community-developed version of UNIX -- will play a pivotal role in this. We will embrace Linux on our server platforms -- and help it become one of those open standards as a natural extension of our commitment to e-business and the next generation of the Internet.

And as you will see from some articles in the media at the time, Palmisano first got seriously interested in Linux by taking a world tour and hearing from his customers that Linux was the next operating system that all the young programmers preferred to use.

On page 5 of the presentation, you will find a chart of server operating systems shipped since 1999. As you can see for yourself, Linux was already on the chart back in 1998 and by 2000, the growth was noticeable to IBM. They didn't make that happen. It happened because people adopted Linux, knowing it really worked well. As SCO even says in their memorandum, Palmisano came back from an overseas tour of IBM partners having found out that the new generation loved Linux, and that is why he decided to support it.

SCO would like you to think there was something criminal in that. But the truth is, it was just business smarts. IBM didn't make the new generation fall in love with Linux. It merely noticed and decided to act to benefit from noticing early in its surge upward and to Linux-enable their products and services, as the former IBM CEO Lou Gerstner puts it in his quotation on page 10.

That is what businesses do, is it not? They compete for business. One way is to be first to spot the next hot thing, like IBM did with the Internet, unlike Microsoft which almost missed the train altogether.

And look at page 28. It's one of the success stories of a company switching from UNIX to Linux, Deutshe Bank AG in London, ironically enough. They went from 8+ hours to 20 minutes to do calculations. How stupid would a business have to be not to want to make a switch like that? Is it SCO's position that the increase in speed comes from stealing UNIX's code, methods and concepts? If so, then why is Linux blazingly fast in comparison to Unix? If SCO's theory were true, how come the "bicycle" is faster than the "race car"?

Here is the memo in full:

Enterprise Systems Group
Samuel J. Palmisano

________________

From: SJP Comm/Somers/IBM @ IBMUS on 01/10/2000 09:14 AM EST

To: ESG EMPLOYEES US07 0021, ESG EMPLOYEES US07 0022, ESG EMPLOYEES US07 0023, ESG EMPLOYEES US08 0001, ESG EMPLOYEES US08 0002, ESG EMPLOYEES US09 0001

cc:
Subject: Next Generation e-business

During the past two-to-three months, we've taken a close look at our server business and what we need to do to get our momentum back.

Today we're taking a first step by making a significant announcement to support Linux and the open source movement and to drive the next generation of the Internet. We intend to be a leader in our industry by:

making all of our server platforms Linux ready;
engaging closely with the Linux community to help Linux evolve; and,
making IBM technologies available to the Linux and open source communities.

This is important news for IBM and for our customers. Here's why:

Over four years ago, IBM stated that the Internet was about more than just browsers; it was about a new way of doing business. Since then, IBM's leadership and view of e-business have helped transform the world.

We believe we're now on the brink of another important shift in the technology world. The next generation of e-business will see customers increasingly demand open standards for interoperability across disparate platforms. Linux -- a community-developed version of UNIX -- will play a pivotal role in this. We will embrace Linux on our server platforms -- and help it become one of those open standards as a natural extension of our commitment to e-business and the next generation of the Internet.

To spearhead that work effort, we are creating a new organization, headed by Dr. Irving Wladawsky-Berger, who has been named vice president, technology and strategy, reporting to me. He was general manager, Internet Division, Software Group.

Irving's organization will have responsibility for our UNIX software efforts, advanced architectures and technologies, and IBM's next-generation Internet strategy. With IBM as the industry's e-business leader, there is no longer the need for a stand-alone Internet Division, since the entire company has been focused on Internet themes for several years.

As we look to the future, we will continue our aggressive push in the UNIX marketplace with our industry-leading RS/6000 and NUMA-Q servers, our award-winning AIX operating system and our efforts to evolve AIX in Project Monterey.

We believe the long-term growth of the Internet is about common application platforms that can harness leading-edge technologies and simplify customers' choices. We believe Linux will develop into that type of common platform. By getting in early and being a key player in the open source community, IBM will be a leader in working with the industry to advance Linux into the future and bring our customers into the next generation of e-business.

This is a long-term play. Significantly, this is not only about servers. There is a huge opportunity for services. For software. For all of IBM.

So this is one step. You'll be hearing from me in the next few weeks on other key initiatives that, in aggregate, will restore our momentum and help us turn our business around. Stay tuned.

