Here is day two of the trial of Novell v. SCO, the daily transcript as text. Our thanks go to Steve Martin. Here's Day 1.
This is the day that saw CEO Darl McBride take the stand and tell the court he always certified truthful SEC filings, even when they seem to contradict what he is now testifying to. He says that the Sun and Microsoft licenses were *not* SCOsource licenses, just UnixWare licenses "embodied in the SCOsource division." Oddly, that is the same language that he uses to describe SVRX, as being "embodied" in UnixWare. I wonder what he means by that word 'embodied'? One clue is his statement that "we use UnixWare as the wrapper to sell a System V license." Well, there you have it. They used a wrapper to sell *System V * licenses. Oops. I think he probably woke up at 2 AM thinking about that answer. A casual onlooker might think he was agreeing with the court, which has already ruled that the Sun and Microsoft licenses are SVRX licenses, to an unknown degree, which is what the trial is to establish, not that Darl acknowledges the court or its decisions as being binding. He stays on message. But might that casual observer get the idea that SCO deliberately wrapped System V licenses in UnixWare to avoid having to pay Novell its System V royalties? Also Chris Sontag finished his testimony, and Greg Jones and John Maciaszek also took the stand. By the way, he mentions that if you go into a bookstore you will find how to program in Unix and Linux books in the same section. That is because Linux is not a programming language. Neither is UNIX. They are both written in C, C++, Java, Perl, Python, and Ada95. Etc. You know. In programming languages. And both are POSIX-compliant, POSIX being a standard. Duh. What he says is like saying that if you go into a US bookstore and head for the cookbooks section, you'll find a lot of books written in English. That is true. You will. Not only that, but they all use cups as a measurement and Tablespoons and such. That doesn't mean they copied from one another, or that all the recipes will produce the identical result, just that they were written in the same language and use standard measurements for US cooks. He is such a riot. And I have only scratched the surface.
Day 2, April 30, the PDFs:
Part 1
Part 2
Part3
Again, use the PDF as being definitive. We strive for accuracy in our text versions, but we are human. So are court transcribers, by the way, and it's Groklaw's policy not to correct any errors they make. Also, this is the version with no line numbers. We like to do that type first, so those who rely on screen readers don't have to listen to numbers read off at the beginning of every line, often in the middle of a sentence. Aside from the August 10 ruling that said the Sun and Microsoft licenses were SCOsource licenses for SVRX, Groklaw member gdeinsta reminds us that there was also a Novell Motion In Limine granted last September, which forbids SCO from arguing at this trial that they are not: Novell's Motion in Limine No. 2 to Preclude SCO from Contesting Licenses Conveying SVRX Rights are "SVRX Licenses" - Granted. "Therefore, SCO cannot be and is not precluded from arguing that the SVRX component is de minimis. SCO's attempt, however, at making a distinction between the license as a whole being an SVRX License and only the SVRX component of the license being an SVRX License is contrary to the court's finding that even an incidental license of SVRX is considered an SVRX License under the APA's broad definition of SVRX License. The court rejected SCO's arguments that the Sun and Microsoft Agreements were not SVRX Licenses because they licensed SVRX only incidentally. ... There is no relevance to evidence relating to legal determinations already made by the court. Disputes as to the court's interpretation of the contract should be left for appeal." That means any testimony, such as Darl's, that the Sun and Microsoft licenses are not what the court already ruled they are has no relevance. So that part is just for the peanut gallery, and for the appeal later. Appeals courts know what court orders are and how they are to be obeyed, of course.
*************************
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
___________________________________
THE SCO GROUP, INC., a Delaware
corporation,
Plaintiff and
Counterclaim-defendant.
vs.
NOVELL, INC., a Delaware
corporation,
Defendant and
ounterclaim-plaintiff.
____________________________________
Case 2:04-cv-139dak
BEFORE THE HONORABLE DALE A. KIMBALL
APRIL 30, 2008
REPORTER'S TRANSCRIPT OF PROCEEDINGS
TRIAL TRANSCRIPT
VOLUME II
(Daily copy)
Reported by: KELLY BROWN, HICKEN CSR, RPR,
RMR
207
A P P E A R A N C E S
FOR NOVELL: |
MORRISON & FOERSTER LLP
BY: MICHAEL A. JACOBS
ERIC M. ACKER
DAVID E. MELAUGH
Attorneys at Law
[address] |
FOR SCO: |
BOIES, SCHILLER & FLEXNER LLP
BY: STUART H. SINGER
EDWARD J. NORMAND
JASON CYRULNIK
Attorneys at Law
[address]
HATCH, JAMES & DODGE, P.C.
BY: BRENT O. HATCH
Attorney at Law
[address] |
208
I N D E X
WITNESS |
EXAMINATION BY |
PAGE |
CHRISTOPHER S. SONTAG |
REDIRECT BY ACKER |
210 |
|
RECROSS BY NORMAND |
222 |
|
REDIRECT BY ACKER |
228 |
|
RECROSS BY NORMAND |
228 |
DARL CHARLES McBRIDE |
DIRECT BY ACKER |
230 |
|
CROSS BY SINGER |
281 |
|
REDIRECT BY ACKER |
296 |
|
RECROSS BY SINGER |
302 |
GREG JONES |
DIRECT BY MELAUGH |
304 |
|
CROSS BY NORMAND |
332 |
JOHN MACIASZEK |
DIRECT BY SINGER |
391 |
|
CROSS BY JACOBS |
408 |
EXHIBITS
NOVELL |
RECEIVED |
151 |
308 |
439 |
315 |
440 |
316 |
441 |
316 |
430 |
389 |
468, 469 |
389 |
|
SCO |
RECEIVED |
|
442, 43, 46, 47, |
317 |
48, 49, 50, 51, 42 |
317 |
53, 55, 56, 58, 59 |
317 |
209
Salt Lake City, Utah, Wednesday, April 30,
2008
* * * * *
THE COURT: You may resume the stand, Mr. Sontag.
You may proceed, Mr. Acker.
Good morning, everyone.
MR. ACKER: Good morning, Your Honor. Thank you.
CHRISTOPHER S. SONTAG,
called as a witness at the request of Novell,
having been previously duly sworn, was examined
and testified further as follows:
REDIRECT EXAMINATION BY MR. ACKER:
Q. Good morning, Mr. Sontag.
A. Good morning.
Q. You testified yesterday in response to questions of
counsel that the price for the SCO intellectual property licenses,
that series of licenses we looked at yesterday afternoon, those
prices were set as the price equal to the most current version of
UnixWare; is that right?
A. The most current and applicable version of UnixWare.
So single CPU or multi CPU version of UnixWare.
Q. So if a potential licensee was using an older version
of SVRX, say an older version of 1992 or 1994, and wanted to take
one of these licenses, under the SCOsource program, SCO would still
charge that licensee the same price
210
they would pay for the most current version of UnixWare;
correct?
A. That is correct.
Q. And that was true for all of the SCOsource IP
licenses; correct?
A. Yes.
Q. Counsel asked you a very direct question yesterday
regarding whether or not there is any UnixWare code in Linux. And I
wrote down your answer, and you said that there very well could be;
correct?
A. Yes.
Q. But the bottom line is that you simply do not know if
there was any unique UnixWare code in Linux; right?
A. I believe your question was about uniquely UnixWare
code. Given that UnixWare has developed out of, you know, many
versions of the UNIX, you know, development tree, much of that code
is uncommon. And to uniquely parse out something that's different
with UnixWare versus previous releases, I've never done that
analysis, never seen this analysis.
Q. Do you know if that analysis has ever been done, that
is, someone has sat down and parsed out what is unique to the most
recent version of UnixWare as opposed to what exists in pre APA
SVRX?
A. I don't know if that has been done.
Q. But the bottom line is that given that testimony,
211
you simply don't know if there's any code that is unique to
UnixWare that is in Linux; correct?
A. I do not.
Q. Counsel also asked you a series of questions about the
first phase of the SCOsource program that was referred to initially
in late 2002 and early 2003 as the SCO Tech program; correct?
A. Yes.
Q. And you answered his questions regarding the licensing
of libraries of UNIX code; correct? Do you recall that
testimony?
A. Yes.
Q. Now, no licenses were ever issued under that program,
that is, the first phase of the program in which it was
contemplated that the libraries would be licensed; isn't that
right?
A. I do not believe there was any specific licenses under
that first release of the SCO Tech or early SCOsource license.
Q. So the SCO Tech or the SCOsource licenses that
actually were issued were the Sun and the Microsoft license as well
as the series of additional licenses that we looked at yesterday;
correct?
A. Yeah. And I would separate out the Sun and the
Microsoft licenses from the series that you speak of. They're
212
separate types of licenses.
Q. But they were all SCOsource licenses; right?
A. They were all under the SCOsource division.
Q. Now, regarding the Sun agreement, if we could put up
Exhibit 187, Attachment 1, please.
Mr. Sontag, we put up on the screen Attachment 1 to the 2003 Sun
agreement. The first page of Attachment 1. And you've testified
that all of this software license, the 2003 license, was included
in this attachment and licensed Sun simply as legacy software or
older versions of SVRX software that was licensed along with the
most recent version of UnixWare.
A. Correct. And they already had a license to most of
this, anyways.
Q. And that was my next question. It's true, isn't it,
that Sun already had a license to all of this software on the first
page of Attachment 1 of 2002 license; right?
A. Yes. And that is -- again, that license for the
previous versions was just a standard practice. So, again,
licensing the latest version of UnixWare and incidentally licensing
all the previous versions.
Q. But because -- and that previous license, the 1994 Sun
license to this exact same 30 versions of software was fully paid
up; correct?
A. Yes.
213
Q. And so Sun didn't need -- there was no need for Sun to
obtain a license. They didn't need a license, a re-license to this
additional 30 pieces of legacy software in 2004 except that they
wanted to expand their rights to distribute the software;
correct?
A. Again, this was all included just because it was a
standard practice of licensing the UnixWare source code.
Q. But Sun already had a license for this software;
right?
A. Yes.
Q. And what they wanted in the 2003 agreement was to
expand or, in your words, to soften the confidentiality provisions
relating to this software; correct?
A. Primarily, they wanted a license to the latest version
of UnixWare for their Intel work that they were doing.
Q. And with respect to this 30 versions of legacy SVRX,
they wanted to soften the confidentiality provisions relating to
the software; correct?
A. It was a minor part of the agreement.
Q. That's what Sun wanted; right?
A. Yes.
Q. And that's what SCO gave to them; correct?
A. Yes. It's all part of the agreement.
Q. Now, it's true, isn't it, that not all of this pre-APA
SVRX software is in the current version of UnixWare?
214
Correct?
A. Probably not. But I would suspect, you know, anything
that is valuable and important would still be in the current
version of UnixWare.
Q. But you've never done a line-by-line comparison to
determine what portions of this software, the legacy SVRX software,
is actually in the current version of UnixWare; correct?
A. I have not.
Q. And you're not aware of anyone else having done that
analysis; correct?
A. I'm not aware of that analysis.
Q. And Sun didn't do that analysis, as far as you know;
correct?
A. Not that I know.
Q. And you're not aware of any expert for SCO doing that
analysis?
A. I'm not aware.
Q. And you're not aware of any technician or technical
person or engineer of SCO doing this analysis; correct?
A. No, I'm not.
Q. Now, you testified yesterday and you've already
testified today that SCO has a history of including older versions
of software when it licenses the most recent versions of software;
correct?
215
A. Yes. And SCO's predecessors in the UNIX business did
the same thing.
Q. But you also testified in answer to your questions to
counsel that you'd seen older licenses in which the legacy software
was routinely licensed, but recently there had been contracts in
which that hadn't been done; correct?
A. My understanding was in the most recent release, most
versions of the UnixWare source license, they removed the long
listings and prior products solely for the purpose of reducing the
size of the contract, though the older versions were still
implicitly included in those contracts.
Q. Well, when you say most recent, what time frame are we
talking about?
A. I think the chain was made with 7.1.3 versions of the
UnixWare source agreements.
Q. And what time frame was that?
A. That would be within the last, you know, five to seven
years. Prior versions 7.1.2, 7.1.1, my understanding is that they
did include the listings of all of the prior releases.
Q. When you say listings, they would have that long
laundry list of the prior SVRX software?
A. That's correct.
Q. If I could show what we've marked and been admitted as
Exhibit 69.
216
(Time lapse.)
THE WITNESS: Okay.
Q. BY MR. ACKER: Exhibit 69 is a SCO license with a
company called CyberGuard; correct?
A. Yes.
Q. And what is being licensed with CyberGuard is UnixWare
7.0; correct?
A. Yes.
Q. And this agreement was entered into 10 years ago;
right? 1998? Look at the bottom of the first page. See on the
signature page?
A. Yes.
Q. Mr. Broderick signed the license March of '98?
A. Yes.
Q. And if we take a look at -- we go back to SCO, SCO
0978321. It's Paragraph 4.7 in the attachment.
A. 4.7?
Q. Yes.
A. Okay.
Q. See there's a heading there, Prior Products;
correct?
A. Yes.
Q. And the only prior products listed there are UnixWare;
correct?
A. Yes.
217
Q. And so there is no -- in this contract 10 years old,
there is no list of all the prior legacy software; correct?
A. It appears to not be the case.
Q. So your testimony or your understanding about SCO's
practices isn't that always all the legacy software is licensed is
not accurate; right?
A. It appears in this case for this one particular
license. However, my understanding on this practice comes from Bill
Broderick who is the one who signed this contract.
Q. Kind of curious, isn't it?
A. And what he had told me was even if they did not
include it, if somebody asked for it, they would provide them with
a supplement that did include it.
Q. Let me show you what we've marked and admitted as
Exhibit 70. Will you take a look at that?
A. Okay.
Q. Exhibit 70 is another license. And this time it's on
behalf of Santa Cruz' predecessor to SCO, an entity called DASCOM,
Inc.; correct?
A. Yes.
Q. And again, this license was entered into 10 years ago;
correct?
A. Yes.
Q. And what was licensed was UnixWare operating
218
system; correct?
A. 7 operating system.
Q. And then if you go to the attachment, paragraph 4.7,
which is on SCO 1043328 --
A. Yes.
Q. -- do you have that? We have it on the screen. Again,
the only prior products listed are SCO UnixWare Release 2.1 and
2.0; correct?
A. Those are the only ones listed.
Q. And again, we don't have a laundry list of all the
prior SVRX product; correct?
A. Not in this case.
Q. So this is another example that is inconsistent with
your understanding of what you've been told about SCO's historical
licensing practices; corrects?
A. Again, I was told that it was removed at some point to
simplify the contract. However, it was provided to any customer
that requested those prior releases.
Q. Let me show you what we've marked and has been -- of
what SCO has marked and been admitted as SCO Exhibit 369.
A. Okay.
Q. SCO Exhibit 369 is a license between a Japanese
subsidiary of SCO and an entity called Alps Electric Company;
correct?
A. Yes.
219
Q. It's dated March 29th, 1996; right?
A. Yes.
Q. And if you take a look at SCO 1042588, you see -- we
have it on the screen. This is a license for UNIX Release 2.0. Do
you see that?
A. Yes.
Q. And then if you go back to SCO 1042612, and the
attachment here is actually a listing of these prior products, and
this exhibit was intentionally left blank. So there was no legacy
software included in this license in 1996; correct?
A. In this particular license, no.
Q. Is it fair to say what we have here in Exhibits 69, 70
and 369 are examples that are inconsistent with your understanding
of SCO's historical licensing practices? Correct?
A. Yes.
Q. And you weren't at SCO until 1992; correct?
A. At SCO?
Q. I mean you weren't at SCO until 2002; correct?
A. That is correct.
Q. So anything that you've learned about historical
licensing practices of the company were simply as a result of
something that's been told to you; correct?
A. That is correct.
Q. In questioning by counsel yesterday, you were
asked
220
about -- I want to turn your attention to Section 2.2 of the
Microsoft agreement. In response to questions from counsel you
testified yesterday that the release and license in Section 2
pertained to UnixWare. Do you recall that testimony?
A. Yes.
Q. But it's true, isn't it, that Microsoft -- that
release and license didn't pertain just to UnixWare, it also
pertained to prior SR VX products because Microsoft's concerns
about those products being in their products would not have
assuaged unless they got released from the earlier products?
A. Actually I think the release was for all of SCO's
intellectual property rights.
Q. And when it includes all of SCO's intellectual
property rights that means both UnixWare and prior SVRX products;
correct?
A. And OpenServer and all of SCO's units and intellectual
property rights.
Q. And you also testified yesterday that Section 4 of the
Microsoft agreement, in that section Microsoft wanted to use
UnixWare and other System 4 products in their products; right?
Excuse me. They wanted to use UnixWare and other System V products
in their products, which is why they took out the license in
Section 4 in the Microsoft agreement?
A. They took out the license in Section 4 to expand
221
their rights for UNIX to a broader set of products.
Q. But your testimony yesterday was Microsoft was
considering including in their products both UnixWare and other
System V products; right?
A. No. The only thing that I would expect that they were
intending to include in their products was the latest version of
UnixWare. They also might possibly have included some of the
OpenServer source code software that we licensed to them. The prior
versions would not make sense to include in new products.
Q. But it's true you're not aware of Microsoft ever
including any of either OpenServer, UnixWare or prior SVRX products
in their products; correct?
A. I do not know what they have done.
MR. ACKER: That's all I have, Your Honor.
THE COURT: Thank you, Mr. Acker.
Mr. Normand?
RECROSS-EXAMINATION BY MR. NORMAND:
Q. Good morning, Mr. Sontag.
A. Good morning.
Q. Could you pull up Novell 187? Attachment 1.
Mr. Sontag, do you recall being asked about this attachment this
morning?
A. Yes.
222
Q. This is a list of System V prior products you said
earlier?
A. Yes.
Q. Do you know whether under the 1994 agreement with Sun,
Sun had already obtained copies to these System V releases?
A. Source tapes or just rights to them?
Q. Either.
A. My understanding was that they had rights to all these
previous releases. I do not know if they had source tapes for any
of these previous versions.
Q. They had rights to use these -- do you have a view as
to whether or not they had rights to use these releases on their
CPUs?
A. Yes.
Q. You were asked about what was described as softened
confidentiality restrictions in the 2003 Sun agreement. Do you
recall that?
A. Yes.
Q. Were the confidentiality restrictions that pertained
to the older System V technology the same as the confidentiality
restrictions that pertained to UnixWare in the 2003 agreement?
A. I don't necessarily know. My understanding is applied
to all the new confidentiality provision in the 2003
223
agreement. My understanding is it applied to all the
versions.
Q. In your view, was there any difference in the way that
Sun could deal with the UnixWare source code as opposed to the
older System V releases?
A. No.
MR. NORMAND: Would you pull up Novell 369.
MR. ERIC WHEELER: 369?
MR. NORMAND: Yes.
THE COURT: SCO 369?
MR. NORMAND: Yes, Your Honor.
Q. BY MR. NORMAND: Do you recall being shown this
document by counsel?
A. Yes.
Q. This is the Alps agreement, the Nihon Alps
agreement?
A. Yes.
Q. Do you know whether Alps ever told Santa Cruz in the
negotiations of this agreement that they had no interest in listing
the prior products?
A. I do not know.
Q. That's not something that you ever discussed with Mr.
Broderick?
A. No.
Q. Pull up the bottom half.
224
What is the date of this agreement, Mr. Sontag?
A. March 29th, 1996.
MR. NORMAND: Could you pull up SCO 141. Go to the next
page. Blow up the bottom half.
Q. BY MR. NORMAND: What is the date of this document, Mr.
Sontag?
A. March 31st, 1997.
MR. NORMAND: And could you blow up the top half.
Q. BY MR. NORMAND: What do you understand this document
to be?
A. This is a supplement.
Q. Which company is it with?
A. With NCR. And I'm not sure what specifically it would
be related to.
Q. BY MR. NORMAND: Are you able to recognize now what
this document pertains to?
A. This looks like a UnixWare Release 2.1 International
Edition right to use sublicensing-type fees and agreement.
MR. NORMAND: Would you go to Page 24. Can you blow up the
top two thirds.
Q. BY MR. NORMAND: And do you recognize what this
represents on this page, Mr. Sontag?
A. A list of prior products.
Q. Now, this document is dated after the Alps
license;
225
correct?
A. That is correct.
Q. And is this document dated after the APA?
A. No, it is not.
Q. Is it dated after the asset purchase agreement?
A. I'm sorry. Yes, it is. Yes, it is.
Q. Do you have any idea as to of all the UnixWare
licenses that were executed how many of them list the earlier
releases of System V?
A. I don't specifically, no. But my impression was it was
the majority.
Q. Who would be the person at SCO who would know
that?
A. Bill Broderick is the person who would know.
Q. Mr. Sontag, who was the principal negotiator for SCO
in the 2003 Sun and Microsoft agreements?
A. I was.
Q. Did either Microsoft or Sun have any UnixWare license
prior to entering into those 2003 agreements?
A. No, they did not.
Q. How much did Microsoft pay for its limited UnixWare
license in Section 3?
A. In Section 3?
Q. Including the option to exercise section.
A. About $8 million, I believe.
Q. If I told you 7 million, would that --
226
A. That's, yeah.
Q. Now, as between Microsoft's limited license to
UnixWare in Section 3 and Sun UnixWare license, who had the broader
license?
A. Can you repeat the question?
Q. As between Microsoft's Section 3 UnixWare license and
the UnixWare license that Sun obtained under its 2003 agreement,
who had the broader license?
A. Sun did.
Q. In your view, did Microsoft obtain any additional
UnixWare rights under Section 4 of its agreement?
A. Yes.
Q. In your view, did Microsoft pay additional money for
its additional UnixWare rights under Section 4 on top of the 7
million in Section 3?
A. Yes, it did. I mean, it was significantly broadened,
as I testified before.
Q. As between Microsoft's full UnixWare license under
Sections 3 and 4 and Sun's license, who had the broader
license?
A. I would view them as being equal.
Q. And how much did Sun pay under its 2003 agreement?
A. About $10 million.
MR. NORMAND: No further questions, Your Honor.
THE COURT: Thank you, Mr. Normand.
227
Anything else of this witness?
MR. ACKER: Just a second, Your Honor.
(Time lapse.)
MR. ACKER: One question.
REDIRECT EXAMINATION BY MR. ACKER:
Q. You just testified in response to counsel that you
viewed the rights that Microsoft obtained under Section 4 of its
license as being equal to what Sun obtained; is that right?
A. Effectively, yes.
Q. Do you believe that Microsoft had open source UnixWare
under Section 4?
A. No, I don't.
MR. ACKER: Nothing else, Your Honor.
THE COURT: Thank you. I guess you meant two
questions.
MR. ACKER: I did. I apologize.
THE COURT: Mr. Normand?
That's all right.
RECROSS-EXAMINATION BY MR. NORMAND:
Q. Mr. Sontag, having considered the question that was
just asked of you, in your view as between the full UnixWare
license that Microsoft had under Sections 3 and 4 and Sun's
228
UnixWare license, who had the broader UnixWare license?
A. Specifically to UnixWare, I view that they were about
equal. I mean, you also have to take into account, which I don't
think I fully explained with the previous question, that Sun had
significantly more rights in terms of sublicensing and software
distribution rights for their UNIX technologies. So they're way
further ahead in many ways. But in terms of just distribution of
UnixWare, they were effectively comparable.
Q. All right. Would it be accurate to say that Sun had
broader rights with respect to UnixWare as to what counsel
described as open sourcing?
A. Modestly. I think I'm not an attorney, so it would be
difficult for me to be able to determine the differences in terms
of those agreements.
Q. Thank you.
THE COURT: Thank you.
Anything else?
MR. ACKER: No, Your Honor.
THE COURT: Thank you.
You may step down, Mr. Sontag.
I assume this witness may be excused?
MR. ACKER: Yes, Your Honor.
THE COURT: You can stay or go as you choose, Mr.
Sontag.
229
You may call your next witness.
MR. ACKER: We would call Mr. Darl McBride, Your
Honor.
THE COURT: Come forward and be sworn, please, right here
in front of the clerk of court.
THE CLERK: Come stand up here. Please raise your right
hand.
DARL CHARLES McBRIDE,
called as a witness at the request of Novell
having been first duly sworn, was examined
and testified as follows:
THE WITNESS: Yes, I do.
THE CLERK: Thank you. Please take the witness stand right
there.
Please state your name and spell it for the record.
THE WITNESS: Darl Charles McBride. D-A-R-L,
C-H-A-R-L-E-S, M-C-B-R-I-D-E.
THE CLERK: Thank you.
DIRECT EXAMINATION BY MR. ACKER:
Q. Good morning, Mr. McBride.
A. Good morning.
Q. You're currently the CEO of SCO; is that right?
A. That's correct.
Q. And you came to the company then called Caldera in
230
that same position in June of 2002; right?
A. That's correct.
Q. And at that time, when you joined Caldera, it was not
in great financial shape; correct?
A. That is correct.
Q. In fact, the company was in somewhat of a turn-around
situation. Would that be accurate?
