Here we are, the third day's daily transcript from May 1st, Thursday's session. Again, it's split into three parts, thanks to Chris Brown:Part 1
Part 2
Part 3
And thanks to the extraordinary Steve Martin, we have the transcript as text already. Thursday's testimony was by William Broderick, Jean Acheson, Jeff Hunsaker, and Jay Petersen. Yes, my friends, the old faithful chorus for SCO, some of the very ones who failed to impress Judge Dale Kimball already.
Broderick, Acheson, and John Maciaszek all supported SCO's Motion for Reconsideration or Clarification of Judge Kimball's August 10th ruling, to no avail. Reviewing all the reconsideration materials reminded me also that the troika of Broderick, Acheson and Maciaszek also testified up and down in that context about the prior products being thrown in to license deals, so that argument we can read about in this transcript we have heard before, and so has Judge Kimball. He wasn't interested in reconsidering his ruling, denied SCO's motion, and basically told SCO to look to the appeals court if they disagreed with his ruling, so that is what SCO says it wishes to do, and the three show up here essentially for that purpose, I suspect. If you want to read how Novell responded to SCO's argument then, here you go. Its main thrust was that witness testimony can't be considered if a contract is clear on its face. Another very telling paragraph, I thought, was this one: SCO then cites testimony it claims establishes that Novell, Unix System Laboratories, and AT&T included licenses to old UNIX versions when licensing a new UNIX version. (Mot. at 7-8.) Whether or not that is true, SCO ignores the fact that Novell and its predecessors were never laboring under any obligation to split revenue attributable to various versions. They could therefore include prior versions without any concern. SCO, on the other hand, accepted a fiduciary obligation to properly apportion mixed revenue when it agreed to the APA, and if changes to typical practices were necessary, it was SCO's obligation to make those changes. So, as you see, we've been around the block on all this before. We get to see Judge Kimball's dry sense of humor again. After arranging to begin the trial on the following day a half hour later than usual, he says this at the very end: THE COURT: You'll get an extra half hour of sleep or worry. Indeed, trials are unbelievably stressful. You have to love that to be a litigator. You know how F. Scott Fitzgerald wrote in The Great Gatsby that "the rich are not like you and me"? Well, neither are litigators. They thrive on the kind of stress that would kill the rest of us. It's very impressive to watch a really good lawyer dealing with whatever happens live in a courtroom. How did you enjoy watching a trial from beginning to end, almost in real time? Was it very different from what you anticipated? I would guess it was, from some of your comments. Any questions on what you saw happen? If so, ask away, but be aware that this makes 7 articles for me in 48 hours, and long, tedious editing of transcripts which aren't all completed yet, and I need to post the final day's transcript when we get it, and the transcript of the summary judgment motions, and the transcripts with line numbers, before I can relax a bit and recuperate. I'm a teensy bit sleep-deprived. And I haven't had a chance yet to even read the transcripts through sequentially and carefully, but I intend to after I sleep through at least one night, so I can tell you what stands out to me. But if you post questions now, I'll try to get to them later. I confess. I love this stuff.
******************************
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 Counterclaim-
Plaintiff.
________________________________
Case No. 2:04-CV-139 dak
BEFORE THE HONORABLE DALE A. KIMBALL
DATE: MAY 1, 2008
REPORTER'S TRANSCTIPT OF PROCEEDINGS
TRIAL TRANSCRIPT
VOLUME III
Reporter: REBECCA JANKE, CSR, RMR
KELLY BROWN HICKEN, CSR,RMR
420
A P P E A R A N C E S
FOR NOVELL: | MORRISON & FOERSTER LLP
BY: MICHAEL A. JACOBS, ESQ.
EIRC M. ACKER, ESQ.
DAVID E. MELAUGH, ESQ.
[address] |
|
FOR SCO: | BOIES, SCHILLER & FLEXNER LLP
BY: STUART H. SINGER, ESQ.
EDWARD J. NORMAND, ESQ.
JASON CYRULNIK, ESQ.
[address]
HATCH, JAMES & DODGE, P.C.
BY: BRENT O. HATCH, ESQ.
[address]
|
421
I N D E X
WITNESSES | EXAMINATION | PAGE |
|
WILLIAM BRODERICK | Direct by Normand | 423 |
| Cross by Melaugh | 482 |
| Redirect by Normand | 503 |
| Recross by Melaugh | 507 |
|
JEAN ACHESON | Direct by Gonzalez | 510 |
| Cross by Melaugh | 537 |
| Redirect by Gonzalez | 542 |
|
JEFF HUNSAKER | Direct by Cyrulnik | 544 |
| Cross by Jacobs | 572 |
|
JAY PETERSEN | Direct by Cyrulnik | 598 |
| Cross by Acker | 622 |
E X H I B I T S
NOVELL'S | RECEIVED |
|
444 | 620 |
454 | 620 |
457 | 620 |
|
SCO'S |
|
414 | 465 |
422
MAY 1, 2008 | SALT LAKE CITY, UTAH |
P R O C E E D I N G S
* * *
THE COURT: Good morning.
ALL ATTORNEYS: Good morning.
THE COURT: You may call your next witness.
MR. NORMAND: Yes, Your Honor. William Broderick
MR. NORMAND: May I approach, Your Honor?
THE COURT: Yes.
Come forward and be sworn, please, right here in front of the
clerk of the Court.
WILLIAM BRODERICK,
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 CLERK: Please state your name and spell it for the
record.
THE WITNESS: William Broderick. B-r-o-d-e-r-i-c-k .
DIRECT EXAMINATION BY MR. NORMAND:
Q. Good morning, Mr. Broderick.
A. Good morning.
423
Q. What is your current position with the SCO Group?
A. I'm the Director of Software Licensing.
Q. And how long have you held that position?
A. Since -- with SCO, since Caldera bought the business
from the Santa Cruz Operation.
Q. And could you briefly describe your responsibilities
in that position?
A. I'm responsible for all contract and licensing
activities.
Q. And how long have you had those responsibilities at
SCO?
A. Since I moved over to SCO from the Santa Cruz
Operation.
Q. What did you do at Santa Cruz?
A. I did contracts and licensing.
Q. How did your responsibilities there compare to your
responsibilities at SCO?
A. They are exactly the same. I just continued to do the
same work with the same people.
Q. And what did you do before you were at Santa Cruz?
A. I was at Novell.
Q. And what were your responsibilities at Novell?
A. At Novell, when Novell first merged or bought
424
the UNIX business from USL, I was Manager of Sales Operations,
but it was a month or two after Novell bought us, I moved to the
contracts group, and then I was the contracts manager.
Q. And what were your responsibilities at Novell?
A. Contracts and licensing of the UNIX business.
Q. What did you do before you went to Novell?
A. I was at the UNIX Systems Labs.
Q. What did you do there?
A. I was Manager of Sales Operations.
Q. And what were your responsibilities there?
A. I reported to the Vice President of Sales, and I
handled the sales compensation plan forecasting; sales compensation
plan, forecasting. If issues came up with the sales force, a lot of
times I was directed to try and solve those.
Q. How have your responsibilities in all those positions
pertained to UNIX?
A. It was all UNIX.
Q. Why is that?
A. Well UNIX System Laboratory owned the UNIX technology
and the business, and when they merged with Novell, Novell bought
that business from Santa Cruz, and we worked in Novell's -- I'm not
sure of the exact title.
425
It was the Novell UNIX Group. And then when Novell sold the
business to Santa Cruz, we moved into Santa Cruz's legal department
and worked contracting UNIX.
Q. You were part of the UNIX Group --
A. Yes.
Q. -- at Novell? What happened to the UNIX Group after
the transfer of assets from Novell to Santa Cruz in 1995?
A. What happened to the UNIX Group?
Q. What happened to the UNIX Group?
A. The UNIX Group, I think in its entirety, went to Santa
Cruz.
Q. How did your responsibilities change, if at all, when
you went from Novell to Santa Cruz?
A. Santa Cruz was doing -- at that time, we were doing
more of the packaged product, the binary business, so we were
working with not only OEMs that were licensing source code, but we
were dealing with distributors, a lot of resellers of the packaged
products, and we were doing agreements for those also.
Q. What are OEMs?
A. OEMs are original equipment manufacturers. They are
the computer manufacturers, Hewlett-Packard, IBM, Compac. The
people that build the computers are OEMs.
426
Q. How did your responsibilities change, if at all, when
the assets went from Santa Cruz to Caldera in 2001?
A. Well, at Santa Cruz, there were a number of people
that did contracts related to the UNIX business, and when I went to
Caldera, I won it all.
Q. And, at some point, Caldera changed its name to The
SCO Group, Inc.; is that right?
A. Yes.
Q. How did your responsibilities change, if at all, upon
that name change?
A. Not at all. But there was a period from August, 2002,
until April of 2003 where I wasn't an employee of Santa Cruz, I
went to another company, but I continued to do consulting with SCL
on the contracts, but essentially my responsibilities changed not
at all.
Q. You mentioned OEMs earlier. What kind of fees or
payments did OEMs make for the UNIX products that you have been
describing?
A. The source code products?
Q. Yes.
A. There was a one-time fee, right to use fee that paid
for the source code, and that gave them the right to put it on an
initial designated CPU. And a designated CPU, that's a computer. So
they could put the source
427
code on one computer, and then they would -- there were extra
fees related to if they wanted additional designated CPU's, if they
wanted to put the source code on more copies. Generally, if they
wanted the source code on more computers in their development lab,
they would pay an additional fee for those.
Q. Was the one-time fee a recurring fee?
A. No. It was a one-time fee.
Q. What kind of recurring payments were made under these
contracts the OEMs executed?
A. Once they created -- they had rights to modify the
source code, and it was generally so the source code would run on
their computers. They would -- the source code is human-readable
code. It doesn't run a computer. You can see every line of code.
You load the source code on to a computer, and you can see every
line of code and interact with it and modify it.
Once you have got the source code where you want it, you run it
through what's called a compiler, and that gives you a binary. And
the binary is what will reside on the computer and run it. And that
binary is just like if you were to go to an Office Max and buy a
copy of Windows, that's a binary. You can't see the code. You can't
modify it. You just use it.
And every time an OEM sold a copy of that
428
binary, they paid a royalty.
Q. And if you want some water, by the way, there's water
there right there.
We have stopped bringing our own water, Your Honor. We used to
do that.
THE COURT: I kidded you about that. I didn't mean to
necessarily persuade you from doing that.
MR. NORMAND: I'm sensitive about that.
THE COURT: A sensitive lawyer.
Q. Now, in the course of your work at all these jobs,
what was the general nature of the product that you were
licensing?
A. It was UNIX.
Q. And any particular version or releases of UNIX?
A. When I started with Novell in the contracts, we were
still licensing a source code product. I believe we were still
licensing UNIX System V, 4.0, Release 4.1 ES, Release 4.2, 4.2 MP,
and we started our UnixWare source code. And then, when we moved to
Santa Cruz, we started licensing UnixWare in a binary format.
Q. What does that mean?
A. That's the -- Santa Cruz -- prior to that, we were
licensing source code in the OEMs, and the OEMs would create the
binary and distribute it. Santa Cruz, prior to buying the UNIX
Group, had a UNIX license, and
429
they created their own binary of UNIX for the Intel
platform.
Q. So, stop there. Santa Cruz had licensed from AT&T
some UNIX source code previously?
A. Yes.
Q. And what had they done with that source code?
A. They created their flavor of UNIX, their binary, for
an Intel computer.
Q. And then Santa Cruz, itself, subsequently came to own
the UNIX business?
A. Yes.
Q. Go on. Sorry.
A. Where was I?
Q. You were talking about the nature of the products.
A. Oh, that's true. Novell was licensing some binaries of
UnixWare towards the end of the time that we worked at Novell, and
I wasn't involved in that binary side of the business. I got
involved in the binary side of the business when we were sold to
Santa Cruz. And then I continued to license the binaries to
distributors and then the source code to the OEMs.
Q. And this SCO Exhibit 390, can you see that on your
Monitor, Mr. Broderick?
A. Yes, I can.
430
Q. Do you recognize this document?
A. Yes.
Q. Can you describe what it is?
A. This is a -- with the OEMs, they would execute a
software agreement which covered the general terms and conditions
of their rights to use and protections of the source code product
in general. And then, under that software agreement, they would
execute supplements, which were the actual licenses to the source
code product. And this is an example of Unisys licensing the source
code product for UNIX System V For Multiprocessor, Version 1.
Q. And what is the number on the middle of the page
toward the right under "fee?" What does that number represent?
A. That's the one-time source right-to-use fee that
Unisys paid for the licensing.
Q. And the date of this document is 1991; is that
right?
A. I don't see it. I don't see a date on mine.
Q. Turn to the next page.
A. October 31, 1999 -- 1991.
Q. So this is UNIX System Labs. This is before Novell
even owned the UNIX business; is that right?
A. Yes.
431
Q. Now, I think you said earlier that Novell, itself,
licensed UNIX in the same manner; is that right?
A. Yes.
Q. SCO Exhibit 27. Do you recognize this document, Mr.
Broderick?
A. Yes, I do.
Q. Can you describe what it is?
A. It's a supplement and licensing order form. It's when
-- it's for AT&T GIS. And they're licensing source code for
UnixWare, Release 1.1
Q. And what is the date of this document on the lower
Right?
A. July 13, 1995.
Q. And if we turn to page 27, do you recognize what these
are, Mr. Broderick?
A. This is a listing of the prior products. It's the
lineage of -- this would be the lineage of UnixWare 1.1. And when
anyone licensed a current release of a source code product, they
were given rights to access prior products. And the prior products
is really, from this here, it starts off with all prior releases
and versions of System V, Release 2.0, so it's all the UNIX
releases, starting with AT&T, that went into the growth and
development of each new release. So, every time there was a new
release, we gave licensees rights to
432
access all the prior releases.
Q. Now, how did Santa Cruz's licensing practices compare
to Novell's licensing practices?
A. Exactly the same.
Q. This is SCO Exhibit 371. Do you recognize this
document, Mr. Broderick?
A. Yes.
Q. Would you describe what it is.
A. It's a supplement licensing order form where Unisys
licensed rights to the source code for UnixWare 2.1.
Q. And what is the date of the document?
A. May 28, 1996.
Q. And at this point, Santa Cruz is the owner of the UNIX
technology; is that right?
A. Yes.
Q. And do you recognize what is on page 24, Mr.
Broderick?
A. Yes. This is the listing of the prior products that we
were granting the licensee rights to.
Q. And did you say the license is for Unisys?
A. This license is for Unisys, and, again, it's the
legacy of the UNIX products. In fact, this is UnixWare 2.1. So,
from the previous document we looked at, you can see we added
UnixWare 1.1 and UnixWare 2.0.
433
Q. And you said this date is 1996?
A. Yes.
Q. Do you recognize this document, Mr. Broderick, SCO
370?
A. Yes. Again, it's a supplement licensing order form
where Novell licensed Unisys, the source code for UnixWare
2.01.
Q. And what's the date of this document on the lower
left?
A. November 3, 1995.
Q. This is before the Unisys supplement that we just
looked at?
A. Yes.
Q. And do you recognize what's reflected on page 26, Mr.
Broderick?
A. Yes. This is another example of prior products that we
granted rights to the legacy products in UNIX.
Q. So, why, in the 1996 supplement, did you list these
same prior products?
A. It was the practice in all current releases to list
the prior products because we didn't tailor make the schedules for
everybody. And it's a possibility that somebody would take UnixWare
2.0 without having any prior products -- I mean prior licenses for
a source code. And for each current release, we wanted to show what
the
434
legacy products were that they were getting rights to.
Q. When you and the UNIX Group went to Santa Cruz in
1996, why did you use the same licensing approach that Novell had
used?
A. We were directed to.
Q. Who directed you to?
A. When we went from Novell to Santa Cruz, we had
transition meetings, and we had statements of works because from
the time the APA, Asset Purchase Agreement, was signed in December
of '95, it didn't close until, I believe it was, February 1, '96.
Well, we were still Novell employees at that time, so we had
transition team meetings, and they talked about how business was
going to go forward and then what we were going to do after we
left, when we became Santa Cruz.
And part of those transition meetings, there was a statement of
works for the contracts people, and our direction was that the only
thing we changed on any of the agreements or anything was the
change of the name from Novell to Santa Cruz.
Q. This is SCO Exhibit 84. Do you recognize this
document, Mr. Broderick, at least the first page of it?
A. Yes, I do.
Q. And is the reference to the SOW in the first sentence
of that letter the statement of work you were
435
referring to?
A. Yes.
MR. NORMAND: Could we go to Bates number 1299956.
Have you seen that document before, Mr. Broderick?
A. Yes.
Q. It's a memo, attention to Steve Sabbath. Who was Steve
Sabbath, as of November 22, 1995, what was his position?
A. Steve Sabbath was General Counsel for Santa Cruz
Operation.
Q. And who was Kelly Hicks?
A. Kelly Hicks was the controller for Santa Cruz
Operation.
Q. Would you go to the next page. Signed by Lou Ackerman.
Who was Lou Ackerman?
A. Lou Ackerman was my manager when I was at Novell as a
contract manager. He was Manager of the Contracts Group.
Q. Do you see this language at the bottom of the first
page in the memo from Mr. Ackerman:
Would you also please confirm that SCO intends to use the
standard software agreement and sublicensing agreement currently
used by Novell, with exception to the
436
necessary name and address changes for any new customers.
Do you see that language?
A. Yes.
Q. How does that language compare to your understanding
of what Santa Cruz was going to be doing in the transition?
A. Well, in the transition, all documents went from
Novell to Santa Cruz. We kept all of our computers. We had all of
the agreements in word processing on our computers, and all we did
was go in and do a global change, Novell to Santa Cruz.
Q. I won't read those out loud, Mr. Broderick. You can
see them. How do those directives from Mr. Ackerman compare to your
understanding of what was to be done on the transition?
A. Again, it was the same idea. We had a UnixWare 2.0
schedule with Novell, with Novell's name in it, and we did a global
change with the name from Novell to Santa Cruz and changed nothing
else.
Q. Do you recognize this document, Mr. Broderick, SCO
Exhibit 71?
A. Yes.
Q. What is the document?
A. It's amendment number 1 to the Asset Purchase
Agreement.
437
Q. If we could go to page 6. This is the language, Mr.
Broderick, in which the parties state that buyer shall have the
right to enter into amendments of the SVRX licenses as may be
incidentally involved to its rights to sell and license UnixWare
software.
Do you see this language?
A. Yes.
Q. This provision goes on to state that buyer shall not
-- shall have no right to enter into new SVRX licenses, except in
the situation specified in little "i" of the preceeding sentence or
as otherwise approved.
Do you see that language?
A. Yes.
Q. Do you recall discussing this language during the
transition period from Novell to Santa Cruz?
A. Yes.
Q. And what do you recall about that?
A. Well, in the transition team, we were told that Novell
was selling the business, but, as part of the purchase price, they
were going to get the ongoing stream of royalties for what was
defined as the SVRX products that were transferred from Santa Cruz
to Novell. We couldn't do anything that jeopardized that revenue
stream. It was essentially money in the bank for Novell.
And we couldn't enter into new licenses for the
438
SVRX products. And what that meant was -- what they didn't want
Santa Cruz to do was -- you had a licensee who had an SVRX product
from Novell. What we couldn't do is go to that licensee and say:
You know, you're paying a hundred-dollar-royalty-per-copy fee. If
you execute a new license with us, Santa Cruz, we'll charge you a
$50-per-copy fee.
We couldn't do anything that took away that royalty stream that
Novell was to get. What they said is but we could license the SVRX
incidentally. And we said: Well, what's "incidentally?"
And they said: Well, the major part of this, if you take a look,
if you license the source code, the source code license fees, from
when they first started being used, always included prior products
of the legacy products. You will continue to use those same types
of licenses. You'll continue to include that legacy prior products.
And that's an example of an incidental right
Q. And did, in fact, Santa Cruz continue to license prior
products with its UnixWare licenses?
A. Yes, we did, because what we did is we changed the
name from Novell to Santa Cruz. The rest of the license was to
remain the same, and the licenses had prior products, and it's the
way source code was licensed from the early '80's.
439
Q. When was this transition period completed?
A. I believe we became Santa Cruz employees on February
1, '96.
Q. Do you recognize this document, SCO Exhibit 141, Mr.
Broderick?
A. Yes.
Q. And could you describe what the document is.
A. It's -- again, it's a supplement licensing order form,
NCR Corporation, licensed UnixWare 2.1 source code from SEL, Santa
Cruz.
Q. And if we go to page 24. And do you recognize this
part of the document, Mr. Broderick?
A. Yes.
Q. And what is it?
A. It's the listing of the prior products where we
granted rights to access the legacy products that UnixWare was
ultimately built on.
Q. What supplement number is this, Mr. Broderick?
A. 112.
Q. And have you had occasion to go back and consider some
of the other types of supplements that predated this
supplement?
A. In my 15 years of doing licensing, I'm aware of how
the supplements are numbered, how they worked.
Q. Specifically to NCR, have you had occasion to
440
go back and look at some of the other supplements they
executed?
A. Yes.
Q. And can you describe what you found?
A. Well, the lion's share of the supplements for NCR and
most other OEMs are for additional designated CPU's or CPU changes.
AT&T -- well -- and all the subsequent owners were very
protective of the source code. They didn't license the source code
to an OEM and let them put unlimited copies of source code
throughout their company where they could possibly loose control of
the source code.
So, what they did is license it on a CPU basis, so when somebody
licensed the source code, they paid the source code right-to-use
fee, and they got it on one computer.
There were a lot of OEMs that wanted the source code on multiple
computers, and you look at some of the supplements where they
licensed source code, and they would list -- sometimes they would
list 50 designated CPU's that we gave the rights to. So, if you
take a look at NCR supplement 112, and you go in and take a look at
their records, the lion's share of those supplements are either
licensing additional designated CPU's, and even when they changed a
computer they were putting it on,
441
like a computer got old and they wanted a computer with more
power and they put the source code on that computer, they executed
a supplement acknowledging a change from one computer to another
computer.
So, if you look at a customer's records, 112 supplements of --
my guess is better than half of them are related to designated
CPU's.
Q. Did your decision on whether to list the System V
prior products in this supplement turn, in any way, on how many
stand-alone licenses for a UNIX release NCR had previously entered
into?
A. Absolutely not.
Q. Do you want a sip of water?
A. You are watching out for me.
Q. Is there any way for you to estimate how many UNIX
licenses you have been a part of during your tenure in these
companies?
A. That I have personally been involved in?
Q. Not in negotiating but that you've overseen in your
roles?
A. By "UNIX licenses," you're talking about where they
actually license a source code product?
Q. Yes.
A. Well, in one way or another, a few thousand.
Q. And, to the best of your estimate and your
442
experience of those number of licenses, how many include the
list of System V prior products?
A. Virtually all of them.
Q. Now, with respect to UnixWare, in particular, to the
best of your estimate, how many UnixWare licenses have you overseen
or been responsible for in your tenure?