(Embedded image moved to file: pic10901.pcx)
Senior Vice President & Group Executive
Enterprise Systems Group

You may read more about IBM's Linux activities, RS/6000, NUMA-Q and AIX successes at http://w3.ibm.com/servergroup

Another news article they cite is interesting because they use it to tell the court that IBM has invested heavily in Linux, which IBM has already told the court is true. To SCO, it's proof of a plot, to beef up services as a revenue source and thus to kill off software-selling vendors, like Sun and SCO. But in the article, an interview with Jim Stallings, IBM's Linux general manager, it's obvious that the growth in their services business comes as a surprise to IBM:

"The services business is growing much faster than we ever thought," doubling annually, said Jim Stallings, IBM's Linux general manager, in an interview at the LinuxWorld Conference and Expo. "Services is growing faster than servers, and middleware is growing faster than servers."

This article, which SCO doesn't cite, from January 2001, says they did it to try to change their image as a stodgy company and it too says that it happened after Palmisano's world tour of customers:

IBM Corp. Wednesday moved to slough off its reputation as a stodgy, slow-moving enterprise by throwing its considerable support behind Linux.. . . . Palmisano, who has been with IBM for 30 years, said he first became interested in Linux after accepting his present position with the company. At that point, he traveled around the world meeting with customers and the one thing everyone was talking about, he said, was Linux.

He also did it, according to his speech at Linux World, reported on in this article, because he grasped a simple truth: no company, not IBM, not Microsoft, no company can match the development of Linux, not with all their money:

"Communities working together can produce exciting, wonderful, quality work," he said. "IBM spends $5 billion in research and development a year. We can't match this," he said opening his arms to embrace the audience.

He is right, of course. No company can afford to hire all the Linux contributors, and even if they could, they'd likely get rejected by many. It's not about furthering IBM's goals. It just isn't. But he was smart enough to see that Linux is an enabling technology and that it was the future of software.

The article is significant for pointing out what IBM's real contribution has been, and it isn't code. It's credibility and support:

"In the year since IBM embraced Linux as key to the evolution of e-business, our customers have rapidly adopted Linux in real e-business solutions. Linux is now ready for real e-business," said Irving Wladawsky-Berger, IBM vice president of technology and strategy, Server Group. "Now, in addition to providing top to bottom Linux support for our hardware and software, we're investing in Linux services so that IBM can assure our customers that the level of support they have come to expect for their enterprise computing environments will be available for Linux."

Stallings is also quoted defending Red Hat from Sun's lock-in mantra:

Stallings also took issue with a prominent rival, Sun Microsystems Chief Operating Officer Jonathan Schwartz. Schwartz argues that the success of top Linux seller Red Hat has allowed the company to lock customers into their software, success that has forced IBM to back Novell's SuSE Linux.

Lock-in is a matter of degree, Stallings said, and it's less with Linux than with other operating systems. "There's a lot more freedom of movement from servers underneath and applications on top with Linux in the middle," Stallings said. "Windows has control points. There's no way out."

SCO also cites a press release from January of 2003, but they provide the wrong url. If you go to the link they give the judge, you will find only 2004 and 2005 press releases. If you want January of 2003, you have to go here. I went down the list looking for that press release, checking by plausible titles. If you find it, do sing out. I also searched by keywords: Palmisano 2003 Linux January but I found nothing. So, again, I figured they just searched on Google, so I did the same, and here is a page that uses the phrase in question, but notice how many other irons in the fire Mr. Palmisano has had going on in addition to the Linux activities, and ask yourself if he is really the right man to talk about the details of the Linux strategy after all:

Biographical Information of CEO

Sam Palmisano is chairman of the board and chief executive of the corporation. He was elected Chairman in October 2002 effective January 1, 2003. Mr. Palmisano has served as executive officer since March 2002. Prior to his appointment, Mr. Palmisano was President and Chief operating officer.

Mr. Palmisano has held a number of key leadership positions during his IBM career, including senior vice president and group executive for IBM's Enterprise Systems Group, where he led IBM's adoption of the Linux operating environment, as well as the launch of the company's unified eServer family. Prior to that, Mr. Palmisano was senior vice president and group executive for IBM Global Services, with responsibility for the worldwide operations of the largest and most diversified IT services organization in the industry.