A. Yes.
Q. The company had not been profitable for the fiscal
year ending October 31st; 2002; right?
A. Yes.
Q. And, in fact, the company had suffered a net loss of
more than $24 million for that year; right?
A. I don't remember exactly, but it wasn't in good shape.
I know that.
Q. And when you first came to Caldera, you met with the
top dozen or so managers of the company and asked them what they
would do if they were running the company.
A. Yes.
Q. And during those conversations, one of the managers,
John, I believe his name is Terpstra?
A. Terpstra.
Q. Terpstra, told you that he believed that the UNIX
intellectual property exists inside of Linux; right?
A. Yes, that's correct.
231
Q. And one of your takeaways or your findings from your
meetings with managers was although that the prior management or
regime had been focusing on marketing Linux, most of the company's
revenue was coming from UNIX; correct?
A. Yes, that's correct.
Q. And you believed that the course of action had to
change in the company in order to become profitable had to turn its
attention in protecting its UNIX assets; right?
A. That was clearly one of the key strategies that we
identified, yes.
Q. Let me show you what we have marked and has been
admitted as Exhibit 139. Mr. McBride, if you would take a look at
that, please, sir.
(Time lapse.)
THE WITNESS: Okay.
Q. BY MR. ACKER: Exhibit 139 is a letter that you wrote
to Caldera shareholders on August 12th, 2002; correct?
A. Yes, that's correct.
Q. And in the first paragraph of the letter or the first
numbered paragraph, you wrote:
Caldera owns the technology and other key intellectual property
rights to UNIX, one of the world's largest, most popular computing
platforms.
Correct?
A. Yes, that's correct.
232
Q. And in the last sentence of that first numbered
paragraph, you wrote:
We can and will be much more aggressive in
marketing and protecting those valuable assets.
Right?
A. That's correct.
Q. And you delineated what those assets were in the prior
paragraphs; right?
A. Yes.
Q. And you delineated them in three groups, UNIX SVRX;
right?
A. Yes. I wouldn't articulate it exactly the way you
are.
Q. Well, my question was you separated it out in three
separate buckets, didn't you?
A. Well, the precursor of those three buckets is the
statement right before it, which is the umbrella to those three
buckets or really the foundation of those three buckets, which is
our UNIX intellectual property. And then we talk about three brands
that they may have heard, which are UNIX, SVRX or System V. We use
that interchangeably, UnixWare and SCOsource. I call these brands
that are on top of the UNIX intellectual property.
Q. So the core assets of the company on the bottom is the
UNIX intellectual property; is that fair?
233
A. Yes, fair enough.
Q. And then built on top of that was UNIX SVRX;
correct?
A. Well, this is a brand. Again, if you go back to the
first thing here, we're talking -- I think it's important that we
don't -- we get the right distinction between a brand and, you
know, the core assets that we're talking about here.
Q. But the core assets, the UNIX core intellectual
property underlies all three of these brands; correct?
A. The core intellectual property is what is tied into
each of these brands, that's correct.
Q. And it was the core intellectual property tied into
each of these brands that you told shareholders in August of 2002
that you sought to protect.
A. Yes.
Q. And the brands that you delineated were three separate
brands, UNIX SVRX; right?
A. Yes.
Q. UnixWare; correct?
A. Yes.
Q. And SCO OpenServer; right?
A. Yes.
Q. And it's true, isn't it, that on several prior
occasions, you have described SCO's UNIX assets using a tree
analogy?
234
A. Yes.
Q. Why don't we bring up Exhibit 421, if we could. Let me
give you a copy.
And if you take a look at the third page of Exhibit 421, Mr.
McBride, or fourth page, that's the tree; right?
A. Yes.
Q. And in the diagram, the trunk labeled as SCO IP UNIX,
that's the core UNIX System V software code; correct? That's what
that represents?
A. Yes.
Q. And the branches on this diagram are derivative works
that are based on the core UNIX software code; correct?
A. Yes.
Q. And those branches include both SCO UnixWare;
correct?
A. SCO -- that is correct. SCO UnixWare is a little bit
unique in this diagram in that it serves both as the trunk of the
tree and also as a branch.
And so if somebody came to the company and said, we want to get
the core intellectual property to UNIX, and we want to take a
license for that, for example, IBM did that with us in 1998, we
said, okay, if you want to get core access to the UNIX intellectual
property or the trunk code, the way you do that is through a
UnixWare license.
235
So UnixWare is unique compared to any of these other branches in
that the core trunk is where the UNIX intellectual property was
held was inside of UnixWare.
Q. Well, isn't it true that when you arrived in Caldera
in late 2002, you realized that the revenues from the branches
UnixWare and OpenServer were, in your words, marching south and
dying off; correct?
A. They were under severe competition from primarily
Linux but also from others. But, yes, they had been going south for
a number of years.
Q. And because the revenues from the branches UnixWare
and OpenServer were marching south and dying off, your strategy was
to focus on maximizing the value of the trunk; correct?
A. In part, that's correct.
Q. And the trunk of the tree is the core SVRX code;
correct?
A. We call it different things along the way. Sometimes
we call it SCO UNIX; sometimes we call it System V; and sometimes
we call it SVRX; sometimes we call it UnixWare. But it's all
basically the core IP UNIX.
Q. And that's the core IP that dates back at
AT&T?
A. It started at AT&T, but it had evolved
dramatically over the years.
Q. And it was the core UNIX IP that you and Mr.
Sontag
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and others sought to mine with the SCO source program at SCO in
2002 through 2004; correct?
A. We sought to take the core UNIX ownership rights that
we had that were primarily embodied in UnixWare and be able to get
more value in the marketplace out of that core intellectual
property.
Q. But you don't know, do you, whether all of the code
from the core UNIX IP exists in UnixWare; correct?
A. The core -- no, that's not correct. The core code of
UnixWare is where the older versions of UNIX have been embodied.
It's been that way for years. I worked at Novell, and it was the
case then and it's the case now 15 years later.
Q. But my question is, do you know if every line of code
of the trunk here, do you know if every line of code in this trunk
exists in UnixWare?
A. I know that if you want to license the trunk code,
you'd have to do it through UnixWare.
Q. That wasn't my question. My question was, do you know
if every line of code in the UnixWare, this core trunk exists in
UnixWare?
A. That's my understanding.
Q. Have you ever done any study to determine that?
A. I'm not an engineer. We have some engineers that will
be here in the next couple days. I suppose you could ask them
that.
237
Q. Do you know if anyone's ever done that?
A. Again, that's something you'd have to ask the
engineers. What I do know is that the way the core UNIX property
was licensed -- I worked for Novell for eight years. I was there
when we bought it from AT&T. I was at Novell as an executive
when we sold the UNIX property to SCO. And I know that when we were
at Novell we made a conscious decision to take the core UNIX code
that we bought from AT&T and have it embodied in UnixWare. It
was part of the strategy. And that strategy has continued on over
the years.
Q. And that was UnixWare that existed prior to the APA;
correct?
A. It started prior to the APA in UnixWare. It has
continued on that way.
Q. Let me show you what we've marked as Exhibit 173.
(Time lapse.)
Q. BY MR. ACKER: Exhibit 173 is a press release
announcing the SCOsource licensing program dated January 22nd of
2003; correct?
A. Yes.
Q. Would you take a look at the paragraph under
SCOsource. This is was a description that the company gave of what
SCOsource was; correct?
A. Yes.
Q. And how you described it in January of 2003 was
238
that:
SCO patents, copyrights and core technology date back to 1969
when Bell Laboratories created the original UNIX source code.
Correct?
A. Yes.
Q. And it was that software, that is the core technology
dating back to 1969 that would be licensed in the SCOsource
program; correct?
A. Part of it was that. There was other things in
there.
Q. Let me show you what we've marked Exhibit 194.
(Time lapse.)
Q. BY MR. ACKER: This is a letter that you wrote to over
1,000 companies in May of 2003; correct?
A. Yes.
Q. And this is a letter written in conjunction with the
SCOsource licensing program; correct?
A. In part.
Q. And in the first sentence you wrote:
SCO holds the rights to the UNIX operating
system originally licensed by AT&T to
approximately 6,000 companies and institutions
worldwide, the UNIX licenses.
Correct?
239
A. Yes.
Q. And if we could go down to the last two paragraphs, in
the fifth paragraph, you write:
Many Linux contributors were originally UNIX
developers who had access to UNIX source code
distributed by AT&T and were subject to
confidentiality agreements including
confidentiality of the methods and concepts
involved in software design.
And then you continue:
We have evidence that portions of the UNIX
System V software code have been copied into
Linux.
That's what you told these 1,000
companies; correct?
A. That's correct.
Q. And in the last paragraph, you wrote:
As a consequence of UNIX' unrestricted authoring process, it is
not surprising that the Linux distributors do not warrant the legal
integrity of the Linux code provided to the customers. Therefore,
legal liability that may arise from the Linux development process
may also rest with the end user.
That's what you sold these companies;
240
correct?
A. That's what the general license says.
Q. And the companies were the end users; right?
A. Yes.
Q. So what you're telling these companies in May of 2003,
is, look, our core intellectual property dating back to AT&T is
in Linux; right?
A. Yes.
Q. And you're using Linux; correct?
A. That's correct.
Q. Therefore, you're going to have to take a license from
us.
A. I don't see anything in here that says you have to
take a license from us.
Q. You're telling them you should consider whether or not
you should take a license from us; right?
A. You have to show me where that is. I don't see it.
Q. What was the intent for writing the letter other than
to put these companies on notice that you believe that your core
intellectual property was in Linux and they were using Linux and
may be, in your words, legal liability for the end user?
A. I think "notice" is the right word you used there.
That's what we were trying to do is put them on notice. I had met
with IBM several months prior to this. And IBM said to me
241
directly that you cannot come after us because we do not do
Linux distributions. That's between you and an end user. And
because we don't do distributions, you can't sue IBM. That's one of
the things they told us. And, you know, if you read the general
public license, it does say that. It says, a caveat emptor phrase
in the general public phrase that says you are getting this license
for Linux for free, and be aware if somebody comes after you for
intellectual property problems we're absolved from that. I'm
paraphrasing now, but that's essentially what it says.
Q. But you not only told these 1,000 companies that our,
SCO's, technology is in Linux, and you're using Linux and you may
have liability, you also gave them a specific example where you
initiated legal action in this letter; didn't you?
A. Yes, we did.
Q. Why don't we turn to the second page.
In the first sentence of this paragraph, you wrote:
We believe that Linux infringes our UNIX
intellectual property and other rights.
Correct?
A. Yes, that's correct.
Q. And there you're talking about the trunk of the tree,
the core UNIX intellectual property; right?
A. I don't believe it says that in there.
Q. But that's what you're referring to; correct?
242
A. I'm referring to a number of things.
Q. Isn't it true --
A. I'm referring to things that are in the trunk and I'm
referring to things in the branches and things that may have been
in the leaves.
Q. You're referring to all three, the whole tree?
A. There were a lot of things going on. And when you go
into a bookstore and you go to the section in the bookstore that
says, how to program in UNIX. And then you go to the section that
says, how to program in Linux, there's not one. It's the same
thing. It's the same book. It's the same thing. Linux is a replica
of our UNIX, period.
Q. But let me just make this clear. When you wrote:
We believe that Linux infringes our
intellectual property rights.
You were referring in part to the core intellectual property
that existed in the trunk of your tree diagram; correct?
A. As I said earlier, I was referring to all parts of the
tree.
Q. Including the core in the trunk?
A. Including System V that was embodied in UnixWare that
was in the trunk, that's correct.
Q. And then you told them you not only put them on
notice, you flat-out told them:
243
We intend to aggressively protect and enforce these rights.
A. That's absolutely correct.
Q. You're basically telling them, take a license or we're
going to sue you.
A. You're going to have to show me where it says
that.
Q. Well, you then told them:
We intend to aggressively protect and enforce our rights.
And then you told them:
We already sued IBM.
Correct?
A. Yes. So where does that say we're going to go out and
sue everybody else? I don't see that in there.
Q. Well, when you wrote the letter, the user did not take
a license, was it your intent to bring legal action?
A. Our intent when we started the SCOsource licensing
program was very simple. We wanted very much to protect the
property. In fact, I had a meeting with IBM weeks after I joined
the company with Mr. Steve Solazzo, who was a senior executive over
there. And I talked to him about the idea of going out and
protecting our intellectual property, UNIX and asked his advice on
it.
And he said he thought that was a great idea. He said IBM does
that, and we collect over a billion dollars a
244
year from our licensing efforts. Now occasionally, you have to
file a lawsuit, yes. It's not the preferred path. It can be very
expensive, as we found out in the cases we're dealing with here.
But you also find that if you don't stand up and protect yourself
and you don't protect your rights, then you are going to have a
property that is going to get run over, and you're not going to
have any value left in it.
So the core idea here was to protect these rights through a
licensing program as the IBM executive had given me the idea.
Q. And that licensing program was SCOsource; correct?
A. That's correct.
Q. And although it was not the preferred route to go, you
understood that there may be the need to bring action if these
companies who you believe were infringing SCO's intellectual
property refused to take a license under SCOsource; correct?
A. That's how IBM played the game, and that's how we were
trying to play the game.
Q. And in June of 2003 -- excuse me -- in 2003, after SCO
announced the SCOsource licensing deals with Sun and Microsoft and
public filings, SEC filings, and press releases, Novell through its
general counsel asked you for copies of those agreements;
correct?
A. Which agreements are you talking about?
245
Q. Sun and Microsoft.
A. Yes.
Q. And Sun and Microsoft are SCOsource licenses;
right?
A. They were UnixWare licenses.
Q. Well, isn't it true that the Sun and Microsoft
licenses are SCO's -- are licenses under the SCOsource licensing
program?
A. They were UnixWare licenses that were embodied in the
SCOsource division.
Q. Well, I guess I'm going to have to ask the question
again.
Were the Sun and Microsoft licenses SCOsource licenses or
not?
A. No. They were UnixWare licenses.
Q. Let me show you what we marked as Exhibit 215.
THE COURT: 215?
MR. ACKER: Yes, sir. It's been admitted.
(Time lapse.)
Q. BY MR. ACKER: Have you had a chance to look at 215,
sir?
A. Yes.
Q. It's a letter to you from Mr. LaSala, the general
counsel of Novell, dated June 24, 2003; correct?
A. Correct.
246
Q. And in the first sentence in the first section of the
letter, Mr. LaSala references Section 416(B) of the asset purchase
agreement; correct?
A. Yes.
Q. And then look at the next slide, please. Next one.
And in the second page of the letter at the bottom, Mr. LaSala
demands to see copies of the Sun and Microsoft agreements;
correct?
A. Yes.
Q. And you refused to provide those; correct?
A. Yes.
Q. And at the time that you refused to provide those, you
were -- SCO was the fiduciary of Novell; correct? Fiduciary
relationship between with two entities; is that right?
MR. SINGER: Objection. It calls for a legal conclusion
which the Court has already determined.
THE COURT: It does call for a legal conclusion. I'll let
you ask him about his understanding about that if he has one.
Q. BY MR. ACKER: Well, you understood that under the APA
you were the agent for Novell to collect licenses or collect
royalties for SVRX licenses; correct?
A. Correct.
Q. And you understand now, don't you, that this Court
247
has determined that you were actually -- there was a fiduciary
relationship between the two companies; correct?
A. For those licenses.
Q. But you refused to provide the Sun and Microsoft
licenses to Novell; correct?
A. Correct.
Q. Now --
A. And can I explain?
THE COURT: Yes.
Because he understands my order doesn't mean he agrees with it,
though.
MR. ACKER: I'm fully aware of that, Your Honor.
THE WITNESS: Can I explain?
THE COURT: Yes. You weren't done with your answer, so go
ahead and answer.
THE WITNESS: Yes.
So my view of those two licenses was that Novell had no more
standing to ask us to produce those licenses to them than the court
reporter here has standing to ask for those. So it didn't make any
sense that we would send it to them.
Q. BY MR. ACKER: So it was your position that the court
reporter here in this courtroom today has the same standing to ask
for those licenses as Novell did in 2003?
A. For the UnixWare licenses with Sun and Microsoft,
248
absolutely correct.
Q. Okay. Why didn't you provide those copies of those
licenses to Novell and explain your position?
A. Same reason I wouldn't provide them to her if she
asked for them. She didn't have any standing, and Novell didn't
have any standing with respect to those licenses. Why would we send
them to her? Why would we send them to you? Why would we send them
to Novell? We had all the standing in the world to do those
UnixWare licenses.
And what -- the other thing, the context I would like to bring
this out in is this letter comes in a series of about two dozen
letters over a couple months. And it comes on the heels of Novell
sending out a letter to the world telling them that they, in fact,
are the copyright owner of UNIX and that they're going to use that
copyright ownership to come after SCO and attack us for the good of
the Linux community. They were currying favor with the Linux
community.
Five days after that, my secretary found Amendment 2 that amends
the asset purchase agreement that says in part SCO has the
copyrights necessary to exercise its rights under the asset
purchase agreement for UNIX and UnixWare.
Upon finding that agreement, that amended agreement to the asset
purchase agreement, I called the CEO of Novell, Jack Messman and
asked him if he had read Amendment 2. And he
249
said, no, I have not seen Amendment 2. What is that? And I said
essentially what I just said to you, that it talks about us having
the rights to the copyrights.
He said, I've never seen that. Is this a trick? And I said, no,
it has Novell's signature on it. Tim Tolman had signed it. Will you
fax it to me? This is 7 o'clock at night his time.
I faxed it to him. Jack Messman, CEO of Novell, called me back
within five minutes after reading Amendment 2, and he said to me,
okay, Darl, SCO has the copyrights, what do you want? That's what
he said. And I -- I don't need to go into detail about everything
that we talked about. But I basically said, we need a retraction.
We need you to come back and tell the world that you, in fact,
don't own the copyrights, that we do. And then we need to talk
about damages. And when I said damages, he got upset and hung
up.
But within 12 hours of that phone call, Novell issued a press
release to the world that said, SCO has produced to us an amendment
to the copyrights -- or to the asset purchase agreement. It wasn't
in our files, but it appears that it is correct that SCO owns some
copyrights. And so we're backing down off from this.
Within days after that -- so that was the immediate reaction
from Novell. That's why I it was always interesting to me the
immediate reaction from not an attorney that is paid
250
to litigate, but from the guy on top said, okay, you've got the
copyrights. What do you want me to do about it?
They immediately send out -- he gets with his general counsel.
They immediately send out a press release to the world that says,
SCO owns the copyrights. And then a few days later, realizing that
they're in litigation, I presume, with their outside attorneys, we
get a series of letters that come at us one after another after
another. It's like, it's like carpet bombing. Carpet bombing of
legal letters of one thing after another after another including a
reversal of their position that they say on the copyrights which
they say, well, I know we said that you're right. We know we sent
the letter out. But the more we think about it, the more we think
we still own the copyrights.
Then they sent out a letter like this that says, oh, and we want
to see the Sun and Microsoft things. And, oh, by the way and by the
way and by the way. There were dozens of those letters that came at
us.
So how serious did I take this? Well, I took it about as serious
as I took the other two dozen, which is they're in litigation.
They're attacking. They're in full attack mode. Did we read every
letter? Did we respond to every letter as necessary? Yeah. There
were some in there that had some legitimacy to them. I didn't view
this as one of them.
251
Q. BY MR. ACKER: In response to this letter, you never
responded back to Mr. LaSala and said, you're not entitled to see
those, did you?
A. Every one of these letters that came in I took over
and handed to Mr. Tibbits over here, the general counsel, and I
don't know what happened to them after that. So you have to ask
him.
Q. And you never wrote a letter back and said, you're not
entitled to those Sun and Microsoft agreements because they're
UnixWare agreements. You never said that; correct?
A. I personally don't know what happened. Again, this is
a legal letter that's coming at me. I gave it to my general
counsel. You'd have to query him on what he did with them because I
really don't know.
Q. So if we wanted to understand what it was with SCO's
response to Novell's request to see the Sun and Microsoft
agreements, we have to look at what Mr. Tibbits said in his letters
back to Novell; correct?
A. Again, that would be the place I would go.
Q. Okay. We'll take a look at that.
If we could bring up Exhibit 294, please.
(Time lapse.)
THE WITNESS: Okay.
Q. BY MR. ACKER: Exhibit 294 is a letter from Mr. Tibbits
written to Mr. LaSala on February 5th, 2004;
252
correct?
A. Yes.
Q. And if we could go to the last paragraph from the
bottom of the first page carrying over to the second page. And in
that letter, Mr. Tibbits writes:
In your letter you assert that SCO has unilaterally amended and modified SVRX licenses with Sun, Microsystems and Microsoft. You claim this characterization is based on public statements by SCO, but you do not identify where SCO made these alleged statements. By your citation of Paragraph 4.16(B) of the APA and Section B of the Amendment 2, it appears you are concerned about the proper flow of royalty revenues to Novell under the APA.
And you understand that at the time that when Mr. LaSala and
others at Novell were repeatedly writing letter to you and others
at SCO, they were concerned about the flow of the SVRX royalties;
correct?
A. I didn't know that at the time. You'd have to ask Mr.
Tibbits about that.
Q. That's what Mr. LaSala said in his letters to you;
correct?
A. That wasn't my view.
Q. And in response to that concern from Novell that
253
these were SVRX licenses and that Novell was entitled to SVRX
royalties, Mr. Tibbits wrote:
To the limited extent that Novell may have rights under Paragraph 4.16 of the APA to protect its revenue stream from SVRX licenses that were in existence at the time of the APA, those rights do not extend to the new contract with Sun and the new contract with Microsoft.
Correct?
A. Correct.
Q. So it was SCO's position back in 2003 that the reason
that Novell was not entitled to these licenses is because these
were licenses that were entered into after the date of the APA;
correct?
A. Yes.
Q. And there was no mention in this letter from Mr.
Tibbits to Novell in 2003 that Novell was not entitled to that
revenue because they were UnixWare licenses; correct?
A. Well, it says the Microsoft agreement is the new
agreement not covered by the APA.
All the licensing going forward was done for UNIX to a UnixWare
license. Novell had no rights to do that. So --
Q. But SCO's position back in 2003 is that Novell was not
entitled to these monies because they were licenses that
254
were entered into after the date of the APA; correct?
A. The new license would be a UnixWare license. And so if
it was done after the APA, it would be a UnixWare license and it
wouldn't be covered. The only thing that Novell had rights to was
the preexisting royalties that SCO didn't buy out as part of the
'95 transaction.
Q. But what Mr. Tibbits told to Mr. LaSala was not that.
What Mr. Tibbits told to Mr. LaSala is, these were new agreements
after the APA; therefore, you're not entitled to royalties;
right?
A. That's what it says there.
Q. And what Mr. Tibbits said to Mr. LaSala was not that
we licensed some SVRX, but it was incidental to UnixWare, but
rather these are new agreements after the date of the APA;
therefore, you don't get money; right?
A. Well, I think you can take bits and pieces of words
and say, here's what it was then. But if you take the approach that
the company has done over the years, it is to license UnixWare. And
if incidentally along the way, there is SVRX that ties to those
things incidentally, then, yes, we have a right to license
them.
Q. But that's not what Mr. Tibbits told Mr. LaSala.
A. I don't see that in there, no.
Q. And that was the position of SCO in 2003; correct?
255
A. That's what Mr. Tibbits' letter says.
Q. So it's true, isn't it, that six times between 2003
and November of 2004 Novell asked SCO to provide it with a copy of
the Sun and Microsoft agreements; true?
A. I'm not sure. I wasn't involved in the
discussions.
Q. But the existence of those agreements had been
disclosed in press releases, articles and SEC filings; correct?
A. Yes.
Q. Yet, SCO refused to provide copies of those agreements
to Novell, an entity it owed fiduciary duty to; correct?
A. We didn't have a fiduciary duty to Novell for these
contracts and licenses, so why would we?
Q. And it's true, isn't it, that never before had SCO
refused to provide a contract or to provide information regarding a
contract to Novell when asked by Novell; correct?
A. I don't know the history of that.
Q. Let me show you Exhibit 326.
(Time lapse.)
Q. BY MR. ACKER: It's an article that you're quoted in
from eWEEK, dated April 13th, 2005; correct?
A. Correct.
Q. And in the article there's a discussion about
Sun's
256
plans to open source its OpenSolaris products; correct?
A. Yes.
Q. And there's a quote attributed to you where you
say:
We have seen what Sun plans to do with open
Solaris, and we have no problem with it.
Do you see that?
A. Yes, I do.
Q. Is that quote accurate?
A. Yes.
Q. And is it true -- it's true, isn't it, that the bottom
line is you don't believe there's anything improper about Sun's
open sourcing of its Solaris product; correct?
A. No.
Q. And SCO does not have a problem with what Sun did in
open sourcing Solaris after the execution of 2003 Sun licensing
deal; right?
A. Correct.
Q. And you would agree, wouldn't you, that what Sun has
done with its OpenSolaris products it has the right to package that
Sun obtained from SCO in its 2003 license?