A. Forty-three.
Q. And of those, how many of those 43 licenses identify
the System V prior products?
A. All but eight.
Q. And how come there are eight that don't list the
System V prior products?
A. Well, one was a UnixWare 2.0 source code license that
Novell did with a company called ALPS. And they intentionally
omitted the prior products. The other seven were UnixWare 7 that we
included as prior products just the UnixWare prior releases.
Q. And why was that?
A. When we were doing the UnixWare 7 license, I was
directed by Steve Sabbath to make it simple, cut it down.
Q. And who is Steve Sabbath?
A. Steve Sabbath is the general counsel at Santa Cruz. He
said -- I think the 2.1 license was 20-some, 28 pages, something
like that. And he said: The sales
443
force complains that a customer is saying that it's too much to
read. See what you can do to cut the thing down. And also, talking
to John Maciaszek, who was the product manager, they wanted the
focus to be on UnixWare.
So we went through the 2.1 license and started going through it,
what needed to be changed to make it a UnixWare 7 license, and we
substantially cut it down. And when when we got to the prior
products, John said: You know, I want -- when we do a -- we have
had UnixWare out there for awhile. When we go to a licensee, I want
them to only see the word "UnixWare." I want them to focus on
UnixWare.
If somebody is licensing the source code, we already have a
binary that we distribute ourselves on Intel, so for somebody that
has another computer that's not Intel -- they have different types
of computers so, if that person licenses the UnixWare and puts it
on their computer, we want them to focus on UnixWare, and we want
that UnixWare to look and feel just like the UnixWare that we have.
We don't want somebody to get a UnixWare license, put it on another
computer, and not have the applications that run on our units that
are run on that.
It's not good for the company. It wouldn't be good for UnixWare.
It would give it a bad name if everything wasn't working. If people
license UnixWare,
444
they want it to look the same.
So, we cut it down and we limited the prior products to
UnixWare.
Q. And when did the UnixWare 7 licenses begin?
A. When we were in Santa Cruz. I don't know the exact
date.
Q. Sometime in the late '90's?
A. Late '90's.
Q. If a UnixWare licensee had called you in 2000 and
asked: Do I have any rights to use the System V prior releases?
What would you have said?
A. Well, I would have talked to John Maciaszek and, in
all likelihood, we would have said: Sure, you can have them.
Q. And would you have charged them any fee for acquiring
a copy of the source code for the prior product?
A. No. We never did.
Q. Did customers pay any additional fee, on top of the
one-time fee we have talked about, for listing the System V prior
products in their supplements?
A. No.
Q. Do you recognize SCO Exhibit 369, Mr. Broderick?
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A. Yes.
Q. And could you describe what it is.
A. It's a software agreement. What I talked about
earlier, the software agreement covers the general terms and
conditions for licensing source code. And this is a software
agreement executed between our Japanese subsidiary Nihon SCO, and a
company called ALPS Electric.
Q. Mr. Broderick, what does this Exhibit A represent?
A. Exhibit A is the -- lists the source code right-to-use
fees for the UnixWare 2.0.
Q. What does the number 375,000 in Section 1.A
represent?
A. That's our standard licensing fee to license UnixWare
2.0.
Q. And is this a number that has something to do with
CPU's you mentioned earlier?
A. Yes. It's the fee to get the source code right to use
it on the initial designated CPU.
Q. And what does this part of the supplement represent,
Mr. Broderick ?
A. This is part of the ALPS license for UnixWare 2.0.
It's the prior products section.
Q. And there's nothing listed?
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A. It says: This exhibit is intentionally left blank.
They did not include any prior products.
Q. ALPS is the licensee you mentioned earlier that I
think you said had no interest in the prior products?
A. I contacted -- when I saw this, when I was reviewing
the UnixWare licenses, I saw this and I contacted our Japanese
office, and they said they didn't remember why, but they said ALPS
said: Take it out. We don't care about it.
Q. We looked at this document earlier, Mr. Broderick. Do
you recognize this document?
A. Yes.
Q. What is it?
A. It's providing to Unisys the license for UnixWare
2.0.
Q. And what is this part of the document, Mr.
Broderick?
A. Again, this is the listing of the source code
right-to-use fees.
Q. And what does Section 1.A, the $375,000 number
represent?
A. That's the right-to-use fee for the initial designated
CPU for UnixWare 2.0.
Q. And what does this part of the document
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represent, Mr. Broderick?
A. That's a listing of the prior products, and it
includes all of the legacy products for UnixWare 2.0.
Q. So, not to belabor the point, but let's compare the
two documents we just reviewed. For the ALPS license, there's a
$375,000 charge for what?
A. The initial designated CPU for the source code product
for UnixWare 2.0.
Q. And are any prior products listed?
A. No. In fact, they are intentionally left out.
Q. And for the UnixWare license we just looked at, what
does this price represent?
A. That's the licensing -- the source code licensing fee
for the additional designated CPU.
Q. And how does this price compare to the ALPS price?
A. Exactly the same.
Q. And were there any prior products listed?
A. Yes, all the legacy products for UnixWare 2.0.
Q. We looked at the NCR license earlier with the
supplement number?
A. Yes.
Q. Can you recall any instances in which you entered into
contracts with licensees whose first
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supplement listed System V prior products?
A. Sure.
Q. Could you describe any of those examples that you can
recall?
A. Off the top of my head, there were two UnixWare
licenses; one with a Company called Super Computer International,
and one with a company called Lexus Software Corporation. They
licensed, I believe it was, UnixWare 2.0, and that was the standard
schedule that listed all of the legacy products for UnixWare 2.0 as
prior products with rights to them.
Q. Did you charge either of those companies anything
extra above the one CPU source code right-to-use fee for the
listing of the prior products?
A. No.
Q. Why not?
A. Because we didn't charge for prior products. It was a
right we granted to our licensees for the legacy products to the
current release that they were licensing.
Q. Now, during your tenure at Santa Cruz and SCO, was it
ever your view that you were obligated to remit to Novell any
royalties for UnixWare licenses?
A. No.
Q. Why did you have that understanding?
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A. SCO owned UnixWare, and the APA stated that UnixWare
gets all the fees -- SCO gets all the fees for UnixWare.
Q. Were you ever part of any audits that Novell conducted
of Santa Cruz or SCO?
A. I wasn't part of it. I knew they were going on, but I
wasn't part of it.
Q. And to what extent were you aware that they were
going? How did you know that?
A. I work on a daily basis with Jean Acheson in the
finance group, and she would tell me that Novell is coming in to
audit.
Q. Who is Jean Acheson?
A. Jean Acheson is currently our controller. When the
audits went on, she was either the manager of revenue or the
director of revenue.
Q. What did Jean Acheson have to do with audits?
A. She was responsible for overseeing or preparing the
royalty payments to Novell for the SVRX products under the Asset
Purchase Agreement.
Q. During these audits, did anyone ever ask you to
produce any UnixWare licenses to Novell or the evidence of any
payments for UnixWare licenses to Novell?
A. No. And if Novell had asked for it, I would have been
told they were asking for it.
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Q. Why is that?
A. Because they weren't supposed to get them.
Q. Why do you have that view?
A. Because Santa Cruz Operation, and then SCO, had full
rights to UnixWare and the UnixWare royalties, so if Novell was
asking for it, trust me, it would have gone through me and all the
way upstairs.
Q. Now, you had some understanding that SCO was obligated
to remit to Novell SVRX royalties; is that right?
A. Yes.
Q. What was your understanding on that front?
A. Again, it was -- the way -- the reason they told us
when we were in the transition meetings was that Santa Cruz didn't
have enough money to pay the asking price that Novell wanted, so
what they negotiated was: Look, we've got these System V products.
We'll identify them in the Asset Purchase Agreement, and for any of
those System V products, if there's a licensee that has a current
agreement with us that we transfer to Santa Cruz, we'll get those
royalties on those SVRX-defined products.
Q. Now, during your tenure at Santa Cruz and SCO, did you
or, to the best of your knowledge, anyone else ever try to
distinguish between the UnixWare license
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payments and any payments for these System V prior products?
A. There were no payments for the System V prior products
to distinguish.
Q. In your view, was the licensing of the rights to use
the System V prior products a source of any royalties that would go
to Novell?
A. No.
Q. Why not?
A. Because it was part of our licensing UnixWare and SVRX
as an incidental component of licensing that UnixWare.
Q. Now, briefly describe, again, why it was that OEMs
would license the UnixWare source code?
A. They wanted to -- they wanted to be able to get the
source code so they could make some modifications to it. And a lot
of the OEMs started out way back in the '80's with licensing UNIX,
and they were building their UNIX offering on their computers. And
the later -- and they licensed System V, every new release that
came out. Virtually all the OEMs, major OEMs, every new release of
UNIX System V that came out they grabbed because they wanted the
new functionality.
If you stay on the old functionality and you don't do anything
with it, you're not going to be in the
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business long. So, every new release that came out, they would
license. And when we released -- when Novell released the first
UnixWare release, which was their branded name for UNIX System V,
OEMs licensed that, so they would continue to build their
product.
A lot of the OEMs also entered into packaged product
distributions with us. It saved them money on development. If they
had an Intel box, they could take our packaged product and just
ship it with their computers, and it was a substsantial cost
savings to them. But they still had their operating systems where
they were running their version of UNIX, and they would continue to
license the source code so they could keep that up to date.
Q. What if the product the OEM created included massive
amounts of System V source code and only a few lines of UnixWare
source code? What kind of royalties did they pay in that
instance?
A. UnixWare.
Q. Why?
A. Because we've also operated on the -- it was generally
referred to as the one-line-of-code rule. If you have a derivative
that you're paying royalties on and it's on a certain release of
UNIX, say, UNIX System V, Release 4.2 MP, and you're paying
royalties on it, if you
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license UnixWare, and you take one line of code from UnixWare
and put it in your 4.2 MP product, that 4.2 MP product is required
to be reported as UnixWare and report the royalties based on
that.
And the reasoning for that is: We didn't want to get into -- it
was just -- there is no way to get into an argument with an OEM of
how much of UnixWare is in the product. Are you going to be paying
-- like, well, I'm only using 5 percent of UnixWare, so I want to
pay a 4.2 MP royalty on this and only a little bit --
That discussion was ended by AT&T years ago. If you take any
of the later release, put it in your current derivative, that
current derivative becomes the later release.
Q. Do you have an understanding as to whether Novell,
before the APA was executed, used that same one-line-of-code
rule?
A. Yes, because I was the licensing manager at
Novell.
Q. And the answer is: They did, or they didn't use
it?
A. They did. Absolutely.
Q. Now, we reviewed the Unisys licenses earlier today. Do
you recall that?
A. Yes.
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Q. You reviewed one from 1991. Do you recall that?
A. Yes.
Q. And one from 1995. Do you recall that?
A. Yes.
Q. And one from 1996. Do you recall that?
A. Yes.
Q. Did there come a time when you contacted Novell with
respect to issues that had arisen regarding Unisys?
A. Yes, there was.
Q. And could you describe those circumstances?
A. Yes. Unisys had -- Unisys came to us and said they
have a product they call ClearPath, a computer they call
ClearPath.
Q. ClearPath?
A. ClearPath.
Q. This was a computer?
A. Yes -- well, it was essentially more than a computer.
It was really three computers in one package, so they had a box and
then they had three computers in that box. And what they were doing
was: One of the computers ran a Unisys proprietary operating
system.
Q. What does that mean "proprietary?"
A. It was a -- before UNIX came out, all of the
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computer manufacturers developed their own operating system for
their computers. The operating system worked with the applications,
and that's how you get work done. So, they had their own
proprietary operating system. When UNIX came out, the market
demanded UNIX, so they also offered a UNIX solution. So, what the
ClearPath product had was one computer running Unisys proprietary
operating system. It had one separate -- and doing certain
functions -- one separate computer running System V, Release 4 MP
performing certain functions, and they had one computer running
UnixWare performing certain functions.
And they wanted to know how they had to pay on it because they
had a list price for that computer with the three -- for that box
with the three computers in it.
Q. Now, what interest did you have in the price that
Unisys was charging for this ClearPath product?
A. Their royalty is based on a percent-of-system list. So
the OEMs would provide us their system list so we could track what
royalty they were supposed to be paying.
Q. System list is, in layman's terms, the price for the
computer?
A. It's their price book, you know, ClearPath, "X"
dollars.
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Q. And to what end did you contact Novell?
A. Well, it involved System V, Release 4 MP and UnixWare.
So --
Q. Now, was Unisys an existing SVRX licensee at the time
of the APA?
A. Yeah. That's why I contacted Novell. And I contacted
Cindy LaMont. I worked with her as a contract administrator at
Novell. She had stayed with Novell and went to the finance group
and was handling the royalties.
I sent her a letter and I said, essentially: Unisys is one of
the -- I don't know if I exactly said this in the letter, but --
here is the deal. Unisys was one of the licensees that transferred
to Santa Cruz from Novell. They've got a situation where they've
got three operating systems on three separate computers in a
box.
Here is how we propose to handle the royalties, so let's
talk.
Q. And what was Ms. LaMont's response, to the best of
your recollection?
A. What's your proposal?
And we said: The UnixWare 7 is on what Unisys called an SMP
computer. I don't know the exact name, but it's SMP something. They
had a list price --
Q. SMP is symmetrical multi-processing; is that
right?
457
A. You've got me.
Q. Okay.
A. I'm a contracts guy.
Q. I finally know something you don't.
A. You win. So they had a list price for that SMP
computer of a hundred-thousand dollars. So we would say, like,
okay. Irrespective of whether it's in this box with these other two
things, if they are running UnixWare on this SMP computer, it's got
a list price of a hundred-thousand dollars. You'll pay a royalty
off your UnixWare license related to the list price of a
hundred-thousand dollars.
What we told Novell was: Here's our proposal. The UnixWare, out
of the ClearPath list price, we take a hundred-thousand dollars off
that list price. Unisys pays the royalty based on the UnixWare
license for that. We keep it. The 4. -- that leaves two processors
left and part of the ClearPath list price.
I don't know what the total ClearPath list price was, but what
we said was: You've got this bucket left after the hundred thousand
is taken off the list price. What we're proposing and what Unisys
has agreed to is that we cut that number in half, so half of that
remaining list price, we will apply the royalties schedule under
the 4.0 MP license, which was licensed
458
under a specific supplement, and those royalties would go to
Novell
Q. And what was Novell's response?
A. Fine.
Q. So, let me make sure I understand it. For the UnixWare
2.0 operating system --
A. Uh-huh.
Q. -- that Unisys was running its ClearPath computer, did
you attribute any value or royalties to Novell for the System V
prior products?
A. No. It was based on their supplement where they
licensed 4.0 MP. It was a separate license for the UnixWare
license.
Q. And at the time you wrote the letter to Ms. LaMont and
had these discussions, had Unisys been paying SVRX royalties that
were being remitted to Novell?
A. Yes.
Q. This is SCO Exhibit 409. Do you recognize that, Mr.
Broderick?
A. It's my letter to Cindy.
Q. This is SCO Exhibit 386. Do you recognize this
document, Mr. Broderick?
A. Yes, it is. This is where we agreed with Unisys on how
the royalties would be treated.
Q. You say in the opening sentence of this letter:
459
The agreement between Santa Cruz and Novell requires prior
written approval from Novell for all the new agreements or changes
to current agreements related to UNIX System V.
Do you see that language?
A. Yes.
Q. Do you recall why you wrote that?
A. It was a flag of Cindy's, related to Unisys, that,
Cindy, we've got a deal coming up. It includes the SVRX product, so
let's get together and talk about it.
Q. And why did you feel compelled to contact her with
respect to that SVRX product?
A. Because that was Novell's -- Novell's right was to the
royalty under the 4.0 MP license.
Q. And why did you have the view that that was Novell's
right to have that money?
A. Because it was a license transferred to Santa Cruz
under the Asset Purchase Agreement.
Q. Mr. Broderick, you've heard of the 2003 Microsoft
agreement, I take it?
A. Okay.
Q. Have you?
A. I have reviewed it.
Q. You've heard of it?
A. Oh, I've heard of it.
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Q. Have you had occasion to review it?
A. I have read it.
Q. At the time of this 2003 license, was Microsoft an
existing UNIX licensee?
A. No.
Q. Do you have any understanding, Mr. Broderick, as to
whether, in Section 4 of this agreement, Microsoft obtained a
license to the OpenServer source code?
A. Yes. My understanding in Section 4 is it loosened up
some of the limitations or restrictions on what Microsoft could do
with the UnixWare and also added OpenServer and some additional
UnixWare releases, OpenServer releases and the prior legacy UNIX
products. That's my understanding.
Q. Now, as of the time of this agreement in 2003, had
Santa Cruz or SCO ever licensed the OpenServer source code for
commercial use?
A. Absolute -- no.
Q. Why not?
A. OpenServer was their flagship product. It was the
binary that ran on the Intel box. It had a huge installed base. I
believe it's where most of the revenue came from, from the packaged
product, and they just weren't going to release the source code
and, essentially, create a competitor for them. It was -- if
461
you want -- if you want a packaged product with UNIX on Intel,
come to us.
Q. Did you have a view as to whether Santa Cruz or SCO
was obligated to pay Novell anything's with respect to OpenServer
licenses?
A. No. In fact, the APA is very specific that Santa Cruz
doesn't owe any royalties to Novell for distributions under their
software agreement, sublicensing agreement schedules they had prior
to, you know, Santa Cruz buying the business.
Q. So -- I won't lead you. How was OpenServer
created?
A. OpenServer was created under Santa Cruz's license for
UNIX System V, Release 3.2.
Q. That was the license Santa Cruz had before it became
the owner of the UNIX business; is that right?
A. Yes.
THE COURT: I'll probably let you lead him if you want to
because you tried to led him about SMP, and he wouldn't be
lead.
MR. NORMAND: Thank you, Your Honor.
THE WITNESS: I missed -- being what?
THE COURT: It's legal stuff. Don't worry about it. It was
a compliment.
THE WITNESS: Well, thank you.
462
Q. Have you heard the phrase "installed base" used with
respect to OpenServer?
A. Yes.
Q. And, to you, what does that mean?
A. Installed base is the number of end users that are
using the software product.
Q. And why is it relevant to talk about installed
base?
A. Because it's adding up everybody that's using your
product. In fact, if you take a look at a lot of marketing
literature or industry reports on UNIX or any other product, they
always refer to installed base as how successful a product is
doing.
Q. What was OpenServer's installed base like?
A. My understanding, it was very large. In fact, I have
seen reports which said OpenServer had the largest installed base
of UNIX products.
Q. How did SCO's OpenServer business compare to its
UnixWare business in the last few years?
A. OpenServer was doing more revenue.
Q. And would the same be true as of the time of the 2003
Microsoft agreement?
A. That's my understanding, yes.
Q. In your view, how would the value of a full OpenServer
source code license compare to the value of a
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full UnixWare source code license?
A. I would say it's a lot more.
Q. Why would you say that?
A. Because UnixWare was licensed in source code format
since it first came out. We were perfectly willing to have OEMs
license the UnixWare source code to create their derivative.
OpenServer, we guarded very close to the vest and never licensed
the source code. So, if we had a point in time when we decided to
license the source code, we would want a lot of money for it.
Q. You've also heard of the 2003 Sun agreement, I take
it?
A. I have heard of it.
Q. Was Sun paying any royalties as of the time of that
agreement?
A. No.
Q. This is Novell Exhibit 5, Mr. Broderick. Do you
recognize this document, dated January 1, 1994?
A. Yes, I do.
Q. This is attachment 2, titled Deliberately Omitted
Software, and the first two entries are System V 4.1 ES 3B2 and
System V 4.1 C2 3B2. Do you see those?
A. Yes, I do.
Q. Now, at the time of this 1994 agreement, did Sun
already have a license for those products?
464
A. Yes.
MR. NORMAND: This is a document, Your Honor, that has not
been agreed to be admitted.
THE COURT: What number is it?
MR. NORMAND: SCO 414.
THE COURT: Okay.
MR. NORMAND: It's not listed in our 26(a)(3). It's a
document we believe rebuts a point that Novell has made in this
case.
THE COURT: Mr. Melaugh?
MR. MELAUGH: I think this is fine. I'm generally
reluctant to agree to exhibits I have never seen before, but I
won't object to this.
THE COURT: It's admitted. SCO Exhibit 414?
MR. NORMAND: Yes.
THE COURT: It's admitted.
(Sco Exhibit 414 received in evidence.)
Go ahead.
MR. NORMAND: Thank you, Your, Honor.
Q. Mr. Broderick, what is SCO Exhibit 414?
MR. MELAUGH: Your Honor, could I at least get a copy of
this, please?
THE COURT: Do you have it?
MR. MELAUGH: I do.
MR. NORMAND: He does.
465
MR. MELAUGH: Thank you.
Q. What is SCO Exhibit 414?
A. It's a UNIX System Laboratories license with Sun
Microsystems, where Sun Microsystems licensed the UNIX System V,
Release 4.1 Enhanced Security Platform and the C2 Auditing.
Q. Do you have any understanding as to why, in the 1994
Sun agreement, these releases were identified as deliberately
omitted software?
A. My understanding is they had a license for the 4.1 ES,
but that code was not included in their Solaris product, so when
they did the royalty buyout, when they did the agreement in 1994,
it was specific to their Solaris product based on UNIX System V,
Release 4.0. So they specifically excluded the 4.1 ES
Q. And, to the best of your understanding, was this 4.1
ES license in place as of the 2003 Sun agreement?
A. Yes. I can't find any record of it having been
terminated. The licenses were perpetual unless you violated the
agreement.
Q. Did their come a time, Mr. Broderick -- we're getting
close to the end -- did there come a time during this litigation
when you undertook to survey all of the UNIX licenses that you have
been overseeing for all these
466
years?
A. Yes.
Q. And, as painful as it may be, can you describe what
you did.
A. I -- all the licenses were on an imaging system. They
were -- when Novell bought us, all the licensing was done in
Greensboro, North Carolina. They were all on hard copy. So, what
Novell did to control this, what Steven Baker did, was he brought
in a company, and what they did was they scanned all the documents.
And it went into what we call the image system. And it was indexed
by customer number and product and date.
So, instead of going through a file room and trying to find
something, on your computer you could just take a look and see what
a customer's number is, put that customer number in, and it would
bring up all of their documents, and you could just go through on
your screen and look at any documents they had.
I was the only one that had this computer. It was on an old
Windows 95 computer. And I thought about: If I get hit by a truck
for this, and this Windows 95 computer, in 2003, decides to give up
the ghost, nobody, really has a record of the history of the
licensing.
So I started going through the imaging system and, if what I've
been told is true, there's 30,000
467
records in the image system. And I probably agree with that
because this project took me the better part of a year.
And what I did was I just brought up the customers and I started
going through each customer and taking a look at what they had
licensed, and I built a Word -- Microsoft Word table. I didn't know
it was going to end up 400 pages. If I did, I would probably have
gone to the our IP department and said: Can you give me a database
or something?