Mr. Palmisano has served as senior vice president and group executive for IBM's Personal Systems Group; led IBM's strategic outsourcing business; and was president of the Integrated Systems Solutions Corp. (ISSC), an IBM wholly owned subsidiary, and now part of IBM Global Services. Before joining ISSC, Mr. Palmisano was IBM senior managing director of operations for IBM Japan. He joined IBM in 1973 in Baltimore, Maryland.

He isn't a programmer. And Linux was only one piece of all he had going on. He started as a salesman with the company. I find it quite plausible that, after making the decision to support Linux following his trip abroad, he delegated the implementation to others. That is what heads of divisions do. That is not to diminish his role, just to say that I doubt he can speak to the technical issues that are central to this lawsuit. SCO should really have deposed those at IBM who handle the nuts and bolts. They have had since March of 2003 to do so, but in their memo they say the are going to, future tense. I gather they feel they have to in order to justify forcing the CEO to be deposed. I'm not saying they won't get to depose Mr. Palmisano. I'm just saying it is silly, unless they have some other purpose beyond what they are telling the court.

The impression I form is that SCO is stilll learning how to use Google. I say that because they reference the home page for things like news articles, which will bring the judge not to the article but to the current page. That spells inexperience to me, or that they prefer that the judge and you and I not check.

They used Google to find information on Mr. Palmisano, I gather, and they stopped before doing the kind of careful research that you need to do to be positive you are right. I wrote about that in the previous article, about how dangerous it is to rely on only partial information. Here is an example.

They likely will be able to depose him, but what they will then elicit from him is the tale you can find for yourself by doing thorough searching on Google, as I just did, namely that IBM's Palmisano got interested in Linux because of a world tour of IBM's customers which convinced him that the younger generation was talking about Linux and *they* were wanting it. It was, therefore, the future. It had nothing to do with taking shortcuts to kill Solaris, as SCO tries to spin it here, although obviously any company would hope to pull ahead of the competition. That's every company's goal. And it isn't illegal, last I looked.

So the last piece is now in place in my mind: IBM wasn't trying to kill UNIX. Mr. Palmisano simply had the intelligence and good business sense to notice that the world had begun to switch to Linux, that the younger generation all loved it, and he realized it would be prudent to include Linux in IBM's offerings. The Palmisano memo also shows that the company itself had no idea Linux would take over everything the way it has, though, and they at the time still believed that Project Monterey would continue. Whatever customers wanted, IBM would provide it. They were simply positioning themselves to offer whatever their customers wanted, but they also had a solid hunch that for a lot of their customers, it was going to be Linux. All the rest from SCO is the kind of wild guessing that result from inadequate research and a hostile imagination. Case closed.

And with that, here are the legal filings, and our thanks go to bstone for transcribing them for us.

****************************

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE
[address, phone, fax]

Stephen N. Zack (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax]

Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Sean Eskovitz (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER
[address, phone, fax]

Attorneys for The SCO Group, Inc.

___________________________

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

__________________________

THE SCO GROUP, INC.

Plaintiff/Counterclaim-Defendant

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff

____________________________

MEMORANDUM IN SUPPORT OF
SCO'S MOTION TO COMPEL IBM
TO PRODUCE SAMUEL J.
PALMISANO FOR DEPOSITION

Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

____________________________

The SCO Group, Inc., by and through counsel hereby respectfully moves the Court to compel International Business Machines Corporation ("IBM") to produce Samuel J. Palmisano for deposition, for the reasons set forth in supporting memorandum filed herewith. DATED this 12th day of January, 2005

HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
Robert Silver
Stephen N. Zack
Edward Normand
Sean Eskovitz

By _____[signature]___

Counsel for the SCO Group, Inc.

CERTIFICATE OF SERVICE

Plaintiff/Counterclaim Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing Motion to Compel IBM to Produce Samuel J. Palmisano for Deposition was served by mail on Defendant International Business Machines Corporation on the 12th day of January, 2005, by U.S. Mail to:

David Marriott, Esq.
Cravath, Swaine & Moore LLP
[address]

Donald J. Rosenberg, Esq.
[address]

Todd Shaughnessy, Esq.
Snell & Wilmer LLP
[address]

___[signature]____

****************************

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE
[address, phone, fax]

Stephen N. Zack (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address, phone, fax]

Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Sean Eskovitz (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER
[address, phone, fax]

Attorneys for The SCO Group, Inc.

___________________________

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

__________________________

THE SCO GROUP, INC.