A. That's what I said.
Q. And it's true, isn't it, that Sun's OpenSolaris is a
derivative of UNIX System V?
A. Yes, it is.
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Q. As --
A. I'd like to -- are you off that thread, or can I
explain why I made those statements?
Q. Well, counsel is going to have an opportunity to ask
all the questions you want. I'm sure you can make all the
statements you want.
A. Okay. That's fine.
Q. As the CEO of either Caldera or SCO, have you ever
certified an SEC filing, either a Form 10K or 10Q with the
knowledge that it contained a false statement?
A. Not that I'm aware of.
Q. If we could take a look at Exhibit 190.
Mr. McBride, feel free to look at any portion of that, but I'm
going to ask you about specific sections of it.
A. Do I have to read this again? These are brutal enough
to go through the first time.
Q. Why don't you take a look at the second-to-the-last
page of the document. You see there's a certification by you of
Caldera's Q for the period ending April 30th, 2003. Do you see
that?
A. Yes.
Q. And before signing -- or having the electronic
signature affixed to the certification, did you read the Q?
A. Yes, I did.
Q. And when you read it I assume sometime in May or
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June of 2003, did you think everything in it was accurate?
A. I hope so or I wouldn't have signed it.
Q. Okay. Why don't you take a look at Page -- the
paragraph beginning on Page 20 and running over to Page 21 of
Exhibit 190.
A. Okay.
Q. This is a description of the SCOsource program;
correct?
A. Yes.
Q. And in 2003 when describing that program, you included
in it the Sun and Microsoft agreements; correct?
A. Yes.
Q. And how you describe the SCOsource program was, the Q
was written:
One of the assets that we acquired from
Tarantella --
And that happened in 2001; correct?
A. Yes.
Q. -- was the intellectual property rights to UNIX.
Correct?
A. Yes.
Q. And those rights that you're referring to that SCO
acquired in 2001 were rights that initially had been developed
according to the Q by AT&T Bell Labs, and over 30,000 licensing
and sublicensing had been entered into with
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approximately 6,000 entities.
Do you see that?
A. Yes.
Q. So the rights that you're talking about protecting in
the SCOsource program are the rights acquired in 2001 from
Tarantella; correct?
A. Yes.
Q. And those rights date back to code that had been
developed in AT&T labs; right?
A. It started in AT&T Labs. But at the point in time
that we were talking about in 2001, if you were going to try to run
the software in the 1968 AT&T Labs code, you would have to have
a punch card to make it work.
Q. Okay.
A. The point is this was a continuous effort. It didn't
stop in 1969. And that's all of the things we were licensing. It
started at AT&T, and clearly there were a number of contracts
that were tied to that period of time. But the technology clearly
evolved.
Q. But the rights that you are referring to here are
rights that you obtained in 2001 from Tarantella.
A. Yes. But what I'm saying is the Tarantella property
itself had evolved in time, as well. So, yes. Some of those were
done in AT&T days; some were done in Novell days; some were
done in SCO, Tarantella and ultimately
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Caldera.
Q. And then the last sentence of this paragraph you wrote
or was written:
We believe these operating systems are all derivatives of the original UNIX source code owned by us.
Do you see that?
A. Yes.
Q. And the UNIX source code that you're referring to
there, again, were the rights that were obtained in 2001 from
Tarantella?
A. Yes.
Q. And then you write:
We initiated the SCO source efforts to review the status of these licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses.
Do you see that?
A. Yes.
Q. And again, that intellectual property that you're
referring to again is that UNIX source code; correct?
A. Yes.
Q. And this effort resulted in the execution of two
licenses during the April 30th, 2003, quarter; right?
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A. Yes.
Q. And those two licenses were the Microsoft license and
the Sun license; right?
A. Correct.
Q. And the way that you described -- or the Microsoft
license was described in 2003 or the Sun license was described,
even though its's not identified as such here is:
The first of these licenses was with a long time licensee of the UNIX source code which is a major participant in the UNIX industry and was a cleanup license to cover items that were outside of the scope of the initial license.
That's the way it was described in 2003; correct?
A. Uh-huh (affirmative).
Q. That's the Sun license. In 2003 SCO described it as a
cleanup license; is that right?
A. That's what it says.
Q. A cleanup license referring back to its original
license from 1994; correct?
A. It says:
A cleanup license to cover items that are outside of the scope of the initial license.
Well, if you want to put a magnifying glass and say, what are
the things that were outside of the scope of the initial license?
It would have been the work that was done
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from the time of the '94 agreement up to 2003. And primarily the
value of the technology in those Jonathan Schwartz, the president
and CEO of Sun, has said multiple times, was relating to the
software drivers that attached to UnixWare. Those were the things
that were outside of the scope of that initial license.
Q. But it also provided Sun with the ability to open
source Solaris, which it hadn't been able to do under the 1994
license; correct?
A. Sun had more broad rights than anybody in the industry
with respect to how widely they could distribute their product.
They paid nearly $100 million for these rights. And what Sun had
that was unique that when they did the original deal for $83
million was they got the right to redistribute source. That was
very unique.
And so although it was not exactly open sourcing, it was so
broadly spreading the source out there that it was going to be very
hard for the company to protect that. That's why they paid so much
for it at the time they did it.
So there was a very broad opening in the technology with Sun
that was finished off at the point in time that we did the
agreement in 2003.
Q. Why don't we take a look at Page -- if we go to Page
22. If we could highlight the bottom two paragraphs.
Here later in the Q in this paragraph above, you
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describe what the revenue is for UnixWare products for the
Court; right?
A. Yes.
Q. That does not include the Sun or Microsoft agreements;
correct?
A. Let me look at it here for a second.
Right.
Q. So in the Q in 2003, we're describing what the revenue
was for UnixWare licensing. Did you not include either the Sun or
Microsoft revenues? Correct?
A. Correct. Can you bring up the tree picture again?
Q. And then when you do talk --
THE COURT: Your counsel can do it if he wants to when he
asks you questions.
THE WITNESS: Can I describe it then?
Q. BY MR. ACKER: When we talk about licensing, which is
the SCOsource program --
A. Right.
Q. -- that's where the Sun and Microsoft revenues were;
correct?
A. These were tied into the trunk, if you will, of the
tree licensing, which is UnixWare. There was also the branch
UnixWare. So if you were going to put this back on the tree
picture, you would take the first two versions up there and say,
OpenServer was a branch, UnixWare was a branch. Those
264
were kept out in the marketplace. Those were sold through our
channels. When you're talking about licensing programs, those were
different channels, it was the trunk code. But those were always
100 percent. Those contracts were driven off of a UnixWare
license.
Q. Let me understand your testimony. So when you're
talking about the UnixWare and OpenServer licensing revenue in the
Q, you're talking about the branches of the tree; correct?
A. Yes.
Q. But when you're talking about the Sun and Microsoft
and SCOsource licensing, you're talking about the trunk, the core
UNIX IP; correct?
A. That's the way I would depict it, yes.
Q. And the core trunk or UNIX IP dates back to AT&T;
correct?
A. It started at AT&T and evolved over time.
Q. Let me show you what we've marked as Exhibit 304. It's
also been admitted.
A. So I'm a little bit troubled that you were trying to
imply that I was not telling the truth in my 10Q here. I don't
understand what --
Q. I'm not implying anything, Mr. McBride. I'm asking
questions --
A. You said that.
Q. I asked you if you have ever not told the truth in
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your Q.
A. Right.
Q. And what you're telling me is that you have told the
truth in your Q.
A. Okay. I just wanted to make sure it was clear.
Q. Let me ask you that. You always have told the truth;
correct?
A. Yes.
Q. And so what we read to you is accurate; is that
right?
A. Yes.
Q. And the Sun and Microsoft licenses, those were not
included as UnixWare licensing revenue; correct?
A. They were included as part of the licensing revenue
that went to the trunk code of UnixWare.
Q. They were not included in the Q as UnixWare or
OpenServer licensing revenue; correct?
A. Not as part of the branch revenue, no.
Q. And that was accurate; right?
A. Pardon?
Q. That was accurate?
A. Yes.
Q. When you said that in 2003, it was accurate;
right?
A. Yes.
Q. And it's still accurate as you sit here today?
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A. Yes. I wanted to make sure we were clear on that.
Q. Why don't we take a look at Exhibit 304. This is
another Q for the quarterly period ending April 30th, 2004. And
again, you would have read this before it went out; correct?
A. Yes.
Q. Why don't we go to Page 40. Do you see on Page 40, Mr.
McBride, there is -- at the top of the chart, there is a depiction
of what revenue was generated for UnixWare revenue for the quarter
ending April 30th, 2004; correct?
A. Yes.
Q. And you had it both for the three months ending April
30th, 2003, and for the three months ending April 30th, 2004, as
well as for the six months ending April 30th, 2003, and for the six
months ending April 30th, 2004; correct?
A. Yes.
Q. And this UnixWare revenue in the Q for April 30th,
2004, none of that involves the Sun or Microsoft licenses;
right?
A. Those would have been done through our licensing
program, not through the products program.
Q. Okay.
A. This is more of a branch revenue out here.
Q. The branch of the tree; correct?
A. Yes.
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Q. Why don't we take a look at the bottom of the page.
And when you talk about SCOsource licensing revenue, as distinct
from UnixWare revenue, you describe it as:
SCOsource licensing revenue consists of revenue generated from vendor licenses to use our proprietary UNIX System V code as well as IP licenses.
Correct?
A. Yes.
Q. Accurate statement; right?
A. Yes.
Q. You're licensing the trunk of the tree; correct?
A. Correct.
Q. And this revenue does include the Sun and Microsoft
licenses; right?
A. Yes. Yes. Along the way we created a division, and we
put as many licensing revenue pieces that we could in the SCOsource
division.
Q. Let me show you what we've marked and been admitted as
Exhibit 313.
Mr. McBride, there is your Form 10Q for the period ending July
31st, 2004; correct?
A. Yes.
Q. And if we go to -- we'll go to your certification on
Page 61.
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Again, on September 14th, 2004, you read the document;
correct?
A. Yes.
Q. And you wouldn't allow someone to place your
electronic signature on it unless you read it and believed it to be
accurate; correct?
A. Correct.
Q. Why don't we go to Page 32 -- I'm sorry. We'll start
on Page 31.
On Page 31 of the Q, it was written:
Our product revenue consists of software licenses of our UNIX products primarily OpenServer and UnixWare as well as sales of UNIX related products.
Correct?
A. Correct.
Q. So when you're talking in the financials about what
products revenue is, it's software license of OpenServer and
UnixWare.
A. Everything in software turns on a license. So, yes, it
was UNIX products and OpenServer UnixWare.
Q. But when the term products revenue is used, it's
specific to OpenServer and UnixWare licensing; right?
A. That's typically how we do did it, yes.
Q. Why don't we turn to the next page, Exhibit 32 --
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Page 32.
So you see on the next page, Mr. McBride, there's a listing
there of the UnixWare revenue and OpenServer revenue for the nine
months ending July 31st, 2003, and 2004. And neither of those
numbers or those line items include the Sun and Microsoft
agreements; correct?
A. What period of time is this talking about?
Q. Well, at the top it's the nine months ending July
31st, 2003, and 2004. So nine months prior to July 31st, 2003, and
2004. And there is a line item for UNIX revenue, UnixWare revenue
and OpenServer revenue; correct?
A. This thing is so dark on the screen I can't even read
it. Let me go to the page. Which page are we on here?
Q. 32.
(Time lapse.)
THE WITNESS: Okay. So what's the question then?
Q. BY MR. ACKER: When you're talking about these line
items up here, UnixWare revenue and UNIX licensing --
A. Right.
Q. -- that does not include the Sun and Microsoft
agreement?
A. That is the UnixWare branch revenue up there. Again,
the only way you can get System V code license company is through
UnixWare.
Q. Let's go back to Page 31. Go back one page.
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In the Q how you describe products revenue is:
Our products revenue consists of software licenses of our UNIX products primarily OpenServer and UnixWare.
Correct?
A. Okay.
Q. We go to the next page, Paragraph 32, this UnixWare
revenue line does not include the Sun or Microsoft licenses, the
revenue from those licenses; right?
A. No; because it was trunk revenue, not branch revenue.
This is referring to branch revenue.
Q. And again, branch revenue is the derivative works
including OpenServer and UnixWare; correct?
A. Yes.
Q. And the trunk is the core UNIX IP; correct?
A. I believe you keep trying to shift my words on this.
If we go back to the very beginning, I believe what I said very
clearly and I said a number of times here is that UnixWare runs
throughout the entire tree, okay. It runs throughout the entire
tree. So I know you're trying to catch me saying things the wrong
way here, but let me come back to the same statement, that UnixWare
runs through the entire tree. UnixWare is also a branch. Any time
we're talking about the core licensing of the code that's running
through the branch, the trunk, it's always going to be through
271
UnixWare licensing.
Q. But when you told the SEC in 2003 and 2004 that you
had a body of UnixWare licensing, you did not include the Sun and
Microsoft agreements in that licensing; correct?
A. No. And we didn't put a picture of the tree in there,
either. This is not inconsistent with the statement that I'm
making.
Q. Let me just get it clear. It's true, isn't it, that
when you told the SEC and investing public in 2003 and 2004 that
the Sun and Microsoft licenses were not UnixWare licensing revenue,
that was an accurate statement?
THE COURT REPORTER: An or inaccurate?
MR. ACKER: Inaccurate statement, that it was true.
THE WITNESS: Say that again.
Q. BY MR. ACKER: Was it true when you told the SEC and
the investing public in 2003 and 2004 that the revenue from the Sun
and Microsoft agreements was not UnixWare licensing revenue?
A. No. It was -- System V was always licensed through
UnixWare. UnixWare here is described -- if you want to go back
--
Q. Well, let me ask you. So the statement was
inaccurate?
A. I was saying something. Can I finish?
Q. Was the statement accurate? I'm asking a simple
272
question. Was it true or false?
A. Can I finish my statement?
Q. Was it true or false when you told the federal
government and the investing public that the Sun and Microsoft
licensing revenue was not UnixWare licensing revenue?
THE COURT: You can finish your statement. You need to
answer his question, but go ahead and finish your statement.
THE WITNESS: Okay.
If you go back and -- have you listened to the conference call
--
Q. BY MR. ACKER: The way this works is I ask questions
and you answer them. It's unfortunate that way.
A. If you listen to the conference call from the time we
were doing this licensing, you go back and listen to them. And we
were always very clear that the licensing -- a lot of the SEC thing
evolves around disclosure, and we've done nothing to not disclose
where these are coming from. The code from the licenses, the only
which -- you couldn't walk into the company and buy a System V
license by itself. There wasn't such a thing on the price list. It
would be like walking into Chevrolet and saying, I'd like to buy a
Duramax engine. It's not there. You buy a Duramax engine by buying
Chevy Silverado, and that's how you get your Duramax.
And that's the same way it happens here. We were
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always very clear on that. This is not deceiving the investing
public. I know where you're trying to go with it. But the
statements that I'm making are not inconsistent with our licensing
practices.
Q. And I'd just like an answer to the question.
A. What's the question?
Q. Is it true when you told the investing public in 2003
and 2004 that the Sun and Microsoft revenue was not UnixWare
licensing revenue?
A. We didn't say it was not UnixWare revenue.
Q. Well, you have a list of what UnixWare revenue is in
the Q; correct?
A. These were UnixWare branch products.
Q. Let me finish.
You have a list of what UnixWare is in the Q; correct? There's a
line in there that includes UnixWare revenue; right?
A. The UnixWare branch revenue is what we're talking
about.
Q. And it doesn't include the Sun and Microsoft licenses;
right?
A. They were down in the licensing part of SCOsource, and
the way you got that was through UnixWare.
Q. But if you go back to the prior page, go back. When
you describe what is included in UnixWare licensing and
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your products revenue, that product line that does not include
Sun and Microsoft, it's the software license of our UNIX products
including OpenServer and UNIX and UnixWare; correct?
A. And this is referring to the branch revenue. We had
the System V revenue that was manifested in a UnixWare license that
was part of that, as well. The investing public looked at UnixWare,
when you say UnixWare to our investors, what they think is what's
coming out of the UnixWare product line, okay. We were trying to --
we were not trying to play trick plays with legalisms here with
where you're trying to go with. We're trying to inform the
investing public they know what our UnixWare product is. And the
fact that we use UnixWare as the wrapper to sell a System V license
is not confusing to our investors. It might be confusing to you,
but it's not to our investors.
Q. Simple question. In your Q, you said that the products
revenue included UnixWare licensing revenue; correct?
A. Say that again.
Q. The products revenue in your Q includes UnixWare
licensing revenue; correct?
A. Which means it was a product. It was a branch.
Q. And that did not include, that line item from products
revenue did not include the Sun and Microsoft revenue; correct?
A. No, it did not.
275
Q. Mr. McBride, with your approval SCO filed this lawsuit
against Novell alleging slander of title; correct?
A. Correct.
Q. And the basis for that claim was that Novell allegedly
slandered SCO's claim to ownership of the copyrights for the UNIX
System V software; correct?
A. Yes.
Q. And SCO claimed that Novell's actions in challenging
SCO's ownership of the UNIX System V software cost SCO hundreds of
millions of dollars in damages; correct?
A. Correct.
Q. And the basis for that hundreds of millions of dollars
of damages claimed that Novell's actions harmed or destroyed SCO's
SCOsource licensing program; right?
A. Yes. That was a major, major factor.
Q. But it's true, isn't it, that the only copyrights that
Novell have claimed ownership of are the copyrights of the software
that were in existence before the 1995 APA; correct?
A. They have filed copyrights that step all over the top
of our UNIX copyrights, the foundation of our SCOsource
program.
Q. But the copyrights that Novell has claimed ownership
to existed prior to the 1995 APA?
A. They have claimed copyright ownership to the
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copyrights that in the asset purchase agreement, if you go to
the included assets, says, SCO is hereby transferred all rights and
ownership to all copies of UNIX and UnixWare. It doesn't say Novell
gets all the previous versions and SCO gets the latter versions. It
says in the first part of the included assets of the asset purchase
agreement, included in the asset list is all copies of UNIX and
UnixWare and all rights and ownership of UNIX and UnixWare. There
is nowhere in there --
Q. I wasn't asking about that. All I was asking you,
isn't it true that the basis for your slander of title claim is
that Novell claimed ownership to software, but it only claimed
ownership to software that existed prior to the APA; correct?
A. That's not -- they have claimed -- well, the way
you're dicing it, I would say that's correct. But it steps on a
number of copyrights we believe we have ownership rights to.
Q. And Novell has never claimed copyrights to SCO
produced UnixWare created after the APA; correct?
A. They have claimed ownership to copyrights that are a
major part of UnixWare. They sold us -- they said to us in 1995,
you go to UnixWare. At that point in time, System V has gone
through a number of iterations. The version of System V in 1995 was
a thing called System V Release 5. System V Release 5 is also known
as UnixWare.
277
So there's an evolution, System V Release 1, 2, 3, 4, 5. Each
time this code base gets broader and deeper. What Novell did is
they told us in 1995, they didn't just tell us, they told all of
their customers that they had sold UNIX and their interest in UNIX
to SCO. They sent out letters to Prentice Hall, they sent a letter
to Prentice Hall and dozens of other companies that said in part,
we have sold our interest and our ownership in UNIX and UnixWare to
the Santa Cruz Operation. It makes immeasurably more sense for you
to be dealing with the owners of UNIX and UnixWare than us. And so
here's their numbers. And Novell signed this. SCO signed it; Novell
signed it.
Then it lists, in this Prentice Hall letter that goes out in
1996, it lists numerous versions of what Novell said to the
customers, to Prentice Hall in this case, was transferred. It was
sold. And it lists all of the things that your client went out and
filed copyrights on, not in '95. Why didn't they do it in '95? Why
didn't they do it in '96? '97? Why didn't they do it in '98 when we
had a licensing deal going on with Monterey or IBM. Maybe in 2001
when SCO transferred the company to a new company called Caldera.
They could have said something then.
They only did it after we filed suit against IBM in 2003 and IBM
paid Novell $50 million to come and work with them. And that
copyright ownership letter that Novell sent
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out to Prentice Hall could not be more clear that SCO is the
owner of those products. And ownership in my mind and in the APA
says that it includes all rights and ownership.
Q. And the products we're talking about are products that
were in existence before 1995; correct?
A. Part of them, yes. Part of them are subsequent
versions.
Q. So because of this claim that SCO was damaged for
hundreds of millions of dollars by Novell's actions, there must be
significant value to that software that existed before 1995;
correct?
A. Again, what you're doing is taking pre 1995 technology
called System V, and up to that point we've had System V Release 1,
2, 3, 4. And in '95, Novell sells to SCO System V Release 5 and
calls it UnixWare. Now they're trying to recreate the playing
field. The business people at Novell are not doing this. The
business people 100 percent line up with our story. There's a
couple of attorneys coming in and trying to recreate the story that
they own the previous copyrights. But yet, that contradicts the
proposition that our company acquired UnixWare and UNIX and all the
rights that go with that in 1995.
And so what Novell would have you believe is that all of the
money, the 100-plus million dollars that we spent and paid to get
rights to all of the versions of UNIX are now
279
stripped away. And all we have is what we created after
that. Q. And because --
A. It's incredible that they even made that argument, let
alone that it's standing up.
Q. And because of those actions, Novell's actions in
claiming ownership to these products that existed before 1995, you
believe SCO has been damaged in hundreds of millions of
dollars?
A. Absolutely.
MR. ACKER: Nothing else, Your Honor.
THE COURT: Thank you.
Let's take our first break. We'll be in recess for 15
minutes.
(Recess.)
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THE COURT: You may proceed, Mr. Singer.
MR. SINGER: Thank you, Your Honor.
CROSS EXAMINATION BY MR. SINGER:
Q. Good morning, Mr. McBride.
A. Good morning. Q. You were asked some questions about the public
filings of SCO in which there's references to license agreements
with two licensees, Sun and Microsoft, to clean up IP issues. Do
you remember that line of examination? A. Yes, I do. Q. Was the
manner in which those IP issues cleared up with Sun and Microsoft
through a license to UnixWare technology? A. Yes. Q. And, with
respect to Microsoft, was there also a license to OpenServer
technology? A. Yes. Q. And, with respect to Sun, was there also a
provision of drivers for UnixWare technology? A. Yes. Q. Now,
anywhere in the SEC filings you are aware of, has SCO sought any
amount of money from those licenses as actually being SVRX license
money in the
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meaning of the APA? A. No. Q. I'd like to direct your attention
back to the eWEEK article, which is Novell's Exhibit 326. Do you
remember being asked a few questions about your comments in that
article about what Sun obtained from SCO?
A.Yes. Q.And you
remember, at one point you wanted to explain what those rights
were, and it was suggested would better be done during my
examination rather than Novell's counsel? A.Yes. Q.Well, that
time has now come, and I would like you to provide that
explanation. A.I remember the advice well. Q.Can you explain what
you understood Sun was getting from the 2003 rights, as you were
expressing them with reregard to the E-Week article? A.Yes. The
key thing that they were looking for was how to take their Solaris
operating system and make it more compliant with the Intel chip
set, which is what SCO has a deep history of doing. And the way you
do that, the way it's substantiated, is by taking the drivers that
attach to SCO's operating systems and allow Sun to move that over
to Solaris.
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Q.With respect to open sourcing rights and the ability to
distribute source code, did Sun have substantial rights from the
1994 agreement in that regard? A.Yes, they did. Q.And you
mentioned $82.5 million being paid in the 1994 agreement; is that
right? A.Yes. Q.Was all of that paid to Novell? A.Yes. Q.At the
very beginning of the direct examination, you were asked about the
tree analogy and UnixWare technology in there. When SCO licenses
UnixWare, is it your understanding that it licenses all the core
intellectual property in the trunk of that tree? A.Yes. Q.Has
anyone come in to you and said: We want to simply go back and
license that technology in the form of the old SVRX licenses from
the 1980's and early 1990's, as opposed licensing UnixWare. A.No.
Q.Have you ever told shareholders that the way in which you're
going to commercially exploit that intellectual property is from
selling those old SVRX licenses, as opposed to through UnixWare
technology?
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A.No. Q.You were asked some questions about UnixWare having
started before the Asset Purchase Agreement was executed in 2005.
Do you remember those questions? A.Yes. Q.Is it your
understanding that Santa Cruz, and now SCO, bought the rights to
UnixWare in the APA? A.Yes. Q.And that included the business as
it was before the APA was executed? A.That's what they told us. Q.
And was a fair amount of consideration paid for that business? A.
Yes. It was well over a hundred million dollars. Q.In addition,
were there royalty rights in the APA for the sale of UnixWare
products that Novell would get under certain conditions? A.Yes. Q.
And were those conditions, first of all, a floor that had to be
exceeded in UnixWare sales? A.Yes.
MR. ACKER: I'm just going to object to leading. The last five
questions have been leading.
THE COURT: Try not to lead.
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Q.Was there a floor in the agreement? A.Yes. Q.And can you
explain how the floor operated? A.Yes. There had to be a certain
threshold hit before Novell would receive any of those royalties.