But there was no way to scan this information in, so I had to
type it all in. So I would just go by customer and take a look at
what they licensed, and it took time because if I was looking at a
licensee who had licensed UNIX System V, Release 3.0, there could
be 25 different supplements. I had to look at the earliest
supplement, bring it up, and if it was when they initially licensed
the 3.0, I would print the page or the first couple of pages and
move on looking for the next product that customer licensed.
I did this for all 30,000 records, and what I did is I would
just print them out during the day, and I would take them home at
night, sit down at the computer and type them in on this 400-page
thing.
When I completed that -- we stopped using the
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imaging system in the late '90's, sometime in the late'90's. The
scanner broke, and Steven Sabbath wouldn't buy us another one. So,
after that, the documents were in hard copy. And when Caldera
bought us, a short time after that all the documents were sent out
to a central filing in Lindon, so on one of my business trips to
Lindon, I went through the files out there, started with A, and
looked at all of them. And if it came up with a source license or a
non-disclosure or something related to UNIX, I checked my list. If
I didn't have it on my list, I added it.
Then, when I was done with that, I sent the list off to our
Japanese subsidiary and said: This is what I have so far. Do you
know of anything that we should add to it or if there's any errors
that you can see?
And Mikado Aso sent me back a huge spreadsheet, essentially from
their financial -- I think it was from their financial -- that
listed the licensees and what they had licensed and when they had
licensed it. I also went through that, checking it against my list.
And the long and the short of it is, after about a year, I had
420-some pages that is a listing of everybody who had licensed UNIX
and when and under what agreement.
Q. This is --
469
THE COURT: 367, Right?
Q. SCO Exhibit 367. Is this what you're talking
about?
May I approach, Your Honor?
THE COURT: You may.
MR. NORMAND: May I have approached?
THE WITNESS: It is, yes.
Q. Now, you've had occasion to review that document, I
take it, in the last few years?
A. Yes. I've used it on a number of occasions, and I
passed it out to some people to use because I put a lot of work
into this, and I wanted people to use it.
Q. Are you aware of any material inaccuracies in the
document?
A. No. I found a couple. I recently went through this to
find some information, and I found a few examples of, like, a UNIX
System V, Release 4.2 MP that I had licensed in 1983, and I knew
that was wrong, so I went to the image system and pulled it up, and
it was 1993. And I just attributed that to the eight's next to the
nine, and I'm human. But, I don't know. I put lot of work into
this, and I didn't do it slipshod, so I think it's fairly -- I
think it's pretty accurate.
Q. Now, you have seen this demonstrative before, Mr.
Broderick?
470
A. Yes.
Q. We worked on it together, correct?
A. Absolutely.
Q. In sum, what does this demonstrative represent?
A. This is taken from information I provided on the
number of UNIX licenses for different System V groupings and when
they were licensed. So, what it shows is the higher -- for each
group, where it shows the higher graph, it's the higher number of
licenses during that period that were granted.
Q. This is based on Exhibit 467?
A. Yes.
Q. Or 367. I'm sorry. So, describe to me what these SVR 1
columns represent.
A. Well, it shows -- it starts off with when the product
was first introduced. There is a certain amount of interest and
licensing. It shows the number of licensees that took licenses. And
then it jumped up when, you know, more people started. During that
time period, more people just started licensing the product.
And then, in time -- and it generally relates to our releasing
of a subsequent release of the product, and it stands to reason, we
have an operating system that people are licensing, and a lot of
people are getting on board, and then, when we license a later
release with
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more functionality, they jump on that. And you can see the older
release starts to go down at the time the new release is going
up.
Q. You're comparing these two columns?
A. Yes.
Q. What is this new functionality you're referring
to?
A. Well, in the software industry, if you don't keep on
improving you're product, you're going to go out of business.
That's why you've got, you know, Microsoft Windows, Microsoft
Windows 95, Windows 98, XP. You have to continually improve your
software product to add more functionality so it can do more
things; also to take advantage of improvements in the computers
they are going to be running on.
So, as they come out with new computers and people are demanding
more functionality, you have to upgrade your software.
Q. What does this demarcation represent between these two
colors, the System 4 era and the UnixWare era?
A. What's that? The starting of the yellow?
Q. Yes.
A. Can you give me a hint?
Q. March 10, 1995, what does that date represent?
A. Oh. That's the last date that we licensed the
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UNIX System V 4.0 product.
Q. Now, do you recall when the APA was executed?
A. The APA was executed in December of 1995. It closed
February 1, '96, I believe.
Q. And that's what you described earlier as the
transition period?
A. Yes.
Q. I wanted to show you one other document about that
period. This is SCO 50. This is an e-mail from Larry Bouffard. Do
you know who Larry Bouffard is?
A. Yes.
Q. Do you recall what his responsibilities were at this
point?
A. Well, I worked with him when I was at USL, and Manager
of Sales Operations. And then, at Novell, I believe he was director
of some sales area, I think the UNIX sales area of Novell.
Q. This is October 10 -- October 19, 1995. Mr. Bouffard
says:
We are obligated to give SCO all information, contracts, assets,
etc., pertaining to the UnixWare business and the old UNIX source
code business. They have bought it lock, stock and barrel. Once the
transition is closed, November or December, we will have no more
involvement in this business. Therefore, if a
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contract is for UnixWare or UNIX, it will be SCO's.
Do you see that language?
A. Yes.
Q. And it says: If a contract is for UnixWare, and let's
say Netware, the UnixWare part is theirs.
Do you see that lin.
A. Yes.
Q. How did Mr. Bouffard's statement compare to your
understanding of what was happening during that transition
period?
A. If not word-for-word, this is what we were told during
the transition meetings when we were -- you know, from Novell to
Santa Cruz.
Q. So, the APA was executed after the last license of SVR
4; is that right?
A. According to the records, yes.
Q. And I know you've alluded to this before, but let's
just have you explain one more time, in your view, why did these
sales erode over time in this way?
A. It's older technology. It's comparable to somebody
coming out with a new PC and announcing to the world, you know:
Hey, buy my new PC. It runs DOS.
These are old products. In fact, if you look at the System V,
Release 2.0 products, there was a UNIX System V 2.0 VAX.
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Q. What is as VAX?
A. It was a -- Digital Equipment Corporation had a model
number for their computer. The computer that that VAX ran on I was
told was the size of a refrigerator and didn't have the
functionality of your cell phone. So, computers increase in power.
You used to have a room full of computers and now a laptop handles
it.
So, as these computers got bigger, you had to improve the
software to run on those computers, and the old software just goes
by the wayside.
Q. So, are these SVR licenses that were in place as of
the time of the APA, did SCO pay Novell royalties on those
products?
A. The ones that were in place, if they were royalty
bearing, and they were transferred to Santa Cruz from Novell, SCO
gave Novell those royalties for the system -- for the SVRX-defined
products.
Q. And did SCO pay Novell royalties on any of the
UnixWare products?
A. No.
Q. I wanted to go to one other point with you, Mr.
Broderick. We spoke earlier about the 1 CPU source code
right-to-use fees. Do you recall that?
A. Yes.
Q. From your experience, do you have some
475
familiarity with the actual prices charged for these releases
over time?
A. Yes.
Q. What were the price -- what was the price charged for
SVR 2? Do you recall?
A. SVR 2 -- the different releases of SVR 2; 2.0, 2.1,
the different versions, they were $43,000 for the initial
designated CPU license.
Q. How about SVR 3?
A. SVR 3, there were different versions. 3.0 started out
at 65,000. 3.1 brought it up to 71,000. 3.2 brought it up to
77,000. Then there was a 3.0386 that was 50,000. It was 50,000
because you had to have one of the other licenses
So, if you took all those releases and averaged it together, you
would get about $55,000 for the 3.X.
Q. Why don't we do it on paper and quickly create a
record of this. Can you see that, Mr. Broderick?
A. Yes.
Q. The first entry on this piece of paper, which is from
an attachment to the 2003 Sun agreement --
A. Okay.
Q. -- is 4.1 ES 3B2, right?
A. Uh-huh.
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Q. Do you know what the 1 CPU right-to-use fee is for
that product?
A. A hundred-thousand dollars.
Q. Let me give you a copy of this, Mr. Broderick, and you
can track of it with me. How about the next release, Mr. Broderick,
4.1 C2 3B2?
A. That was a security feature. That was $50,000.
Q. And the next?
A. That's a hundred-thousand dollars. I'm assuming that's
the platform.
Q. 4.1 ES is a hundred?
A. Yes.
Q. And these were the prices paid at the time of the
releases; is that right?
A. It's the additional -- that would be the CPU source
right-to-use fee that is in the license.
Q. How about System V, Release 4.2?
A. 200,000.
Q. 4.2 MP?
A. 250.
Q. And the next releases are UnixWare releases,
correct?
A. Yes.
Q. Now, you and I did this addition last night.
477
Do you have a record of what that comes out to? Is it 700?
A. If you're talking about the -- all the UnixWare --
Q. Not the UnixWare releases. I mean the numbers I've
written down I believe adds up to $700,000?
A. Yes, 250, 500. Yes, 700,000.
Q. I'll take that back from you now that it's coming up
on the screen. It just confuses things.
Let's do the same thing, Mr. Broderick, with respect to Exhibit
C for the 2003 Microsoft agreement. I take it you have seen this
page before?
A. Yes.
Q. This one is a little more challenging.
A. Is there a focusing of it?
Q. It didn't work. Why don't we do this. We'll do it half
and half.
A. That's good. I can see it.
Q. Yeah. Now, some of these documents are in italics. Do
you see that?
A. Yes.
Q. Do you have an understanding of why they are in
italics?
A. They were source code releases that we did not have
copies to provide.
478
Q. Now, let's start with the paragraph that says sCO
OpenServer, Release 5.X. Do you see that?
A. Yes.
Q. What is the first System V release identified in that
list?
A. System V, Release 4.2 MP.
Q. How much was that?
A. 250,000.
Q. What is the next release?
A. 4.2.
Q. There's a release for 4.2 MP international edition; is
that right?
A. It's the same thing. The source code for 4. -- for all
the source code products is you've got 4.2 MP and 4.2 MP
international. It was the same fee. It was just whether it went
international or not, and my understanding is that the only
difference is that if it went internationally, there were some
restrictions on encryption coding.
Q. You didn't charge any extra fee for the international
edition?
A. No. Absolutely not. If a licensee licensed a product,
the license schedule was titled 4.2 MP and 4.2 MP
International.
Q. And what is the next product you see? 4.2 MP,
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you said?
A. Yes. This is V, Release 4.2.
Q. How much?
A. 200,000.
Q. What's the next you see?
A. 4.1 ES.
Q. How much?
A. 100.
Q. What's the next you see?
A. 4.0 MP.
Q. How much?
A. 150.
Q. What's the next you see?
A. Well, the italics is Release 4.0, Version 4.
Q. Let's hold off on the italics for now.
A. Okay.
Q. What's the next one down?
A. UNIX System V, Release 4.0.
Q. How much?
A. 100.
Q. What's the next?
A. 4.40, Version 2. That's also a hundred.
Q. What's the next, not in italics?
A. UNIX System V 386 3B2.
Q. Okay. And is the same true of its
480
international edition?
A. Yes.
Q. How much?
A. That's the one that was 50,000 because you had to have
another release with it that I talked about earlier.
Q. Okay. Next?
A. You need to raise it up.
Q. What's that?
A. Slide it up.
Q. You can't see it?
A. I can't see the next.
Q. Sorry, Mr. Broderick.
A. That's okay. UNIX System V, Release 3.2.
Q. How much?
A. 77. 3.1 is 71. 3.0 is 65. All of the 2.0's are 43.
Q. Now, you and I did this math last night. excluding the
Italics, we came up with 1.249. Do you recall that?
A. Yes.
Q. Sounds good to you? And I think you did work on your
own, and you came up with a number if you were to include the sum
of the italicized releases, correct?
A. The sum of the italicized, yes. I believe that
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was 700.
Q. That's correct. Thanks for your patience, Mr.
Broderick.
A. No problem.
Q. And, again, these are -- these prices represent
what?
A. The source code right-to-use fees for the initial
designated CPU.
Q. Paid at what time?
A. At the time of -- at the time of licensing.
Q. So, for example, using our number from 2.0, at the
time of a 2.0 license, what was the one-time source code
right-to-use fee for one CPU?
A. $43,000.
MR. NORMAND: That's all I have, Your Honor.
THE COURT: Thank you, Mr. Normand.
Mr. Melaugh, you may cross examine.
MR. MELAUGH: Thank you, Your Honor. Your Honor, may I
approach?
THE COURT: You may.
MR. MELAUGH: There is a binder of some of the exhibits we
may be using during the cross examination.
CROSS EXAMINATION BY MR. MELAUGH:
Q. Good morning, Mr. Broderick.
482
A. Good morning.
Q. Now, let's start with SCO Exhibit 141. Let's go to the
second page of that. You were asked a number of questions about
this exhibit during your examination. You'll note here that it's
supplement 112, correct?
A. Yes.
Q. Now, I believe it was your testimony that you looked
over the history of the supplements with NCR; is that right?
A. Yes.
Q. And you found that something on the order of half of
those supplements were additional CPU fees; is that right?
A. Not necessarily additional CPU fees. It could be
changes in designated CPUs, assignment of designated CPUs. Roughly,
that's the way it looked.
Q. So, it's fair to say, then, that during your -- during
the course of your tenure as contracts manager, the particular CPU
upon which the source code could be used is something you took very
seriously?
A. Oh, yes. It was a control factor.
Q. And, in fact, to move it even from one CPU to another
required its own supplement?
A. At a point in time, we stopped that practice, when we
were at Novell. We started just tracking number
483
of designated CPUs.
Q. And if a licensee wanted to use it on more CPU's than
they had at the present, they needed to come to you and execute
another supplement?
A. Correct.
Q. And you charged them a fee for that?
A. Correct.
Q. So, it's fair to say that the right to use code on a
particular CPU is something that had commercial value, both to
AT&T, USL, Novell, Santa Cruz and presumably the licensees
themselves?
A. I'm not sure the -- I'm not sure the intent was to get
commercial value out of it. The way it was explained to me when I
started doing licensing, worked in licensing, was they wanted the
licensee to really think about how many copies of the source code
they wanted to have internally in their lab, so they wanted -- so
they charged them a nominal fee.
I mean, if you're spending $200,000 for your source code license
on an initial designated CPU and then you have to pay $3,000 for
additional CPUs, that's not a great deal of value. It's more of a:
Think about this, guys. You've got to write a check for three grand
for each CPU. How many do you really want?
Q. So it was something that everyone was all just
484
pretty careful about?
A. Yes.
Q. And if a company had come to you and said: We'd like
to use this source code on any CPU we want, anywhere in the
world.
It's not something that you would have have allowed under, at
least the terms of the license as we see here under this
supplement?
A. I'm sorry. What was that?
Q. If a licensee had come to you -- say NCR had come to
you and said: We would like to use this code not just on the CPU
we've designated in this supplement but on a CPU anywhere; anywhere
in the company, anywhere in the world.
That's something they wouldn't have been able to do under this
licensing regime; isn't that right?
A. Actually, we changed. If you're talking about they
have got the designated CPU that's licensed, we changed the policy
from tracking all the CPU's. And the reason we changed the policy
is: When AT&T tracked all this stuff, they had 25 people in
Greensboro doing it. With Novell it went down to three of us.
So we said: Look. You have a certain number of CPU's. We're not
tracking it anymore. So, say you've got one CPU. You're licensed
for one CPU. Taking into
485
consideration export rules, you can use that CPU anywhere in the
world. That was the policy.
Q. It's just one CPU, though?
A. Yes.
Q. And so if NCR had come to you and said: You know, I
recognize that our supplement says one CPU. We want to use it on a
hundred CPUs.
That's not something they could have done under this
supplement?
A. They would have had to give us a purchase order for
whatever the license said. Some licenses were $2,000, some were 3.
But they would have to give us a purchase order for the number of
additional designated CPUs they wanted to use.
Q. And under these supplements, the NCR supplements as an
example, NCR couldn't pass along the source code to sublicensees,
for example, could it?
A. No rights to distribute source code.
Q. Say again?
A. No rights to distribute source code.
Q. And you and I can agree, can't we, that the right to
distribute source code is something that has commercial value?
A. Yes.
Q. And it's something that AT&T, USL, Novell
Santa
486
Cruz were pretty careful about?
A. Correct.
Q. So, when we saw this list of prices that you went
through, the prices for all the 40 versions and 41 versions and 42
versions and 30 versions and 20 versions, none of those prices
reflected a license that allowed the licensee to distribute source
code; is that right?
A. Under those licenses that -- under the software
agreement that governed those licenses, that is correct.
Q. And under the software agreement that governed the 40
license the 42 license, all of those licenses, none of those
licenses gave the licensee the power to, say, open source the
source code?
A. That's correct.
Q. And for every one of those licenses, again, the 42
licenses, the 41 licenses, the 40 licenses that we saw, if that
licensee wanted to distribute binary code for those versions, they
would have to pay AT&T, USL, Novell, Santa Cruz an extra fee
for each copy; isn't that right?
A. A binary royalty, yes.
Q. So that fee is not incorporated into the figures that
Mr. Normand was writing?
A. That's correct.
487
Q. Let's take a look at Exhibit 30. I think this is
something you have already been looking at. If you don't have a
copy, I'm happy to give you one. It's a Novell exhibit. So you
addressed this letter in your testimony -- in your direct
testimony; isn't that right?
A. Yes.
Q. This is a letter dated May 26, 1996?
A. Yes.
Q. It's to Cynthia LaMont, correct?
A. Yes.
Q. And you have signed it at the end, Bill Broderick?
A. Yes, I did.
Q. And it lists your title as Manager of Law and
Corporate Affairs?
A. Yes.
Q. And the first paragraph of this letter reads:
The agreement between Santa Cruz Operation, Incorporated, SCO,
and Novell, Novell, requires prior written approval from Novell for
all new agreements or changes to current agreements relating to
UNIX System V.
Is that an accurate statement?
A. As it applies to Unisys here. This is a letter that
was directed at the Unisys issue.
Q. And in the third paragraph of this letter, you
488
talk through what Unisys is proposing to do essentially,
correct?
A. Yes.
Q. Unisys is talking about shipping a product that
combines, in some way, SVR 4.0, a Unisys proprietary system, and
UnixWare 2.1; is that right?
A. I want to be clear. It doesn't combine those. They are
talking about a box that has three separate and distinct computers,
and each one runs one over these.
Q. So they are talking about making a distribution of
each of those pieces of software?
A. On specific -- individually specific computers,
yes.
Q. And what you propose here is essentially an
apportionment of the value what Unisys is proposing to pay SCO
between monies that SCO gets to retain and monies that Novell gets
to retain?
A. Yes.
Q. And you are -- as your direct testimony indicated, you
reasoned it through. I think there's even a spreadsheet attached to
another copy of this exhibit. And you make a proposal to Novell. We
think this much should be yours and this much should be ours.
That's a fair characterization?
A. Yes.
489
Q. And, in the end, you seek Novell's approval for the
arrangement?
A. Yeah.
Q. So, it's fair to say, from this letter, that you
regarded Unisys -- Unisys' proposal to distribute a binary version
of SVR 4.0 MP as something that SCO needed to remit royalties to
Novell for; isn't that Right?
A. Yes. Because it was under a supplement that Unisys had
executed, where they licensed the 4.0 MP, and in that license it
had how to calculate the royalties. And it said that if you ship
this product, you will pay royalties. So, under that license, if
they were using the 4.0 MP on that specific computer, they had to
pay the royalties, and those royalties went to Novell.
Q. That's despite the fact that, at the time, Unisys also
had more frequent -- more recent supplements; isn't that Right?
A. Yes.
Q. And those supplements listed prior products?
A. Yes.
Q. But, nevertheless -- and those prior products included
SVR 4.0 MP?
A. Yes.
Q. And, nevertheless, though, this was something that SCO
regarded it had to pay Novell for?
490
A. Because it was under a specific license that Unisys
had for the 4.0 MP.
Q. Is this the existing-vs.-new license distinction?
A. I don't understand your question.
Q. I'm trying to see what you're getting at here. I'm not
sure I understand why it is your saying that the SVR 4.0 MP fees
are something that SCO had to remit to Novell. I take it, it's
because, at the time of the APA, there was an SVRX license for 4.0
MP?
A. That was transferred from Novell to Santa Cruz.
Q. But that's the reason that SCO had to pay Novell for
4.0 MP?
A. Yes. Under that separately-licensed product, yes.
Q. So, the basis of your testimony is that the reason SCO
had to pay for 4.0 MP is because this was an existing SVRX
license?
A. At the time of the Asset Purchase Agreement, yes.
Q. All right. Let's take a look at SCO Exhibit 371. It's
been pre-admitted. I think this is a license that we also addressed
-- that you also addressed in your direct testimony; is that
correct?
491
A. Yes.
Q. It's with Unisys Corporation?
A. Yes.
Q. It's supplement number 233?
A. Yes.
Q. It's dated May 28, 1996?
A. I don't have a date -- yes, it is.
Q. And, at the bottom, we see your signature on behalf of
Santa Cruz Operation?
A. Yes.
Q. And if we turn to Exhibit I of this document, which is
140491, there's a listing of prior products that you have addressed
in your direct testimony?
A. Yes.
Q. Now, isn't it true that, at the time Unisys entered
into supplement 233, it already had the rights to every product
listed on this list by way of its previous supplements?
A. I would have to check, but Unisys is a long time OEM,
and they always licensed the latest release that was coming out, so
if not all of them, a majority of them.
Q. Well, we can look. Let's turn to Exhibit 370. This is
also an exhibit that you addressed in your direct testimony. I'm
happy to give you a copy, sir, if it's
492
helpful.
A. What is 370?
Q. This is Novell Exhibit 370 -- I'm sorry, SCO Exhibit
370.
A. You have got to help me out here.
MR. MELAUGH: May I approach, Your Honor?
THE COURT: Yes.
THE WITNESS: Okay.
Q. And we see, from the second page of this, that this is
another supplement executed with Unisys?
A. Yes.
Q. It's supplement 230; is that right?
A. Correct.
Q. And it's something that Novell executed?
A. Correct.
Q. And if we turn to the list of prior products on
Exhibit J, for which the reference is 1039921 --
A. Okay.
Q. -- we see the prior products that are carried over
into the next supplement; isn't that right?
A. Yes.
Q. And if we were to put them up side-by-side, which you
can see on your monitor?
A. Uh-huh.
Q. Again, that indicates that in Exhibit 233 -- in
493
supplement 233, Unisys had already paid for all the rights that
are listed in the prior product rights; isn't that right?
A. Unisys didn't pay for the products in the prior
products. They paid for the source right-to-use fees on additional
designated CPUs. The prior products came with no fee.
Q. When looking at supplement 233, isn't it right that,
at the time Unisys executed this, they already had the rights to
all of the versions listed in Exhibit I by way of their previous
supplements?