Plaintiff/Counterclaim-Defendant

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant/Counterclaim-Plaintiff

____________________________

MEMORANDUM IN SUPPORT OF
SCO'S MOTION TO COMPEL IBM
TO PRODUCE SAMUEL J.
PALMISANO FOR DEPOSITION

Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

1

PRELIMINARY STATEMENT

On December 2, 2004, SCO duly noticed the deposition of Samuel J. Palmisano, who at the key times relevant to this suit was an IBM Vice-President in charge of the computer-server group, with responsibility for IBM's Linux strategy. SCO seeks to depose Mr. Palmisano because (1) this litigation concerns the nature and scope of all of IBM's "activities relating to Linux," including IBM's well-publicized "Linux strategy" (Exh. B at 1); and (2) before Mr. Palmisano became IBM's CEO, he was the senior IBM executive who "spearheaded" that strategy (Exh. J at 2); who "pushed most emphatically for the Linux initiative" (Exh. B at 2); who presented to IBM's then-CEO the "rigorous and exhaustive" report on how IBM should adapt to Linux (Exh. B at 2); who chose IBM's "Linux czar" to oversee IBM's strategy (Exh. B at 3); and who personally committed to make technologies at the heart of this case available to the open source community (Exh. N). Mr. Palmisano's involvement in Linux before his promotion to CEO was so substantial that IBM has described its Linux strategy as "Sam's bet." Exh. B at 2.

IBM, however, has refused to produce Mr. Palmisano for deposition based on Mr. Palmisano's current position as IBM's Chief Executive Officer and Chairman of the Board. IBM incorrectly claims that Mr. Palmisano does not have "any knowledge" of any facts relevant to this litigation. Exh. C. at 1 (IBM has not even claimed undue burden.) SCO shows below that because Mr. Palmisano does have first-hand knowledge of substantial facts directly relevant to this litigation (and because there is no undue burden on him or IBM), the Court should order IBM to produce Mr. Palmisano for deposition.

BACKGROUND

IBM's "Linux strategy" is directly at issue in this litigation, by virtue of both SCO's claims and IBM's counterclaims. Indeed, in refusing to produce Mr. Palmisano for deposition, IBM has not contended otherwise. To illustrate:

- SCO's core contract claims put IBM's Linux strategy at issue because that strategy explains IBM's strong financial motivation to use shortcuts in order to promote Linux's commercial appeal, including by contributing important UNIX technologies from the AIX and Dynix operating systems to Linux; and

- IBM's own Tenth Counterclaim puts IBM's Linux strategy at issue, because in that counterclaim IBM seeks a declaration that "IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through its Linux activities, including its use, reproduction and improvement of Linux." IBM's 2d Am. Countercl. ¶ 173.

SCO has further demonstrated the extent of IBM's worldwide Linux-related activities and the concomitant need for significant discovery on those activities. See SCO's Mem. in Opp. to IBM's Motion for Partial Summary Judgment on its Tenth Counterclaim (July 9, 2004) at 76-78.

Accordingly, using IBM's own documents and publicly available information, SCO briefly summarizes below the advent and evolution of IBM's Linux strategy. Mr. Palmisano has played a direct and critical role in formulating and fostering that strategy.

A. The Origin and Goals of IBM's Linux Strategy

In the late 1990s, IBM concluded that its UNIX-based operating system (AIX) would not successfully compete with products from Sun (Solaris, also based on UNIX) and Microsoft (Windows NT). Solaris was "rapidly becoming the de facto UNIX, and posed a significant threat to IBM servers" and also "disadvantaged IBM middleware." IBM's internal "Linux Strategy Update" (Exh. D) at 1710189072; see also id. at 1710189068 ("Sun and Microsoft continue to grow at an impressive rate. AIX continues to lag Solaris and NT in popularity, a

2

Accordingly, in order "to neutralize the Solaris and Windows control points in Unix servers and high volume platforms," in December 1999, IBM decided to "act quickly, decisively and with common purpose" to execute a broad and "disruptive" Linux strategy. Exh. D at 1710189068. IBM reasoned (given that Linux was available free of charge) that "Linux's low cost compared with that of rival Windows leaves customers who opt for the cheaper OS with more money to spend on IBM's related products and services." IBM: Linux is the `logical successor'," C/Net News.com, http://news.com (Jan. 29, 2003) (Ex. E); see also Exh. B at 3 ("I.B.M. would love to drive the profit out of the operating system business of its rivals -- just as Microsoft did to Netscape, the browser pioneer, by giving browser software away free.").