Q.Was there also a -- was there any time limit on the time during
which those royalties would accrue to Novell? A.Yes. Q.And do you
remember how many years that time limit existed for? A.I know that
it expired December 31, 2002. Q.Did Novell ever qualify for any
royalties on UnixWare sales, as provided in that provision of the
APA? A.No. Q.Has, to your knowledge, Novell, at any time, ever
suggested to you that you owed Novell any royalties under that
provision? A.No. Q.Outside of that provision, has Novell ever
suggested to you, in any way, that you owed UnixWare licensing
money to Novell on sales of UnixWare products? A.No.
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Q.Even if some of those products were UnixWare products that
started at Novell prior to the sale?
A.No. Q.There was a line of
questioning about the request for the Sun and Microsoft agreements.
And I want to ask you a couple of questions about that. Mr. Acker
asked that -- if SCO had ever refused before to provide a contract
when provided by Novell. I'd like to ask you, had Novell ever
requested any UnixWare licenses prior to the Sun and Microsoft
agreement? A.Not that I'm aware of. We did a deal with IBM in '98
over Project Monterey, and I never saw anything where they came in
and requested to see what was going on with that. Q.Now, in
connection with the Sun and Microsoft agreements, you were asked
some questions about, first of all, the June 24, 2003 letter to you
from Mr. LaSal A.And that is Novell's Exhibit 215. That was in June
of 2003? A.Yes. Q.Prior to that time, had there been
conversations that you had with Novell regarding the SCOsource
program? A.Yes. Q.Who did you have those conversations with
at
286
Novell? A.Greg Jones. Q.Can you tell me when the first
conversations occurred? A.Yes. It would have been in the fall of
2002, probably early November. Q.Who initiated the conversation?
A.I first called in to Greg Jones, who was an attorney at Novell.
Q.Okay. And what did you tell him or ask him? A.Well, I told him
that I was the CEO of SCO, SCO had acquired the UNIX properties, as
we remembered from the '95 time frame, and we were preparing to
enforce our intellectual property rights and, in the process of
going through the related agreements, I had come across a
head-scratcher, if you will, something in the agreements that did
not make sense to me.
There was competing language, where the majority of the Asset
Purchase Agreement seemed to appear that all of the property went
to the Santa Cruz operation, and there was really just one word in
one small section that was conflicting that, and that was relating
to the copyrights in the excluded asset list.
And I explained that to Mr. Jones and, at the same time,
explained to him what we were trying to do
287
with our SCOsource program. Q.Now, at the time you had this
conversation, were you aware of amendment number 2? A.No, I was
not. Q.What did you ask Mr. Jones for Novell to do? A.I asked him
if he would help us find all of the documents that related to the
Asset Purchase Agreement in 1995, so we could try and get some
clarity to what was clearly an erroneous problem. Something was in
error because there was conflicting statements. Q.What did Mr.
Jones say to you? A.He agreed with me and said he would do his
best to see how he could help. Q.Okay. Was there a follow-up
conversation with Mr. Jones or anyone else from Novell? A.Yes.
Over the period of the next, I would say, two to three months,
there were a number of discussions I had with Greg. And then,
eventually, there was someone else from Novell, a Dave Wright came
in, and I had some discussions with him, but primarily it was with
Mr. Jones. Q.Can you relate the substance of that conversation --
conversations? A.The substance, if you put a thread through it,
was basically us asking them to clarify this language
288
that we felt was conflicting and that we had bought the
technology, SCO had bought it, Novell had sold it. I went through
that with Greg. Greg agreed with me and said: Yeah. That doesn't
make sense. Let's try and figure out if there's a document out
there somewhere.
So, the first part was going out to try and find some documents
that would help that. So if there was a thread through it, it was
Greg was very helpful every step along the way to try and help us
resolve the issues. Q.Well, did they express a willingness to go
back and search for documents? A.Yes, they did. The first part of
of it was Mr. Jones telling me: Let me go see what I can find
out.
I worked with Greg at Novell, and I knew him well. A lot of
people had left over the ten years since I had worked there, so --
eight years, whatever it was. So -- but I did know Greg, and Greg
was very helpful to, first of all, go try and find any
documentation that would explain what was going on at the time of
the deal. Q.Did there come a time when Novell said they were not
willing to provide any assistance in doing that? A.Yes. Q.When
did that occur?
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A.The first come back from Greg was that they had gone -- he
had gone down the path of trying to find the documents, and he came
back and said to me that all the documentation around the UNIX
stuff was old and in archives and wasn't even on property anymore
and so it was going to be extremely difficult for them to go out
and even find the documentation around the UNIX technologies. Q.At
that time, did you ask them if they would take any further steps to
clarify the ownership of the copyrights? A.Yes. Well, we talked
about it, and so the first step that I took was to try and explain
to them why there would be an incentive for them to do it, and that
was that Novell's royalties from the preexisting royalties from
'95, they obviously had been coming down over the years. And the
way I described it to Greg was that if we're able to support, in
the industry, the defense of the intellectual property for UNIX,
vis-a-vis Linux, then anybody who has anything to do with UNIX will
benefit from that, so their declining revenue stream might slow
down.
So I was trying to explain to them that it wasn't just in our
interest, but it was in fact in Novell's interest to get involved
with us to support us
290
in what we were doing with SCOsource. Q. Did you explain the
SCOsource program to Mr. Jones? A.Yes, I did. Q. That it would
involve licensing individuals who are using Linux to make use of
whatever UNIX intellectual property existed in Linux?
MR. ACKER: Same objection. Leading, Your Honor. He can ask,
simply: What did you say? Q. Did you describe the SCOsource
program? A. Yes, I did. I explained to Greg what we were doing. I
believe he understood it. At the point in time we were talking, the
tight focus that we had on the intellectual property problems in
Linux related to our UNIX was around our library licensing, and I
went through and described generally what we were doing with
SCOsource and then also specifically what the first program would
be around. Q.Did Novell, through Mr. Jones or anyone else, respond
to you with respect to their interest in helping on the SCOsource
program? A.Well, again, Greg was extremely helpful along the way
to try and help us clarify what the problems were in the Asset
Purchase Agreement. And with respect to the SCOsource program --
well, in order -- what came back was
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Mr. Jones said that SCO -- Novell was not interested in
participating in anything to do with UNIX. That was yesterday's
story, that they had taken it all the way up to the top of the
company. And I can't remember if he said executive committee or the
CEO.
Somebody at a very high level had reviewed the request for both
things; to get involved in what we were doing with our licensing
program, but also to help us try and get some clarity around what
was clearly some incorrect documents. Q.Did Novell agree or refuse
to provide any clarification, through any subsequent documentation,
on the ownership of the copyrights? A.Greg agreed, but higher-ups
disagreed. So, Greg, after basically saying that it's in the
archives, we can't find them, and after we kept pressing and saying
that we really want to get this cleared up, Greg had an idea which
I thought it was a good one, which was: Why don't you guys just
draft a statement -- maybe we can include it as a side letter --
and clarify what is clearly a problem in the documents, and I'll
get somebody to sign it, and we'll be done with it.
We went through that step per Mr. Jones' request. We actually
created a one-page, I believe. It was a document that was a little
side letter to attach
292
that said: Both parties agree that, at the time of the
transaction, it was the intent of the parties to -- that the
copyrights were part of this transaction.
Over the course of the last several years, it's been proposed --
Q.I'm not asking about the last several years, Mr. McBride, just
those questions. A.Okay. Q.With respect, though, to that request
for clarification, did Novell ultimately agree or refuse to provide
it? A.They ultimately refused. Q.Did -- at any time in these
conversations that occurred in late 2002 and early 2003, did Novell
ever say that you, SCO, are not able to engage in a SCOsource
licensing program because we, Novell, own that intellectual
property? A.No, they did not. Q.Did Novell, at any time during
those discussions, ever say: You, SCO, if you go forward with that
program, have to give us, Novell, the revenue that comes out of it?
A.Not at all. In fact, what they did say was: UNIX is yesterday's
story. We're going forward. We're interested in Linux. We don't
want to get involved in
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UNIX. Q.Now, moving forward to June 24, 2003 and Novell Exhibit
215, Mr. McBride, you were asked about this letter, which talked
about receiving copies of the agreements, the two license
agreements. A.Correct. Q.At that time, did Novell ever say to
you: We think the SCOsource licenses that are publicly being made
available are licenses which violate our SVRX rights. A.Say that
again. Q.Did Novell ever say to you, either in the June 24, 2003
letter, or at that time, that the SCOsource licenses, which are
publicly available, that you're selling to the public, violate our
SVRX rights in the APA? A.No. Q.In fact, if you turn to Exhibit
272, which is Mr. Tibbitts' letter that you were asked about, Mr.
Tibbitts' letter of February 5, 2004, to Mr. LaSala -- A.I think
it's 272. It appears -- oh, here it is. Q.It's Deposition Exhibit
272. It's Trial Exhibit 294. It should be.
If you turn to the second page, you see even in
294
February, 2004, Mr. Tibbitts is saying to Mr. LaSala:
You also question SCO's introduction of intellectual property
license for Linux and whether that was a USVRX license.
Do you see that? A. Yes. Q. Had Novell, even as late as
February, 2004, ever told you that the publicly available SCOsource
licenses, that SCO was marketing at that time, were things that you
were not authorized to offer to the public because of their SVRX
rights? A. No. Q. Did they ever tell you, at that time, that if you
marketed those, they would get the revenue? A. No. Q. Or they
believed they were entitled to the revenue? A. No.
MR. SINGER: Thank you very much.
THE COURT: Thank you.
Anything else, Mr. Acker?
MR. ACKER: Just a few questions, Your Honor.
THE COURT: Is it Acker or Acker?
MR. ACKER: Spelled Acker, pronounced Acker.
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REDIRECT EXAMINATION BY MR. ACKER:
Q. Mr. McBride, if you still
have Exhibit --
Could you bring up Exhibit 215, please.
And Exhibit 215 is the letter to you from Mr. LaSala, dated June
24, 2003, that counsel just asked you about. If we could take a
look at the second page under the "therefore" clause, it's true,
isn't it, that what Mr. LaSala wrote in June of 2003:
Immediately provide to Novell copies of the two agreements in
question -- the Sun and Microsoft agreements -- and any other
agreements in which SCO purports to amend, modify or waive rights
under any SVRX license or to enter into any new SVRX license.
Do you see that? A. Yes. Q. So, it was the case in June of 2003
that Novell asked you not only for the Sun and Microsoft license,
but for any other licenses, correct? A. You're looking under A? Q.
Yes, sir. A. Yes, uh-huh. Q. And Counsel asked you about
conversations that you had with folks at Novell in late 2002, going
into 2003. At that point, the SCOsource program was still in
296
its infancy, correct? A.Yes. Q.And, in fact, you were still
playing with this idea of licensing UNIX libraries, correct? A.
Right. Q. And that plan, that licensing of UNIX libraries, that
never went forward, right? A. That's not correct. Q. Well, there
was never any license issued under that program, correct? A. That's
not correct. Q. The licensing of the UNIX libraries in the SCOtech
program, it's your testimony there were licenses entered into? A.
No. There were licenses made available. There was no one that
licensed it. Q. So this early first version of SCOtech, there were
never any licenses actually executed, correct? A. The licensees
that were interested in it were ultimately interested in getting
more than just the libraries. They wanted the license to all of the
UNIX intellectual property that was related to all of the Linux. Q.
And so, when you had this conversation -- conversations with folks
from Novell in late 2002 and
297
early 2003, the SCOsource program wasn't even really formally in
existence yet, correct? A. No. That's not correct. It was in
existence. Before we went out with it, we went and visited with
various people, industry partners, and explained to them what we
were doing, but we eventually launched it in January of 2003. Q.
And what was launched in January of 2003 changed in the summer of
2003? A. It got bigger as we went along. Q. And the -- when you had
the conversations with folks from Novell in late 2002, you didn't
disclose to them what ultimately became the SCOsource program in
the summer of 2003, right? A. When I talked to Greg, on the very
first call we talked about how we were going to protect our
intellectual property rights. I explained the SCOsource program. At
that point in time, I think it was actually called SCOtech, but I
explained very clearly what the program was. And it was clear what
we were doing. And what I explained to him in the fall and winter
of 2002 is eventually what SCOsource became. Q. Well, did you
disclose, in those conversations with Mr. Jones, that you intended
to enter into a license agreement with Sun that would modify and
restate Novell's
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license agreement with Sun from 1994? A. We didn't talk about
Sun when I talked to Greg. Q. When you talked to Mr. Jones, did you
disclose to Mr. Jones that you had plans to enter into a licensing
agreement with Microsoft? A. I didn't talk about specific
companies. I didn't talk about Sun. I didn't talk about Microsoft.
I did talk, in general terms, about being able to protect our
rights, whether it was vis-a-vis users or large companies. Q. And,
after you were asked, when Novell became aware of the Sun and
Microsoft agreements, as you testified earlier this morning, you
got letter after letter of them demanding to see copies of those
agreements, right? A. I got letter after letter as a result of
Novell doing a flip flop on the copyright language. That's exactly
when the letters started. And that's when they got very intense in
litigating. Q. And they also sent you letters that we looked at
this morning, Mr. LaSala's letter, where he asked for copies of the
Sun and Microsoft and any other agreements, correct? A. The
question was? Q. You also got a letter from Mr. LaSala --
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A. Yes. Q. -- asking for those agreements? A.Yes. Q. And you
refused to provide those agreements, correct? A. We refused to
provide those and a number of other things. Q. Let me show you, if
I could, Exhibit 267. Mr. McBride, Exhibit 267 is a letter from
Mike -- it's Bready, I believe -- to Robert Bench, the Chief
Financial Officer of SCO, dated November 21, 2003. Do you see that?
A. Yes. Q. And if you take a look at the first paragraph, Mr. Bench
wrote to SCO's CFO, in November of 2003:
We have completed significant portions of the audit, but we are
still lacking critical information and documentation necessary to
finish the audit.
Do you see that? A.Yes. Q.And if we take a look at the second
page, paragraph 1.4, there's a specific reference to the Sun and
Microsoft agreements, correct? A.Yes. Q.And then, in paragraph
1.5, just below it,
300
again Novell renews its request for the Sun and Microsoft
agreements. Do you see that? A. Yes. Q. And then, if we could take
a look at Section 2.1, there's a specific reference in this letter
from Mr. Bready to Mr. Bench regarding the incidental clause in the
APA.
Do you see that? A. Yes. Q. And it's true, isn't it, that
despite these letters and requests for agreements and references to
the incidental clause in the APA; at no point, in either 2003 or
2004, did SCO respond to Novell and say: You're not entitled to any
of these revenues because this was a UnixWare license, the Sun and
Microsoft license were, and any other software we licensed was
simply incidental.
That never happened, right? A. I don't know how we responded to
all these. Again, I wasn't involved in the response. Q. Are you
aware of that response ever being made? A. Yes. I talked to Mr.
Tibbitts. Q. I asked you: Are you aware of that response ever being
made? A.I don't know what they -- how they responded to it.
301
MR. ACKER: I don't have anything else, Your Honor.
THE COURT: Thank you.
Anything else, Mr. Singer?
RECROSS EXAMINATION BY MR. SINGER:
Q. Based on your
conversations with Novell in early 2003 and late 2002, do you
believe that Novell clearly understood that you were intending to
license UNIX intellectual property for use in Linux? A. Absolutely.
Q. And it was in the context of that discussion that Novell refused
to provide clarification that the copyrights were in SCO's
possession; is that correct? A. That's correct. Q. And did you, at
any time, ask Novell to transfer to SCO copyrights? A. No. I have
to tell you, it makes me very upset every time I read that in some
kind of paper or anywhere that is stated. Novell's papers -- you
have Mr. Jones' own testimony that contradicts that. So, the answer
is: No. I never asked them to transfer it. I always took the
approach that the property had been sold and all we were seeking
was a clarification. That was it.
MR. SINGER: Thank you very much. Nothing
302
further.
THE COURT: Anything else -- thank you, Mr. Singer.
Anything else, Mr. Acker?
MR. ACKER: No, Your Honor. Thank you.
THE COURT: Thank you. You may step down, Mr. McBride. I assume
this witness may be excused.
MR. ACKER: Yes, on behalf of Novell, Your Honor.
MR. SINGER: Yes, Your Honor.
THE COURT: You may call your next witness.
MR. MELAUGH: Your Honor, we call Greg Jones
GREG JONES,
the witness hereinbefore named, being first duly cautioned and
sworn or affirmed to tell the truth, the whole truth, and nothing
but the truth, was examined and testified as follows:
THE COURT: Let's see, now. You're Mr. Melaugh, right?
MR. MELAUGH: Yes, I am. Good morning, Your Honor.
THE COURT: Good morning.
THE CLERK: Please state your name and spell it for the
record.
THE WITNESS: Greg Jones. G-r-e-g.
303
J-o-n-e-s.
THE CLERK: Thank you.
DIRECT EXAMINATION BY MR. MELAUGH:
Q. Good good morning, Mr.
Jones. A. Good morning. Q. Mr. Jones, could you please introduce
yourself to the Court? A. Yes. I am Greg Jones. I am Vice President
of Technology Law at Novell. Q. Mr. Jones, could you please
describe your educational background. A. Yes. I have a Computer
Science Degree from Brigham Young University and also a Juris
Doctorate Degree from BYU. Q. Could you please describe briefly
your work history following graduation from law school. A.
Following law school, I had a law clerk/baliff position in Utah
County, which included being law clerk to a State District Judge.
In March of '92, I joined Novell. I have been at Novell since then,
always in a position of advising on intellectual property and
licensing matters, and I currently lead a team of attorneys that
supports Novell's R&D efforts. Q. Mr. Jones, could I ask you to
expand a bit on
304
your responsibilities during the timeframe at issue in this
case; say, from 2002 to the present? A. Again, leading this team of
attorneys and paralegals in supporting the R&D efforts. So,
that includes inbound licensing of technology and other
intellectual property licensing. Also, if there are disputes that
arise or things of that nature that affect the R&D
organization, then we offer counsel and advice. Q. Mr. Jones, you
have been present in the courtroom since we began; isn't that
right? A. Yes. Q. And so you've heard the testimony of Mr. Sontag
yesterday, and Mr. McBride today? A. Yes. Q. I'd like to ask you
about a segment of that testimony. I believe the substance of it is
that, both from Mr. Sontag and from Mr. McBride, that SCO explained
the details of the SCOsource program to you; that you or anyone
else from Novell didn't say no to SCOsource; and that, therefore,
SCO felt it could proceed with the SCOsource program.
How does that testimony comport with your memory of these
communications that are being talked about? A. Well, they both did
speak of their belief that
305
UNIX intellectual property or code may be found in Linux. I
recall Mr. McBride talking about the libraries that he alluded to.
And I recall their desire to enforce their rights. And, at one
point, I do recall them saying that the enforcement may be by means
of a licensing program. But I didn't have a full understanding
exactly what SCOsource would be or what it would entail. I had
never seen anything that explained the exact terms of what that
program might be or anything of that nature. Q. Did they ever
suggest to you, during these communications, that SCO might sue
Linux users for infringement of SVRX copyrights? A. They were not
that specific. Q. As part of these communications, did they ever
suggest to you that SCO was going to go out and license SVRX? A.
Again, they were never that specific. In those 2002 conversations,
where are they were introducing themselves and what was happening,
they never got that specific with me. Q. As well as the early 2003
communications; is that right? A. The only thing in 2003 was: There
was this -- Mr. McBride aluded to a document they prepared and they
sent to Novell and, in looking at that document, which --
306
there is a reference to SVRX, but, again, it's not really an
explanation of what the SCOsource program is. It was, instead,
something they were proposing to do to define the rights in a way
that they wanted to see them defined. Q. And, and as a matter of
fact, no one from Novell signed that letter, no one from Novell
agreed to the letter that you're referencing? A. That's correct. Q.
As part of these communications, did anyone from SCO ever suggest
to you or anyone else at Novell that SCO was going to purport to
authorize the open sourcing of SVRX? A. No. Q. Did they ever
suggest to you that they were going to amend or -- and restate
Sun's 1994 buyout agreement? A. No. Q. Did they ever suggest to
you, or anyone else at Novell that you're aware of, that they were
going to enter into a license with Microsoft? A. No. Q. Mr. Jones,
I'm going to show you an exhibit that's not in the binder that you
have. This has been premarked as Exhibit 151 from Novell. I want to
draw
307
your attention to the paragraph at the bottom of the e-mail.
This is from -- the paragraph right above that that's from you.
THE COURT: This has not been admitted, correct?
MR. MELAUGH: That's correct, Your Honor. Q. Does this comport
with your memory of the communications that you have just
described? A. Yes. Q. And I want to draw your attention to the top
of the e-mail. And this is a response from Chris Stone. Does this
comport with your memory of Novell's reaction to SCO's proposal? A.
Yes.
MR. MELAUGH: Your Honor, I'd like to move Exhibit 151 into
evidence.
MR. NORMAND: No objection, Your Honor.
THE COURT: 151 is received. (Novell's Exhibit 151 received in
evidence.) Q. Mr. Jones, if you could turn in your binder to
Exhibit 187. This is Novell Exhibit 187. It's been pre-admitted.
Mr. Jones, what is this? A. This is a 2003 software license
agreement between Sun and SCO. Q. Where did Novell obtain this
document?
308
A. We obtained this document from SCO in discovery in
litigation. Q. Did Novell have a copy of this document prior to
obtaining it in discovery in this litigation? A. No. Q. After
receiving this agreement in discovery in this litigation, what did
you do? A. Well, this agreement, you know, it relates back to this
1994 agreement -- excuse me -- it relates back to a 1994 agreement
between Novell and Sun, and it says that it meant to restate that
agreement. So I went back and looked at the 1994 agreement. Both of
them identified versions of SVRX as technologies that are being
licensed, so I also took a look at the Asset Purchase Agreement
between Novell and Santa Cruz, SCO. Q. If you could turn for a
moment to the next tab in this Novell Exhibit 5, which has been
pre-admitted, what is this document, Mr. Jones? A. This is a 1994
software license and distribution agreement between Sun
Microsystems and Novell. Q. Was this the 1994 agreement you were
referring to just a moment ago? A. Yes. Q. As a general matter,
what is this agreement?
309
A. Well, this is an agreement under which Sun bought out its
royalty obligations for licenses to UNIX technologies. Q.After
reviewing the Asset Purchase Agreement and the 1994 agreement and
the 2003 agreement, what was your understanding of the relationship
between these three agreements? A. Well, I guess, first of all,
that indeed the 2003 agreement carries over many of the terms from
the 1994 agreement, but it does, for all practical purposes, remove
the confidentiality obligations for the source code that were part
of the 1994 agreement.
I also note that the 2003 agreement, basically, is a restatement
of a buyout that was done. So this is an agreement relating to a
buyout of royalties that comes under provisions of amendment number
2 to the Asset Purchase Agreement, which requires that such
agreements not be entered without both parties' consent.
Also, the 2003 agreement relates to SVRX technologies and
substantial new rights being granted with respect to them,
independent of the UnixWare technologies identified in the
agreement. So, it is an SVRX agreement.
The licensing of SVRXs is not merely incidental to UnixWare.
It's not minor. Expansive rights were
310
granted with respect to SVRX, that it could even be released as
open source. So, this is also an agreement that, under the Asset
Purchase Agreement, should not have been entered without Novell's
approval. Q. So, let's walk through that again. You -- I think, the
first part of your answer referred to confidentiality obligations
that were in the 1994 agreement and in the 2003 agreement. Are you
referring to the -- at least, in part, to the sections that are on
the screen now? A. Yes. This is from the 2003 agreement, right? Q.
Can you walk us through your understanding of these sections? A.
Well, so -- well, so, first have all, 10.1 is just a general -- I'm
sorry 10.1 is -- Q. 10.1 is from 1994, to be clear, and the bottom
one is from 2003. A. So 10.1 is from the 1994 agreement and imposes
confidentiality restrictions, of course. I'd add that there are
other provisions in the 1994 agreement that also provide that any
source code sublicensing has to be done pursuant to terms at least
as restrictive as those that Sun uses for its most valuable
proprietary source code.
So, while there were significant sublicensing
311
rights in the 1994 agreement, they were very tightly controlled.
And, furthermore, Sun had an obligation to police those licenses
and to act on any violations of the confidentiality.
And, by contrast, I look at Section 8, Roman 1, towards the
bottom, which basically says that if Sun distributes these UNIX
technologies under a license model of Sun's choosing, then, at that
point, those technologies are no longer confidential, and there are
no longer any confidentiality requirements that apply to that
technology. Q. I believe you said it was also your understanding
that SVRX plays a significant role in the 2003 SCOsource license.
What led you to that conclusion? A. Well, simply that the SVRX
products are identified on the schedules and that this dramatic
expansion of rights received by virtue of removing the
confidentiality applies across the board to all of the technologies
that are identified, whether it's UnixWare or earlier versions of
SVRX that predated the APA. Q. Stepping back to this change in the
confidentiality obligations, what significance do you attribute to
this change? A. What significance in terms of how it's
important?