A. More than likely.
Q. Let's turn to SCO Exhibit 141.
MR. MELAUGH: May I approach, Your Honor?
THE COURT: Yes.
Q. If you could turn to the second page of this exhibit.
This is a supplement with NCR Corporation?
A. Yes, it is.
Q. It's supplement number 112?
A. Yes.
Q. It's something that you executed on behalf of Santa
Cruz in March of 1997?
A. Yes.
Q. And, again, we see an example of a prior products
listing at Exhibit I, which is 977766. And
494
isn't it true, again, that, by way of previous supplements, NCR
had all of the rights that you see listed here on Exhibit I?
A. The chances are, yes.
Q. Now let's turn to exhibit -- SCO Exhibit 392.
A. I'm sorry, could I take one second and stand? My knees
are getting old.
THE COURT. Sure.
THE WITNESS: Thanks.
THE COURT: You can even answer questions while you stand
if you speak up.
THE WITNESS: Okay. Let's go.
Q. Okay. Good for you. SCO Exhibit 392.
A. Okay.
Q. We're looking at the second page. This indicates it's
a supplement with Stratus; isn't that right?
A. Yes.
Q. And it indicates it's supplement number 87?
A. Yes.
Q. And we see your signature at the bottom on behalf of
Santa Cruz, Bill Broderick?
A. Yes.
Q. And if we turn to the prior products listing, we see
another of these lists of prior products, UnixWare
495
20 and down to earlier versions UNIX; isn't that right?
A. Yes.
Q. And, again, if we turn to SCO Exhibit 405, this is
another of these supplements with Stratus?
A. Yes.
Q. And it's numbered 86?
A. Yes.
Q. So it comes just one before the one we just looked
at?
A. Yes.
Q. And it's something's you signed, Bill Broderick, this
time on behalf of Novell?
A. Yes.
Q. And, here again, when we look at the prior products,
we see that by the time Stratus enters into supplement 87, the one
we just looked at, they already have the rights to all the prior
products that are listed in the prior products section?
A. Not necessarily. They didn't have rights to access the
prior products under the 2.1 license unless they are listed in the
2.1 license. These are prior products that they are allowed to
access under the 2.0 license, and if they access them, they have to
be treated the same as a UnixWare 2.0.
When you go to the 2.1 license, we list prior
496
products which grants them rights to access them under the
UnixWare 2.1 license. Two separate and distinct licenses. We're
granting rights to access the prior products under UnixWare 2.1 and
then under UnixWare 2.0. The fact that they have rights to the
prior products under 2.0 doesn't give them rights to 2.1 unless we
add them, unless we include them in the 2.1 license.
If you read this, it says they can access it as if they were
part of the UnixWare 2.0 license. That means the access to the
prior products on this 2.0 license are directly related to the 2.0
license. When we go to the 2.1 license, it will say the same thing,
but they can access the prior products as though they were a
UnixWare 2.1 product. You need them in each license.
Q. Let's talk that through. So, if we're looking at
supplement 87 -- this is Exhibit 392 -- and if we look at the prior
products list, we see SCO UnixWare 1.1, for example?
A. I'm sorry. Oh, here we go. Okay.
Q. So, this is supplement 87, which is the UnixWare 2.1
supplement?
A. Yes.
Q. And we see UnixWare 1.1 release on the prior products
schedule?
A. Yes.
497
Q. And this prior products schedule gave them the right
to access that source code?
A. Correct.
Q. And it gave them the right to distribute binary copies
of the source code if they paid Santa Cruz an extra fee?
A. It gave them rights to distribute -- which product,
the 1.1?
Q. 1.1.
A. If it was -- if they didn't have a license for 1.1,
and through the prior products they were able to access the 1.1,
and they included some of that code into the 2.1 product, they
could distribute the binary, but the binary would be a UnixWare 2.1
binary. The prior products don't give any licensee the right to
create a derivative work of, say, UNIX System V, Release 3.2. This
is just a grant of access. Any access they have and any use they
would use of these prior products has to be done under the current
and, in this case, the UnixWare 2.1 license.
Q. Let me make sure I understand your testimony. If I
wanted to make a derivative work of UNIX System V, Release 3.2,
that is not something I could do under supplement 87?
A. That's correct.
498
Q. And so, if I wanted to use --
A. Well, let me clarify that. If you wanted to create a
derivative work of UnixWare 2.1, that included some of the prior
product, you could do that. But if you just looked at the prior
products, the prior products grant access to it. It is not the same
as having a full source license for that product, so there is no
right, by virtue of the prior products, that you can distribute a
stand-alone UnixWare 3.2 derivative work.
Is that clear?
Q. I think so.
A. Okay.
Q. Now, I believe it was your testimony that the
inclusion of prior products was not something that was always done,
either by AT&T or by USL or by Novell or by Santa Cruz?
A. As a general practice, it was always done.
Q. But there were exceptions to that?
A. One on the UnixWare 2.0 license, where they were
specifically omitted, and then UnixWare 7, where a business
decision was made to hone in on the UnixWare only as a prior
product. But everything prior to UnixWare 7, all the thousands of
licenses that were issued, I only found one that did not include
prior products.
499
Q. What was that one?
A. That was the ALPS one.
Q. If we could turn to SCO 8.
MR. MELAUGH: May I approach, Your Honor?
THE COURT: Yes. What is it? SCO what?
MR. MELAUGH: This is SCO Exhibit 8, Your Honor.
Q. This is a supplement with Sequent Computer Systems;
isn't that right, Mr. Broderick?
A. Yes.
Q. And it's supplement number 4; is that right?
A. Yes.
Q. And it's something that USL entered into -- or I'm
sorry -- AT&T entered into?
A. Yes.
Q. Now, I don't see any prior products listing here, Mr.
Broderick, do you?
A. No, I don't.
Q. Take a look at SCO Exhibit 10. This is another
supplement with Sequent Computer Systems; isn't that right?
A. Yes, it is.
Q. Supplement number 9?
A. Uh-huh.
Q. It's entered into by AT&T; isn't that right?
500
A. Yes.
Q. And, again, I don't see any prior products listing in
this supplement. Do you, Mr. Broderick?
A. No. But this is a 3.1 upgrade from 3.0. And it says
that the -- in addition to the terms and conditions set forth in
the attached upgrade schedule. For upgrades from 3.0 to 3.1 from
the UnixWare 3.0, the terms and conditions of supplement 6 for 3.0
govern, and I believe if you go look at supplement number 6 for
3.0, you'll see prior products listed.
Q. We can agree, though, that this supplement does not
list prior products; isn't that right?
A. Yes, but it references a supplement -- it ties to a
supplement that does.
Q. Let's turn to SCO Exhibit 12. This is another of these
supplements. It's again with Sequent; isn't that right?
A. Yes, it is.
Q. And it's supplement number 15?
A. Yes, it is.
Q. Entered into by AT&T?
A. Yes.
Q. And, again, we don't see any prior products listed in
terms of this supplement, do you?
A. No. And, again, this is an upgrade
501
supplement.
Q. So there's a class of supplements that you're calling
upgrade supplements that do not include prior products rights?
A. Yeah -- well, no. When I reviewed the licenses,
especially in the 3.0, because in 3.0, you license 3.0 and it was a
main schedule that had a lot of these licensing requirements. But
when they upgraded to 3.1 or 3.2, in a lot of cases it was just a
one or two-page supplement that referenced back to the original
3.0. And in that original 3.0, I think you'll find that there are
prior products listed.
THE COURT: Pick a good breaking point, Mr. Melaugh.
MR. MELAUGH: Your Honor, I think I have no more
questions. I think I can end now.
THE COURT: Are you done with this witness?
MR. MELAUGH: I'm done with this witness.
THE COURT: Then let's take a break. We'll be in recess
for about 15 minutes.
THE WITNESS: Is that it?
THE COURT: He might have some redirect.
(Short recess)
502
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 May 1, 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 420
through 499 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 May 1, 2008.
_______________________________
REBECCA JANKE, CSR, RPR, RMR
THE COURT: Do we have a witness? You can resume the stand.
And you may proceed with redirect, Mr. Normand.
MR. NORMAND: Thank you, Your Honor.
REDIRECT EXAMINATION BY MR. NORMAND:
Q. Mr. Broderick, you've been asked by both counsel and
myself about the Unisys ClearPath situation. Do you recall those
questions?
A. Yes, sir.
Q. If the ClearPath computer contained only the CPUs that
worked with UnixWare on the one hand and with the Unisys
proprietary product on the other hand, would you have remitted any
money to Novell?
A. No. I wouldn't have told them about it.
Q. Why not?
A. Because UnixWare was owned by SCO, and the APA was
very clear that UnixWare money went to SCO.
THE COURT: Put the mike up and speak right into it.
THE WITNESS: I'm sorry.
Q. BY MR. NORMAND: You looked at the Supplement Number
for the NCR license, I think it was 112. Do you recall that?
A. Yes.
503
Q. I take it that every licensee at some point had to
execute a Supplement 1; is that fair to say?
A. Correct.
Q. Now in those instances of UnixWare licensees who
executed a Supplement 1, was there a list of prior products in that
supplement?
A. Absolutely.
Q. And what were the two examples that we spoke about
earlier of that, that you can recall?
A. I had two examples. One was Super Computer
International, and one was Lexis Software Corporation. They license
UnixWare 2.0 licenses with Novell. And the UnixWare license was
Supplement Number 1. They had not licensed anything previously.
Q. Mr. Broderick, this is the Unisys UnixWare 2.0 license
represented on the right. Do you recall going through this?
A. Yes.
Q. Now, to your understanding, was any of this System V
material included in the UnixWare source code at the time of this
license?
A. At the time we developed the UnixWare 2.0 source code
product?
Q. At the time the Unisys UnixWare 2.0 license was
executed, did you have an understanding as to whether this
504
UnixWare source code included source code from these prior
releases?
A. Source code from the prior releases, if it had any
commercial usability or value would have continued forward into
UnixWare. Each release is built on a previous release. And what
they do is, say you're at 4.2 MP, you add new functionality to it.
You may make some modifications, but you're adding new
functionality to support market needs. That new functionality that
was put in the 4.2 MP became UnixWare 2.0. And 4.2 MP has
functionality from 4.0 conceivably to 3.0. If there is any
commercial usability to it, it's carried forward.
Q. Now, at this point, the time of this license, did
Unisys have an existing UNIX license?
A. Yes.
Q. And do you know whether they had an existing operating
system that was derived from their previous UNIX licenses?
A. If they had -- well, Unisys had a derivative work that
was based on UNIX System V Release 4 MP.
Q. Was that your understanding?
A. That's a fact.
Q. As to that operating system under this UnixWare 2.0
license, was Unisys entitled to use any part of these prior
products in building that derivative work?
505
A. For --
THE COURT REPORTER: I'm sorry?
THE WITNESS: I'm clearing up the question.
Q. MR. NORMAND: For Unisys' existing UNIX derivative
operating system --
A. Yes.
Q. -- once Unisys acquired this UnixWare license, were
they entitled to use any material they wanted from this System V
releases in that existing operating system?
A. Yes. They just had to treat it as UnixWare 2.0 and pay
the royalties based on the 2.0 license.
Q. Was there any scenario in a case of a UnixWare
licensee like Unisys in which they would be paying royalties based
on the System V products?
A. Not solely based on the fact that they're listed as a
prior product and they have access to them. They would pay
royalties if they had executed a separate supplement for that
specific release of UNIX.
Q. If you had a licensee who had never before been a UNIX
licensee, brand-new, UnixWare licensee of the sort that we
discussed earlier, for simplicity, let's pick a name, Super
Computer, was that a UnixWare 2.0 licensee?
A. Yes.
Q. Is there any scenario in which Super Computer would be
paying System V royalties based on the list of System V
506
products with its UnixWare license?
A. Absolutely not. It's very clear in the prior products
section that says you can access these prior products pending any
code you might use has to be treated as though it's UnixWare. So
no. If you access prior products under UNIX -- for 2.0 schedule,
it's 2.0.
Q. In the case of Super Computer, first-time UnixWare
licensee --
A. Uh-huh (affirmative).
Q. -- to your understanding, was there System V material
in its UnixWare source code that it had a license?
A. Well, yes. UnixWare is a System V product. It's just a
brand naming. So -- and it's built on prior releases of UNIX System
V. So UnixWare clearly has System V coding.
Q. And under its license, it can use System V technology
consistent with its rights to use UnixWare; is that fair to
say?
A. Absolutely.
MR. NORMAND: Thank you, Your Honor.
THE COURT: Thank you, Mr. Normand.
Any re-cross, Mr. Malaugh?
MR. MALAUGH: Yes, Your Honor.
RECROSS-EXAMINATION BY MR. MALAUGH:
Q. When you and I were looking at that NCR supplement
507
and I asked you whether that supplemental loan, it was a 2.1
supplement, gave NCR the right to make derivative works from the
prior products listed, I think your answer was no; isn't that
right?
A. As a standalone derivative work, my answer is no.
Q. Is that answer also true -- and isn't that answer also
true if it had been Supplement 1?
A. That's correct. They can access the code, but it has
to be treated as though it would be a UnixWare 2.0 product.
Q. And they don't have the right to make derivative works
and distribute derivative works as standalone products for products
listed in the prior products list of that Supplement 1?
A. Well, it's kind of hypothetical. If somebody took a
2.0 license and they accessed the prior products, and they built a
derivative by accessing the prior products on a UnixWare license,
then they could distribute derivative work, but they would pay off
a UnixWare -- they would pay off of the UnixWare license.
Q. I thought you had said that the prior products license
did not convey the right to make a derivative work of those
products.
A. That's true. But it's -- it doesn't grant rights to
create a derivative work, like UNIX -- you have UNIX
508
System V 3.2 listed as prior products.
Q. Uh-huh (affirmative).
A. You can't access that from a -- say you get from a
licensee that has a SCO license created derivative work on that 3.2
and distribute that derivative work as a 3.2 license.
Q. And that's true regardless of whether it's Supplement
112 or Supplement 1.
A. That's correct.
Q. You've answered my question. Thank you very much.
THE COURT: Thank you.
Anything else, Mr. Normand?
MR. NORMAND: No, Your Honor.
THE COURT: Thank you. You may stand down, Mr. Broderick.
I assume this witness may be excused.
MR. NORMAND: Yes, sir.
THE COURT: And you may call your next witness.
MR. GONZALES: Your Honor, SCO calls Jean Acheson.
THE COURT: You are Mr. Cyrulnik; is that correct?
MR. GONZALES: No. I wish I were. I'm Mr. Gonzalez. Mr. Cyrulnik
is a few years younger than I am.
THE COURT: All right. Thank you.
MR. GONZALEZ: May I approach, Your Honor?
THE COURT: Yes. Thank you.
509
Come forward and be sworn, please, right here in front of the
clerk of court.
Do we need these posters up still?
MR. GONZALEZ: No. I'll take them down.
THE CLERK: Please raise your right hand.
JEAN ACHESON,
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 over
there.
THE WITNESS: Thank you.
THE CLERK: Please state your name and spell it for the
record.
THE WITNESS: My name is Jean Acheson. That's spelled
J-E-A-N A-C-H-E-S-O-N.
THE CLERK: Thank you.
DIRECT EXAMINATION BY MR. GONZALEZ:
Q. Good morning, Ms. Acheson.
A. Hello.
Q. What is your current occupation?
A. I'm the controller at SCO.
Q. And when did you began?
510
THE COURT: Excuse me. Pull the mike down a little and speak
right into it. Thank you.
THE WITNESS: Okay.
Q. BY MR. Gonzalez: When did your tenure as controller
begin?
A. Last September.
Q. And in that role, do you have responsibilities that
are related to UNIX revenues?
A. Well, all of the financial functions report into me
including the recording of the UNIX revenues.
Q. And have you had prior experience related to UNIX --
the UNIX licensing business and its revenues?
A. Yes. I started back with AT&T UNIX Systems
Laboratories '90, '91. Basically at that point I started in the
accounts payable and moved over into the revenue as a contract
administrator working for Carolyn Kachinsky in UNIX Systems
Laboratories. And there I processed the OEM and other company
quarterly reports for the SVR binary royalties.
Q. And did you then leave USL?
A. Well, not really, because Novell purchased USL, and I
continued in the same function with Novell. And then later when
Santa Cruz Operations was purchasing the product line from Novell,
my boss at that time Carolyn Kachinsky moved into another position
at Novell, and I took over management for the binary royalties. And
then with Santa Cruz Operation, I
511
continued as the manager of the binary royalties taking on all
the binary royalties for the company, whether it was the SVRX,
UnixWare, OpenServer or other products. And later making the
worldwide revenue manager for Santa Cruz and then moved into that
that same position when Caldera later known as SCO purchased the
UNIX product line, as well.
Q. Thank you. Is it fair to say, therefore, that since
1991 when you started at USL you have been continually involved
with tracking and reporting of UNIX revenue?
A. Yes.
Q. And within those functions, did you come to be
involved with the reporting and tracking of what are known as SVRX
royalties under the agreement between Novell and Santa Cruz in
'95?
A. Yes.
Q. And what function did you play with respect to those
royalties?
A. Well, either myself directly or my direct report would
review the quarterly royalty reports that were sent in by the OEMs
and the other customers. We would review them for correctness under
the various product schedules to make sure they were calculating
correctly, you know, just adding and subtracting correctly. We
would record these revenues, well, not as revenue, to SCO or to
Santa Cruz or to SCO, but we would record the transactions. We
would segregate the cash,
512
and then on a monthly basis prepare a report that we would give
to Novell for the cash from the preceding month.
Q. And did you continue performing those functions once
you moved over to Caldera SCO?
A. Yes.
Q. So again, it's fair to say that with respect to SVRX
royalties, you had been on the front line of tracking and reporting
and remitting those royalties?
A. Yes.
Q. And what exactly -- what is your understanding of what
these SVRX royalties are?
A. Basically as identified in the APA, you know, as SVRX
royalties it's various products where the revenue stream was, you
know, maintained administratively by Santa Cruz for Novell.
Q. And that administration has continued with SCO?
A. Yes.
Q. And are you aware of any interest under the APA that
Novell had with respect to UnixWare royalties?
A. Novell didn't have any interest in UnixWare under the
APA.
Q. Was there a section of the APA that provided for any
interest that Novell would have in UnixWare royalties if certain
benchmarks were reached?
A. Yes, that's correct. The APA provided that if
513
Santa Cruz reached in their total UnixWare sales more than 40
percent of projections that were laid out in the APA, then Santa
Cruz would have had to have paid an additional fee, royalty fee to
Novell for the UnixWare product line. These benchmarks were never
reached, and that calculation ended in 2002.
Q. By that, do you mean that Novell's interest expired in
2002?
A. Yes.
Q. And in your work with -- in your work in the UNIX
business that you were describing, did you become familiar with the
licenses that generated the UNIX revenues that you tracked?
A. Yes. We had to review them from the financial
viewpoint.
Q. And please describe the licenses under which licensees
paid these SVRX royalties that you've been talking about.
A. Well, basically it was a product schedule that
described, you know, from the technical view point it described a
lot about the product and the licensee's rights for the product.
And then it also -- the section I was more interested and concerned
with was how to calculate the royalties and when royalties were
due.
Q. Going back to your earlier testimony about the
514
interest that Novell had with respect to UnixWare royalties that
expired in 2002, did you have a shorthand name for that
interest?
A. Yeah. We called it the 40-percent calculation.
Q. So going back to the line of questioning on which we
were, were the licenses that you were describing that are
identified under the APA that generated SVRX royalties, were those
for a particular release of a System V product?
A. Well, each product schedule was for a release. So you
would have -- you know, a customer would purchase licensing rights
for SVRX or System V Release 3.2 or System V Release 4.0, et
cetera.
Q. Are you familiar -- having seen and worked with these
UNIX licenses, are you familiar with the concept of prior products
under these licenses?
A. Yes. I've seen that.
Q. And can you describe for us your understanding of what
prior products are?
A. Usually when licensee would sign up for the next --
for a release of a product, it would include, there was usually a
section in it, a schedule that would list all of the prior releases
or most of the prior releases of the predecessor products. So if
they were taking System V Release 4.0, it would give them rights to
3.2, 3.0, 2, et cetera.
515
Q. Now, you've just testified that you work for SCO's
predecessors. In the UNIX licensing business; correct?
A. Yes.
Q. Which of the companies that you worked for in the UNIX
business before SCO include prior products in their UNIX
licenses?
A. UNIX -- well, AT&T because we inherited the
agreements from them, UNIX System Laboratories, Novell and Santa
Cruz.
Q. Did any of those companies charge a separate
additional fee for the prior products?
A. No.
Q. So the licensee only paid royalties on the current
Release V license?
A. Yes.
Q. Do you know of any instance in which a licensee paid a
separate fee for the prior products?
A. No, not under the schedule.
Q. And that would be true for any of the companies that
you have worked for before SCO?
A. That is correct.
Q. Ms. Acheson, did you play any role in the transition
of the UNIX business from Novell to Santa Cruz?
A. Yes.
Q. And what role did you play?
516
A. Well, basically I was on various committees with
Novell and Santa Cruz personnel to, you know, discuss the various
clauses of the APA and, you know, how to execute the transition
smoothly between the two companies. My major focus, especially
later on in the transition, was on how to report and how to
administer the SVRX administration arrangement under the APA with
Novell.
Q. And during this period of transition of business, how
often did you have an opportunity to meet with Novell on the issues
that you are describing?
A. Well, first, of course, the meetings were almost
daily, and later on, especially around the reporting, it was
probably more on a monthly basis with the reports. And then, of
course, telephone conversations in-between if we had questions on
other things for the transition.
Q. I'd like to now show you what has been admitted as SCO
Exhibit 331. And can you tell us what that document is?
A. Well, it's the cover sheet of a report that we would
have sent to Novell for the January -- for the cash collected
during January of 1997.
Q. And can you briefly walk us through some of the major
items there on that chart?
A. Well, basically we're stating that there was -- that
adjusted revenue was approximately -- sorry. It's pretty blurry. I
think it's 5.6 million. And that after the
517
administrative fees and other royalties are deducted, that the
total payment due to Novell for the period is 4.5 or 6 million.
Q. And if you turn the pages, what do the underlying
documents reflect?
A. Well, you know, sometimes our licensees aren't the
quickest on remembering who to pay what. And so consequently, we
sometimes -- the licensees would direct the cash to the wrong
company. So that next page was just returning cash to Novell that
belonged to Novell directly.
Q. And the next two pages, what do they reflect, the
spreadsheet?
A. That page is simply just the detail of the fees that
we administered under the agreement for the month of January.
Q. How was the form at of this report developed?
A. During the transition, Cindy Lamont, who had worked
for me in Novell as a contract administrator, and -- or I'm sorry.
Cindy Lamont was a contract manager and Barbara Cavalla, who was
the contract administrator, they remained with Novell. And what
happened is for the first time that we needed to do a report for
them, I sat down and figured out a format that looked right. And
then we reviewed it in light of the clauses within the APA.