To execute this strategy, IBM made a series of multi-billion dollar investments intended to convert Linux from a hobbyist system controlled by "anti big business," "wild guys" and "geeks," IBM's Internal "Linux Community v. Linux Market" Memorandum (Exh. F), into an industrial-strength computing system capable of handling financial transactions and other complex tasks, see Exh. B at 4. To that end, IBM contributed substantial portions of the UNIX- based AIX and Dynix operating systems to Linux, and even announced it was "willing to open source any part of AIX that the Linux community considers valuable." Interview with Robert LeBlanc of IBM, Free OS.com, http://www.freeos.com/articles (Dec. 20, 2000) (Exh. G). In other words, IBM was willing to "abandon" its UNIX-based products in order to "move its `enterprise strength' features into Linux," so that Linux would look like the "true" UNIX "in the

3

SCO will show that, if IBM considered its obligations under its software agreements with SCO at all in deciding whether and what contributions to make to Linux, IBM simply placed a higher priority on defeating Sun and other competitors than on compliance with those contractual obligations, just as it had done on previous occasions. As one IBM official then put it, if it is necessary to breach a licensing agreement to prevent a customer from choosing Sun over IBM, "I'm inclined to shoot first and answer questions later. It's easier to ask for forgiveness than to ask for permission." Exhibit H (IBM email 10/11/95) at 2 (emphasis added).

B. Mr. Palmisano's Key Role in IBM's Linux Strategy, Before Becoming CEO

Mr. Palmisano originated IBM's Linux strategy in 1999: "At the end of October, fresh from a global tour, Sam Palmisano, a senior vice president, reported that the Internet companies he spoke with told him that the preferred language of the young programmers they were hiring was Linux." Exh. B, at 1. Shortly after Mr. Palmisano returned from that trip, an eleven-person team of researchers, led by Nick Bowen, was given seven weeks to make a "rigorous and exhaustive" report on how IBM should adapt to Linux. Id. at 2. The report concluded that IBM should "push Linux as the operating system of choice for the Internet -- more robust and reliable than Windows NT and eventually overtaking Solaris, Sun's flavor of Unix, as the industry standard for Unix." Id. To this end, the report urged Palmisano to "establish a Linux `division' with the following responsibilities:

* Provide IBM-wide Linux leadership (internal and external)
* Business Development
* Strategy

4

* Brand Management * Standards, consortia, communities."

N. Bowen, Creating a Linux Volume Application Development Platform for IBM Servers and Middleware (12/20/99) at 181516909 (Exh. M).

Mr. Bowen presented his team's report to Mr. Palmisano on December 20, 1999 -- six days after the meeting where, as shown in Exhibit L, the IBM team proposed abandoning UNIX/AIX and moving its "enterprise strength" features into Linux, so that Linux would become the "true UNIX' in the mind of the customer. On December 22, 1999, Mr. Palmisano presented the report to IBM's then-chairman, Louis Gerstner, who approved both the plan and Mr. Palmisano's choice of Mr. Irving Wladawsky-Berger as IBM's "Linux czar." Mr. Wladawsky-Berger became vice president of technology and strategy in the computer-server group, then headed by Mr. Palmisano. Exh. B at 3. Less than three weeks later, Mr. Palmisano personally proclaimed: "We intend to be a leader in our industry by ... making IBM technologies available to the Linux and open source communities." M. Chang, IBM Linux (September 2004), http://www.mindwork.com.tw/0909/sildes/3_0909%20Novell%20Linux%20Day%20- %20For%20Download.pdf, at 10 (Exh. N) (quoting Palmisano speech of Jan. 10, 2000).

Indeed, IBM has publicly stated that Mr. Palmisano "led IBM's adoption of the Linux operating environment," IBM Press Release, http://www-1.ibm.com/press/PressServletForm.wss (Jan. 2003) (Exh. I), and (on the occasion of Mr. Palmisano's election as CEO, in January 2002) that he had "spearheaded a major initiative to embrace Linux." http://www- 1.ibm.com/press/PressServletForm.wss (Jan. 29, 2002) (Exh. J). IBM has already invested billions of dollars into Linux, its 2004 sales revenue for Linux servers is expected to be nearly $2 billion, and its services and sales revenue is doubling annually and is expected to exceed server

5

On December 2, 2004, SCO noticed Mr. Palmisano for a deposition to take place on January 24, 2005. Exh. A. On December 17, 2004, counsel for IBM objected to producing Mr. Palmisano "because we do not believe that he has any knowledge regarding any specific issues that are relevant to this lawsuit or any knowledge that cannot be obtained by deposing other individuals within IBM." Exh. C. Shortly thereafter, counsel met and conferred (by teleconference), during which SCO's counsel referenced the publicly available information concerning Mr. Palmisano's key role in formulating and promoting IBM's Linux strategy, but the parties were unable to reach agreement on Mr. Palmisano's deposition.