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Q. In the context of what you know about Sun's business, the
actions Sun took after entering into this license? A. So, Sun has
an operating system known as Solaris. It's a UNIX variant. It's
competitive with Linux. This 2003 agreement allows Sun, then, to
release Solaris as open source under an open source licensing
model, which they have done in a project called OpenSolaris. So it
poses a direct competitive challenge to Linux and, certainly, to
Novell, given that Linux is an important part of Novell's business.
We are a Linux distributor. Q. Do you know whether there is any
SVRX code in Sun's OpenSolaris product? A. Yes. Q. How do you know
that? A. Well, Novell has SVRX code in its possession, and so I
obtained source code files from Novell's personnel, and then I
downloaded source code from OpenSolaris. I found those same files,
and sometimes with some degree of difference or change but, in the
majority's of instances, identical in the OpenSolaris project. So I
took those files, compared them side-by-side, so I was able to find
SVRX files in the OpenSolaris project.
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Q. You said you downloaded the OpenSolaris code. Is that
something anyone can do? A. Yes. Anyone can do that. Q. And do you
have to pay any money to download the OpenSolaris code? A. No. Q.
Do you have to sign an agreement to download the OpenSolaris code?
A. No. You don't have to do that. Q. If you could turn to Exhibit
439 in your binder. This is Novell Exhibit 439. It has not yet been
admitted. Mr. Jones, could you describe what 439 is. A. Well, the
right-hand side of this document contains the -- just the contents
of one of the SVRX files that I looked at, this one called Auto
Push.C, and the left side of the document, the left column, is a
corresponding file that comes out of the OpenSolaris project. Q.
And what's significant to you in the text of the chart that we're
looking at right now? A. Well, one thing just of note is, of
course, Sun has included its open source license notice at the top
of the file, but then below that, on the left-hand side, we see an
AT&T copyright notice, with the latest year of creation of code
being 1989. And then we just jump
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across the page to the SVRX side and see basically the identical
copyright notice.
And from there on, you can see what's striking is that while
there are places where there are some additional text or a minor
difference, there are just extensive portions of the file where
what you find is that they are identical. Q. And, moving to the
second page of this chart, is that what we're seeing here? A.
Yes.
MR. MELAUGH: Your Honor, I'd like to move Exhibit 439 into
evidence.
MR. NORMAND: No objection.
THE COURT: 439 is received. (Novell's Exhibit 439 received in
evidence.) Q. Mr. Jones, if you could turn to Exhibit 440. Could
you tell us what this exhibit is? A. Yes. Again, this is a document
in which the right column includes the contents of a source code
file from SVRX, Disk USG.C, and the left column is a -- the
corresponding file that I downloaded from the OpenSolaris project.
And, as with the previous exhibit, you look at the copyright
notices. You see the commonalities.
On this particular one, you see that Sun notes that it made some
modifications in 1999, so they are not
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going to be identical in every respect, but you walk down
through the file and they are identical in many respects. And it's
evident that the OpenSolaris file is based on the SVRX file. Q. Mr.
Jones -- I move Exhibit 440 into evidence, Your Honor.
MR. NORMAND: No objection.
THE COURT: 440 is received. (Novell's Exhibit 440 received in
evidence.) Q. Mr. Jones, if you could turn -- and we will just
address this briefly, to Exhibit 441. Is this similar to what we've
seen with the past two exhibits? A. Yes. It's the same. Again, on
the right-hand side, the contents of a source code file from SVRX;
on the left-hand side, the contents of a source code file from the
OpenSolaris project. The file names are the same, and it's quite
clear, as you walk through, the similarities show that the
OpenSolaris file was based on the SVRX file.
MR. MELAUGH: Your Honor, I move Novell Exhibit 441 into
evidence.
MR. NORMAND: No objection.
THE COURT: 441 is received. (Plaintiff's 441 Exhibit received in
evidence.) Q. Greg, if you could just page through the
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exhibits that follow in this book. I'm going to list them off
for the record. They are Novell Exhibits 442, 443, 446, 447, 448,
449, 450, 451, 452, 453, 455, 456, 458 and 459.
Mr. Jones, are these exhibits similar to the three that we have
just taken a look at? A. Yes.
MR. NORMAND: No, objection.
MR. MELAUGH: Your Honor, I move these exhibits into
evidence.
THE COURT: Same nature. Any objection?
MR. NOLRMAND: Your Honor, I said no objection.
THE COURT: I didn't hear you.
MR. NORMAND: I'm sorry.
THE COURT: 442, 443, 446, 447, 448, 449, 450, 451, 452, 453,
455, 456, 458 and 459 are received.
(Novel Exhibits 442, 443, 446, 447, 448,
449, 450, 451, 452, 453, 455, 456, 458
and 459 received in evidence.)
MR. MELAUGH: Thank you, Your Honor. Q. Mr. Jones, do you know
whether there is any SCO UnixWare code in OpenSolaris? A. I have
not done a comprehensive search. I did search on the OpenSolaris
site for any reference to Santa Cruze or SCO that would appear on a
copyright notice. I
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didn't find anything, but I didn't make a comprehensive effort
to identify UnixWare code in OpenSolaris. Q. When you say "search
on the OpenSolaris web site," what do you mean? A. There is a -- if
you go to the OpenSolaris site on the internet, there is a user
interface there, and there is a utility that allows you to do text
searches that searches through the text of the source code files
that are there on the OpenSolaris site. Q.I 'm sorry. What were the
terms that you searched for in that code? A.Two of them, Santa
Cruz and SCO. Yeah. I also -- I also did Caldera. There was one
Caldera file. Q.And by "file," are you referring to copyright
notices? What are you referring to when you say that? A. Again, all
I looked for is whether those terms appeared in any copyright
notices, and I could not see them appearing in a copyright notice.
Q. Did SCO obtain Novell's permission to enter into the 2003 Sun
SCOsource license? A. No. Q. Would Novell have consented to the
2003 Sun SCOsource license if SCO had asked? A. No.
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Q. Why not? A. Well, it simply would not have been in Novell's
commercial interests. In the fall of 2002, Novell had acquired
Simeon a Linux desk top company. We were exploring ways to get into
the Linux market so enabling a competitor to Linux simply would not
have been in Novell's interests. In the manner in which they
entered this agreement, when they did it, they kept all the money.
I assume that would have been their proposal but, fundamentally, it
simply would have been contrary to Novell's business interests to
enable something like this. Q. What amount does Novell seek from
the Sun SCOsource licensse? A. Everything that was paid. Q. Why
does Novell believe it is entitled to that amount? A. Well, there
were expansive rights granted with respect to the versions of SVRX
that pre-date -- post-date -- pre-date the Asset Purchase
Agreement. These were dramatically greater rights than were enjoyed
under the 1994 agreement, and there is nothing in the agreement
that assigns any value to anything other than the SVRX technologies
for which Novell is entitled to receive royalties.
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The customary 5 percent administrative fee that SCO normally
receives for collecting SVRX royalties just doesn't seem to be
germane in this particular instance. Q. Based on your experience
with software licensing, would you describe the 2003 Sun SCOsource
license as a typical software license? A. No. I mean, it's an
extraordinary agreement. When you enter an agreement where you take
the step of going from proprietary to open source, that is quite a
dramatic change. And so it's not something you would custom --
certainly it would not be what you would customarily see in an
agreement. It's an extraordinary agreement. Q. 267, Novell's
267.
Did Novell ever ask SCO whether SCO considered the Sun license
an incidental license of SVRX? A. Yes. Q. Are you familiar with the
letter -- we have had testimony about this so far. Are you familiar
with this letter that's Exhibit 267? A.Yes. Q.This is a letter to
Mr. Bench, dated November 21, 2003, correct? A.Correct. Q.If I
could draw your attention to the second
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page of the letter, paragraph 1.2. So, what's going on in this
paragraph, Mr. Jones? A.Well, this simply -- it's an audit letter,
of course, so this is describing to SCO this particular aspect of
amendment 1 to the Asset Purchase Agreement that does allow SCO to
engage in certain SVRX licensing activities if they are incidental
-- well, just as it says right there: As may be incidentally
involved through SCO's right to sell and license UnixWare
software.
So, this paragraph kind of says: Okay. Let's talk about this
topic here. Q.Let's take a look at paragraph 1.6. A.Okay. Q.And
so what's going on in Exhibit 1.6? A.That is an invitation to SCO
to say, you know, if the activities -- any activities that you're
participating in that qualify for these exceptions, then, you know,
please make those known to us. Q.And if we could take a look at
paragraph 2.1. And the same question here, Mr. Jones: What's going
on in this paragraph? A.So, again, we're introducing the topic of:
We're aware that there is this exception in the context of
incidental licensing and so I think it's, again, going
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to be an invitation for them to let us know if they believe any
of their activities would qualify for this exception. Q. So, after
asking three times in this letter, Mr. Jones, up and until this
litigation, did SCO ever say to Novell that the reason it was
entitled to the Sun SCOsource revenue was because that license was
an incidental SVRX license? A. No. Q. Mr. Jones, if you could turn
to Exhibit 189 in your binder. What is this exhibit, Mr. Jones? A.
This is a release, license and option agreement between Microsoft
and Caldera International d/b/a the SCO group, now known as SCO. Q.
Where did Novell obtain this document? A.We obtained this in
discovery in this litigation. Q.Before obtaining this document in
discovery in this litigation, did Novell have a copy of this
document? A. No. Q. After receiving the 2003 Microsoft SCOsource
license, what did you do? A. Well, this agreement -- again, you
know, you go through a license agreement to see what technology
is
being licensed. And I observed there numerous versions of SVRX
identified as licensed technologies. So I then took out the Asset
Purchase Agreement between Novell and SCO and looked at this
agreement in light of the terms of the Asset Purchase Agreement. Q.
After conducting that review, what was your understanding of the
2003 Microsoft SCOsource license as it concerns the Asset Purchase
Agreement?
A. Well, it's certainly an SVRX agreement. I think it's
been found that an SVRX agreement is one that relates to SVRX code.
And this one certainly does. I also look at it from the perspective
of whether this exception for licensing of SVRX incidental to
UnixWare might be germane.
In this instance, I look at the identification of all of these
SVRX technologies, and I look at the broad intellectual property
licenses that are granted under the agreement. And I see that there
is -- this is not an amendment to an existing agreement. This is
not adding rights to rights already acquired. So, basically, all of
the rights to the SVRX technologies are new, and, again, they are
quite expansive as you march through the options.
So I look at this as an SVRX agreement that should not have been
entered without Novell's approval.
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There is a Section 3 that relates solely to UnixWare, but the
overall agreement is an SVRX agreement, and those other parts are
so substantial that I can't view them as being really incidental to
the UnixWare component of the agreement. Q. Did SCO obtain Novell's
permission to enter into the 2003 Microsoft SCOsource agreement? A.
No. Q. Would Novell have consented to the 2003 Microsoft SCOsource
agreement if SCO had asked? A. No. I just can't see, again, any
commercial benefit to Novell from this particular agreement, and
so, no. Q. What amount does Novell seek from the 2003 Microsoft
agreement? A. Well, I actually don't know the specific figure
myself. It's whatever amounts were paid under Section 2 and under
Section 4 of the agreement, but not whatever was paid under Section
3. Q. So let's walk through those. A. Okay. Q. If we could put up
Section 2, please. Why is Novell entitled to the revenue from
Section 2? A. Well, here, you know, we have these licenses that
broadly relate to SCO's, you know, intellectual
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property rights. And I think, at that point in time, I simply --
I can't avoid looking at this in the context of what was going on
in the marketplace in terms of the dramatic representation being
made about SCO ownership of UNIX technologies, historic UNIX and so
forth.
And so, looking at that context, in combination with Section 2,
I say, basically, this is an invitation for someone to use
intellectual property when in the end it has been found to be
Novell's. There is no apportionment, value-wise, in this agreement
as to, you know, how many dollars correspond to this or that. And I
think Novell is entitled to conclude that all of it should come to
Novell. Q.What do you -- what conclusions have you come to about
the Section 3 revenue, Mr. Jones? A.Well, as previously mentioned,
you know, this is something that Novell is not pursuing. It is --
it is the case that the Section 4 rights that, again, relate to
SVRX, can't be obtained without these Section 3 UnixWare optional
rights being exercised or being purchased, but we're not pursuing
it. Q.Are you at Section 4 now? A.Yes. Q.Mr. Jones, why is
Novell entitled to the revenue from Section 4?
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A.Well, again, Section 4, the license grant relates to all the
technologies identified in the agreement, including those in
Exhibit C, which is a list of SVRX, pre-APA SVRX technologies. And,
again, these are new rights. I don't see any evidence of -- that
these are merely restating rights previously obtained under some
separate agreement, that these are new rights that are being
received to SVRX technologies. I simply cannot conclude that this
is incidental to UnixWare. They are substantial rights.
There is no -- there is nothing on the face of the agreement, or
otherwise, by which SCO has attempted to assign value to the
UnixWare-unique portion of this section. So I think Novell is
entitled to conclude that Novell should receive all of this money.
Q.Mr. Jones, if you could turn to what's been marked as Novell
Exhibit 237, which has been pre-admitted. A.I think I -- I think I
should add that, in these instances, one thing that factors into my
conclusion in terms of Novell's being entitled to draw these
conclusions is that Novell was counting on SCO to be our fiduciary,
to look at these SVRX agreements, to bring them to our attention if
our rights were implicated.
326
And, as demonstrated by our repeated requests for these
agreements, and those requests being rejected, we had absolutely no
visibility as to what was going on with these transactions. And so,
there was -- to me, there is a heightened responsibility here, and
it lends -- and that lends to Novell's being entitled to conclude
that we should receive all these monies. Q.And I asked you earlier
-- we saw that letter from Mr. Bready, and I asked you earlier
whether SCO had ever said that the Sun license was incidental up
until this litigation. Did SCO ever say that the Microsoft license
-- that it was entitled to the Microsoft money because it was an
incidental license of SVRX, up until this litigation? A.No. Q.So
now we're on Exhibit 237, Mr. Jones. What is this document? A.This
is a SCO Group intellectual property compliance license for SCO
UNIX rights. The agreement is between SCO, obviously, and Computer
Associates. Q.Where did Novell obtain this document? A.In
discovery in this litigation from SCO. Q.And, prior to obtaining
this document in discovery in this litigation, did Novell have a
copy of this document?
327
A.No. Q.After receiving this intellectual property compliance
license, what did you do? A.Well, again, this is -- it's a
license, so I look for what technology is being licensed or what
intellectual property rights, and, you know, so I go to -- and
you'll see that, you know, a key term here is that this is
UNIX-based code. Q.You're looking on the second page now? A.Yeah,
on the second page. Q.And at 1.14, is that what you're looking at?
A.Right. And here, you know, there's a reference to -- that the
UNIX-based code is UNIX System V or UnixWare. And so, these are,
again, implicating versions of pre-APA SVRX in a context in which
there are no -- this is not enhancing a previous agreement. This is
not adding UnixWare rights on top of UNIX System V rights that were
previously obtained. It's just a brand new grant. So I view this as
an SVRX agreement. Q.What's your understanding of the larger
context in which this SCOsource license and the SCOsource licensing
campaign is taking place? A.Well, this was obviously a very public
campaign that SCO was undertaking, and in a very -- a public
campaign carried out in a very public way; a lot of
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publicity and a lot of assertions of rights and a lot of
assertions that Linux included UNIX code. And so, it was in that
context that these types of agreements were being offered to
people. Q. And do you have an understanding of what code SCO claims
is at issue in SCOsource, is at issue in Linux? A. Well, you know,
clearly, Novell's assertion of ownership to the SVRX -- the pre-APA
SVRX copyrights basically precipitated this litigation, and there
were claims that this was causing great damage to SCO as a result
of damaging the SCOsource program itself.
And so -- so, basically, it's quite evident that the SVRX code
was just critical to the SCOsource project. Q. Has Novell ever
claimed to own copyrights to SCO UnixWare? A. No. If by "SCO
UnixWare," you mean any UnixWare code produced after the date of
the Asset Purchase Agreement, no. Q. Did SCO obtain Novell's
permission to enter into the license that we're looking at right
now? A. No. Q. Would Novell have consented if SCO had asked? A.
No.
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Q. Why not? A. Well, again, this is entered into in August of
2003, and, again, in the fall of 2002, Novell's going in the
direction of Linux, and this would simply be completely contrary to
Novell's business interests, among other things. There's just no --
no benefit to Novell to enter such an agreement, and a down side.
Q. What revenue from this agreement does Novell seek? A. All of it.
Q. Why is that? A. Again, this is one where there are substantial
SVRX rights granted. There is no allocation or identification of
value uniquely associated with UnixWare, and, again, all this is in
the context of SCO being Novell's fiduciary and entering
SVRX-related agreements and not disclosing them to us, and we are
not in a position to protect our rights. Q. If you could look
briefly at the exhibits that follow, Mr. Jones. For the record
those are Novell Exhibit 286, Novell Exhibit 300, Novell Exhibit
309, Novell Exhibit 322, Novell Exhibit 349, Novell Exhibit 422 and
Novell Exhibit 426, all of which have been pre-admitted in this
litigation.
As a general matter, what are these exhibits,
330
Mr. Jones? A. These are all agreements of a like nature. Their
terms may vary in some, I think, immaterial respects, for our
purposes, but they are all -- well, they are all agreements that
purport to license the licensee to use any UNIX code that is found
in copies of Linux that the licensee is using; and, again, whether
it's UNIX System V code or UnixWare code. Q.Did SCO obtain
Novell's permission to enter into any of these licenses? A. No. Q.
And would Novell have consented to these licenses, if asked? A. No.
Q. What revenue does Novell seek from these licenses? A. All of the
revenue. There is no specification in the agreements as to any
specific amount that's associated with UnixWare, and there are
substantial SVRX rights granted, and there's a fiduciary
relationship here. So I think we are entitled to all of them.
Again, the 5 percent administrative fee that Novell normally allows
SCO for collecting royalties doesn't seem germane here.
MR. MELAUGH: Thank you, Mr. Jones.
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THE COURT: Thank you, Mr. Melaugh.
Mr. Normand, you may cross examine.
MR. NORMAND: Thank you, Your Honor.
CROSS EXAMINATION BY MR. NORMAND:
Q. Still good morning, Mr.
Jones. A. Good morning. Q. You're a lawyer, right? A. Yes. Q. How
long have you been a lawyer? A. Since 1990. Q. Did you ever work in
selling any software products since you have been at Novell? A. No.
I have been involved in the outbound licensing of technologies for
revenue. I've assisted -- I have assisted in a legal role in
supporting sales efforts, but it's not been, by any means, my
primary responsibility or my focus. Q. Hve you been involved in
pricing any software products, while at Novell? A. Very
tangentially. Q. Did you ever work in marketing any software
products at Novell? A. Probably not even tangentially. Q. Did you
ever have occasion to negotiate the
332
terms of any software agreement regarding UNIX at your time at
Novell? A. Yes. Q. Can you please explain that? A. It was -- there
was a -- it was after the Asset Purchase Agreement, there was a
source code licensee that had -- was involved in a buyout
situation, and so I participated to some extent in that. I was not
the primary person responsible for doing that. Q. Do you remember
the name of the licensee? A. I think it was Silicone Graphics,
Silicone Graphics and Cray. Q. And do you recall dealing with Santa
Cruz on that issue at all? A. I believe Santa Cruz was involved,
but I can't recall whether I'm one of the people who spoke to them.
Q. How much familiarity with how computer operating systems are
developed do you have? A. I have a general familiarity. I have been
-- you know, I have a computer science degree. I have been working
in the industry. I have been legal counsel to a company that
develops and markets operating systems and legal issues associated
with the development process and so forth. So, I don't know how to
quantify my knowledge, but I come from that background.
333
Q. Have you ever worked as a programmer, professionally? A. Yes.
Q. And when? A. This was prior to law school, just working for a
small software company. Q. What operating systems did you deal
with? A. There? Well, one was Solaris. And I can't recall the other
operating systems that we were using. Q. Did you have an
understanding, at that time, as to the origins of Solaris? A. At
that point in time? No. Q. Do you now? A. To some extent, yes. Q.
What is that understanding? A. Well, that Solaris is an SVRX-based
operating system. Q. Which release? A. Well, I generally understand
SVRX 4. My knowledge is no more specific than that, and that -- and
that, basically, Solaris is one of the many source code licensees
that takes a source code license and then will create their own
variant, and so Solaris is the Sun variant of SVRX 4. Q. Do you
know how Solaris was developed?
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A. I'm not sure what you mean. Q. AT&T developed Solaris
with Sun, correct? A. You're saying -- if AT&T and Solaris
worked together, side-by-side, to develop Sun? I'm not aware of
that one way or another, so I don't know what you're asking about.
Q. Let me ask it again because I think you flipped Solaris and Sun
in your answer. Do you know how the SVR 4 operating system was
developed? A. Well, I have a general understanding that AT&T
developed the base UNIX technologies and that, at a certain point
in time, there was a subsidiary, UNIX System Laboratories, that was
created. They would advance the core UNIX technologies and then
they would license out that source code to the various UNIX OEMs.
Q. Now, when it came time for AT&T and USL to move from Release
3 to Release 4, in developing Release 4, they actually worked with
Sun, didn't they? A. I have no knowledge one way or another on
that. Q. And when Sun developed Solaris, it did so simultaneously
with the development of Release 4, correct? A. I'm not sure exactly
what you mean. Q. Do you have a view as to whether Solaris
335
contains any significant amount of SVR 4 technology? A. My
understanding has been that it does. Q. Do you know whether
previous versions of UNIX contained source code included in
UnixWare? A. Previous to what? Q. Previous to the latest release of
System V that UnixWare represents? A.My general understanding is
that you would find, in the latest release of UnixWare, code that
had been in earlier versions of UnixWare SVRX. Q. And code that had
been in earlier versions of System V might not have made its way
into UnixWare, correct? A. Yeah. I'd -- yeah. I don't know that for
a fact, but you say "might," and that sounds very possible to me.
Q. Do you have a view as to whether, if code from older versions of
System V has not made its way into UnixWare, do you have a view as
to whether that older code has any commercial value? A. Well, yes.
Q. What's your view? A. Well, in terms of -- to me, there are at
least two types of commercial value. One commercial value is that
there is actual technical merit that is still placed
336
on the marketplace, and I can't opine one way or the other. The
other is that there are intellectual property rights associated
with the technology but that, independent of that current technical
merit of that code base, could have some relevance in the
marketplace. Q. Do you have a view as to whether UNIX System V,
Release 2, for example, has any commercial value? A. I just --
well, in that respect that I just set out, I would say, with
respect to whether it has technical merit, I'm not in a position to
say. As to whether the intellectual property rights associated with
it potentially have value, potentially. Q. But you don't have a
view one way or the other? A. I think I would have a bias towards
-- well, which release is it? Q. Release 2. A. UNIX System V? So
it's SVR 2? Q. Two. A. Let me see. Well, you know, copyright lasts
for a long time, and so if that code is still available,
potentially it could have commercial value in the sense that I
stated, for the intellectual property. Q. As someone with
programming experience, do you have any view as to whether there is
any existing hardware that you could run SVR 2 on?
337
A.I don't know. I don't know. Q.Now, in Novell's view, if
there are trade secrets in UNIX System V, SCO owns them, correct?
A.I believe that's been Novell's position. Q.And was that your
position at deposition? A.I think so. Q.And, in Novell's view,
SCO owns the software know-how and methods and concepts in UNIX
System V and UnixWare, correct? A.You're talking post-APA
UnixWare, these rights -- independent of copyright? Q.I'm asking
you whether, in your view -- A.And I'll answer it this way.
Post-APA versions of UnixWare, to the extent not implicating
Novell's pre-APA copyrights in SVRX, and to the extent they are
developed by SCO, as opposed to some partner of SCO or something,
Novell would not be asserting rights to those, certainly.
MR. NORMAND: Your Honor, could I publish a portion of Mr. Jones'
deposition in this case?
THE COURT: Sure.
(A portion of the deposition was played.)
MR. NORMAND: That's from Mr. Jones' May 10, 2007 deposition,
Rule 30(b)(6); at page 36, line 24, to page 38, line 1.
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Q.Mr. Jones, in Novell's view, it would not be accurate to say
that Novell had transferred its existing ownership interest in the
UNIX System V products to Santa Cruz in 1995, correct? A.Could you
say that again? Q.In Novell's view, it would not be accurate to
say that Novell had transferred its existing ownership interests in
UNIX System V to Santa Cruz in 1995, correct? A.Right.
THE COURT: SCO 411?
MR. NORMAND: Yes, Your Honor. Q.Mr. Jones, this is a document
dated May 23, 1996. Do you recognize the document? A.Yes. I've
seen it before. Q.And the second full paragraph says:
As you may have heard, Novell has transferred to Santa Cruz,
Santa Cruz Operation, Inc., Novell's existing ownership interest in
the UNIX System-based offerings and related products, collectively
transferred products.