Q. Do you have a view as to how familiar Ms. Lamont
518
and Ms. Cavalla were with the UNIX business?
A. Well, quite familiar, because Cindy Lamont was a
contract manager. She had worked on developing many of the
schedules and the agreements and had worked with the negotiations
with the OEMs and other customers on these. And Barbara Cavalla had
worked directly for me as a contract administrator actually
reviewing many of the quarterly reports.
Q. So if I understand correctly, these representatives of
Novell that you were meeting with were the colleagues who just a
few days before you had worked with intimately within the Novell
business?
A. That is correct.
Q. So the meetings with Novell developed the report that
we are looking at. Did Novell at any time say that you would be
reporting UnixWare royalties?
A. In this report? No.
Q. Or in any report?
A. No. None.
Q. Did Novell say to you that would you be reporting
royalties for any prior products listed in a UNIX license?
A. No.
Q. Did the reports that you, in fact, sent Novell every
month after that point in time ever contain any information about
royalties paid under UnixWare licenses?
519
A. No.
Q. After the transition period ended, did you have
further interactions with Novell representatives?
A. Yes. Each month as we sent this report in, you know,
they would call to discuss it. If they had questions about certain
of the revenues because, as I stated, Barb and Cindy were pretty
familiar with the OEMs and knew how to ask the various questions in
regards to it.
Q. I'd like to now show you what has been admitted as SCO
Exhibit 98. And this is a letter that you wrote to Cindy Lamont of
Novell whom you've testified about.
A. Uh-huh (affirmative).
Q. And as you can see, it's dated April 26, 1996.
A. Uh-huh (affirmative).
Q. And can you tell us who the people copied on this
e-mail?
A. Basically those were my co-workers at SCO. So T. Dulin
was my boss, Terry Dulin, Kathy Sensor was one of my contract
administrators. Burt Lavine was an attorney who had come from
AT&T and through Novell and out to Santa Cruz Operations.
Q. And if you look at the very last paragraph where if
says:
We have given the pertinent Cray letter
agreements to Burt.
520
Who is Burt?
A. That was the Burt Lavine.
Q. So that was the same person that is copied on this
e-mail?
A. That is correct.
Q. And if you can focus on the subject matter, you see
that it says "Cray source"; right?
A. That's correct.
Q. Can you briefly describe what the issue that you were
discussing with Ms. Lamont on this issue of Cray source?
A. Yeah. Cray had been given a special right to actually
distribute source code. And during the review of one of the monthly
reports, I believe it was Barbara Cavalla brought up because she
was -- you know, knew the details of the Cray reporting, that Cray
had reported source code. And since it was a reporting, she thought
that possibly those revenues would belong to Novell. I disagreed,
and this was why I disagreed. This was my argument for it.
Q. So is it fair to say that you are setting forth the
issue of the question in the first couple lines where you say:
Dear Cindy, we have looked in the ownership of
the revenues generated by Cray Research, Inc.'s
right to distribute source code products.
A. Yes.
Q. And then later on I believe you're expressing a
521
position that Santa Cruz came to with respect to those source
code sublicenses fees where you state:
SCO has a right to retain 100 percent of
the revenue.
A. That's correct.
Q. And there's a last paragraph where it says:
We have been given the pertinent Cray letter
agreement to Burt -- I'm sorry -- we have given
the pertinent Cray letter agreements to Burt, and
it is his opinion that these source revenues do
belong in full to SCO.
Do you see that?
A. Yes.
MR. MALAUGH: Objection, Your Honor. I think this is a leading
line of questioning.
MR. GONZALEZ: I'm asking about the document. I can ask her what
it says. It makes it more efficient.
THE COURT: Overruled. Go ahead.
Q. BY MR. Gonzalez: So you do see that language;
right?
A. Yes.
Q. And do you understand that to mean that you had
consulted with Mr. Lavine on this issue, and you were copying him
so that he would be aware of your communications with Novell on the
issue?
522
A. Yes.
Q. And what was Novell's response to the position that
Santa Cruz had taken with respect to Cray's source of licensing
fees?
A. After their review, they agreed.
Q. And I'd like to now show you what has been marked as
Exhibit 126.
THE COURT: SCO 126; right?
MR. GONZALEZ: Pardon me?
THE COURT: SCO 126.
MR. GONZALEZ: I'm sorry. SCO Exhibit 126.
Q. BY MR. Gonzalez: Is this an e-mail in which Novell
communicated to you its position?
A. Yes. They actually sent it to my boss, Terry
Dulin.
Q. And this is dated a few months later in August of
1996; correct?
A. Yes.
Q. So this is actually an e-mail that Terry Dulin, your
boss, sent to you?
A. Right. Forwarded it to me from Cindy Lamont.
Q. What was she forwarding to you?
A. Basically stating that Cindy stated that Novell agreed
that the source code fee paid by Cray did belong to Santa Cruz.
523
Q. And would that language be reflected where it
says:
This is to let you know -- Terry, this is to
let you know that Novell agrees that the fees that
Cray pays pertaining to their source sublicensing
provisions -- and we can skip down a little bit --
can be retained by SCO as a source code right to
use fee under Amendment Number 1 of the APA.
A. That's correct.
Q. Is that the position that Novell took, as you
understood it?
A. Yes.
Q. And we can go back to the prior exhibit, I believe it
was SCO Exhibit 98. In the second paragraph, do you see a reference
there to the Novell SCO agreement, section E?
A. Yes.
Q. Do you see that? Is that a reference to Amendment
Number 1?
A. I believe it is.
Q. And that's why Ms. Cindy Lamont communicated and
relied on the same position in her response?
A. Yes.
Q. Thank you.
Did Cray pay these sublicensing source fees to Novell before the
APA?
A. Oh, yes.
524
Q. Why do you say "oh, yes"?
A. Because it's been a relationship that's been going --
went way back into the AT&T premie.
Q. Were the fees substantial?
A. It was a few 100,000 a year, at least afterwards. I
think it had been more substantial back in the AT&T days.
Q. Did Cray continue to pay these source sublicensing
fees to Santa Cruz?
A. Yes.
Q. And for how long did that occur?
A. I believe for several years thereafter. They would
still be obligated to pay today if they had the situation
arise.
Q. We can briefly go back to Exhibit, SCO Exhibit 126. I
meant to highlight for you in Ms. Lamont's e-mail to your boss
Terry Dulin, a Michael Gennaro was copied in that e-mail;
correct?
A. Yes.
Q. Who was Michael Gennaro?
A. He was the controller of Novell at that time.
Q. So Ms. Lamont was conveying Novell's position and
making Mr. Gennaro aware of the position they had taken; right?
A. Yes.
Q. So going back to the history of Cray paying the
525
source sublicensing fees, you said he continued to pay Santa
Cruz a few years after the APA; correct?
A. Correct.
Q. Did I understand that correctly?
A. Yes.
Q. Did Novell ever ask later on for those fees?
A. No.
Q. Did Novell ever deviate from the position it took in
its 1996 e-mail that I've just shown you?
A. No.
Q. Did SCO or Santa Cruz, in fact, remit such
sublicensing fees to Novell at any time?
A. No.
Q. Do you recall we were talking about prior products a
little bit earlier?
A. Yes.
Q. What versions of UNIX did Novell license when it was
the owner of the UNIX product line?
A. Well, there was what we classified as the SVRX
products, which went up through, I think like Release 4.2 MP. And
then there was in what was classified as UnixWare, UnixWare 1.1 and
2.0.
Q. Did Novell's UnixWare licenses include the list of
prior products?
A. Yes.
526
Q. Did those prior products include SVRX products that
are identified under the APA?
A. Yes.
Q. Let me show you now what has been marked as SCO
Exhibit 27. And as you can see, this is a license between AT&T
GIS and Novell executed July 1995. Do you recognize the signature
of the person who signed this at the bottom for Novell?
A. Russ Holt.
Q. Are we looking at the same thing?
A. For Novell. I'm sorry. Bill Broderick. For AT&T is
Russ Holt.
Q. And what do you understand this document to be?
A. This was a licensing form that when both parties had
signed gave AT&T the right to use the UnixWare Release 1.1.
Q. And if you turn to the next page, I take it this is a
table of contents for what the schedule includes?
A. Correct.
Q. And where do we find the prior products?
A. It's in Exhibit J, prior products, Page 27.
Q. And again, this was a license granted by Novell in
1995 for UnixWare 1.1; correct?
A. Yes.
Q. So we look at Exhibit J on Page 27. Is that the
527
list of prior products that you've been testifying about?
A. Yes, it is.
Q. Did Novell charge an separate fee for the prior
products?
A. No, they did not.
Q. How did you book the revenues from Novell's UnixWare
licenses?
A. As UnixWare and then whatever the release was. So in
this case, it would have been booked as UnixWare 1.1 or UW 1.1.
Q. Did you book any part of the revenue from UnixWare
licenses at Novell as SVRX revenue to account for the prior
products?
A. No.
Q. To your knowledge, did anyone at Novell do that?
A. No.
Q. Did Santa Cruz later release its own versions of
UnixWare?
A. Yes.
Q. And do you recall what those versions were?
A. I believe it was the UnixWare 2.1 and then all of the
UnixWare 7 family.
Q. So let me show you what has been marked as SCO Exhibit
371. And you see about three quarters of the way down where it
says, UnixWare 2.1 technology?
528
A. Yes.
Q. So what is this document?
A. It's also a licensing order form executed giving
Unisys the right to UnixWare 2.1 technology.
Q. Who are the parties of this license?
A. Unisys as the customer and Santa Cruz Operation.
Q. And do you see on the next page that there's also a
list of prior products?
A. Yes.
Q. At least an item for that identifying --
A. Yes.
Q. -- a page where the prior products are listed?
A. Yes. Exhibit I, Page 24.
Q. Turn to that, Exhibit I. Do you see the list of prior
products that you've been testifying about?
A. Yes.
Q. And did you book royalties under licenses for UnixWare
that Santa Cruz granted as UnixWare revenues?
A. Yes.
Q. Did you ever seek to break out those revenues as
UnixWare and prior products in any way?
A. No.
Q. Did Novell transfer its UnixWare licenses to Santa
Cruz?
A. Yes.
529
Q. Did Santa Cruz continue receiving royalties paid under
those licenses?
A. Yes.
Q. Did Santa Cruz remit any of those royalties to
Novell?
A. No.
Q. Did Santa Cruz remit to Novell any royalties for prior
products?
A. No.
Q. Did Santa Cruz remit any royalties paid under its own
UnixWare licenses to Novell?
A. No.
Q. Did Santa Cruz ever remit to Novell royalties for the
prior products in its UnixWare licenses?
A. No.
Q. Did Santa Cruz transfer its own and Novell's UnixWare
licenses to SCO in 2001?
A. Yes.
Q. Did SCO continue receiving royalties under those
UnixWare licenses?
A. Yes.
Q. Did SCO remit those royalties to Novell?
A. No.
Q. Ms. Acheson, have you had experience with audits?
A. Yes.
530
Q. How deep is your experience with audits?
A. Well, as a finance person in public companies, of
course, we have quarterly audits and the annual, you know, major
audit. Additionally, in a revenue group where we deal with binary
royalties, we had an audit group that audited many of our customers
or we worked through independent CPA firms to audit customers.
Additionally, we have been audited by companies who have granted us
licensing rates, such as Microsoft and Mrs. Novell audited us
twice.
Q. Did Novel audit the administration of the SVRX
royalties?
A. Yes.
Q. When did that take place?
A. One time in 1998 and then again in 2003.
Q. Who was audited in 1998?
A. It would have been Santa Cruz Operation in '98.
Q. What role did you play in the 1998 audit?
A. Well, my boss Terry Dulin at that time did the
majority of the negotiation of the auditors for timing and scope. I
worked with them as far as supplying the information and data to
them that they required.
Q. And based on your experience with auditing, how
thorough and detailed do you think Novell's auditors were in that
1998 audit?
A. They were extremely detailed.
531
Q. Did Novell's auditors ask Santa Cruz for any
information or documents regarding SVRX licenses or royalties?
A. No; except for the 40-percent calculation which they
reviewed with my boss Terry Dulin.
Q. With that exception aside, did they ask for any
information about anything regarding royalties or licenses?
A. No, they did not.
Q. Did Novell at that audit request Santa Cruz to pay
UNIX for royalties?
A. No.
Q. Under UnixWare licenses?
A. No, they did not.
Q. Did Novell request any share of those royalties for
the prior products that were listed in the UnixWare licenses?
A. No, they did not.
Q. What role did you play in the 2003 audit of SCO -- I'm
sorry. Was SCO audited later, you said?
A. Yes, it was SCO.
Q. In 2003; right?
A. Correct.
Q. What role did you play in that audit?
A. By that time, I had the direct negotiations with the
auditors, and, you know, working with -- my contract administrator
supplied them with the details that they required under the
audit.
532
Q. Did Novell's auditors ask SCO for any information
about Novell's or Santa Cruz' UnixWare licenses?
A. No, not from those.
Q. The licenses of those companies have executed?
A. No.
Q. As part of the audit did Novell request payment for
royalties from those licenses?
A. No, they did not.
Q. Did Novell request any share of those royalties for
the prior products listed in the UnixWare licenses?
A. No.
Q. To the best of your knowledge, Ms. Acheson, did Novell
ever ask to assign any value to the prior products in UnixWare
licenses and pay Novell for the licensing of those products?
A. No, they didn't.
Q. To the best of your knowledge, did Novell ask the same
thing of SCO? I meant to say Santa Cruz before. But I guess your
answer applies to both Santa Cruz and SCO?
A. Well, with one exception.
Q. What --
A. No. They only asked auditing for the Sun and Microsoft
agreement.
Q. And no new information about UnixWare licenses granted
by Novell or Santa Cruz?
533
A. No.
Q. Do you recall a licensee called Unisys?
A. Yes.
Q. And so let me show you what has been marked as SCO
Exhibit 370.
And it's been admitted, Your Honor.
If you look at the second page, correct me if I'm wrong, but I
think I understand this to be a Unisys 2.0 license executed in 1995
between Unisys and Novell. Do you read that document to be
that?
A. Yes.
Q. And if you look at Paragraph -- Page 26 we find a list
of prior products; is that correct? On Page 26?
A. Yes.
Q. Was this license transferred to Santa Cruz for the
sale of the UNIX assets?
A. Yes, it was.
Q. Did Santa Cruz receive royalties from Unisys under
this particular license?
A. Yes, we did.
Q. Let me show you, then, what has been marked Exhibit
387, SCO Exhibit 387. And this document was produced by Novell in
this litigation. Can you, please, briefly describe or explain what
this report reflects.
A. Basically it's one of the pages of the quarterly
534
reports submitted by Unisys to document the payment of their
various royalties under their various products schedules. What
they're doing on this report is they are summarizing for about nine
quarters the gross amounts due for both UnixWare 2.0 and the SVRX 4
product. The net amount due after discount is taken on the third
matrix down basically shows the geographic breakout of the UnixWare
sales activity, and the fourth segment of the report shows how they
calculated their discount.
Q. And how often did Santa Cruz receive this report?
A. Quarterly.
Q. Did Novell receive this report?
A. Yes.
Q. When it was the owner of the UNIX business?
A. Well, yes. When it was the owner, yes.
Q. And if I wanted to focus on the royalties that Unisys
was paying on their 2.0 license from Novell that we just saw, where
would I look within these tables?
A. The third table down would probably be the easiest.
It's basically breaking out the UnixWare 2.0 binary royalty fees by
geographic region, and the second column is the total. The other
columns are just the regions within Unisys.
Q. So if I look, for example, at the very last item, it
says first Q '99, how much did Unisys report and pay to Santa Cruz
under the 2.0 license?
535
A. $152,966.
Q. Do you know how Novell came into possession of this
document?
A. More than likely through their audits of us.
Q. Did Novell at any time ask for the royalties that
Santa Cruz was collecting under the 2.0 license between Unisys and
Novell?
A. No.
Q. Did Novell ever ask for a share of those royalties
corresponding to the prior products?
A. No.
Q. Did Novell ask for any royalties under this license
even in its 2003 audit?
A. No, they did not.
Q. Just a couple of discrete questions, and we're
done.
Ms. Acheson, are you familiar with OpenServer?
A. Yes.
Q. What is OpenServer?
A. OpenServer is, well, Santa Cruz Operation's flavor of
UNIX.
Q. And is that a SCO product?
A. Now it is, yes.
Q. And how do SCO's UnixWare royalties currently compare
with SCO's OpenServer -- I'm sorry. How does SCO's
536
UnixWare revenues currently compare with SCO's OpenServer
revenues?
A. I believe in 2007, it was about 70-percent OpenServer
and 30-percent UnixWare.
Q. And how did those revenues compare in 2002?
A. At that point it was about two-thirds OpenServer and
one-third UnixWare.
MR. GONZALEZ: Nothing further. Thank you.
THE COURT: Thank you, Mr. Gonzalez.
Mr. Malaugh, you may cross-examine.
MR. MALAUGH: Thank you, Your Honor.
If I may approach?
THE COURT: Yes.
MR. MALAUGH: It's the list of exhibits that we may be using
during cross-examination.
CROSS-EXAMINATION BY MR. MALAUGH:
Q. Good morning, Ms. Acheson.
A. Hello.
MR. MALAUGH: If I may approach the witness, Your Honor.
THE COURT: You may.
Q. BY MR. MALAUGH: Ms. Acheson, I'm showing you what's
been pre-marked as Novell Exhibit 187. It's been admitted. Do you
recognize this document? This is the
537
agreement --
A. Yes.
Q. -- with Sun SCO entered into in 2003; is that
correct?
A. Yes.
Q. If I can ask you to turn to Attachment 1 of that
document. And the second page. This is SCO 1287219.
You see there's a list of SVRX versions here and then OpenUNIX 8
release. Do you see where I'm pointing to?
A. Yes.
Q. And my first question is about the first version
listed here System V 4.1 ES/3B2. In the ordinary practice of
royalty remission, was this one of the SVRX versions that SCO was
under an obligation to remit royalties as to?
A. When it was separately licensed by the licensee,
yes.
Q. And the same is true of the next version listed here,
4.1 C2/3B2?
A. Yes.
Q. And same is true of the next three lines, in fact, 4.1
ES, 4.2 and 4.2 MP?
A. Well, as long as it was the standalone version, not --
not that which was included in UnixWare.
MR. MALAUGH: If I may approach.
Q. BY MR. MALAUGH: I'm showing you what's been marked
538
as SCO Exhibit 141. I think you may have actually seen this
during your direct testimony. This is a license supplement with
NCR. I'm sorry. SCO Exhibit 141. This is a license supplement with
NCR; is that right?
A. Yes.
Q. And it's listed as Supplement 112?
A. That is correct.
Q. And it's signed by Mr. Bill Broderick of the Santa
Cruz Operation?
A. That is correct.
Q. Let's turn to the prior products listing that we've
heard some testimony on today. I believe it is Exhibit I in this
document. It's on SCO 9776.
Now, I take it, it's your testimony and it's SCO's position that
once NCR had entered into this UnixWare 2.1 supplement with Santa
Cruz, Santa Cruz was non-obligated to pass along royalties on
account of these prior products listed in Exhibit I?
A. That's correct. NCR was purchasing UnixWare 2.1.
Q. So if we were to look at the royalty reports that
Santa Cruz was issuing and you've testified about --
A. Uh-huh (affirmative).
Q. -- we shouldn't see any royalties for the versions
listed here being remitted from Santa Cruz to Novell?
A. As long as it was -- as long as they were
reporting
539
under the UnixWare schedule we would not have.
Q. I'm not sure what you mean by that. So if NCR is out
there using its System V Release 3.2 rights, is it SCO -- and
paying money for using those rights, is it SCO's position that
because of this supplement SCO doesn't have to pay any money to
Novell?
A. Okay. No, that's not correct. Basically the customers
paid under the product schedule of which their software release
was. So if NCR had an older, it's just like if you have Windows,
you know, one of the older releases of Windows versus a later or
Vista, it's two separate products. So, too, would NCR. They would
have an older release. And if that was under the standalone
schedule for 3.2, then they would pay royalties under that
schedule. However, if they upgraded their product to the UnixWare
2.0, then their new releases they would pay under the UnixWare of
2.30.
However, customers still use the old products. They want
upgrades. They want new installation, so they would continue paying
under the 3.2. If that case happened, you know, we would record the
3.2 as SVRX 3.2 and the UnixWare 2.0 as UnixWare 2.0.
Q. So let me see if I understand your testimony, thank
you. If NCR is out there, it's got derivative work. It's made some
changes to the source code, and the source code is a derivative of
it is 3.2 that we've been discussing. And it's
540
distributing that derivative work, the money for all of that is
still Novell's despite the fact that there's this new supplement
for 2.1.
A. Right. As long as they were distributing under that
original product supplement for 3.2.
Q. And that's the case despite the fact that they've got
this list of prior products rights in Supplement 112?
A. Yes.
Q. In fact, if we look at SCO Exhibit 387, which was one
of the last exhibits you testified about.
A. Uh-huh (affirmative).
Q. This was the Unisys reporting history. We see a
significant amount of money that's coming in for SVR4. There's some
entries at the top, and there's some entries down at the bottom.
Those all fees that SCO is continuing to remit to Novell; is that
right?
A. Yes.
MR. MALAUGH: I have no further questions of this witness.
THE COURT: Thank you, Mr. Malaugh.
Mr. Gonzalez, any redirect?
MR. GONZALEZ: Yes. I have brief redirect, Your Honor. // //
541
REDIRECT EXAMINATION BY MR. GONZALEZ:
Q. Ms. Acheson, Mr. Malaugh just asked you about a
scenario in which a licensee took out, for example, a UnixWare
license, and at the same time had a derivative product based on an
earlier license, for example, for System V Release 3.2. Do you
recall that discussion with Mr. Malaugh?
A. Yes.
Q. And when you said the licensee would report under the
newer license for that product and then you pointed out it would
report royalties for the earlier license, the 3.2 license, are you
referring to source code fees or binary fees?
A. Binary fees.
Q. And so when the licensee who took out the later
license pay any source code fees for the prior products listed in
that license?
A. Well, they were buying the UnixWare what -- they're
buying whatever the latest and greatest version is in that product
schedule.
Q. And they would pay the source code fees for what?
A. For whatever that product was. So if the product
schedule is UnixWare 2.30, then they would be purchasing UnixWare
2.30.
Q. And they would pay the fees just for that later
release?
542
A. Correct.
Q. And just to be clear, there would not be any fees for
the prior products?
A. No.
MR. GONZALEZ: That's all, Your Honor.
THE COURT: Thank you.
Any recross?
MR. MALAUGH: No, Your Honor.
THE COURT: You may step down.
I assume this witness may be excused?
MR. MALAUGH: Yes.
MR. GONZALEZ: Yes, Your Honor.
THE COURT: You may call your next witness.
MR. NORMAND: Jeff Hunsaker, Your Honor.