ARGUMENT

As an initial matter, under Federal Rule of Civil Procedure 30(a), SCO may depose "any person, including a party." An officer of a party noticed for deposition must appear unless he moves for a protective order under Rule 26(c) and successfully bears the burden of proving that justice requires that the deposition be quashed or limited due to "annoyance, embarrassment, oppression, or undue burden or expense." Fed. R. Civ. P. 26(c); see, e.g., Speadmark, Inc. v. Federated Dep't Stores, 176 F.R.D. 116, 118 (S.D.N.Y. 1997). With respect to SCO's notice to depose Mr. Palmisano, IBM has neither sought a protective order nor invoked (in discussions with counsel for SCO) any of the Rule 26(c) factors. In light of the impending discovery cut-of

6

It is "most extraordinary relief" to preclude the deposition of a party's executive. Speadmark, 176 F.R.D. at 118; see, e.g., Pepsi-Cola Bottling Co. of Pittsburgh v. Pepsico, Civ. A. Case No. 01-2009-KHV, 2002 WL 922082, at *1 (D. Kan. May 2, 2002) (Exh. O) (courts "disfavor barring a deposition" and, absent "extraordinary circumstances, courts rarely grant a protective order that totally prohibits a deposition"); see also Salter v. Upjohn Co., 593 F.2d 649, 651 (5th Cir. 1979) (it "is very unusual for a court to prohibit the taking of a deposition altogether and absent extraordinary circumstances, such an order would likely be in error").

Indeed, IBM bears the burden of demonstrating that Mr. Palmisano "has nothing to contribute." Speadmark, 176 F.R.D. at 118 (allowing deposition of CEO). In considering whether to preclude a deposition altogether, the Court gives "considerable deference" to "counsel's good faith judgment as to the needs of his case" because a court should not "be in a position of second-guessing counsel's judgment except when counsel goes beyond the pale, so to speak, and seeks discovery for which there is no factual basis or which is taken in bad faith or for tactical advantage or solely for the purpose of harassment or oppression." Travelers Rental Co. v. Ford Motor Co., 116 F.R.D. 140, 146-47 (D. Mass. 1987) (allowing depositions of Ford's president and other top executives).

SCO respectfully submits that, for several reasons, IBM has no basis for precluding SCO from deposing Mr. Palmisano.

First, the Court has in effect already determined that Mr. Palmisano is relevant to and "has something to say" about this litigation. In response to SCO's requests for the production of documents, IBM previously contended that Mr. Palmisano had no documents relevant to this

7

Second, independent of the Court's March 3 and October 20 Orders, and as the foregoing background demonstrates, Mr. Palmisano has unique and relevant testimony to give regarding a crucial aspect of this litigation - namely, IBM's "Linux strategy." It is well-settled that a company's CEO and other high-level executives are appropriately subject to deposition where their knowledge is even arguably relevant to the case - and that is true even if they claim by affidavit (or otherwise) to lack knowledge of specific facts pertaining to the case.See, e.g., Pepsi-Cola, 2002 WL 922082, at * 1-3 (Exh. 0) (allowing depositions of Pepsico's president and vice-chairman, despite their declarations that they had "no personal knowledge of the facts or issues" of the case); Simpson v. Home Depot, Inc., Civ. A. No. 00-2285-JAR, 2002 WL 485661.