Do you see that line? A.Yes. Q.And you think that that's an
inaccurate statement, correct?
339
A.Yes. Q.Do you have any explanation for why Mr. DeFazio would
sign a document containing such a statement? A.No. Q.Have you
spoken with Mr. Defazio about that issue? A.No. Q.Mr. Jones, do
you have a view as to whether a UnixWare license gives the licensee
the right to use all prior releases of UNIX System V? A.I take it
a UnixWare license to be a license to a stand-alone version of
UnixWare, and then I would say that that license includes rights to
any code contained in it, and if it so happens that some of that
code was in prior releases of UNIX, then the licensee is receiving
licenses to that code. Q.Do you have any view as to whether, when
Novell owned the UNIX business, it granted rights to the previous
releases of System V when it did a license of the most recent
releases of System V? A.I've had some exposure to that in this
litigation and seeing what's come forward in discovery. It seems --
what I have seen is that that happens when consideration has been
given for the prior products that are in the agreement.
340
But, as I have told you before, and as you were inquiring today,
you know, my career focus has not been doing sales agreements and
things of that nature, so -- Q. Did you watch your counsel's
opening argument? A. Yes. Q. Did you see reference made to the NCR
supplements? A. Yes. Q. Do you recall what the number of that
supplement was? A. 112. Q. And it's your position, as you
understand it -- when I say "you," I mean Novell. It's Novell's
position that the only reason the System V prior products were
listed for NCR was because it had previously obtained a stand-alone
license to every previous release of System V? A. Well, what I
heard was that, in fact, the licenses had been obtained for
previous releases. I don't necessarily recall having heard that's
the only reason. I just can't recall. Q. I may have misunderstood
your answer. I thought you said that your understanding was that
the only reason System V prior products would be listed would be if
the licensee had already obtained a stand-alone
341
license to all those releases. A. Did I say "only?" Q. That's
what I understood you to say. A. Okay. I -- and I thought I
prefaced it with generally. But, I mean, what I have -- my
impression that I have formed after seeing the documents that I
have been able to see in this litigation is that consideration has
been given for prior products. And I, again, tell you that I have
not surveyed all these agreements. That has not been my purview.
That's is not what I am about. Q. Can you recall coming across any
agreements where that could not have been true? A. No. Q. Are you
familiar with the language in the APA providing that Novell would
receive royalties from SCO's sales of UnixWare if certain
conditions were met? A. Yes. Q. You were here for Mr. McBride's
testimony, right? A. Yes. Q. So you heard questions and answers
regarding floors and thresholds regarding UnixWare sales? A.
Actually I think my mind drifted off at that point, but I have seen
those parts of the agreement.
342
Q. Are you familiar with language in the APA providing that,
after December 31, 2002, Novell would not receive any royalties
from SCO's sales of UnixWare, even if the conditions were met?
A.
Yeah, something to that effect. I know that there was a cut-off
date and so forth. Q. So, in Novell's view, after December 31,
2002, SCO had the right to retain all royalties it received for
licensing UnixWare, correct? A. Clearly, from the language, at
least, stand-alone versions of UnixWare. Q. And, in Novell's view,
in fact, the entire intent of the APA was for the UnixWare business
to be transitioned to Santa Cruz, correct? A. Could you say that
again? Q. In your view and in Novell's view, the entire intent of
the APA was for the UnixWare business to be transitioned to SCO,
correct? A. Well, I don't -- I guess the only thing I would say is:
You know, in terms of entire intent, certainly it was a driving
factor behind the agreement, was to transition that technology into
another company and have it advanced. But there were a variety of
other purposes to that agreement, including protecting Novell's
interests in making sure that there were provisions that
343
would enable Novell to receive a portion of an ongoing revenue
stream to be compensated for the business.
And so I'm with you in terms of, you know, the business motive
that triggered the transition was certainly to advance the UnixWare
technology, but I can't go as far as saying that that was the
entire purpose of that document, the agreement. The agreement also
has a fundamental purpose to protect the interests and rights of
Novell. Q. Let me rephrase the question. With respect to UnixWare,
Novell's entire intent was to transfer the UnixWare business to
Santa Cruz, correct? A. Yeah, to the extent consistent with
Novell's other interests that would be implicated by the agreement,
which I think is -- you know, manifests itself in various places in
the document.
MR. NORMAND: Your Honor, I would like to play a brief excerpt
from Mr. Jones' deposition.
THE COURT: Go ahead.
(A portion of the deposition was played.)
MR. MELAUGH: If I could ask Mr. Normand to state the part in the
deposition before your start the clip.
MR. NORMAND: All right. Sorry
MR. MELAUGH: I don't think you have indicated
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it yet, the date and the page number you're referencing.
THE COURT: The page number and the line.
MR. NORMAND: Yes, Your Honor. I'm sorry. That's Mr. Jones' May
10, 2007, 30(b)(6) deposition, and at page 60 lines 14 to 23.
Q.
SCO 61 is a two e-mail chain dated December 4, 1995, the top e-mail
is from David Johnson to, among others, Larry Bouffard. Do you
recognize any of those names, Mr. Jones? A. Yes. Q. And do you see
the name of Skip Jonas about a third of the way down? A.Yes. Q.
Who is Skip Jonas? A. He had a position relating to -- he had a
sales position, and I know that at least at one time his
responsibilities related to our UNIX business. That's about the
extent of my knowledge of Skip Jonas. Q. Do you see this language,
Mr. Jones, where Mr. Jonas says, quote:
Novell is out of the UNIX/UnixWare business after the closing
and does not have the right to sell UnixWare, so if Novell has any
inventory of UnixWare after the closing, I believe that Novell has
only two choices. Sell it to SCO or destroy it.
345
Do you see that language? A. Yes. Q. Is that language consistent
with your understanding of what happened with the sale of UnixWare
under the APA? A.I'm not familiar with this particular issue of
the preexisting UnixWare inventory and what was done with it and so
forth. At this moment in time, I can't recall that issue. Q. But it
is your understanding that Novell was out of the UnixWare business
after the APA, correct? A. Yeah. I think, generally-speaking, I
would have to say yes. I would like to ask a clarifying question on
your earlier question. Q. Of course. A. What do you mean by
"UnixWare business?" Q. What's the ambiguity as to what UnixWare
business is? A. Well, for example, there were pre-APA versions of
SVRX that were UnixWare, and so Novell continued to have a revenue
stream associated with those. So, that's why I asked the question,
in terms of just: What do you mean by "in the business," because
there's still interests there. And so, hence, my question. Q.Is
that your only caveat to your view that the
346
entire UnixWare business had been transferred, as you sit here
today? A.Now, that's a different question, the entire UnixWare
business having been transferred. Generally, of course, Novell's
focus was not going to be UnixWare, and Novell was counting on SCO
on moving forward with that. And Novell had some -- it retained
rights in terms of copyrights, in terms of royalties that
corresponded to UnixWare, you know, and I haven't thought through
to delineate every little interest, ongoing interest Novell may
have, but I'm with you in terms of: No doubt, the general direction
was that UnixWare was moving forward with SCO, and Novell has some
ongoing interest in that area, but it's certainly not Novell's
focus. Q. You're not suggesting, then, that Santa Cruz was Novell's
agent for purposes of UnixWare licenses, are you? A. Well, what do
you mean by "UnixWare?" And, again, I just mean, there are -- there
were some pre-APA releases of SVRX that were UnixWare, so, with
respect to those releases -- and those are identified on the
schedule of SVRX licenses. So, only with respect to those versions
of UnixWare, I would say that that fiduciary relationship, that
collection role applies to those.
347
Q. But the right that Novell retained was to continue to receive
royalties for certain UnixWare licenses that were in existence? A.
Anything that would be an SVRX license that would pertain to the
pre-APA release of UnixWare. Q. Your position is that the APA
identifies, as a basis for SVRX licenses, certain UnixWare
licenses? A. I believe, if we were to take out the Asset Purchase
Agreement and look at the schedule that we would see that the last
one or two SVRX releases were, in fact, UnixWare. And that's all
I'm talking about. Q. And, apart from that retained royalty
interest, do you have a view as to whether Novell retained any
interest in the UnixWare business after the APA? A. Again, I think
I've mentioned that, you know, we would have copyrights associated
with anything that was pre-APA. And you said "apart from the
royalties," and so we're not talking about that, you know, and I --
so, in my mind, those are the primary things. But as I've told you,
this is the last place in the world I would want to sit and attempt
to delineate every single aspect of the APA and every possible
ongoing interest.
And I'm with you in terms of the UnixWare business, in general,
is going to SCO, and that's SCO's focus, and it's not Novell's from
that point going
348
forward. Q. It's not Novell's view that, when SCO was licensing
UnixWare with SVRX copyrights therein, it's not Novell's view that
SCO had to try to value those copyrights and remit money to Novell,
is it? A. So, if you're talking about versions of UnixWare created
post-APA and what's being licensed is that version of UnixWare,
yes, that is not Novell's position that SCO would have to attempt
to, you know, value all the SVRX component parts that make up a
part of that UnixWare release. Q. Even though that UnixWare
release, in your view, does contain all manner of SVRX code,
correct? A. That's right. Q. Now, you're familiar with this
language in amendment number 1 to the APA?
THE COURT: What is the exhibit?
MR. NORMAND: This is SCO 71, Your Honor. I'm sorry. Q.You have
seen this language before? A.Yes. Q.Now, I may have misunderstood
your testimony, but SCO had the right to enter into new SVRX
licenses if it was doing so incidentally through its rights to sell
and license UnixWare software, correct?
349
A.Right. Q.Now, when you were testifying earlier, I thought
you were saying that, in your review of the Microsoft and Sun
agreements, that an important fact to you was that it was a new
license. Did I mishear you? A.Well, that was an important fact,
but it was taken in combination with my belief that the UnixWare
activity in the agreement was not -- excuse me -- that the SVRX
rights being granted were not merely incidental to the UnixWare
portion.
So I wasn't -- that was not the only factor. I did highlight
that. Q.It doesn't really matter whether the SVRX component of the
Sun and Microsoft agreements is a new component for purposes of
determining this incidental exception, does it? A.I think it does.
Q.How so? A.Well, so, for example, if you go to that licensee and
they already have a fully paid-up license for a certain release of
SVRX, and then that licensee approaches SCO and licenses UnixWare,
and from the license -- that wouldn't be surprising -- licenses
UnixWare from SCO and enters an agreement in which UnixWare is
identified and then that version of SVRX, for
350
which the licensee had fully paid up its license, in that
scenario, the fact that -- and, to me, in that scenario, the
licensing of UnixWare very likely is incidental to the -- excuse me
-- the licensing of the SVRX showing up on the schedule of the new
UnixWare agreement, it's, for all purposes, incidental because no
new rights are being granted. It's significance there is it's
almost meaningless.
However, if I took that same version of SVRX and SCO approaches
a customer, and SCO enters an agreement with the customer and
identifies that same version of UnixWare on the product schedule
and then separately that version of SVRX, and that customer has
never paid for SVRX before and charges that customer the very same
amount for UnixWare, you know, then, to me, I say: Well, now this
customer has received substantial additional rights that it did not
previously have. Q.It sounds like you've thought about the issue
of incidental licensing a bit? A.I've thought about it. Q.But you
don't have any view as to whether this language, this incidental
language, encompasses a prior practice of licensing older versions
of System V with the most recent release, do you? A.Well, my view
is, to the extent I have been
351
exposed to prior practices, that the theme that I see in them is
consistent with the rationale that I just set out. Q. You don't
have a view as to whether, in amendment number 1, the parties
intended, through the use of that language, to encompass the
practice of licensing the prior releases of System V with the most
recent release, do you? A. I don't have any knowledge of the people
who drafted that language, having -- having spoken and saying that
this is why we are putting that language in the agreement. I do not
have that type of knowledge. Q. Well, if you have no view on that
issue, you can't make a fully-informed assessment of whether
incidental licensing has occurred, can you? A. To the contrary.
This is an agreement. I think there is an integration clause that
says this merges prior discussions and understandings. This
agreement, you know, I look at it, and I think that that language
has meaning independent of whatever prior discussions took place.
Q. Would you acknowledge that it could also be meant to encompass
this prior practice, correct? A. What prior practice? Q. The prior
practice of licensing older versions
352
of System V with the most recent release? A. Well, the prior
practice that I described is one in which, for each of those prior
releases, consideration had been given. So I don't know if you're
talking about the same prior practice, but if that's the prior
practice you're alluding to, I could easily see that this would
support that type of practice. Q. You don't have a view as to
whether it encompasses a practice of licensing releases even to
those people who had not previously acquired a stand-alone license
to the earlier releases? A. I don't have any knowledge of it being
applied to such people. Q. And if this provision was intended to
encompass this practice, it would change your analysis, wouldn't
it? A. I don't know that it would. Q. So you think the intent of
the parties is irrelevant? A. No. But, again, there is -- this is
an agreement. I think there is an integration clause.
"Incidentally" is a word that appears in the dictionary. It has a
meaning. Q. It's ambiguous, isn't it? A. I don't know. I think it
calls for application
353
to circumstances, but I have been asked about this before, I
know, and I said, you know, I'd look at the dictionary, so --
THE COURT: Pick a good stopping point.
MR. NORMAND: This is fine, Your Honor.
THE COURT: Are you sure?
MR. NORMAND: Yes.
THE COURT: All right. We'll take our second break and be in
recess for 15 minutes.
(Short recess.)
354
REPORTER'S CERTIFICATE STATE OF UTAH )
) ss. COUNTY OF SALT LAKE )
I, REBECCA JANKE, do hereby certify that I am a Certified Court
Reporter for the State of Utah;
That as such Reporter I attended the hearing of the foregoing
matter on April 30, 2008, and thereat reported in Stenotype all of
the testimony and proceedings had, and caused said notes to be
transcribed into typewriting, and the foregoing pages numbered 281
through 354 constitute a full, true and correct record of the
proceedings transcribed.
That I am not of kin to any of the parties and have no interets
in the outcome of the matter;
And hereby set my hand and seal this 30th day of April,
2008.
_______________________________
REBECCA JANKE, CSR, RPR, RMR
THE COURT: You may proceed, Mr. Normand.
MR. NORMAND: Thank you, Your Honor.
May I approach, Your Honor?
THE COURT: You may.
MR. NORMAND: This is a copy of the bulk of the exhibits
that we'll be using.
THE COURT: Are these all in? Have they all been
admitted?
MR. NORMAND: With one exception, Your Honor. And when we
get to that, I'll offer it.
Q. BY MR. NORMAND: Mr. Jones, do you recognize Schedule
1.1(A) to the APA?
A. I'm familiar with it. It's not up there right now. I
don't have the exhibit to myself.
Q. And you referenced the schedule of assets that is in
1.1(A) earlier; correct?
A. Correct.
Q. And that's in Item 6 of the APA; right?
A. Right.
Q. And there's no UnixWare release identified in Item 6;
correct?
A. I'm not certain in that -- my only uncertainty is that
I knew the early release of UnixWare was based on Release 4.2. And
so I just -- I'm not certain whether that version of 4.2
corresponds to what was in UnixWare release or
355
not. That's my only uncertainty.
Q. Your view is UNIX System 5 Release 4.2 MP is the same
or virtually the same as the first release of UnixWare;
correct?
A. That's a lot more than I said. I just -- I think that
the early version of UnixWare corresponds to 4.2. But sitting here
today, I'm just not certain. So if it is the case, then there's
UnixWare in the schedule. If it's not the case, then UnixWare is
not there.
Q. So looking at Item 6 now, you don't think Novell
retained any interest in any UnixWare royalties after the APA;
correct?
A. If none of those identified as SVRX releases are
UnixWare, then the SVRX licenses and the corresponding royalties
would relate to UnixWare. So it's just a factual question that I
have. And that was -- when I was -- earlier when you were asking me
about UNIX everything I said was based on whether or not any of
these releases are, in fact, a version of UnixWare.
Q. But in your view, the place to look to determine what
royalties arose is Item 6; correct?
A. Yeah, that's right. Item 6 is where there's a
reference to that in Section 4.16.
Q. You said earlier in your understanding that System V
prior products are only licensed when consideration
356
was given for the prior products; right?
A. I think I said generally. To the extent that I had an
opportunity to see examples that that's what I've seen. So that's
what I said.
Q. You're aware of examples of UNIX licensees who were
not charged any price for getting prior products; correct?
A. I don't believe I am. I'm not saying that that has
never happened. But I don't think I'm aware of any examples.
MR. NORMAND: This is SCO Exhibit 369. It may not be in
the book, Your Honor, as it turns out.
Blow up the top half.
Q. BY MR. NORMAND: Do you recognize this document, Mr.
Jones? Software agreement for Nihon SCO, Limited; correct?
A. I just need to actually read the document here.
Yes.
Q. Page 10?
MR. MELAUGH: Can I ask Mr. Normand to give a copy to the
witness? Do you have a copy?
THE COURT: Do you have a copy that you can give to
him?
MR. NORMAND: Somewhere, Your Honor.
THE WITNESS: Thank you.
MR. NORMAND: Blow up the top half.
MR. ERIC WHEELER: Yes, sir.
357
Q. BY MR. NORMAND: Mr. Jones, Exhibit A to this document
at Page 10 reflects an initial designated CPU price of $375,000;
correct?
A. Just a second. I'm trying to find it here.
Q. It's at Page 10. Do you see Item A, 1A?
A. I want to make sure it's the same page. It's kind of
clipped at the top.
Okay. Right.
Q. And if you turn to Page 32, Mr. Jones. There are no
prior products listed; correct?
A. Page 32?
Q. Correct.
A. I'm really thrown by the numbering.
Q. Do you not see this on the screen? Do you want me to
blow it up?
A. Well, I'd like to be able to see it in context. And
you're referring to page 32. I'm simply not tracking on the
pages.
Q. Bates number is 1042612.
A. Okay.
Q. So for this supplement, the initial CPU price is
$375,000, and there are no prior products listed; correct?
A. There are no prior products in this exhibit. I've
never seen this agreement before. I'm not familiar with the way
it's organized. So all I can really say is I know this
358
exhibit says that, but I'm not familiar with the agreement.
Q. Okay.
May I approach, Your Honor?
THE COURT: You may. What exhibit are you talking
about?
MR. NORMAND: SCO 370.
Q. BY MR. NORMAND: SCO 370 is a UNIX agreement concerning
UNISYS; correct?
A. Yes.
Q. Do you see at Page 4 which is --
A. I think the Bate stamp number would help.
Q. It's easier?
A. Yeah.
Q. Bates 1039897.
A. Okay.
Q. In Section 1A, the initial designated CPU price is
$375,000; correct?
A. Correct.
Q. If you turn to Bates 1039921. A lengthy list of prior
products; correct?
A. Right. There is a list, right.
Q. So these two documents reflect the same initial per
CPU price for UnixWare licenses whether or not the prior products
are listed; correct?
A. Again, I'm not familiar with the documents. I can
359
simply say that that information appears on the two pages that
we saw in each agreement. I have never studied this document. I'm
not familiar with the way it's organized and how it works.
Q. Well, having seen what I've shown you, it's clear that
--
MR. MALAUGH: Mr. Normand, is this a demonstrative that you
intend to use?
We have a stipulation such that demonstratives that are going to
be used with witnesses must be disclosed 24 hours in advance.
MR. NORMAND: This is from the opening.
THE COURT: It's from what?
MR. NORMAND: The opening argument that Mr. Singer did,
Your Honor.
MR. SINGER: I used those two in my opening.
THE COURT: I thought he did.
MR. MALAUGH: I think our understanding of the agreement was that
if someone was going to use something with the witness, we would be
told it was going to be used with the witness.
MR. NORMAND: I don't need to use it, Your Honor. But I do
have a different understanding of the meaning of the
stipulation.
THE COURT: Well, I don't have any understanding of the
meaning of that yet. So apparently you two have a
360
different ones. But now it's not relevant; right.
MR. NORMAND: I'll ask Mr. Jones a question without using
the exhibits.
THE COURT: All right.
Q. BY MR. NORMAND: Based on what I've shown you on these
two licenses, the same per CPU price per unit where a license was
charged whether or not the system prior products was listed;
correct?
A. The same price was listed on the page whether or not
the exhibit identified a product or not. And that's all I can say,
is those words appear. And I haven't studied the agreements, so I
don't know how they work.
Q. You are a lawyer; right?
A. I think lawyers actually need to read documents to
understand them, nonetheless.
Q. I understand.
Now, in your view, one needs the details in the transaction at
issue to determine whether there is an incidental licensing that's
SVRX with UnixWare; correct?
A. I'm sorry. Could you say that again?
Q. In your view, one needs to understand the details of
the transaction at issue to determine whether there has been
incidental licensing of any SVRX with UnixWare; correct?
A. Once you understand the circumstances of the
transaction.
361
Q. Now, on the issue of whether any SVRX source code was
licensed incidentally to UnixWare in Microsoft agreement, you think
Microsoft views are irrelevant?
A. As to SVRX agreement, yes.
Q. And as to whether there's been any incidental
licensing; correct?
A. Yes.
Q. And the same is true as to Sun's view in its agreement
as to whether there's been incidental licensing; correct?
A. Yes.
Q. But you do think the overall facts and circumstances
surrounding the transaction are relevant; correct?
A. Well, the circumstances of the transaction -- yeah, to
some extent that needs to be understood.
Q. To a significant extent; correct?
A. Yes.
Q. And primarily, you think the actual terms of the
agreements are the most important to determining whether there has
been incidental licensing; correct?
A. Not necessarily. I mean, the terms -- the terms of an
agreement might not fully reflect the circumstances behind the
transaction.
MR. NORMAND: Your Honor, may I play a clip from
362
Mr. Jones' deposition?
THE COURT: Yes. Tell us.
MR. NORMAND: May 10, 2007; Page 246 Line 16 to Page 247
Line 1.
THE COURT: Thank you.
MR. MALAUGH: It was May 10th? Thanks.
MR. NORMAND: If that's not going to work, I can read it,
Your Honor.
THE COURT: Is it not going to work? All we're getting so
far is it a sounds like someone backing up.
MR. ERIC WHEELER: That is the audio, Your Honor.
THE COURT: If you can read it if you can't get it to
work.
Q. BY MR. NORMAND: Mr. Jones, I asked the following
question, and you gave the following answer:
Question. So in Novell's view --
MR. MELAUGH: Can I ask -- I'm sorry I'm having difficulties, but
could you give him a copy of the transcript to Mr. Jones so he can
follow along with you?
MR. NORMAND: May I approach, Your Honor?
THE COURT: Oh, yes. Yes.
Q. BY MR. NORMAND: This is at Page 246 Line 16:
Question. So in Novell's view whether the
UnixWare had been licensed or whether the SVRX had
been licensed incidentally with UnixWare is
something to be determined from the terms of the
agreements; is that right?
Answer. Well, as I said, I think terms of
the agreement would be the most important
consideration. And my response is I think I
suggested the overall facts and circumstances, and
those facts and circumstances I think are probably
the most important thing in the terms.
Do you recall being asked that question and giving that
answer?
A. Vaguely. But here it is, so....
Q. Now, beginning in October of 2002, you had several
communications with SCO; right?
A. Yes.
Q. And there were in your best estimate four to six
conversations between Novell and SCO during that time?
A. Something like that. I don't know.
Q. And to your recollection, in October of 2002, Mr.
McBride told that you SCO was starting to look into the possibility
of Linux end users using UNIX code; correct?
A. Yes.
MR. NORMAND: Will you pull up SCO 398?
MR. ERIC WHEELER: Yes, sir.
Q. BY MR. NORMAND: And in this e-mail, in the fall of
2002, you refer to that earlier conversation with Mr. McBride;
364
correct?
THE COURT: This is SCO 390?
MR. NORMAND: Yes, Your Honor -- 398.
THE COURT: Pardon me?
MR. NORMAND: 398.
MR. MELAUGH: And again, Your Honor, if I could ask counsel to
follow the general practice and give the witness a copy of the
exhibit that he's referring to so that the witness can see the
context of what you're blowing up.
Q. BY MR. NORMAND: Mr. Jones, do you need a copy of this
exhibit to understand this question?
A. Not this one. But in general I really appreciate
having the exhibits.
Q. Of course.
And you recall in this document that a few weeks earlier on
November 15th --
A. I actually didn't answer your question. But you had
asked me the question about --
Q. Do you think this e-mail reflects your discussions
with Mr. McBride?
A. Yes.
Q. This is an e-mail from November 15th, 2002;
correct?
A. Right.
Q. And you recall that a few weeks earlier on that
365
date, Mr. McBride, quote:
Expressed interest in pursuing Linux users
who may be using misappropriated UNIX code. End quote.
Right?
A. Right.
Q. This is SCO 397, e-mail dated November 20th, 2002,
from yourself. And in this e-mail you described a conversation with
Mr. McBride that you and Dave Wright had that same day;
correct?
A. Just a second.
(Time lapse.)
THE WITNESS: Yes.