MR. SINGER: Your Honor, we're going to have another one of our
attorneys put on Mr. Hunsaker. His name is Jason Cyrulnik, and
he'll be with the witness in a moment.
THE COURT: All right.
Come forward and be sworn, please, right here in front of the
clerk of court.
THE CLERK: Just right up here. Please raise your right hand.
JEFF HUNSAKER,
called as a witness at the request of SCO Group,
having been first duly sworn, was examined
543
and testified as follows:
THE WITNESS: I do.
THE CLERK: Thank you. Please take the witness stand over
there.
MR. CYRULNIK: Good morning, Mr. Hunsaker.
THE COURT: Hang on just a minute.
THE CLERK: Please state your name and spell it for the
record.
THE WITNESS: Jeff Hunsaker. J-E-F-F H-U-N-S-A-K-E-R.
THE COURT: You may proceed.
MR. CYRULNIK: Thank you, Your Honor.
DIRECT EXAMINATION BY MR. CYRULNIK:
Q. Mr. Hunsaker, are you currently employed?
A. Yes.
Q. And what is your current employment?
A. I work for the SCO Group. My title is president and
chief operating officer of SCO Operations.
Q. And what is the relationship between SCO Operations
and the SCO Group?
A. It's a wholly-owned subsidiary of the SCO Group.
Q. How long have you been president and chief operating
officer of SCO Operations?
A. Since December of '07.
544
Q. And when did you first start working for SCO?
A. I started in January of 2000 with Caldera SCO.
Q. And can you briefly describe your prior positions at
SCO starting in January 2000?
A. Yes. I started as director of sales, and over
subsequent years I was over sales for the Americas division. I was
vice-president of worldwide marketing, vice-president of worldwide
sales, general manager of our UNIX division and also general
manager of our mobile business until recently president, chief
operating officer.
THE COURT: Until recently what? Excuse me. I didn't hear
you.
THE WITNESS: Until recently president and chief operating
officer of SCO Operations.
THE COURT: Thank you.
Q. BY MR. CYRULNIK: Mr. Hunsaker, did your
responsibilities generally remain the same during the course of
your time with SCO?
A. Yes. Primarily focussed on sales, marketing, business
development activities.
Q. Can you briefly describe your employment prior to
joining SCO in 2000?
A. In 1989, I started with a company called WordPerfect
Corporation in sales and marketing capacity. And for the next
seven, eight years until I believe it was 1998, I
545
was with the same company, but we were acquired by Novell and
Corel Corporation. And then in 1998, I worked for a company called
Baan, B-A-A-N, enterprise resource planning company in a sales
capacity until 2000 when I joined SCO Caldera.
Q. And what was the nature of your work at WordPerfect
and Baan?
A. I was a product marketing, regional sales manager, so
fairly consistent always focussed on sales marketing, business
development.
Q. So would it be fair to say you've had almost 20 years
of experience in the sales or marketing aspects of the computer
industry?
A. Yes.
Q. Can you briefly summarize your educational background
for the Court?
A. Bachelor of Arts degree in business from Utah State
University.
Q. And when was that?
A. In 1989.
Q. Mr. Hunsaker, I'd like to go back to the 2002-2003
time period for the moment. And can you describe generally your
role during those particular years?
A. Yeah. During that time frame, I was vice-president of
worldwide marketing, also during that time vice-president of
sales.
546
Q. And what were your responsibilities as vice-president
of sales and marketing?
A. Generally in terms of marketing and sales, you're
focussed on the customers, products, making sure that your product
are messaged properly, they're priced properly, that there's a way
to distribute those products, that your sales teams are out selling
and talking to customers, the administrative side, you know, of
quotas and so forth. So it's just generally driving those
activities.
Q. What products was SCO primarily selling or marketing
during the 2000-2003 period?
A. We were selling UnixWare and OpenServer is our primary
flagship products.
Q. What was UnixWare?
A. UnixWare is an operating system that runs on hardware
that serves up applications, business applications, that allow
companies to function. And UnixWare comes, you know, from the early
days of AT&T, USL, Novell and through SCO. And so that was that
product.
Q. And what was OpenServer? That was the second product
you mentioned.
A. OpenServer is also an operating system, same scenario.
Runs on hardware required, and also serves up applications for
various customers. And we started in the early days with SCO back
in I think late '80s.
547
Q. Mr. Hunsaker, I believe you testified that UnixWare
and OpenServer, I think you used the term --
THE COURT REPORTER: I'm sorry?
MR. CYRULNIK: Sorry.
Q. BY MR. CYRULNIK: I believe you used the term they were
SCO's flagship products during that period?
A. That is correct.
Q. What percent of SCO's annual revenue do UnixWare and
OpenServer account for approximately?
A. At that time and still today, almost 100 percent of
our revenue. I mean, 95-plus, 98 percent of our revenue comes from
those two products as it relates to products.
Q. And are you familiar with the term installed base as
it's used with respect to an operating system?
A. Sure.
Q. Can you generally describe the size of OpenServer's
install base?
A. Well, we've stated for many years over the history of
this company we've sold approximately 2 million servers that have
been deployed with, you know, various installations. And OpenServer
has accounted for approximately two-thirds of the overall installed
base and revenue for our company.
Q. In your various sales and managerial positions, did
you have occasion to use the term UNIX?
A. Yes.
548
Q. Did you have occasion to use the term System V?
A. Yes.
Q. And how often did you use those terms?
A. You know, fairly frequently with customers, with
employees discussing our UNIX and System V technologies.
Q. Mr. Hunsaker, when you use those terms, what did you
mean to convey?
A. UnixWare and OpenServer. We're talking about our
products. And so when I use the term UNIX or System V, I'm
referring to the brand of UnixWare and/or OpenServer.
Q. Were you referring to a particular release when you
would use those terms?
A. Well, yeah. Release version of UnixWare or version of
OpenServer, yes.
Q. If you heard the term UNIX or System V being used by a
customer in the year 2000, for example, what product, if any, would
you have in mind that that customer was referring to?
A. I don't recall exactly which version, but it would be
UnixWare Version 7, 7.1, perhaps.
Q. And that was the current release?
A. It was the current version at that time, yes.
Q. Mr. Hunsaker, was the latest release of UnixWare,
UnixWare 7, referred to by any other names?
A. Yeah. We referred to it as System V Release 5,
549
SVR5. It's synonymous with UnixWare 7.
Q. And is that same SVR 5 used internally?
A. Yes.
Q. Is it used externally?
A. Yes.
Q. Do you have any technical training or expertise?
A. No.
Q. Your expertise is in sales and marketing?
A. Correct.
Q. From a sales and marketing perspective, Mr. Hunsaker,
did you have an understanding as to the relationship between the
latest release of UnixWare, say UnixWare 7, and the prior release
UnixWare, say UnixWare 2?
A. Well, the relationship is -- we have always understood
from the sales and marketing perspective we're selling the latest
release of our products, UnixWare 7.13 or whatever the version was
at that point in time, which incorporated the prior release
technology and brought forward any of the technology that was
commercially valuable that obviously was important to bring forth
into the next version of our products to sell to our customers.
Q. How about the relationship between that prior release
of UnixWare, say, UnixWare 2, and the proceeding release System V,
say SVR4.2?
A. Same scenario. Once again, it's all based on
550
whenever the time was we would be selling the latest version of
our product where it included the System V technology, and we would
bring forth and forward earlier technologies that were relevant,
that were commercially valuable, that were needed by customers
based on their requests and their input and deliver this into a new
product.
Q. Mr. Hunsaker, when you say that you understood the
latest release of UnixWare to include the commercially valuable
technology from the prior release, would you explain to the Court
what you mean by commercially valuable?
A. Well, I'm referring to, first of all, technology that
is current, that it runs and is supported by the latest hardware,
latest drivers, that is based on features and functions that our
customers need to run their products and their application within
their environment. And so it obviously needs to incorporate
relevant current technology that we bring forth and then add to
that technology for new versions of our product.
Q. And how would SCO go about determining what technology
fit that description, what technology was commercially
valuable?
A. Well, from a sales perspective --
MR. ACKER: Your Honor, I object to this line of questioning. The
witness has testified he does not have technical expertise. He has
no involvement in the development
551
process, and we're really just asking the witness to speculate
now how the development process works.
THE COURT: Mr. Cyrulnik?
MR. CYRULNIK: Your Honor, I'm specifically asking the
witness about his sales perspective, and I believe the witness has
now testified his sales team was intricately involved in
determining the commercially valuable technology being included in
the next release.
THE COURT: I'll let you ask. Overruled. You can go ahead.
THE WITNESS: Yes. Once again, from a sales marketing
perspective, which has always been my world, we meet with our
customers. We talk to them face to face, and we have, whether it's
user conferences or annual forum events, we have webinars, just
obviously, you know, need to need discussions with customers to
understand from them what's relevant and what's important, what
they need in terms of their solutions for an operating system.
And we take this information, and we move it forward. We talk to
our engineers. And we convey to them, you know, this technology is
not needed or required. They're looking for new technologies, new
functions. And we have what's called product meetings. The product
managers and the system engineers and our sales teams communicate
updates from the customers upon a weekly basis.
552
Q. BY MR. CYRULNIK: So the process of determining the
commercially valuable technology was a process that involved the
sales side of SCO and the engineering side together?
A. Yes; because the sales teams' responsibility was to
focus on the customer and understand their needs and then convey
that to the engineers who would then develop the products and the
applications.
Q. And with whom did you interact on the development
side, on the engineering side to convey the information feedback
that you were getting from the marketplace as to what was
commercially valuable?
A. Well, during that time frame, we spent time talking to
our product managers and engineering leads, Andy Nagle, John
Maciaszek, Wolf Bauer, Sandy Gupta and others in terms of these
meetings.
Q. And did you have an understanding as to what they
would do with the information you would to provide them?
A. Well, they would -- they're smart individuals, and
they understand the importance of customer feedback. And so they
would take the latest technology, and they -- functions and
technology that is relevant and current and move that forward and
then add new features and functions that the product needed at that
time to deliver that solution to a customer so we could sell
it.
Q. Were you involved in that process at all, the
553
engineering process?
A. Not the engineering process, but I was involved in the
sales communication process to the engineering teams. That was my
focus and my team's focus.
Q. Mr. Hunsaker, in addition to the various releases of
UnixWare and OpenServer that you said you were marketing and
selling during your tenure, were there other, any other UNIX
products that you were marketing or selling during that time?
A. Yeah, there were other products. But once again,
almost exclusively and primarily our revenues were made up of
OpenServer and UnixWare. We had products such as SCOofficer Server,
as I recall, and Merge and a few others that don't come to
mind.
Q. That's fine.
During your tenure, did you or your sales team ever market or
sale older pre-UnixWare releases of UNIX? And I'll call those SVRX
for short.
A. No.
Q. Why didn't you ever market or sale to customers
pre-UnixWare releases of System V?
A. It doesn't really make sense to me. Our customers
weren't asking for old technology. They want the latest and
greatest technology. And so from the sales perspective, we're
focusing on selling our most current technology. You know,
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the System V Release 5 technology at the time with UnixWare 7,
which once again incorporates all of the technology that's
commercially valuable over many years of work. And so that's what
they ask for, and, of course, that's what we're focusing on
selling.
Q. Mr. Hunsaker, did you have direct contact with SCO's
customers?
A. Yes.
Q. In the context of that contact, do you recall any
instance in which a customer or sales rep requested a license,
either source or binary, to a pre-UnixWare release of UNIX System
V?
A. No.
Q. Never?
A. Never.
Q. Do you recall any instance in which you personally
tried to sell or market or in which you told members of your team
to sell or market a pre-UnixWare version of UNIX System V?
A. No. I wouldn't even know how.
Q. Mr. Hunsaker, you testified earlier that you were
working at SCO in the 2002-2003 time period in particular?
A. Yes.
Q. Are you familiar with the SCOsource program?
A. Yes.
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Q. And can you generally describe what the SCOsource
program was?
A. This program was put in place to provide a licensing
mechanism for Linux customers that were perhaps unknowingly using
our intellectual property, our UNIX technology. And it provided a
way to make them whole or clean, if you will.
Q. Were you involved in the administration of the
SCOsource program?
A. I was involved in the overall program based on my
responsibilities and sales in marketing, but I didn't run the
program.
Q. Who did run the program?
A. That was -- the general manager of that division was
Chris Sontag.
Q. And do you have a recollection as to how the SCOsource
program unfolded, how it came to be?
A. I do. I remember being in a sales call in the 2002
time frame, late 2002, as I recall, in Tennessee with a customer,
and they were, we found out, moving from our UNIX platform to a
Linux platform. And they -- in the course of these discussions and
so forth, we realized that they were unbundling our libraries from
our SCO UNIX technologies and using those within Linux to allow for
their Linux application to run easily on Linux.
556
And, you know, a big flag went up and said, well, you can't do
that. Our licensing agreement, our ULA, UNIX licensing agreement,
does not allow customers to unbundle technology to be put in
Linux.
And so that's kind of the genesis for these discussions. And we
then developed a licensing program to allow those customers that
wanted to use those libraries, we allowed them through this
licensing program which they would pay for.
Q. I'd like to show you what's been marked as Novell
Exhibit 387.
And, Your Honor, can I approach?
THE COURT: Yes.
MR. CYRULNIK: A book that contain all of the exhibits
that I intend to use.
THE COURT: All right.
THE WITNESS: Yes.
Q. BY MR. CYRULNIK: Mr. Hunsaker, do you recognize Novell
Exhibit 387 generally?
A. It looks like a presentation, a PowerPoint
presentation.
Q. And were you involved in creating PowerPoint
presentations of this sort?
A. Yeah. I was involved and reviewed and had, you know,
some say clearly in presentations that were communicated
557
out to our employees and customers.
THE COURT: This is Novell 387?
MR. CYRULNIK: Novell 387, yes.
THE COURT: Thank you. Excuse me. Go ahead.
Q. BY MR. CYRULNIK: Mr. Hunsaker, if you could turn to
Page, I believe it's 4 or 5. It's marked as 4267 in the bottom
right-hand corner as a Bate stamp. Once again it's Novell 387. You
can also access it on your screen. It's easier.
A. I'll just look at it on the screen.
Q. Okay. And do you recognize this part of the SCOsource
presentation?
A. Yes. It looks like it's talking about what I just
described, the System V for Linux license.
Q. Do you recall being involved in creating this
presentation about SCOsource?
A. I recall being -- and reviewing these presentations. I
didn't author all of those documents.
Q. And the text of this slide reads:
SCO shared UNIX libraries from OpenServer and
UnixWare for use of Linux.
Is that correct?
A. Correct.
Q. Was SCO licensing libraries in any prior versions of
UNIX to its customers?
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A. No. Once again, we're focusing on our latest
technologies of UNIX and OpenServer, which included all of the
commercially valuable technology from prior releases.
Q. Does SCO continue with SCOsource after those initial
concerns about the libraries, OpenServer and UnixWare?
A. Yes. We realized after a period of time that it was
more than just the libraries that were being used within Linux and
recognized there was additional code. And so we furthered this
program and instituted what is called, I believe, the SCO IP
license program, which included more of our UnixWare code and
technology that was found in Linux.
Q. Mr. Hunsaker, what was the nature of the agreements
that were used to license this technology?
A. To license the SCOsource technology?
Q. The SCOsource agreements.
A. Well, these agreements were based off of our UnixWare
technology. And it was simply a license that a customer would use
and to register, and then they would be made clean, meaning we
would not come out after them and sue them, if you will, for using
our code inappropriately. It was obviously different from a
UnixWare license because once again, with the UnixWare license
itself, you could not unbundle, the ULA, the UNIX License Agreement
didn't allow you to unbundle the technology. So it was a new
license, a new product, if you will.
559
Q. So with respect to, say, the libraries just as an
example, the traditional type of UnixWare license would allow you
to use those libraries in what context?
A. Well, you would use those libraries on a Linux
deployment for those customers that were trying to migrate UNIX
applications to Linux. So they would purchase a license in order to
run those Linux -- those applications, UNIX applications on
Linux.
Q. And just to clarify that, what was allowed under the
SCO source license?
A. Correct.
Q. And under a pre-SCOsource license, UnixWare license,
would that be allowed?
A. No. No. Once again, you couldn't unbundle the
technology. And so that's why we developed the SCOsource IP
license.
Q. I believe you characterized these agreements in your
answer, a couple of answers ago, as types of UnixWare licenses. Was
that always your understanding of the SCOsource agreements?
A. Yes.
Q. I'd like to show you what's been marked as SCO Exhibit
236. And again, it's in your binder and will be on the screen in a
moment.
Do you recognize SCO Exhibit 236?
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A. Yes. A press release that we issued in July regarding
UNIX and our copyrights and so forth. Yes.
Q. And again, were you involved in issuing these press
releases or creating or reviewing these press leases?
A. Primarily reviewing the press releases for content.
Did not author every word of the documents, no.
Q. I'd like to zoom in on the bottom third of the press
release that begins:
Following the distribution of our letter.
A. Uh-huh (affirmative).
Q. And press release quotes Mr. McBride saying:
Today we're delivering a very clear message to
customers regarding what they should do.
Intellectual property is valuable and needs to be
respected and paid for by corporations who use it
for their own commercial benefits. The new
UnixWare license accomplishes that objective in a
fair and balanced way.
Is that an accurate reading?
A. Yes.
Q. And does the language of that press release, is that
consistent with your recollection that you had always termed this
UnixWare license?
A. Yes, absolutely. The SCOsource program was all built
on our UnixWare licenses built around a UnixWare
561
license.
Q. Now, Mr. Hunsaker, you had testified -- well, I think
you said it was UnixWare license. It was different from the
traditional UnixWare license. Can you elaborate on the specific
difference between the UnixWare license, traditional UnixWare
license and the SCOsource UnixWare license?
A. Well, one is the target audience, I mean, for the
traditional UnixWare license, it was sold to SCO customers and
other SCO customers and new SCO customers that we wanted to run our
UnixWare technology on, our OpenServer technology on their
hardware. And it included a packaged product. It included a manual.
It included CDs. It included registration, cards. It included a
license agreement. And so it was physically a packaged product that
was delivered and installed and it was ready to use.
On the other hand, a SCOsource IP license, while it's based on
the same technology of UnixWare, it was focussed for Linux
customers that just wanted to be made clean and one against ensured
them that we were not going to sue them. And it didn't have
anything to install. There was nothing physical to it. It was
simply a license that allowed them to run this in that instance.
There was no manual or other things that I've talked about.
Q. Let me direct you to Novell, what we've marked as
Novell Exhibit 227. And if you'll briefly review that.
562
Do you recognize this document?
A. Yes.
Q. And the document appears to be a series of e-mail
exchanges that involved either you sending or receiving
e-mails?
A. Correct.
Q. Could you turn to Page 2, please, of the document,
Novell 227. And I'd like to focus in on the e-mail that you sent on
July 31st of '03. Do you see that second half of the page?
A. Yes.
Q. And if you can specifically look at the line that
begins, Item 1.
A. Okay.
Q. You were the author of this e-mail?
A. Yes. It says my name. Yes.
Q. And, Mr. Hunsaker, you wrote on July 31st of '03:
The official name of this program will be the
SCO UNIX IP compliance license program. This is
not a UnixWare 7.1.3 SKU.
A. Yes.
Q. Mr. Hunsaker what's an SKU?
A. SKU or SKU is defined as a stock keeping unit. It's
more of a manufacturing operational term designed to categorize or
name a particular product. It's a unique
563
identifier for products that we deliver.
Q. And what did you mean when you were writing that, this
is not a UnixWare 7.1.3 SKU?
A. Well, it's not. It's different. And once again, my
mindset is always from a sales marketing perspective. I mean,
that's my focus. But from a -- so from a product perspective, this
was a different SKU than the SCO IP license. It had a different
part number. It had -- you know, like I described earlier, it had a
manual and CDs and disks and license agreement that were unique to
that.
Whereas, the SCO IP license was based on the same technology. So
if you look at the technology perspective, it's the same. But from
a pure product perspective, it requires a unique identifier and
different package.
So it's -- if I could -- perhaps let me just give a quick
analogy here. The way I view this is if you were looking at an
automobile, for example, a Chevrolet or a GMC truck, they're very
different in terms of products and customers that they focus on, in
terms of the brand. And so -- but the underlying technology is
pretty much the same. I mean, it's based on the same engine, the
same chassis. But if you look at the product managers that are
responsible for the GM Division versus the Chevrolet Division,
they're very different.
As a customer, I'm a GMC guy. That's the truck I
564
prefer. And others like Chevy. So they're different from a
product perspective, but the technology is essentially the
same.
Q. And you were talking about from a technology
perspective or a product perspective?
A. I'm talking about it from a product perspective, they
were unique. From a technology perspective, they're pretty much the
same.
Q. Continue on in the e-mail. Pick up where we left
off:
The license is called the SCOUnix IPC license
for Linux. The only rights that this license
provides is for Linux binary run-time copies.
When we are ready to issue a similar license for
AIX, it will be called the SCOUNIX IPC license for
AIX. There is no connection between
UnixWare/OpenServer and the SCOUnix IPC license
whatsoever. They are independent.
Did I read that accurately?
A. Yes. I mean, that's what I wrote at the time.
Q. Mr. Hunsaker, can you explain once again what you
meant when you wrote this language?
A. Well, once again, you've got to remember the
perspective that I authored this from. I'm thinking of things more
in terms of binaries, in terms of a product. And this is
565
different. The SCO -- the IP license is different in terms of a
product, if you will, than it is from a SCO UnixWare license. And
so in that respect, they're very much different. But in terms of
the technology, it's the same technology.
Q. And were you involved from the technology perspective
at all, the licenses? Were you involved in defining the
technology?
A. Just providing feedback from what our customers
requested.
Q. Mr. Hunsaker, if you could turn to Page 1 of that
exhibit. I'm if following the chain of e-mail correctly, it's a
response to you're e-mail from someone named Kim Jenkins at the
bottom of the page?
A. Yes.
Q. Who was Kim Jenkins?
A. I believe Kim was a consultant for the company.
Q. And if you look at the response he gives, he
writes:
Item 1, name is fine by me. Separation from
UW 7.13 is also fine with me. I like the
simplicity but defer final decision to Chris.
Do you have any understanding as to what Mr. Jenkins meant when
he said he likes the simplicity of separation of 7.13?
A. I don't know exactly what his intent was, but I
566
think it's similar to what I described previously.
Q. Mr. Jenkins continues:
Also as a clarification to your last sentence
Item 1, this license does not allow users to run
Linux legally. The license allows Linux end users
to be clean with SCO.
Did I read that correctly?
A. Yes.
Q. Mr. Hunsaker, do you have any understanding as to what
Mr. Jenkins meant when he said that?
A. I think as I previously testified, the license allowed
the infringing Linux customers to be clean with SCO. We were not
going to sue them because they had a license that covered the
technology that we owned. And they were clean with SCO.
Q. And is Mr. Jenkins' understanding consistent with your
understanding?