8

In Tulip Computers International, B.V. v. Dell Computer Corp., 210 F.R.D. 100, 102 (D. Del. 2002), for example, the plaintiff claimed that Dell Computer ("Dell") had infringed its patents. The court permitted the plaintiff to depose Dell's CEO, Michel Dell, regarding (among other things) Dell's "method and strategy of developing the technology that is in issue in this case." SCO proposes to explore such issues with Mr. Palmisano. Given his role in spearheading and fostering IBM's Linux strategy, Mr. Palmisano has first-hand knowledge of and unique testimony to give regarding issues such as IBM's consideration of its software licensing agreements, and the scope of activities, in the development of the technology used in furtherance of the Linux strategy. ²

Third, SCO's request to take Mr. Palmisano's deposition is made in good faith (and, at least to date, IBM has not suggested otherwise). The deference courts give to counsel's

9

In that vein, the deposition would not unduly burden Mr. Palmisano or IBM (and again, at least to date, IBM has not suggested otherwise). SCO proposes to depose Mr. Palmisano in Armonk, New York, where he has his office. Cf. Gazaway v. Makita U.S.A., No. Civ. A. 97- 2287-JWL, 1998 WL 219771, at *2-3 (D. Kan. Apr. 16, 1998) (Exh. Q) (executive residing in Japan would not be obliged to attend deposition in Kansas City, but he could be deposed if he returned to the United States). Further, under the Case Management Order, the deposition is limited to seven hours. Indeed, SCO has noticed the depositions of other IBM executives and employees with their own unique testimony regarding their participation in devising and executing IBM's Linux strategy; there can be no serious claim that SCO's notice of deposition for Mr. Palmisano is improperly intended for harassment purposes. ³

Finally, IBM has noticed, and SCO has not objected to producing, SCO's CEO and other top executives for depositions in this case. IBM should be required to produce Mr. Palmisano

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CERTIFICATION OF COMPLIANCE WITH MEET AND CONFER OBLIGATIONS

On December 2, 2004, SCO noticed Mr. Palmisano for a deposition to take place on January 24, 2005. Exh. A. On December 17, 2004, counsel for IBM objected to producing Mr. Palmisano "because we do not believe that he has any knowledge regarding any specific issues that are relevant to this lawsuit or any knowledge that cannot be obtained by deposing other individuals within IBM." Exh. C. Shortly thereafter, counsel met and conferred (by teleconference), during which SCO's counsel referenced the publicly available information concerning Mr. Palmisano's key role in formulating and promoting IBM's Linux strategy, but the parties were unable to reach agreement on Mr. Palmisano's deposition.

CONCLUSION

For the reasons set forth above, SCO respectfully requests that the Court compel IBM to produce Samuel Palmisano for deposition.

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Respectfully submitted,

HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James

BOIES, SCHILLER & FLEXNER LLP
Robert Silver
Stephen N. Zack
Edward Normand
Sean Eskovitz

By______[signature]________

Counsel for The SCO Group, Inc.

¹On December 22, 2004, SCO filed a renewed motion to compel, seeking the Court's assistance in securing IBM's full compliance with the Court's prior orders.

²In the unlikely event that Mr. Palmisano does testify to a lack of knowledge on such issues, that would itself be relevant: the claimed ignorance of "high executives may, in and of itself, be relevant evidence," because "a corporation, when engaging in potentially illegal activities, would act in such a way as to make it seem that top executives had no knowledge." Ford Motor, 116 F.R.D. at 144.

³Thus, IBM cannot rely on Thomas v. International Business Machines, 48 F.3d 478, 483-84(10th Cit.. 1995), an age discrimination case where the plaintiff made an eleventh-hour attempt, without adequate notice, to depose IBM's board chairman at a location far from his office, even though plaintiff had made no attempt to depose his direct supervisors, the ones who had evaluated and ranked him. This case is clearly distinguishable in view of the plaintiff's obvious lack of good faith and intent to harass. Thomas and virtually every other case quashing an executive deposition involved "an individual personal injury, employment, or contract dispute with which the `apex' official had no personal involvement." Bridgestone/Firestone, supra at 536 (distinguishing Thomas). Where general corporate policy, strategy or knowledge is relevant to the case, plaintiff's counsel have the right to pursue any good faith deposition strategy they deem appropriate. Pepsi-Cola, supra (executives could be deposed on strategies and decisions in the execution of Pepsico's consolidation plan); Home Depot, supra (executive who lacked knowledge of plaintiffs injury could be deposed about his possible knowledge of risks stemming from Home Depot's warehouse-style operations); Sony, supra (corporate policy at issue); Dell Computer, supra (corporate methods and strategies at issue).

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CERTIFICATE OF SERVICE

David Marriott, Esq.
Cravath, Swaine & Moore LLP
[address]

Donald J. Rosenberg, Esq.
[address]

Todd Shaughnessy, Esq.
Snell & Wilmer LLP
[address]

 Exhibits/ Attachments to this document have not been scanned.

Please see the case file. case file.