Q. BY MR. NORMAND: You recount the possible efforts by
SCO to assert claims relating to infringing uses of SCO's UNIX
libraries by end users of Linux; correct?
A. Right.
MR. NORMAND: 399.
Q. BY MR. NORMAND: To some extent you may be able to find
it. It's tabbed.
A. Okay. Thanks.
Q. We're on 399 now.
I'm told we may need some time technically to be able to use the
documents this way, which I think is faster. But I defer to how
Your Honor wants to proceed. It may take us three to four
minutes.
366
THE COURT: To get this up and running?
MR. NORMAND: Yes, sir.
THE COURT: Well, we better wait. I think it ultimately
would be quicker.
MR. NORMAND: I agree, Your Honor.
(Time lapse).
THE COURT: There are no -- there are no interlude
non-exhibit questions you could ask? If there aren't, there
aren't.
MR. NORMAND: I'm sort of in the middle of this topic.
(Time lapse.)
Q. BY MR. NORMAND: There is a discrete area that we can
turn to, Mr. Jones, if you're comfortable with that. We can go back
to this.
A. Yes.
Q. You spoke about the Solaris files with counsel in your
direct examination. Do you remember that?
A. Yes.
Q. Exhibits 439 to 59?
A. It sounds right.
Q. Do you know what functions these files perform in
Solaris?
A. I didn't. No. I didn't attempt to understand what
their functionality was.
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Q. Do you know what function these files performed,
SVR4-389?
A. No. In neither case did I look at them to what their
functionality was.
Q. Do you know if the files originated in SVR4-386?
A. Meaning that the first version in which they
appeared?
Q. Yes.
A. I don't know.
Q. You said that Novell had a hard copy of SVR4-386;
correct?
A. A hard copy?
Q. A hard copy of the source code?
A. If I said that I'm mistaken. We have SVRX source code.
But if you understood me to say that we have hard copies of it, I
didn't intend to say that. That would be a huge printout.
Q. I didn't mean to say you printed it out. I mean you
have access to the actual source code?
A. Okay. I understood you to mean by hard copy we had a
printout of the system.
Q. No. Why did Novell have the source code of the
SVR4-386?
A. I don't know why we wouldn't.
Q. Novell transferred all copies of its source code
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for UNIX and UnixWare to Santa Cruz in 1995; correct?
A. There is a license of technology back to Novell. The
technology license agreement. It was contemporaneous with the asset
purchase agreement. So -- there are certain bounds on the license,
but we're perfectly entitled to have copies of the pre APA SVRX
according to the terms of that license agreement.
Q. Now you identified 21 OpenSolaris filings that you
found; correct?
A. Yeah. There were 21 that we talked about today.
Q. And all of those files are in UnixWare 1; correct?
A. I don't know whether they're in UnixWare 1.
Q. You did not look at that, did you?
A. I did not look at that.
Q. Now, you testified, Mr. Jones, your views as to what
money Novell is entitled to under the Sun agreement in 2003. Do you
recall that?
A. Yes.
Q. And you said you didn't think that the 2003 Sun
agreement was a customarily license agreement. Do you recall
that?
A. I think I said -- I can't recall -- that may have been
the question. I think what I said it was extraordinary. I can't
recall if I said, used the words, it's not customary. But I do
recall using the word extraordinary.
369
Q. The 1994 Sun agreement was extraordinary, as well,
wasn't it?
A. Yeah. I'd say it's not a typical agreement. It's a
buyout of source code rights. Buyout, excuse me, of source code
royalty obligations.
Q. Now, Novell seeks all 10 million that was paid for the
2003 Sun agreement?
A. Yes.
Q. The 2003 Sun agreement does provide some broad rights
with respect to UnixWare; correct?
A. Yes.
Q. And you asses no value to that UnixWare license;
correct?
A. No. As I stated, there has been no value specific to
the UnixWare portion suggested by SCO. And given the relationship
between Novell and SCO in this regard and SCO being the fiduciary
and no value being, having been assigned by SCO, I conclude that
we're entitled to all of it.
Q. So your view is the only reason that Novell is
entitled to all of it is because SCO hasn't suggested an
apportionment?
A. Well, I don't think that -- you know, there would have
to be some legitimate apportionment established, and one has not
even been suggested.
Q. But your view is the most important thing to look
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at to determine whether there's been incidental licensing is in
terms of the agreement; correct?
A. Well, let me see here. I mean, obviously what we've
talked about is the facts and circumstances and the terms and
conditions both mattering, having to look at all of it. And so in
my deposition you asked me the question, I said one was more
important than the other, and today I said the other is more
important. They're both important. They're all important in
understanding the agreement. I don't truly know that gets us
anywhere by trying to say one is more important than the other. But
the circumstances, the facts and circumstances, the terms, all of
those need to be considered.
Q. One can't reasonably review the 2003 Sun agreement and
conclude that no money was paid for the broad UnixWare license;
correct?
A. I don't think one can conclude that the monies paid
were not to some extent in consideration with the UnixWare related
rights. But I have no way of knowing how much of it was for
that.
Q. Your view is SCO should forfeit whatever money it
might be entitled to because it hasn't suggested a specific
apportionment; right?
A. In light of the fiduciary relationship that exists
between the parties and the fact that SCO executed this without
Novell's approval and involvement and SCO has not been
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forthcoming with some suggestion as to what the value should be
for the UnixWare portion, yes.
Q. You think SCO should forfeit the money?
A. Well --
Q. You just said yes.
A. Well, then --
Q. So that's your answer.
A. Well, I guess forfeit the money is a
characterization.
Q. You're an attorney. I've asked you a question. What's
your view? Is it forfeiture?
A. What my view is is that there's no reason Novell
should forfeit any of the monies itself given the position that
Novell is in, given that Novell was excluded.
Q. That begs the question, doesn't it? We were here to
determine who gets what, what the relative value is of this
license.
A. Absolutely. And, of course, as I've expressed and you
certainly are going to disagree with me, that from my perspective,
given the fiduciary relationship and all the factors that I've
described, that if there's a party that's at risk of forfeiting or
foregoing some consideration as between Novell and SCO, it should
be SCO.
Q. Section 3 of the Microsoft agreement is the UnixWare
license; correct?
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A. Yes.
Q. It was $7 million worth of the UnixWare license;
correct?
A. You know, I just know there's money there. I have not
memorized the payment amounts for each section of that
agreement.
Q. The Sun UnixWare license is broader than the Microsoft
UnixWare license, isn't it?
A. I haven't looked at the two in those terms.
Q. Well, you testified at some length in your direct
examination about how much thought you've put into this. The
Section 3 Microsoft license is narrower than -- Section 3 license
of Microsoft UnixWare is narrower than Sun's UnixWare license;
correct?
A. Is the question whether I said that before or whether
that's a fact?
Q. No. I'm asking you a yes or no question right now.
A. Right now. Well, the elements of a license in its
breath I think are the technology that are licensed and the rights
that are conferred. And the rights that are conferred in the Sun
agreement I can't imagine more expansive rights than those. I
haven't looked at the Sun agreement and the Microsoft agreement
side by side to see if there's any meaningful distinction in the
technologies that are identified. So I simply haven't looked at the
agreement from
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that perspective. I haven't thought of it that way.
Q. You're not able as you sit here to compare the scopes
of the UnixWare license of Microsoft 2003 to the scope of the
UnixWare of Sun in 2003; that's your testimony?
A. Are you asking me to do that now?
Q. I'm asking you --
A. I have not done it before.
Q. How could you not have done that and apportion any
value to the Sun license?
A. For the reasons that I've stated before.
Q. The UnixWare license in the Sun agreement is worth at
least $7 million, isn't it? Wouldn't it follow from the act of the
Section 3 UnixWare license in Microsoft was for $7 million?
A. I have not, you know, come here today having attempted
to made any specific valuations, just as SCO has not offered any
specific valuations. And my position as between Novell and SCO is
it's incumbent on SCO to do that. And if they haven't done it, then
they're the ones that should bear the risk of foregoing
consideration.
Q. But you concede that if you're wrong about that point,
if you're wrong about that burden that you think applies to SCO,
then there is value to the UnixWare components in the Sun
agreement. That is your view, isn't it?
A. Can you say that again?
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Q. If you're wrong about your argument that SCO should
forfeit the value of any UnixWare license in the Sun agreement, if
you're wrong about that, there is value to the UnixWare Sun
agreement, isn't there?
A. I don't understand what you're saying. There's value
to the UnixWare --
Q. Are you suggesting that Sun take no money, no
consideration for the broad UnixWare license it received in
2003?
A. I'm just confused because the whole agreement
characterizes the UnixWare agreement. And you're specifying the
UnixWare portions?
Q. I understand Novell's position to be that there's at
least a broad UnixWare license in the Sun agreement. I understand
that Novell takes the position, that there's more than that as
well. And SVRX components. Are we on the same page?
A. No. Where I got disconnected from you is that you said
that the Sun UnixWare license. And what I've heard SCO do is it
characterize the entire agreement as a UnixWare license. And you
just asked me if there's value associated with it. And I think,
well, yeah, Sun paid for it. So I wasn't sure if you were asking
about the entire agreement.
Q. I'm asking just about what you regard as the UnixWare
portion.
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A. The UnixWare portion? Yeah. I've never said -- I'm
drawing some conclusion that there's no value in the UnixWare
related rights that are conferred. But the question is, how do you
establish some valuation for apportionment purposes? And SCO has
not provided anything on that. And again, under those
circumstances, I feel Novell's entitled to conclude that that money
should be Novell's, and Novell should not be required to forfeit
something here.
Q. Your view that Novell gets all the money, the 10
million, is based on a legal argument; correct?
A. Well, it's based on -- legal arguments don't exist in
a vacuum. It's based on the factual circumstances and the legal
arguments arising out of the fiduciary relationship that exists
between the two parties.
Q. Your view that Novell gets everything is not based on
an objective assessment of what was paid for the rights in the 2003
Sun agreement, is it?
A. It's not -- it does not reflect any type of economic
valuation or analysis or anything of that nature.
Q. I want to turn back to your discussions with SCO in
the fall of 2002.
A. Okay.
Q. I won't be much longer.
Exhibit 400, Mr. Jones. It should be in that book.
THE COURT: This is SCO 400?
376
MR. NORMAND: Yes, Your Honor.
THE WITNESS: Yes. I've got it.
Q. BY MR. NORMAND: Now, at the time of these discussions
with Mr. McBride, Novell had no interest whatsoever in supporting
any UNIX infringement claims against end users of Linux;
correct?
A. Yes. I think that's correct. And that's what our
executives advised me.
Q. Novell's efforts were prioritized in other places;
correct?
A. Well -- I guess I just say yes, just by virtue of the
fact that this didn't have priority. So....
Q. Now, at the time of these discussions Novell was fully
moving in the direction of being involved in Linux; correct?
A. That's correct.
Q. And you didn't say that to SCO in these discussions;
correct?
A. No. I mean, to me I think we had acquired Zimeon at
that point, which is the Linux desktop company. So that was public
knowledge. And any other information that I had about Novell's
investigations would have been confidential, so no.
Q. You didn't raise any objections with respect to the
perspective licenses that Darl had mentioned; correct?
377
A. I did not understand the licenses that would be
granted.
Q. You understood --
A. Darl, he came to me requesting help with due diligence
and assessing what SCO's rights would be. I confided that once they
understood what their rights would be, they would act accordingly.
So not having known the terms that would have been offered to
people in any such program or any agreement and also just
understanding that SCO seemed to be investigating intellectual
property rights to understand the bounds what they might properly
do, I don't think there was any need for me -- I don't know what I
would have objected to.
Q. He specifically told you that they were concerned
about the use of UNIX code and use of UNIX code by Linux end users;
correct?
A. That's right.
Q. What did you understand UNIX code to be?
A. At that point I wouldn't know.
Q. Didn't think about it?
A. There wouldn't be -- as has been discussed, there is a
wide variety of UNIX code that's been developed over the years. So
how would I know what specific code he would be discussing? He did
mention -- the one specific thing that Darl mentioned was the
library. But I couldn't understand,
378
you know, in the vast scheme of things, you know, where that
would factor in or under what terms it would be offered or -- you
know, my information was very scant.
Q. But you knew it concerned Linux and UNIX; correct?
A. That I knew.
Q. And Novell's position is that it retained substantial
rights in the UNIX business; correct?
A. We have substantial rights in pre-APA SVRX. UNIX would
be a pre-APA SVRX as a subset of UNIX. So when someone says they're
going to do something with UNIX, I cannot know if they're taking
about something that would implicate Novell's interest or not.
Q. And you understood SCO to be contemplating a program
on its own; correct?
A. Yes. On its own -- well, what do you mean by, on its
own?
Q. You understood that SCO was interested in pursuing its
own efforts against Linux end users; correct?
A. Yeah. I guess I just need not to jump to a conclusion
here. They were asking for Novell's cooperation and assistance to
the extent of helping them identify documents or due diligence
purpose and things of that nature. And, of course, they had
questions about the terms of the earlier agreements. And whether or
not they had any involvement with third parties was something I had
no
379
knowledge of. So I was hasty to say they were going alone. That
was what I just described was the extent of the knowledge that I
had.
Q. You're not suggesting that Mr. McBride had asked you
to be a business partner in pursuing these Linux end users, are
you?
A. What do you mean by business partner?
Q. It was SCO's effort and they were asking for due
diligence support from Novell; right?
A. Yeah. The nature of the cooperation, and, you know,
partnering covers a wide variety of activities. So Mr. McBride
suggested, as he explained earlier here today, you know, hey,
Novell, if you help support us in some way, what we intend to do
that could have some business benefit to you. And so, Novell, what
we want of you is to help us do due diligence. We think that will
help support our efforts.
So is that partnering? I think that's some form of partnering.
But that's the extent of what Mr. McBride explained to me. He
didn't explain something beyond that to me or suggest something
beyond that.
Q. This is Exhibit SCO 87, Your Honor.
THE COURT: Okay.
Q. BY MR. NORMAND: Mr. Jones, I want to go back to a
couple of letters that we discussed. In 1996, you were employed by
Novell; correct?
380
A. Yes.
Q. Now, in 1996, Novell informed its customers and
business partners that Novell had transferred its existing
ownership interest in all releases of UNIX and UnixWare to Santa
Cruz; correct?
A. Could you say that again? I was looking at the
document, and you were speaking.
Q. I said in 1996 Novell represented to its customers and
business partners that it had transferred its existing ownership
interest in all releases of UNIX and UnixWare to Santa Cruz;
correct?
This paragraph that is Attachment A.You can go to Attachment
A.
A. I guess the only liberty -- I mean, this letter was
sent. I simply don't have the personal knowledge of how extensively
it was sent, but I think you said its customers. So I don't know
how many -- I just don't know how many customers received it. But
this letter does reference in this exhibit all releases of UNIX
System V and prior releases of the UNIX system. And the letter
would be inconsistent, of course, with the asset purchase
agreement.
Q. But Novell did make these representations to
Prentice-Hall; correct?
A. It's sent -- well, you know, again, I assume
Prentice-Hall received it, Novell wrote this in a letter to
381
Prentice-Hall by an Novell employee.
Q. Novell said that it was assigning its right under its
agreements that concerned those releases; correct?
A. If this letter says that, it's inconsistent with the
asset purchase agreement.
Q. Let's go to Exhibit 411.
THE COURT: SCO 411?
MR. NORMAND: Yes, Your Honor.
Q. BY MR. NORMAND: This is a letter from Mike DeFazio to
SunSoft. Do you know what SunSoft is?
A. I thought it was a software division of Sun.
Q. You're correct.
A. Okay.
Q. And Novell specifically told Sun that Novell had
transferred its existing ownership interest and all releases of
UNIX and UnixWare; correct?
A. This letter says that, and it's inconsistent with the
APA.
Q. Who signed this letter?
A. Michael J. DeFazio.
Q. What was his position?
A. I don't know his precise title, but he was -- I know
he had significant responsibilities for Novell's UNIX business. You
know, I regard him as having headed it up, really, at certain
points in time.
382
Q. Was he head of the organization within AT&T and
USL and later Novell responsible for product management, marketing
and licensing terms and conditions for UNIX from 1984 to 1995?
A. I don't know what you're reading. It sounds plausible.
It's obvious I don't come in here with that specific knowledge in
my mind. But that sounds plausible.
Q. But you think he was wrong about what he said?
A. Yes.
MR. NORMAND: SCO 136.
Q. BY MR. NORMAND: There is a SCO -- what number is
this?
MR. ERIC WHEELER: 136.
MR. NORMAND: 136, Your Honor.
Q. BY MR. NORMAND: This is a similar letter to Microsoft;
correct?
A. Just a second.
MR. NORMAND:
Your Honor, I don't think there's a stipulation as to this
document, so I move for its admission.
THE COURT: 136.
MR. MELAUGH: No objection.
THE COURT: Well, it's on the list, isn't it?
THE CLERK: It is not on the list.
THE COURT: 136. It's on my list. SCO Exhibit 136.
383
THE CLERK: I don't have a 136 on mine, on my list.
THE COURT: Well, I'll admit it. It's on my list.
(Whereupon, SCO 136 was received.)
MR. NORMAND: Thank you, Your Honor. We'll cure the
confusion.
Q. BY MR. NORMAND: Now, in these letters, Mr. Jones,
Novell was telling people to deal directly with Santa Cruz;
correct?
A. I've been reading the other part of the letter. So
just a second.
(Time lapse.)
Q. BY MR. NORMAND: Have you had a chance to review the
document?
A. Yes. Yes. It's consistent with what you said. These
are -- it's informing the parties that the contracts have been
assigned to SCO. So in effect that they should, you know, they
should be dealing with SCO then.
Q. And Novell told Sun and Microsoft that; is that
correct?
A. SunSoft and Microsoft.
Q. My colleagues remind me that when we went down with
the system, I was on one of your e-mails.
A. Okay.
Q. Your infamous e-mails.
A. Infamous.
384
MR. NORMAND: This is still 399, Your Honor.
Q. BY MR. NORMAND: Do you have that e-mail in front of
you, Mr. Jones?
A. Hang on just a second. Tab -- this is Exhibit -- yeah,
I've got this.
THE COURT: SCO 399.
THE WITNESS: Right. Thanks.
Q. BY MR. NORMAND: Let me know when you've had a chance
to review it.
A. Okay.
(Time lapse.)
THE WITNESS: Okay.
Q. BY MR. NORMAND: Thank you, Mr. Jones.
You said on December 4th, 2002, that you and Mr. Wright had
returned a phone call from Mr. McBride; correct?
A. Yes.
Q. And you said that Darl reiterated his request from
Novell's assistance, and then he informed us that next week SCO
will announce a Linux licensing program; correct?
A. Correct.
Q. That's an accurate statement; correct?
A. I believe so.
Q. In your review of this document, have you had seen any
statements that you made that you think are inaccurate?
A. That I made that are inaccurate?
385
Q. Correct.
A. I think the only thing I might take issue with is my
poor writing in the second sentence of the fourth paragraph where I
talk about potential increase of the declining $8 million revenue
stream.
Q. But the rest of your statements in the e-mail you
believe are accurate?
A. Yeah. And I think, as Mr. McBride was saying, I think
he was just suggesting that the decline would slow, not that there
would be some substantial increase or something of that nature.
MR. NORMAND: May I approach, Your Honor?
THE COURT: Yes.
Q. BY MR. NORMAND: I hand you two last documents, Mr.
Jones.
A. Okay.
Q. These are Novell 468 and 469. This is a Novell letter
to Microsoft from September of 2007; correct?
A. Well, there are two letters. I'm sorry. We were on
--
Q. I'm sorry. I'm on 468.
A. Okay.
Q. And 469 is a letter to Sun.
A. Yeah.
Q. And the content of the letter is the same;
correct?
386
A. I don't know.
Q. Let's do 468.
A. Okay.
Q. Have you seen this letter before?
A. I think I have. I've seen so many documents. But I
believe I've seen it.
Q. In this letter, Mr. LaSala, who was general counsel at
the time; correct?
A. Yes.
Q. Tells Microsoft, quote:
We believe that the 2003 agreement is
unenforceable, void or invalid, and hence that
there may be copyright issues arising out of
Microsoft's use of UNIX or UnixWare code in which
Novell retains copyright ownership.
Do you see that line?
A. Yes.
Q. Does that statement reflect Novell's position today,
as well?
A. Yes.
Q. Exhibit 469 is a letter to Sun. And it contains in
bottom third of the letter the same statement; correct?
A. I think they're not quite identical. But you're asking
if that still reflects Novell's position? That's the question?
387
Q. Right.
A. I believe so.
MR. NORMAND: Nothing further, Your Honor.
THE COURT: Pardon me?
MR. NORMAND: Nothing further.
THE COURT: Thank you, Mr. Normand.
Anything else, Mr. Melaugh?
MR. MELAUGH: Your Honor, we have no further questions of this
witness.
THE COURT: Thank you, Mr. Jones. You may call your next
witness.
MR. JACOBS: Your Honor, we have no further witnesses. We
have a couple of exhibits to move into evidence. And we would
request the opportunity to just check this evening against the
exhibits that we looked at to make sure that they were either part
of the stipulation or we moved them into evidence.
THE COURT: What exhibits are you talking about?
MR. JACOBS: So 430, Novell Exhibit 430 is the letter to
the Arbitral Tribunal in which SCO stated that it had no further
claims after this Court's copyright decision.
THE COURT: This is Novell 430.
MR. JACOBS: Correct.
THE COURT: Any objection?
MR. SINGER: No objection.
388
THE COURT: 430 is received.
(Whereupon, Novell Exhibit 430 was received.)
MR. JACOBS: And Novell Exhibits 468 and 469 are the two
exhibits that you just saw in the examination of Mr. Jones. The
letters from last September to Microsoft and Sun.
THE COURT: You want them in twice?
MR. JACOBS: No. He did not move them into evidence.
THE COURT: Didn't he? I thought he did.
MR. NORMAND: I missed the reference to the exhibits
number. I'm sorry.
THE COURT: It's SCO.
MR. JACOBS: No. I believe it's Novell.
THE COURT: Novell 468 and 469.
MR. NORMAND: I would like to move them into evidence.
Thank you.
THE COURT: I thought you would. 468 and 469 are received.
(Whereupon, Novell Exhibits 468 and 469 were received.)
MR. JACOBS: And then if we may, Your Honor, just check,
we don't know of anything we left out. But we would like to check
this evening on whether there were any further exhibits.
THE COURT: We'll check at the end of the trial, as
389
well, for both of you. All right.
MR. JACOBS: Otherwise we rest, Your Honor.
THE COURT: Thank you.
MR. SINGER: Your Honor, we would like to move at this
time for an involuntary dismissal of these claims. I'm not going to
ask to argue at this time, but argument on a certain basis later
today. But we simply would like to do so on the basis of all the
papers that have been submitted including arguments in our trial
brief and proposed findings.
THE COURT: All right. And I'll take those motions under
advisement.
And you may call your first witness.
MR. SINGER: That is John Maciaszek.
THE COURT: You want this on the record? Because we can't
hear you if you do.
MR. SINGER: We would like to put on the record reserving
the right to using these blowups used in the openings with any
witnesses that will be called tomorrow. We won't use them with Mr.
Maciaszek today.
THE COURT: You will not today?
MR. SINGER: I don't think we'll need them with Mr.
Maciaszek.
THE COURT: All right. Well, that almost gives you your
24-hour notice.
Come forward and be sworn, please. Right here in
390
front of the clerk of court. Right there. That will be good.
Thanks.
THE CLERK: Please raise your right hand.
JOHN MACIASZEK,
called as a witness at the request of SCO Group,
having been first duly sworn, was examined
and testified as follows:
THE WITNESS: I do.
THE CLERK: Thank you. Please take the witness stand right
there.
Please state your name and spell it for the record.
THE WITNESS: John Maciaszek, M-A-C-I-A-S-Z-E-K.
THE CLERK: Thank you.
DIRECT EXAMINATION BY MR. SINGER:
Q. Good afternoon, Mr. Maciaszek.
A. Good afternoon.
Q. When were you first employed by AT&T or any
company involved in the UNIX business?
A. Well, I started in AT&T back in 1966. The UNIX
business portion was when I moved into USL in December of 1991.
Q. So that's when you would date back your beginning of
involvement with UNIX?
A. Centrally, yes. Before that I had peripheral
391
interactions relative to it on other product lines.
Q. When you started with USL, UNIX System Labs, in 1991,
what were your responsibilities?
A. I had product management responsibility for some
components of the operating system business, as well as ultimately
responsibility for the interaction between USL, Novell and the
joint venture Univell.
Q. Did there come a time when your employment changed
either to a new company or your responsibilities changed?
A. Fundamentally I've been a product manager ever since
joining USL, all the way through the changes through Novell and
through Caldera and back to SCO again.
Q. Has products for which you have managed include the
UNIX System V products?
A. Yes.
Q. And do they include UnixWare?
A. Yes.
Q. What is your current employment?
A. I'm currently employed by SCO on a part-time basis.
I'm sort of semiretired at the moment.