A. Yes.
Q. And, Mr. Hunsaker, was it your understanding at the
time that you were offering SCOsource licenses that Linux users
were free from claims from any other company aside from SCO if they
bought the IP license from SCO?
A. Yeah. This related to our technology, and they're
clean with SCO. Others could make other claims if need be. But once
again, this is focused on our technology, our
567
UnixWare systems allowing them to be clean by licensing this
from us and from SCO. Others could do whatever they chose.
Q. Mr. Hunsaker, you just described a number of
differences between this license and the last, this UnixWare
license and the other UnixWare license. Do the differences that you
just described have any impact on how the SCOsource program was
administered or managed?
A. Well, yes; in that we created a new division. And we
had a general manager, Chris Sontag, that ran that business. They
focused on a different set of customers, a different target market
and its own products and revenue. And so that's the difference from
setting up a new division.
Q. So SCO had a new division to run this particular type
of license?
A. Correct.
Q. I'd like to show you what had been marked as Novell's
Exhibit 159. Do you recognize Exhibit Novell's 159?
A. Yes.
Q. And can you generally describe what Novell 159 is?
A. Well, it states:
SCO establishes SCOsource; New Division Created
to Insure and Protect Intellectual Property in Linux
Environments.
So it's announcing the creation of this business division.
568
Q. And do you recall the creation of that new
division?
A. I do.
Q. And can you explain to the Court why a new division
was necessary to run this particular license?
A. Well, as I've described previously, the product was
being focused on the Linux customers, the Linux installed
customers. And so there was a new sales organization that was
focused on selling these licenses to that audience. And we had a
general manager running that business with the unique, you know,
SKUs and parts numbers for those products in the SCO UNIX division.
Once again, while the technology is consistent across both, we were
focused on selling to our installed base and to new UNIX customers
that wanted to employ our UnixWare and OpenServer technology.
Q. Mr. Hunsaker, did you charge customers for a SCOsource
license?
A. Yes.
Q. Do you recall what you charged?
A. Yeah. We charged the same price as we charge for a
UnixWare 7.13 license. It was 1399.
Q. I'd like to show you what's been marked as Novell's
Exhibit 245.
THE COURT: Pick a good break point, Mr. Cyrulnik.
MR. CYRULNIK: Sure. I only have a couple
569
questions left, if Your Honor would like me to finish up with
this witness.
THE COURT: Go ahead.
Q. BY MR. CYRULNIK: Do you recognize Novell 245 as an
e-mail from John Maciaszek to a bunch of recipients that attaches
the document that begins on the second page of that document?
A. Yes.
Q. What's that document that is attached?
A. It is the SCO IP compliance program for Linux.
Q. And I believe it's labeled, Internal Product
Announcement?
A. That's correct.
Q. And did you participate in drafting internal product
announcements?
A. I did not draft the announcements, but I reviewed the
announcements.
Q. If you would turn to the next page for a moment, third
paragraph. The internal product announcement writes:
Pricing of the Linux IP licenses is based on
standard pricing for the UnixWare 7.1.3 using the
business edition, which is 1-CPU as the starting
point.
Did I read that correctly?
A. That is correct.
570
Q. So you priced the SCO IP license, the SCOsource
agreement, the same based on the pricing of the UnixWare 7.1.3?
A. Yes.
Q. And it's exactly the same price?
A. Yes.
MR. CYRULNIK: Nothing further. Thank you.
THE COURT: Thank you. We'll take a 15-minute break.
(Recess.)
THE COURT: You may cross-examine, Mr. Jacobs.
MR. JACOBS: Thank you, Your Honor.
CROSS-EXAMINATION BY MR. JACOBS:
Q. Good afternoon, Mr. Hunsaker.
A. Good afternoon.
Q. You've spent by my calculation about over 10 years in
the computer business?
A. More than that. Since about 1989.
Q. Selling products?
A. Correct.
Q. Going to customers and saying, we've got a value
proposition for you?
A. Yes.
Q. And it's in the functionality of our software or
hardware, that value proposition?
A. Yes.
Q. It will do good things for your business. It will
allow you to perform functions better than you were performing them
before?
A. Are you saying generally speaking or in a certain
context?
Q. In selling the kinds of products you've sold in your
career in the computer industry.
A. Sure. You're trying to provide value for value to
572
the customers.
Q. But the value is value to the customer and actually
enhancing the operation of their business?
A. You want to improve, absolutely sell something that
they will need, that they'll use and add value to what they will
use.
Q. Have you ever done anything like SCOsource before?
A. No.
Q. Pretty usual product, isn't it?
A. I don't know in terms of how unusual it is. I just
know it's important for people to protect their intellectual
assets.
Q. That's what it was about it; right? It wasn't about
offering customers functionality to drive their business; it was
about SCO's efforts to protect what it believed were its
intellectual property assets; correct?
A. That's partially true. I mean, clearly some customers
wanted to and chose to use Linux, and so we offered them a way to
be clean, if you will, by using infringing SCO technology.
Q. You actually stopped selling Linux; right? You got out
of the Linux business, and your relationship with Linux was as
asserter of intellectual property and licensor; correct?
A. Yeah. Over time we stopped selling and
573
distributing our Linux release.
Q. Was UNIX System V Release 4, UNIX System V Release 4
code commercially valuable in the context of SCOsource?
A. It was commercially valuable as it related to -- we
were offering the latest versions of our UnixWare product in our
System V Release 5 technology. So as the commercially valuable code
that was found in prior versions of System V, whatever version or
release it was that came forward, that technology and the latest
version was commercially valuable.
Q. Different question. Now we're shifting over to
SCOsource, which you were involved in selling; correct?
A. I was involved absolutely in those activities. I was
not responsible for selling SCOsource licenses. That was done by
Chris Sontag and his own sales team. I was not responsible for that
sales organization, and frankly did not sell the licenses
myself.
Q. Well, let me ask it this way. When you were examining
the question of what's commercially valuable under the direct
examination of SCO's counsel, were you asking that question -- were
you answering that question in the context of SCOsource?
A. I'm not sure I follow the question.
Q. Were you answering the question of whether older code
is commercially valuable, did you have in mind SCOsource
574
campaign when you were answering that question?
A. Once again, the focus that we put forth at the time
when we entered the SCOsource licensing was to develop a licensing
program based on our UnixWare technology, our latest System V code.
And we offered that to our customers and Linux users to indemnify
them, so to speak, based on our technology.
Q. Is it your testimony that System V Release 4 code,
whether or not it was carried forward into the latest release of
UnixWare but SCO believed was found in Linux, was not commercially
valuable?
A. What I'm saying is commercially valuable is the
technology that moved forward into at the time the UNIX System V
Release 5 code. And whatever code that was that came forth was what
we determined at that time commercially valuable because that's
what customers were willing to pay for. People weren't interested
in old technology that didn't run on certain hardware or wouldn't
work and function with drivers or other -- or applications. They
were looking for our latest and greatest technology that was found
in System V Release 5. And that was the impetus of the SCOsource
licensing program. It was derived based on that technology.
Q. And that is a determination that you recall having
been made in the context of SCOsource?
A. I didn't have to make that determination. It was --
and from my viewpoint, once again in sales and
575
marketing, I don't reflect back on old technology and old
products. It's just -- our customers don't look back at old
technology and old products as, yes, that's what I want. They want
the latest technology, the relevant technology that works with
their hardware and applications. And so that's what we derive the
program based on is the current version of the time of our UnixWare
technology. So it's based on that.
Q. But you weren't selling technology or product and
SCOsource to customers; you were selling immunity from intellectual
property lawsuits; correct?
A. We were selling a license that was based on our latest
technology, our UNIX System V technology.
Q. Do you know for a fact, Mr. Hunsaker, that the code
that SCO alleged was found in Linux was also found in UNIX System V
Release 5?
A. I'm not a legal expert. I'm not an engineer. I don't
know all the technical ins and outs. All I know is that the code
that was found in our UNIX System V or latest UNIX products was
what we found to be infringed upon in Linux. And so that's what we
focused our IP program around.
Q. And when did that become clear to you, sir?
A. Well, I think that's all I talked about. We started
learning about this in the late 2002 time frame based on our
libraries, and then in 2003 with other instances of our
technology.
576
But, you know, I think others could talk more about that than
myself. Once again, I was focussed on our products and our product
business and realized talking to customers that, all right, there's
some issues here.
Q. You understood that the SCOsource campaign had another
dimension that made it different from your traditional product
sales, which was that it was heavily -- heavily involved lawyers;
correct?
A. Well, I'm not sure I follow your question.
Q. By March 2003, SCO's in litigation with IBM;
right?
A. Yes. I think it was about that time frame.
Q. And you knew there was a lot of legal activity
surrounding the SCOsource campaign?
A. I don't know if there was legal activity around the
SCOsource campaign or if there was legal activities around the
lawsuits that were going on at the time.
Q. And you're separating those from SCOsource?
A. Well, I'm just saying that the issue -- and once
again, I'm not an expert. I know there's a contract dispute. It was
one of the issues that relates to IBM, but I don't think we're here
to talk about that.
MR. JACOBS: Your Honor, may I approach?
THE COURT: Yes.
Q. BY MR. JACOBS: Mr. Hunsaker, I've handed you Novell
Exhibit 270. Would you take a look at that for a
577
minute, please.
A. Uh-huh (affirmative).
MR. JACOBS: This has been pre-admitted, Your Honor.
Q. BY MR. JACOBS: Mr. Hunsaker, Novell's Exhibit 270 is
an e-mail that you sent to the -- an e-mail that's called
execgroup. Do you see that?
A. Yes.
Q. And that's the senior executives of SCO?
A. Yes.
Q. And you were one of them?
A. Yes.
Q. And you attended a meeting on December 11th, 2003, and
you were responsible for taking notes that day.
A. I don't know if I was responsible for taking notes,
but it appears that I summarized some of the discussion points of
that day.
Q. And you were -- it's December 2003. SCOsource has been
under way for about a year. You're looking ahead to 2004 and you're
laying your plans; correct?
A. It seems to be what we were discussing.
Q. And you had some revenue goals at SCO 48485. Do you
see that?
A. Yes.
Q. And that was discussed at that meeting?
578
A. Sure.
Q. And by the way, "OPS Council," what does that
mean?
A. Operations.
Q. And you were part of the operations council?
A. Yes.
Q. And the operations council had various strategy
meetings around SCOsource?
A. This wasn't around SCOsource. This was around our
overall business.
Q. SCOsource was discussed at many OPS committee OPS
council meetings?
A. Well, as you can see here, we're talking about we're
running a company. So the operations council gets together to
discuss all aspects of running a business, setting goals for the
company, motivating employees, setting strategy, direction, trying
to create, you know, the next phase of our business, yes.
Q. And the answer to my question is "yes"?
A. What was your question?
Q. The OPS council discussed SCOsource on various
occasions?
A. Yes.
Q. And if you go down among the goals for 2004, it says,
"emerge as industry leader for IP." Do you see that?
A. Uh-huh (affirmative).
579
Q. And then, "gain Linux justice." Do you see that?
A. Uh-huh (affirmative).
Q. And that was something that was discussed at the
meeting, "gain Linux justice"?
A. I don't recall specifically, but it is documented
here.
Q. And down at the next heading, the heading is
SCOsource, and is refers to Chris Sontag as the general manager;
correct?
A. Yes.
Q. And among the activities of SCOsource that's being
discussed there is litigation. Do you see that?
A. Yes.
Q. And litigation against IBM. Do you see that?
A. Yes, I see that.
Q. And end users and others. Do you see that?
A. Yes.
Q. So litigation was part of the SCOsource activities
that were contemplated when you were discussing SCOsource in this
meeting; correct?
A. Not necessarily. I mean, clearly there was litigation
going on at the time. So that was part ongoing litigation as I
believe at this time. I don't know if all my days are correct. But,
sure. That's a relevant discussion when you're involved in
litigation with other companies in OPS
580
council.
Q. And then there's a reference to the licenses that
SCOsource might offer. Do you see that?
A. Yes.
Q. And RTU, the right to use. That's the SCO intellectual
property license for Linux as you understood it; correct?
A. Yeah. The right to use our intellectual property in
Linux.
Q. And then SCOx actually is about product development;
correct?
A. Yeah. It was a name we used for a certain period of
time to describe our general UNIX business.
Q. I'd like to scroll down, I'd like you to look down and
we will scroll down to the bottom fifth of the e-mail. You took the
following notes:
What is our business model for SCOsource and
SCOx? SCOsource. Take 1500 penguins and create a
room in Lindon and line them up and place the
company brand on each one of them. We then send
out a letter within the next few weeks which takes
our code claims and demonstrates to customers what
we have found to date. We let the end user know
that, "if they want to be safe, they need to
remove the offending code from Linux in order to
581
continue to use legally. Once you have cleaned up
your system, you will be clean."
Do you see that?
A. I do.
Q. That was something discussed at this meeting as a
undoubtedly humorous way of discussing the SCOsource ideas at the
time; correct?
A. I do not recall that discussion, but I see it here in
this document.
Q. And then it refers to the codes. It says:
Code such as JFS, Malloc, RCU, et cetera.
Do you see that?
A. Yes.
Q. And that was the code in this discussion SCO was
thinking about making clear to customers is contained in Linux;
correct?
A. Based on what it states here, that's what it's
referring to. I'm not going to testify specifically what code is or
is not found in Linux. That's not my area of expertise. I don't
understand all the technology.
Q. And you don't know whether JFS is found in System V
Release 4 code?
A. Once again, you're talking to the wrong guy about
those types of issues. I was focused on sales and marketing
activities.
582
Q. If JFS was found in System V Release 4, would you
agree that it is commercially valuable in the context of the
SCOsource as represented by this discussion?
A. Well, I'll repeat. Once again, what we do, if it was
valuable it would be found in our latest versions of our UNIX
System V technology. And that's where it would be found because
that's where we were focusing on licensing and selling. So I can't
recall -- I can't talk about older technology.
Q. So let me understand the basis for what you've said
because you said it several times.
Do you recall a specific discussion in the context of SCOsource
in which it was represented to your satisfaction that all the code
that was the focus of the SCOsource campaign was found in the
latest release of SCO's software?
A. You know, once again, I don't know if I'm the -- have
the technical understanding of all the codes, so I'm not going to
pretend to know that. All I know is that we were selling and
marketing our latest versions of our products to our UNIX
customers. And then when it came to our SCOsource IP agreements, it
was a license based on our latest technology of our products and
all the commercially valuable technology that was found in our
latest releases. You'll have to talk to other experts about
specific codes. I don't know. I just know that we sold what
customers wanted, and it was the latest
583
and greatest stuff.
Q. And then the notes recount the discussion around what
would happen next after the penguins were released, I suppose:
We will require the CEO and CIO to respond to
this letter call to action.
Do you see that?
A. Yes.
Q. And then you describe what the letter -- or the
meeting -- in the meeting there was a discussion of what the letter
needs to state. Do you see that?
A. I do.
Q. And it says:
We will state the facts and the demands, the
timeline and the consequence.
Do you see that?
A. I do.
Q. And the consequence is the license cost of, gee, only
$700 or $1400 a server, and litigation, $$$. Do you see that?
A. I do.
Q. And that was part of the discussion that the license
would be cheaper than the litigation; right?
A. I don't know what it means. I don't remember this
document, frankly.
584
Q. And then there was some analysis in the meeting about
who might take what course of action. Do you see that?
A. Uh-huh (affirmative).
Q. And that there was a plan that was described
including, if you go -- scroll down a little bit, lawsuit 1 and
lawsuit 2. Do you see that?
A. Yes.
Q. And then scrolling up a little bit. Item 2, letters
send December 17th. Do you see that?
A. Yes, I do.
Q. So let me ask you about an exhibit we saw here
previously. Novell Exhibit 274. Novell Exhibit 274 is a letter sent
on December 19th, two days after the December 17th date referenced
in the plan of action that we just discussed. Do you see that?
A. Yes.
Q. And if you -- if we scroll down on the letter now, and
illuminate that paragraph. And do you see that it refers to
AT&T binary interfaces down there?
A. Could you highlight that for me?
Q. Yes. That paragraph right there.
A. Okay.
Q. Do you see it's referring to AT&T binary
interfaces?
A. I see where it states that, yes.
585
Q. Could you take a look at this letter and tell me
whether it says anywhere anything about SCO's latest and greatest
technologies?
A. No. I didn't author this letter. I don't remember any
details in the letter. And so once again, I'm not able really to
testify specifically about the contents and the timeframe in which
it was written.
Q. I want to ask you about OpenSolaris. What do you know
about OpenSolaris?
A. Not a whole lot. I do know that that it's a Sun
product.
Q. What kind of Sun product? Is it a word processing
--
A. It's an operating system.
Q. So you know it's an operating system. You know that
OpenSolaris is open source operating system; right?
A. Yes.
Q. And you know that it's based on System V code that
predates the asset purchase agreement in 1995?
A. I don't know what it's about. Again, my focus has not
been in the technology as much as selling and marketing.
Q. Did you have selling and marketing concerns around the
release of OpenSolaris?
A. I remember I had questions at the time, but I don't
remember anything specifically.
586
Q. All right. Let's take a look at your questions.
May I approach?
THE COURT: Yes.
Q. BY MR. JACOBS: We're looking at Novell exhibit 327.
And Novell Exhibit 327 is an e-mail from you to -- an e-mail that's
called "Darlstaff." Do you see that?
A. Yes.
Q. Is that another e-mail for the executive team?
A. It was an alias for the directed course of Darl
McBride.
Q. And you labeled it, "internal confidential." Do you
see that?
A. I do.
Q. And it attaches -- it attaches several articles, but
it attaches an article about SCO having given the green light to
OpenSolaris. Do you see that?
A. Yes.
Q. And let's go through the article first so we can see
the context of your question. So if you can scroll down. And this
is an article that came out in April 15th, 2005. Do you see
that?
A. Yes.
Q. And it reports an announcement by SCO that it won't
raise legal challenges to Sun's plan to open source the Solaris
UNIX operating system. Do you see that?
587
A. Yes.
Q. And then it goes on to talk about the fact that SCO is
in litigation with IBM. And then if we scroll down a little bit
more. And the article reports:
Sun plans to release OpenSolaris under its own
open source common development and distribution
license this summer. And SCO's chief executive
Darl McBride said SCO has no problem with that.
"We believe we have a pretty good idea of what Sun
is trying to do, close quote.
Do you see that?
A. I see it.
Q. And then he goes on to say:
After reviewing what their plans are and
reviewing what our agreements with them are, we
feel comfortable with the direction they're going,
he added. Sun took out a fresh UNIX System V
license from -- there's a typo there. It must
mean SCO -- in February 2003 joining Microsoft
Corp. as one of only a handful of SCO source
licensees.
Do you see that?
A. Yes.
Q. And then you read this letter, and then you ask to
Darlstaff:
588
Do you really give the green light? Are
we as confident in Sun's position with OpenSolaris
as this article intimates? I personally still have
my doubts. I think we should discuss.
Do you see that?
A. I do.
Q. So this got your attention, this announcement.
A. Apparently so.
Q. Different from Sun's release it and refresh it of the
regular Solaris system; correct?
A. I don't know specifically.
Q. Well, something about these plans caught your
attention. It wasn't the fact that it was a new release; it was the
fact that it was open source, wasn't it?
A. I think I was trying to ask, since I had nothing to do
with any license agreements to Sun or others, that I was wanting to
understand what this means. And so I was posing a question here.
Help me understand this so I can then convey what I need to my
team.
Q. Well, you said:
I personally have my doubts.
What do you mean by that?
A. I don't know what I meant by that. I just wanted more
clarification. I needed to understand asking some questions. Once
again, I was not involved in those
589
transactions. I just needed to understand some specifics if I
needed to answer any questions.
Q. Well, do you think you would have written that e-mail
if you had concluded this was a minor blip in the evolution of
operating systems software?
A. Well, I would hope as a responsible sales manager that
represents employees and customers that I would need to understand
the specifics about such announcements so I would ask questions. It
doesn't mean things weren't right or wrong. It's just part of a
process you go through in day-to-day sales or marketing management.
Help me understand. You know, digest the information and move
forward.
Q. I think I'm not asking simple enough questions, so let
me ask a very simple one.
Did you consider the announcement of OpenSolaris, an open source
version of Solaris operating system to be significant?
A. I didn't know the significance because I didn't
understand what it meant. So that was why I was asking the
question.
Q. As you sit here today, do you think it's
significant?
A. It's relevant. I don't know how significant it is.
Q. Let's take a look at Exhibit 227. You have that in
front of you from before. But if it's not right there, I have
590
another copy. This is the e-mail that you were asked about on
your direct examination.
A. Uh-huh (affirmative).
Q. Do you have it handy?
A. The one from the previous?
Q. No. No. Sorry. I'll give you another copy.
May I, Your Honor?
THE COURT: Yes.
Q. BY MR. JACOBS: Now, just to set the context, Mr.
Hunsaker, this e-mail is being written in the summer of 2003;
correct?
A. That's what it says, yes.
Q. And litigation is already under way between SCO and
IBM; correct?
A. I believe so. I don't recall the exact date.
Q. And you're aware by this time of the significance of
litigation to the preparation of documents and e-mails; that is,
that what you write is likely to be discovered in litigation;
correct?
A. I don't recall if I was fully aware of all those
items.
Q. Did you have an understanding by this time that you
could continue on as normal and write casual e-mails?
A. Well, I hope, you know, I wouldn't write casual
e-mails. I want to write e-mails that make sense and reflects
591
thought at that time.
Q. Now, you've testified probably between half a dozen
and a dozen times that SCOsource was selling the latest and
greatest technology; correct?
A. Yes.
Q. And how do you square that, sir, with what you wrote
in this e-mail? That is, that UnixWare has nothing to do with
SCOsource?
A. Once again, you must remember I'm not an engineer. And
from the perspective that I had at the time and I have today, it's
based on a product, a specific deliverable, a SKU that was called
UnixWare and/or OpenServer. And it is different because that's how
we think in the sales and marketing world. We're selling and
marketing a particular product to our customer. And as I stated, it
has its part number and materials and CDs and so forth.
And so in that respect, it was absolutely different. And it's
very clear to me. There's nothing here that I'm hiding, if you
will, because in my mindset, it was different in terms of the
product. But as it relates to the technology, the underlying
technology, it's based off of our UnixWare 7.1.3 technology.
Q. And we just explored that, sir. And I believe you
testified that you weren't really the right person to ask about
whether the SCO intellectual property license for Linux,
592
what technology was implicated in that. Isn't that what you told
me a few minutes ago?
A. What I said is understanding all the technical bits
and bites within the operating system, I'm not one to testify on
that. All I know is that we sell the latest technology that we have
that is relevant to customers that has what they need in the
product.
Q. So let me ask you again, sir. Do you recall a specific
discussion in which it was represented to you that with the SCO
intellectual property license for Linux, SCO is licensing its
customers to its latest -- the Linux licensees to its latest and
greatest technology?