Q. Where do you live?
A. I live in Marlboro, New Jersey.
Q. And have you worked consistently in New Jersey on
AT&T and UNIX System Labs and so forth?
A. Yes. Yes. I was born in New Jersey, and except
392
for my time in the Army, I lived there all my life.
Q. Mr. Maciaszek, was there a time when you worked for
Novell?
A. Yes.
Q. What was that time period?
A. It was a time period when Novell acquired USL from
AT&T. And during -- I was there during that entire duration
before the sale to Santa Cruz.
Q. Were your responsibilities the same?
A. Essentially the same, yes. I was product manager.
Q. And when the sale occurred to Santa Cruz, did you go
over to Santa Cruz?
A. Yes, I did.
Q. And did you continue with those responsibilities?
A. Yes.
Q. And similarly forwarded to SCO?
A. Yes.
Q. Was there a licensing group that was at Novell at the
time that the asset purchase agreement was entered into?
A. Yes, there was.
Q. And what happened to that licensing group or most of
the members of the group after the agreement was executed?
A. They basically moved over to SCO. I believe everybody
with possibly one or two exceptions moved to Novell -- I mean to
SCO.
393
Q. They moved from Novell to SCO?
A. That's right.
Q. Did they continue with the licensing of UNIX for Santa
Cruz?
A. Yes, they did.
Q. And you remained part of that group?
A. Well, I was not in the licensing group. But in product
management. And obviously I had responsibilities to interact with
the licensing group to put together the schedules.
Q. Can you explain what the Santa Cruz UNIX licensing
group did?
A. They were responsible for the legal aspects of new
schedules that got put together for new product offerings. I'm
talking in this case about source code products. Plus they were
responsible for all the contracts that were negotiated with
customers for both binary and source and interacted with all the
sales organizations worldwide.
Q. What is UnixWare?
A. What is UNIX or UnixWare is the latest, depending on
the number you want, it's -- what is UnixWare. The next release of
UNIX System V that we offer in both binary package format today as
well as potentially source licenses for it.
Q. Are you familiar with SVR4.2 MP?
A. Yes.
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Q. What does that stand for?
A. That's System V Release 4.2 multiprocessing
version.
Q. How did that relate to UnixWare?
A. Well, that was the predecessor to UnixWare 2. UnixWare
2 essentially contains the bulk of SVR4.2 MP, plus some additional
user interface code that was built on top of that.
Q. What does the MP mean?
A. Multiprocessor. That's today's technology. Typically
all the computers you see today have more than a single processor
in it.
Q. Is that important?
A. That contains the code that enables the operating
system to support those multiprocessors.
Q. Is that an important development?
A. Absolutely. I mean, there were very few today even at
the desktop level that you buy with -- having only a single
processor.
Q. You mentioned after SVR4.2 MP you had UnixWare 2?
A. Yes.
Q. Was there a UnixWare 1?
A. Yes. UnixWare 1 was actually based on SVR4.2, no MP,
which was a single processor version of the operating system. And
UnixWare 1 was produced as part of the joint
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venture of Univell and USL. Univell did some work on the user
interfaces. Novell added some code with respect to the NetWare, and
then the product was sold, was initially sold as a packaged
product. The initial units were packaged products by Univell.
Q. Was UnixWare 2.0 the first multiprocessing version of
UnixWare?
A. That's correct.
Q. Now, did the versions of UnixWare build on the earlier
System V UNIX code?
A. Yes, of course.
Q. And after -- at the time of the APA, did you have a
transfer of the UnixWare business to Santa Cruz?
A. Yes.
Q. And did Santa Cruz continue in development and release
of its own versions of UnixWare?
A. Yes, it did.
Q. Did it make any modifications to the UnixWare
operating system?
A. Every new version contains modifications to support
new hardware, support new features that were needed by the more
modern applications that were coming to the market.
Q. And you also were employed at the time in 2001 when
Santa Cruz sold its business to Caldera?
A. Yes, I was.
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Q. And what happened to the UNIX licensing group at that
time?
A. That crew moved, as far as I can recall, lock, stock
and barrel to Caldera.
Q. And your involvement continued throughout?
A. Yes, that's correct.
Q. Okay. Now, at Novell, with respect to UnixWare, did
you have any involvement in the negotiation or oversight of
UnixWare licenses?
A. Yes.
Q. Can you explain what your responsibility was?
A. As a product manager, my recollection is that I was
involved in putting together the UnixWare 2 license, to model it so
that it paralleled our package product introducing what the
discount structure would be.
Q. Can you describe generally what a UnixWare license
provided at that time?
A. The UnixWare license provided access to the source
code of the corresponding package product and would enable an OEM
or other licensee to construct an identical product to what we were
shipping as packaged product or to use the source code to produce a
version of UnixWare that would run under alternate architecture.
The products that we were selling then and continue to sell now are
targeted at the Intel market. But at that time, there clearly were
other chipsets
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that were in the marketplace. And a licensee of that source code
could produce a version that would run on those alternate
architectures.
Q. Let me go over that a little bit and make sure I
understand the set.
There were some SCO UnixWare products that were just sold out to
the market; is that correct?
A. The packaged product, yeah.
Q. And that would be --
A. Excuse me. We're almost out of water here.
THE COURT: Just enough for you.
THE WITNESS: Right. It looks that way.
Q. BY MR. SINGER: Are you ready now?
A. Yes.
Q. The end user -- the packaged products go to end users;
is that correct?
A. Ultimately to the end users, yes. We sold through a
multi-tier distribution and still do.
Q. Now, you mentioned you also licensed source code to
OEMs, original equipment manufacturers; is that right?
A. Right. Those are computer manufacturers.
Q. And your point was they could use that to develop
their own type of operating system based on that source code and
sell those products?
A. Right. They would either modify it because they
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had a different central processing architecture or they would
need to make improvement so that it would perform best on their
hardware over and above, you know, other hardware.
Q. When you gave one of those OEMs a license to do that
with the UnixWare source code, could they use any part of the
UnixWare source code for developing their own product?
A. Yes, of course.
Q. And that would include the System V source code that
may have originated back in 1969 or later times?
A. Well, whatever was in UnixWare was UnixWare.
Q. There was no distinction in terms of what the customer
could use?
A. No, absolutely not.
Q. Now, when you licensed UnixWare and at the time that
you were Novell, did Novell grant the customer any license to any
older versions of the System V products?
A. Well, the standard practice going back to AT&T
days was to grant the right to use prior products as part of the
new products.
Q. And you said that goes back to AT&T days?
A. Oh, yeah. Started well before I joined the
organization. Go back and look at the SVR1.1 prior, and there were
always prior products listed there.
Q. Did you obtain --
A. Is it okay if I have a cough drop?
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THE COURT: Sure.
THE WITNESS: Thank you.
Q. BY MR. SINGER: And if you need more water --
A. No. I still got the water. When I talk a lot I tend to
cough.
Okay. Let's go.
Q. Okay. Did you have personal knowledge of that
licensing of prior products at the time that you joined UNIX
Systems Labs?
A. Oh, yes. I mean, I was involved in creating the 4.2
license, so I understand very well what the situation was.
Q. Were the customers who were given those prior products
asked to pay anything extra for the prior products?
A. Absolutely not.
Q. And is that a consistent practice throughout the time
that you have been at Novell and both its predecessor and successor
companies?
A. Absolutely. I can't remember or recall any occasion
where there would be any even thought given to charge them for
that.
Q. Was there any requirement imposed that you would only
give the prior -- the access or right to use prior products to
those licensees who had bought for value that earlier version?
A. No.
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Q. That's not something you looked into?
A. No. Absolutely not. That was part of the standard
license in general. We use the same license for all licensed
users.
Q. Now, when the original equipment manufacturer entered
into a license, what types of fees did they pay?
A. Well, there would be a fee for the software agreement,
a fee for the sublicensing agreement and a fee for the individual
schedules or the individual licensees with particular releases of
the product.
Q. Was the fee for the actual source code, was that a
one-time fee or something that would recur?
A. It was a one-time fee.
Q. And then you mentioned there would also be a fee for
distribution?
A. That's right. The sublicensing fee.
Q. Was that also a one-time fee?
A. It in effect became a one-time fee. It was listed each
time. But if somebody already had one, we typically didn't charge
them again.
Q. Was there a third source of fees or royalties
involved?
A. Well, the most obvious fee and the most generic was
the one when you distributed the products there would be a royalty
or per copy fee that was paid for each copy of the
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product, the derivative work that was distributed.
Q. Is that sometimes referred to as a binary fee?
A. Binary per copy fee, right.
Q. And what does the binary refer to?
A. Well, it is non-source. In essence, it's a running pro
product that has been created when compiling, linking source code
into a binary. In essence, think about the CD that you put in when
you install Windows. That's a binary product. You don't get the
source code to Windows.
Q. And that fee, of course, would vary depending on how
many products were sold?
A. There was a discount schedule, and also it would
depend on what release you were shipping. Over the historical time
the fees tended to go up as time marched on.
Q. Now, I'd like to show you Exhibit 141. This is SCO
141.
May I approach the witness, Your Honor?
THE COURT: Yes.
Q. BY MR. SINGER: Mr. Maciaszek, do you recognize this
exhibit?
A. Yeah. This looks to me like a 2.1 schedule for the
UnixWare 2.1.
Q. You see a customer name on the second page?
A. Right. NCR.
Q. Okay. And was this a license for UnixWare 2.1
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source code?
A. That is correct.
Q. Now, if you turn to Exhibit I, prior products on Page
24 --
A. Okay. I'm there.
Q. Okay. Is this a list of prior products which NCR was
given rights to use in connection with this license?
A. Yes, that is correct.
Q. Was any additional fee charged to NCR to make use of
any of these products?
A. No.
Q. Was there anything special about this treatment of NCR
from what you treated other customers at this time?
A. Absolutely not. This is a standard schedule, as best I
can tell from looking at it.
Q. Did there come a later point in time after this when
you stopped listing particular prior products on a schedule?
A. Yes. With UnixWare 7.
Q. Why was that done?
A. Well, the plain thrust there, if you go look at the
history, at that time we were primarily in the packaged product
business. The majority of OEMs had already downsized and eliminated
their engineering organization. So our goal with UnixWare 7 was a
standard binary product that would go
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into the marketplace. Consequently, we didn't add the additional
prior products because we wanted to maximize the similarity of all
releases of UnixWare.
Q. If a customer wanted to use, make some use of a prior
product they had had, was that a problem?
A. No.
Q. Did you charge anything extra for that?
A. No. To my knowledge, I don't think anybody -- we
actually did -- I don't think we actually modified anybody for that
purpose. But had they asked, we would have added the additional
prior products without any issue.
Q. Do you recall in the period of time that was the way
you approached the license whether anyone even asked to use the
prior products?
A. I don't believe anyone ever did. I'm not -- I
certainly can't recall anyone who did.
Q. Can you turn to Page 6 of the license, which has
Paragraph 10. Can you see the section, perhaps we can blow it up,
called the Novell NetWare software?
A. Yes, I do.
Q. What does that paragraph mean to you?
A. Well, NetWare was a component of UnixWare 2. There was
some components of NetWare. At that time, Novell had the strategy,
not unlike the one I referred to earlier about UnixWare 7, of
wanting to make NetWare ubiquitous across all
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operating systems. So UnixWare 2 contained NetWare components.
And in essence, what this is saying is that you had to include --
wait a minute. Let me read this one -- oh, you could only use the
source code for NetWare should you choose to license it; in
essence, to fix bugs, but not to make derivative work. That was to
keep NetWare standards.
Q. So this was a limitation on the use of NetWare, which
was a Novell product, which was being sold along with the
UnixWare?
A. Yes, that's correct. If you were a licensee of
UnixWare 2.1, we would have delivered to you the complete source
code to build that product coupled with some binary components that
you couldn't change. NetWare was one of them. There were some other
third-party components. NetWare source was licensable as an add-on
to the 2.1. I believe if you look at the first page of the schedule
there is a separate price for it. This paragraph is constraining
what you could do with that source should you choose to optionally
license it.
Q. Was there any restriction, Mr. Maciaszek, in the
license agreement on earlier versions of UNIX software, not talking
about NetWare now, but UNIX software that may have been developed
by Novell or its predecessors?
A. No.
Q. So this was specific for NetWare?
A. That's correct. NetWare was considered to be the
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crown jewels of Novell at the time. And I would assume it still
is today.
Q. Now, when -- you've discussed the fact there was no
separate source code licensing fee for including prior products; is
that correct?
A. That's correct.
Q. Now, let's say you have a binary product that one of
these companies developed using that source code. Was there a
method that was used to determine what royalty scale you would use;
in other words, whether the royalty would be calculated by the most
recent UnixWare version or an earlier version of the System V
code?
A. The royalty was always based on the latest source code
that was incorporated and used to build the derivative work. So if
you were shipping 2.1, you would read this schedule, and it would
tell you exactly what you would have to pay.
Q. What if you have a derivative work that has some old
System V code in it and some more recent versions in UnixWare, how
would you determine the royalty in that situation?
A. The royalty was the same.
Q. What would it be based on?
A. Pardon me? It would be based according to this
schedule, what we said it was for UnixWare 2.1. That was the
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whole purpose of the prior products.
Q. How much code of UnixWare would there need be to
trigger the UnixWare royalty as opposed to one of the older
royalties?
A. Well, that's the concept. The one-line-of-code concept
said if you licensed UnixWare 2.1 and it was the latest release, if
you took a single line of code from UnixWare and included it in a
derivative work, your derivative work as you distribute it would be
subject to the terms, conditions and obviously royalties which were
part thereof of the UnixWare 2.1 schedule. So you'd pay based on
UnixWare if you took one line of code from UnixWare sources and put
it in derivative work.
Q. That's why it's called one line of code?
A. That's correct.
Q. So even if 99 percent of the code in that derivative
product was an older System V version, if it was one line of
UnixWare, it would trigger UnixWare royalty?
A. That is correct.
Q. And under the APA, are you aware whether any UnixWare
royalties had to be remitted to Novell?
A. No UnixWare royalties remitted to Novell. There would
have been possibly royalties paid on UnixWare based upon the
business model that was part of the AP A.But that was never
achieved, so we never did pay.
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Q. You're referring now to the part of the APA which had
a special UnixWare royalty?
A. That is correct.
Q. And that was never achieved, you said?
A. As far as I know it was never achieved. And as the
product manager I would have been aware if we were paying those
royalties.
Q. And by achieved, the sales never reached the level
that that would be kicked in by?
A. That's correct. It was a business plan that was
stipulated as part of the AP A. And if we achieved certain targets,
then some royalties potentially would have gone back to Novell. But
that was never achieved.
Q. Okay.
I have nothing further. Thank you.
THE COURT: Thank you.
You may cross-examine, Mr. Jacobs.
MR. JACOBS: Thank you, Your Honor.
CROSS-EXAMINATION BY MR. JACOBS:
Q. Mr. Maciaszek, good afternoon.
A. Good afternoon.
Q. Could you take a look again at SCO 141, please.
A. Is that what I'm looking at now?
Q. Yes. That's that NCR license.
408
A. Okay.
Q. And if you look at the second line, you see it? It
says, supplement Number 112?
A. Yes.
Q. Can you explain, please, what that means?
A. Well, that says to me that there would have been 111
prior agreements or supplements that NCR had executed prior to this
one.
Q. And in each of those 111 prior agreements or
supplements, NCR would have paid fees for that supplement?
A. I would have assumed -- I would assume so. I can't
testify if that's correct since I'm not aware of them.
Q. That was -- based on the ordinary license practice,
which you testified that you're familiar with, that would be your
assumption?
A. Yes.
Q. So at least in this particular case, this was not a
fresh out-of-the-box license of March 31, 1997, of UnixWare 2.1 to
NCR with no history to it, was it?
A. It was a fresh 2.1. There was clearly interaction and
history for NCR's relationship going back all the way to AT&T,
obviously.
THE COURT: Excuse me. All the way back to what?
THE WITNESS: To AT&T when they first licensed their
first substantiation of UNIX from AT&T. And I can't
409
tell you what that was.
THE COURT: Okay.
THE WITNESS: It was before my time.
THE COURT: Excuse me, go ahead.
Q. BY MR. JACOBS: Take a look, please, sir, at the prior
products section of this agreement. I believe you told us it was
Exhibit I. This would be Page 77766 on this exhibit.
A. Okay.
Q. And I believe you testified -- I think you might have
just been mistaken about the meaning of Mr. Singer's question. He
asked you whether there were any restrictions on the use of the
prior products, and you said no. That's not quite right;
correct?
A. Well, in this particular case, there was a restriction
with respect to the corporation of NetWare in the application
server and personal edition, if that's what I'm reading.
Q. Well, there were restrictions on, for example, the use
of SCO UnixWare 2.0 under this license agreement, are there not,
sir?
A. I think I just said what it was. I said that if, in
fact, you deleted NetWare from your derivative work, then you were
only able to use 2.0 and 1.1.
Q. Let me ask you -- perhaps I could ask it this way,
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sir. Take a look at prior products, and you see that it says,
SCO UnixWare Release 2.0. Do you see that?
A. Yes.
Q. Was it your understanding under this agreement that
the customer was free to publish the source code of SCO UnixWare
2.0 on its website?
A. No, absolutely not.
Q. Why not? What restricted him?
A. I would assume it would have been -- the place that
you would find that restriction would be in the software
agreement.
Q. In the --
A. Software agreement.
Q. In the software agreement which governs all the
software licenses --
A. Unless it's superceded, yes.
Q. You would be pretty shocked if a customer said, you
got the rights to release 2.0. Under a 2.1 agreement, we can do
whatever we want with it including publishing it on our
website?
A. That was not -- that certainly would not be authorized
under the software agreement.
Q. And publishing the software code on the website would
be a big deal in your capacity as a product manager?
A. Yes.
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Q. Why?
A. Well, it depends on what you were publishing, what
purpose you were publishing it for.
Q. You're publishing the entire source code for SCO
UnixWare 2.0.
A. That would have been a violation of your contractual
rights.
Q. And substantial injury to the owner of SCO Release --
UnixWare 2.0?
A. Yes.
Q. And the same with, say, let's pick one, UNIX System V
Release 4.2 Intel386 Implementation. Everything you said about SCO
UnixWare 2.0 applies to that release, as well; correct?
A. Well, it's a matter of greed. The bulk of that stuff
was obsolete at the time.
Q. If a customer under your tenure as product manager,
say when you were at Novell --
A. Yes.
Q. -- and let's go back a little bit, had published on
its website, Internet is just coming into being, and they publish
on their website UNIX System V Release 4.0 Intel386 the Version 3
implementation, that would have been a big surprise, wouldn't
it?
A. Yes, it would have been.
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Q. And it would have been a substantial potential injury
to the business you were responsible for?
A. Absolutely.
Q. Now, you talked about the development practices of the
UNIX operating system. You testified that modifications were added
over time with each successive release. Do you recall that
testimony?
A. Yes.
Q. And isn't it a fact, sir, that modifications also
include deletions of code over time?
A. That is correct. Substitutions, as well.
Q. And I think in answer to a question from Mr. Singer
that was driving at a somewhat similar point, you said, whatever is
in UnixWare is in UnixWare. Do you recall that answer?
A. Yes.
Q. And in order to know whether any particular code from
a prior release has been carried forward all the way to the present
day, you would actually have to look at the code and compare it,
wouldn't you?
A. To be definitive, yes.
Q. And it's quite possible that code from, say, UNIX
System 4.0, pick your release, has been deleted over time and is
not in the current version of UnixWare?
A. That's correct. It could have been deleted or it
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could have been substituted or enhanced.
Q. And the same is true for, say, UNIX System IV, pick
your release, and, say, SCO UnixWare 2.1?
A. That's correct.
Q. Under the OEM agreements, an OEM licensee could create
its own version of UNIX and put its name on it, say, Sun Solaris;
correct?
A. That's correct.
Q. And it is, indeed, your understanding that Sun Solaris
is based upon a UNIX System V release; correct?
A. That is correct.
Q. Do you happen to know which release, sir?
A. To be perfectly frank, no, I don't. I have not looked
at the Solaris code recently, so I do not know.
Q. It is true that Solaris was developed before the 1995
asset purchase agreement; correct?
A. Yes.
Q. And it would not surprise you if you found substantial
code predating the asset purchase agreement in Sun Solaris?
A. No. It wouldn't surprise me if there were code from
the prior release, no.
Q. And at any particular point in time, an OEM licensee
could stop taking additional releases of UNIX or UnixWare and
develop it on its own path; correct?
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A. That's correct.
Q. And, in fact, some OEMs did that; correct?
A. Yes.
Q. For example, Sun Solaris; correct?
A. Yes.
Q. They -- in so far as their code refresh, if you will,
from any of the UNIX businesses was concerned, it was frozen in
time as of the last schedule attached to their software agreement;
correct?
A. I would have assumed, yes. I think it was 4.0, but I'm
not positive.
Q. And that code as to Sun, that older code, that is the
UNIX code on which then as of that date and going forward, unless
they were to sign a new license, they were building their variance
on; correct?
A. Yes.
Q. And --
A. I would assume there would be code from other sources,
as well. But, yes.
Q. You're right. I didn't actually ask that quite
precisely enough.
In so far as the UNIX code is concerned, once they're frozen in
time as of their latest schedule, that is the UNIX code on which
they were relying; correct?
A. Correct.
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Q. And as to Sun in that case, that UNIX code has
substantial value, doesn't it?
A. Well, you'd have to ask Sun that. I mean, I can't
answer that question.
Q. Well, if you went to them and say, after the asset
purchase agreement went to them in 1996 and said, you know what, we
want you to strip out all of that UNIX System V Release 4 code from
Sun Solaris, what do you think their reaction would have been?
A. It wouldn't have been favorable.
Q. Because it would have been a substantial injury to
their business, would it not, sir?
A. Yes.
Q. Have you in preparing for your testimony studied any
other examples of UnixWare licensing other than the NCR
Corporation?
A. Studied?
Q. Yes.
A. No, not to my knowledge. I don't recall studying
anything.
Q. Have you surveyed the UNIX licenses that SCO and its
predecessors have entered into to try and form an understanding
whether your testimony today about the practices is, in fact,
supported by the actual underlining documents?
A. I did not study all licenses, no.
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Q. Did you study any of the licenses?
A. I'm aware of a good number of them.
Q. But did you go back and check before you testified
today to see whether the documents relating to UNIX licensing
practices support your testimony today?
A. Probably casually, yes. I don't recall any detail
going back over all of those licenses.
Q. Thank you.
Thank you, Your Honor. No further questions.
THE COURT: Thank you.
Mr. Singer?
MR. SINGER: Just a couple of questions.
REDIRECT EXAMINATION BY MR. SINGER: Q. Mr. Maciaszek, if Sun, once they get a UnixWare source
code license incorporates one line of that UnixWare program into
their new Solaris products, do they have to pay royalties on the
binary products based on the UnixWare schedule?
A. Yes.
Q. Is that an application to what you discussed as the
one-line-code rule?
A. That is correct.
Q. Can you think of any reason why Sun would buy a
license from UnixWare if they weren't interested in making use
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of new technology?
A. It doesn't make any sense to me.
Q. Now, with respect to the NCR agreement, Exhibit 141,
you were asked about the fact that there were a lot of earlier
supplements as being 112. Are prior supplements also done whenever
there are additional CPUs which are being added to the license to
make use of the software?
A. Yes, that is correct.
Q. Are they done for additional distributions of the
software?
A. Yes, that is correct.
Q. So it doesn't necessarily mean a new release of the
operating system?
A. Oh, absolutely not. There are all kinds of ancillary
products that would end up being on one of these supplement
licensing forms.
Q. So did NCR's rights to make use of prior software
products as set forth in this UnixWare license depend in any way on
the fact there were 112 prior supplements?
A. Absolutely not.
Q. Your answer?
A. Absolutely not.
MR. SINGER: Nothing further.
THE COURT: Thank you.
Anything else, Mr. Jacobs?
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MR. JACOBS: No, Your Honor.
THE COURT: I assume this witness may be excused?
MR. SINGER: He may.
THE COURT: You may be excused.
We'll be in recess now until 3 o'clock when you'll be back to
argue the motions.
MR. JACOBS: Great.
MR. SINGER: Can we leave everything as it is, Your
Honor?
THE COURT: Sure.
(Whereupon, the trial proceedings were concluded.)
* * * * *
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STATE OF UTAH
ss.
COUNTY OF SALT LAKE
I, KELLY BROWN HICKEN, do hereby certify that I am a certified
court reporter for the State of Utah;
That as such reporter, I attended the hearing of the foregoing
matter on April 30, 2008, and thereat reported in Stenotype all of
the testimony and proceedings had, and caused said notes to be
transcribed into typewriting; and the foregoing pages number from
207 through 280 and 355 through constitute a full, true and correct
report of the same.
That I am not of kin to any of the parties and have no interest
in the outcome of the matter;
And hereby set my hand and seal, this ____ day of _________
2008.
______________________________________
KELLY BROWN HICKEN, CSR, RPR, RMR
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