A. Sure. Yes.
Q. And when you recorded notes at this meeting in
December, you believe that JFS, Malloc and RCU were SCO's latest
and greatest technologies?
A. Once again, I'm not going to comment about the
technology code that you've talked about. If it was relevant and
needed by our customers, it would still be found and contained in
the latest version of our UNIX System V technology.
Q. And who represented that to you, sir? Who represented
to you that what is at issue in the Linux operating system and the
accusations SCO was making about it is in SCO's latest and greatest
technology?
593
A. It seems pretty obvious to me just in the course of
discussions that we're developing a license based on UnixWare.
You've seen evidence of that, and we priced it accordingly. Once
again, we don't sell old stuff that is irrelevant; we sell our
latest technology and bring that forward. So it was 1 plus 1 equals
2.
Q. Do you believe, sir, that whatever was incorporated or
that you believed, you institutionally, SCO, the company believed
was incorporated in the Linux from UNIX was commercially
viable?
A. Can you repeat the question?
Q. Yeah. It's not a very good one. Let me start over.
You had a belief about methods and concepts and codes from UNIX
having been incorporated into Linux; correct?
A. That's my understanding.
Q. Do you believe that those methods and concepts and
codes are commercially valuable?
A. Yes.
Q. And why do you believe that?
A. It's how -- based on how the product has been
developed and the intellectual property that we've created as a
company and how we derived our releases, it's spent years and years
developing that technology. And someone takes your stuff, you're
going to protect and fight for your rights.
594
Q. In fact, you believe, sir, that that code and those
methods and concepts converted Linux into a hardened enterprise
quality operating system, don't you?
A. Well, once again, I'm not sure I'm the best one to
testify on those issues. I did not -- was not responsible for the
SCOsource business. I did not sell the SCOsource technology. We had
a separate division and team, sales team that focussed on those
areas. We were just focussed on protecting our intellectual
property and selling the latest and greatest technologies to our
customers, whether it be to our Linux or IP license.
MR. JACOBS: Your Honor, I would like to publish Mr. Hunsaker's
transcript in the IBM case dated November 10, 2005. And I'd like to
read from that transcript.
THE COURT: Tell us pages and lines.
MR. JACOBS: Yes. Page 45 Line 3 through 46 Line 1.
THE COURT: Go ahead.
Q. BY MR. JACOBS: And you have a copy of that transcript
in front of you, sir, if you would like to follow along.
A. Sure.
Q. Question. Let's first take from a
business perspective.
Answer. Well, the relationship clearly
595
over time waned in terms of the relationship as
they were looking to migrate their solutions to
a Linux platform. So, therefore, as a result of
that, our revenues declined. And the relationship
has become, you know, very stagnant, if anything
at all. And once again, we attribute that. And
had this not all occurred with the rise and support
from IBM and other companies, you know, using
SCO's intellectual property and disclosing methods
and concepts that, you know, Linux from the outset
was always viewed as a hobbyist operating system
mainly for desktops for scale and architecture, not
at the enterprise, not hardened, not ready to
run mission critical applications like you'll
see within Sherwin Williams, within AutoZone,
within these customers.
UNIX and SCO was the de facto standard for the
Intel architecture. And through various initiatives
and breach of contracts, Linux was given a huge
boost through various, you know, code and methods
and information such as it would cause extreme
damage to SCO's business.
Did you give that testimony in response to that question?
A. I don't recall. I spent 30 hours in depositions.
596
I don't recall just a slice of that. But if that's what was
stated, yes.
Q. And, in fact, didn't you believe, sir, that the
contribution of what you believed to be SCO intellectual property
to Linux converted Linux from a hobbyist desktop system into a
hardened enterprise ready to run mission critical applications
operating system?
A. Clearly there was a direct correlation between the
code that was found within our technology, within SCO UNIX that was
placed in Linux illegally, we believe, through a breach of contract
that did propagate the Linux operating system through our latest
technologies.
Q. Did the alleged contribution of code and methods of
concepts -- and methods and concepts from what you believed to be
SCO UNIX into Linux convert Linux from a hobbyist desktop operating
system to an enterprise hardened ready to run mission critical
applications operating system?
A. As I testified there, that is part and parcel to what
went wrong and how we believe and I believed at the time Linux did
advance through the use of our technology.
Q. Thank you, Mr. Hunsaker.
MR. CYRULNIK: No questions.
THE COURT: Thank you, Mr. Jacobs.
I assume this witness may be excused.
And you may call your next witness.
597
MR. CYRULNIK: Your Honor, we call Jay Peterson.
THE COURT: Come forward and be sworn, please, right here in
front of the clerk of court.
THE CLERK: Come right up here, please. Raise your right
hand.
JAY PETERSEN,
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.
Please state your name and spell it for the record.
THE WITNESS: Jay Petersen. J-A-Y P-E-T-E-R-S-E-N.
THE CLERK: Thank you.
THE COURT: Go ahead, Mr. Cyrulnik.
MR. CYRULNIK: Thank you, Your Honor.
DIRECT EXAMINATION BY MR. CYRULNIK:
Q. Good afternoon Mr. Petersen. Are you currently
employed?
A. Yes, I am.
Q. What is your current employment?
A. I'm director at UNIX Engineering at SCO Group.
Q. How long have you held that position a director
for
598
SCO?
A. Since 1997.
Q. And when did you first start working for SCO?
A. 1995 when SCO acquired the UNIX business from
Novell.
Q. And were you involved in the UNIX business prior to
joining SCO?
A. Yes, I was. I joined Bell Labs in 1980, did systems
engineering for five years. In 1985, I joined the UNIX development
group in Bell Labs, worked there that until 1990. At that point, I
left and went to a Windows startup software company for a few
years. I came back to Novell, again came back to UNIX in 1993 and
stayed there through the transition desk of SCO.
Q. So with the exception of the three-year period when
you joined the startup company, you were involved in the UNIX
companies for almost 20 years?
A. Right.
Q. And before you began with Bell Labs in 1980, can you
briefly describe your employment?
A. Yeah. Before that I had a career in academia as a
physicist. I worked at the University of Minnesota and the last
five years at Yale University. I did a lot of programming in the
course of that work.
Q. And so it's fair to say you've almost got 35 years
599
worth of programming experience?
A. Yes.
Q. And can you briefly summarize your educational
background for the Court?
A. Yeah. I have a bachelor's degree in math from the
University of Michigan in 1969; a master's degree in 1971 and a PhD
in physics in 1974.
THE COURT: Could you pull the mike down just a little bit?
THE WITNESS: Sure.
THE COURT: Thank you.
Q. BY MR. CYRULNIK: Mr. Peterson, I'd like to go back to
the 2000 period, 2000 to 2003 time period for the moment. And can
you generally describe your role with SCO during that period?
A. Yeah. At that point I was involved in the development
of new releases of the UnixWare, probably 7.12 in that time
frame.
Q. And what were your responsibilities?
A. I was managing a group of engineers that were building
that product.
Q. And you say you were involved in developing UnixWare
7.12, I believe it was?
A. Right.
Q. At that time?
600
From an engineering perspective, did you have an understanding
as to how a new release of UnixWare was developed?
A. Yes. I'd seen that going on for 20 years and was
involved in that process at that point, too.
Q. And can you explain to the Court what your
understanding was as to how a new release of UNIX System V was
developed?
A. Yeah. We would, of course, start with the previous
lease, work with our customers to understand what new things needed
to be added, what other things could be taken out. This is a
commercial product, of course, so that was all driven by the value,
either value had to be added to that system or there were parts
that were no longer any commercial value, and we dropped those
out.
Q. And Mr. Peterson, during your 20 years in the UNIX
business, were you personally involved in that process of designing
a new release?
A. Yes, I was. Often my role involved working with some
of our major customers, hardware vendors, for example. They were
the ones most interested in giving us requirements for new
features. As they developed new hardware, the operating system had
to reflect those new features or it wouldn't be useful, and the
hardware wouldn't be fully taken advantage of.
601
Q. And can you give the Court an example or some examples
of features or technology that would not have been carried forward
to the next release of UNIX System V?
A. Yeah. A lot of that was driven by the evolution of the
hardware itself. Either the core processor or the devices that are
connected to the computer. Simple examples are some kind of devices
just became completely obsolete and wouldn't be recognized today,
things like paper tape readers and teletypes, any special support
we had in the operating system for those things is long gone at
this point.
Q. So there was specific codes in the operating system
that dealt with interfacing with those things that you mentioned,
tapes or floppy disks?
A. Right. Drivers in those cases and other hardware
aspects. Typically everything new about hardware or not had some
analog or supporting code in the operating system.
Q. So with respect to that specific code that dealt with
a piece of hardware, for example, a floppy disk, would you carry
that piece of code forward when replacement of floppy disks came
out, for example?
A. No, we wouldn't. We would want to simplify our code
base. And our customers would tell us they didn't want that in
there. They didn't want to struggle with supporting things, old
devices, either. So we were both decided to move old code out.
602
Q. And code related to hardware that was still in use and
wanted in the marketplace, what did you do with that code?
A. We carried it forward. You know, for example, if we
added something new in a particular release and that kind of
hardware continued. USB is an example of that. We added that in the
late '90s, and, of course, USB has gotten more and more important.
So that code has been carried forward and further evolved.
Q. Mr. Peterson, I'd like to now turn to a little later
in the time period 2002-2003 and focus in on then for a moment.
Were you involved with any agreements that SCO entered into during
that time period?
A. Yes, I was.
Q. And which agreements were those?
A. We had a source license agreement with Sun and another
one with Microsoft.
Q. Let's begin with the Microsoft agreement. I'd like to
show you Exhibit SCO 237.
MR. ACKER: Can I have a copy of that, please?
MR. CYRULNIK: Sure.
Your Honor, may I approach?
Q. BY MR. CYRULNIK: If you can flip approximately to the
sixth or seventh page of that Exhibit SCO 237.
Do you recognize this document, Mr. Peterson?
A. Yes, I do.
603
Q. And is this a document that memorialized the agreement
of Microsoft that you said you were involved in in 2003?
A. Yes, it is.
Q. Were you involved in negotiating the Microsoft
agreement?
A. A little bit, yes.
Q. Who was the lead negotiator of that agreement?
A. Chris Sontag.
Q. What was the primary involvement that you had with
that agreement?
A. As I said, a little bit while it was being drafted,
but most of the work I did on this was delivering technology that
was licensed by Microsoft from us.
Q. And which sections of this agreement relate to the
technology that you delivered to Microsoft?
A. I think Section 3 is a licensing UnixWare and is a
delivery of UnixWare code, and Section 4 gives further rights to
the UnixWare code and also adds OpenServer code and prior
products.
Q. And I believe you stated --
MR. ACKER: I'm sorry. The exhibit is on the screen. What exhibit
is it?
MR. CYRULNIK: It's SCO 237.
(Discussion held off the record.)
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THE COURT: Did you want that on the record? Because she couldn't
hear you if you did.
MR. CYRULNIK: Sorry about that.
MR. ACKER: No, Your Honor. It's just the copy of the agreement
that he's given me has the amendment in front so I'm confused, but
I think I found where I am. Thank you.
Q. BY MR. CYRULNIK: Mr. Petersen, I believe you testified
that Section 3 of the Microsoft agreement related to an option to
purchase UnixWare license?
A. Yes.
Q. And then you said Section 4 of the agreement, I
believe you testified, related to an option to purchase a full
UnixWare license, an OpenServer license and you said older
technology, as well?
A. Yes.
Q. And did you have an understanding as to the difference
between the UnixWare license under the first option, Section 3, and
the expanded UnixWare license under Section 4 that you
referenced?
A. Yes, I did. And in Section 3 there were some
limitations on the way Microsoft could use the code it was
licensing. It could only use it in a subset of the products it
sold, and I think it had to appear in something called the SFU,
services for UNIX. So it kind of restricted the amount of places
that they could sell this code.
605
Q. And if you could turn to Section 3.7 of the agreement.
Are those the license limitations that you were referring to when
you said the Section 3 license had limitations?
A. That's right. Yes.
Q. And as an engineer or based on your involvement in the
negotiations of the agreement, did you have an understanding as to
why Microsoft would want the restrictions in Section 3.7
lifted?
MR. ACKER: Objection; calls for speculation as to what Microsoft
thought.
THE COURT: Well, he asked if he had an understanding.
Did you have one?
THE WITNESS: Yeah, I had an understanding.
THE COURT: You can ask him how he obtained it.
MR. CYRULNIK: Sure.
Q. BY MR. CYRULNIK: What was the basis for that
understanding?
A. Well, the way that the license was structured and the
conversations that I had in particular about this section,
Microsoft was concerned about how it could use this technology to
provide compatibility through this SFU feature. And the
negotiations about 3.7 involved what was the scope of that, how
many systems, what kind of limitations they could have on
606
that, so....
Q. Did you have an understanding at the time as to the
significance of that restriction?
A. Yeah. It was my understanding was what they were doing
was this license was so they could add better compatibility to UNIX
into Microsoft. And that's why they wanted this.
Q. And, Mr. Peterson, under Section 4 under the Microsoft
agreement, under the option delineated in Section 4, were the
restrictions or those that you just described, were those
lifted?
A. Yeah. It basically gave them broader rights to use
this compatibility, take this compatibility approach with every
version of Windows if they wanted to. And it kind of broadened
their ability.
Q. I believe you testified, look at Section 4 now, that
there were in addition to the expanded UnixWare license there were
other under Section 4 there was an OpenServer license?
A. Right.
Q. And there was also Legacy UNIX product that were
provided under Section 4?
A. That's right.
Q. And I believe you testified, were you involved in
collecting the deliverables, the source code that was
607
ultimately provided to Microsoft under this agreement?
A. Yes, I did collect that and deliver it to
Microsoft.
Q. I'd like to direct your attention to SCO Exhibit 391.
And if you'll take a look at that document. Tell me if you
recognize it.
A. Yes, I do.
Q. And this document appears to be a series of e-mail
exchanges between you and someone named Doug Miller or Rich
Wickham?
A. That's right.
Q. Who's Doug Miller?
A. Doug Miller was a UNIX -- or rather a Microsoft
technical director.
Q. And did you interact with Doug Miller during the 2003
time period?
A. Yeah. Through e-mails like this.
Q. Turn to Page 2 of that exhibit. And I believe there's
an e-mail dated September 2nd, 2003, to you from Doug Miller. Do
you see that on the back of the page?
A. Yes, I do.
Q. And will you zoom in on the bottom lines? You
write:
As was suggested in Exhibit C, there are a few
older items, items that we no longer have. These
608
are noted as not available on the spreadsheet.
Regards.
A. Right.
Q. Do you recall writing that?
A. Yes.
Q. Mr. Petersen, did you collect all the source code that
was ultimately delivered to Microsoft?
A. Yes, I did.
Q. You were personally in charge of that?
A. Yes.
Q. And did you provide Microsoft with all the UnixWare
source code?
A. Yes.
Q. Did you provide Microsoft with all the OpenServer
source code?
A. Yes.
Q. And did you provide Microsoft with all the older UNIX
technology source code?
A. No. We didn't provide them everything on that list.
And that's why I sent this e-mail and also had a spreadsheet that
kept them apprised of what we could or couldn't find.
Q. In response to this e-mail, do you recall Mr. Miller
ever communicating to you that Microsoft had a problem with SCO's
inability to provide some of the older
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legacy code?
A. No.
Q. Did Microsoft ever ask for an adjustment of the price
that they paid under Section 4?
A. No.
Q. Were you surprised that Microsoft didn't demand any
adjustment for the price after writing this e-mail?
A. No, not at all.
Q. And as an engineer, do you have an understanding as to
why Microsoft didn't demand any adjustment for the price?
MR. ACKER: Same objection; calls for speculation. Calls for
hearsay. It's based upon a conversation.
THE COURT: Sustained.
MR. CYRULNIK: I'll rephrase.
Q. BY MR. CYRULNIK: Did you ever have any conversations
with Mr. Miller with respect to the inabilities of SCO to provide
older legacy technology to Microsoft?
MR. ACKER: Objection; calls for hearsay.
THE COURT: Well, he can answer that yes or no, so we don't know
whether it does or not.
MR. ACKER: All right. I agree.
THE WITNESS: No.
Q. BY MR. CYRULNIK: Okay. Would you turn to Page 1 of the
document that you're looking at, it's a subsequent e-mail nine days
later, September 11th. And it's an e-mail
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from you again to Doug Miller. And focus in on the bottom Number
2. You write:
CD number 2 in the OpenServer source product
contains restricted third party source, the
OpenServer analogs of Exhibit B restricted source
for UnixWare. Since the focus of the contract was
on UnixWare technology, we never addressed the
restricted source that is in the OpenServer
product.
Is that a fair reading of what you wrote?
A. Yes.
Q. Can you explain what you meant by, "since the focus of
the contract was on the UnixWare technology," when you wrote that
in 2003?
A. Well, Section 3, of course, was all about UnixWare.
The discussions that we had was providing compatibility for the
latest version of UNIX, which was UnixWare. So my assumption, then,
was what they were most interested in was UnixWare compatibility.
That's why we had all this detail about the parts of UnixWare that
they could use. This was a question about, did they require the
same thing for OpenServer? And they didn't. And that's why they
were interested in that product.
Q. I'd like to now turn to the other agreement you said
you were involved in. I believe you testified you were
611
involved in the Sun agreement in 2003, as well?
A. Yes.
Q. Let me show you SCO Exhibit 185. Do you recognize that
document, Mr. Petersen?
A. Yes, I do.
Q. What is that document?
A. This is the license that we negotiated with Sun.
Q. Were you involved in the negotiating the Sun
agreement?
A. No, I was not.
Q. Who did negotiate that agreement?
A. Chris Sontag.
Q. What was the extent of your involvement with the Sun
agreement?
A. I was given a copy of it after it was signed and told
to deliver the technology that we -- Sun had gotten rights to in
this agreement.
Q. I'd like to -- if you can flip on SCO Exhibit 185 to
Attachment 1, which is towards the end. Page 11 of the
agreement.
A. Okay. Yep.
Q. Mr. Peterson, when you say you were involved in the
technology, is this the technology that you were providing Sun
under the 2003 agreement?
A. Yes, that's right.
612
Q. And can you briefly review for the Court the
deliverables that SCO provided to Sun under this agreement?
A. I'm sorry. Repeat that.
Q. Sure. Can you briefly review for the Court the
deliverables that SCO provided to Sun under the 2003 agreement?
A. All right. There was a current UNIX source code
described here. Drivers for UnixWare and for OpenServer and then
prior UNIX products.
Q. And that current UnixWare source code, that was listed
under Page 12 on Number 2?
A. Right. That was open UNIX 8 UnixWare 7.1.2, 7.1.3.
Q. And before that list, I think you said the other older
technologies that you provided to Sun?
A. Right.
Q. And under Number 3 on Page 12 of the agreement, are
those the drivers that you were referring to?
A. Yes, that's right.
Q. I'd like to start with the UnixWare on the old UNIX
source code that you provided Sun. Did you collect that code
personally?
A. Yes, I did.
Q. And did you provide Sun with all of the older releases
of System V?
A. No. We couldn't find all the releases on this
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list. So I had to tell them we couldn't deliver everything.
Q. And did Sun ever communicate to you it had a problem
with the fact that you weren't able to deliver all of the older
releases of System V?
A. No.
Q. Did it ever ask for a price adjustment?
A. No.
Q. Were you able to provide Sun with all of the UnixWare
source code?
A. Yes.
Q. And I believe you said the other aspects of what you
provided in addition to UnixWare and the older UNIX source code
were their drivers?
A. Right.
Q. Mr. Peterson, what are drivers?
A. That's software that's added to the operating system
to support a particular device, a special kind of disk drive or
some other thing that gets connected to a computer.
Q. All right. Are drivers important it an operating
system?
A. Yes, they are. Typically when a person buys a computer
they want to have peripherals added to it. Most of those are
supported by drivers.
Q. Did you personally collect and deliver to Sun the
drivers that were required to be provided to Sun under this
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agreement?
A. Yes.
Q. And where were those drivers from? Which operating
system?
A. UnixWare and OpenServer.
Q. Do you remember how many drivers you provided?
A. It was hundreds.
Q. I'd like to show you SCO Exhibit 19. I'd like to ask
you if you recognize the document?
A. Yes, I do.
Q. And it's entitled, Clarification of License Grant to
UnixWare and OpenServer Drivers; is that correct?
A. That's correct, yep.
Q. And what role did this document play in your
collecting and gathering the drivers that were required to be
provided to Sun under the 2003 agreement?
A. Well, we needed to provide Sun. The OpenServer and
UNIX were drivers, but there was a difference in the rights we had
and the rights we could transmit to Sun. So this document explained
that. Most of the drivers, you know, we had the source code and we
could provide the source and Sun could use the source. In some
cases the drivers had come from third parties, and there were
restrictions associated with those drivers. And this document
explained those.
Q. Mr. Peterson, did you provide Sun with any
615
non-UnixWare or OpenServer in particular any pre-UnixWare System
V drivers?
A. No.
Q. And as an engineer, did you have an understanding as
to what Sun would be able to do with drivers in conjunction with
the operating system it was getting?
A. Yeah. We would let them produce a version that would
support this hardware. In the case of Sun, Sun had a Solaris for
Intel products, and these drivers could be used or modified to
provide support for those hardware devices in Solaris.
Q. Did Sun ever request any older drivers?
A. No.
Q. I'd like to direct your attention to SCO Exhibit 391,
please. And if you could turn to the middle of that exhibit. I
apologize. It's not numbered in an easy fashion. But if you turn to
the middle of the exhibit, there's a page labeled 74 at the bottom.
It appears after Exhibit D. And the top of the page it's an
e-mail.
A. Okay. Yes, I have it.
Q. I think we have it on the screen over here. I'd like
to zoom in on the top half. And do you recognize what that e-mail
exchange was?
A. Yes, I do.
Q. And I believe it says it's an e-mail from you,
616
Jay Petersen, to Andy, A-N-D-R-E-W-R, at Sun, dated Monday, the
21st of April 2003?
A. Yes.
Q. Who is Andy?
A. Andy was Andy Roach. He was a technical director in
the UNIX development group at Sun. He's the person that I delivered
all the code to.
Q. Okay. You wrote to Andy in the second paragraph of
that e-mail:
I have a question about older binary drivers.
There are binary drivers in some of the earlier
versions of UnixWare. In some cases, these are
just earlier versions of the latest binary
drivers. And in other cases, they may simply be
obsolete. The vendor may be out of business, et
cetera. Do you think we need to list all the
binary drivers in all the earlier versions of
UnixWare that we have shipped you? My feeling is
that if you wanted to use any driver, the version
you would want would be the one from the latest
version of UnixWare or OpenServer, parentheses,
the list in the letter, end paren.
Do you see that, Mr. Petersen?
A. Yes.
Q. Can you explain the background of what prompted
you
617
to ask Andy Roach that question?
A. Yeah. We'd done a lot of research on the current
drivers so we knew what our rights were, and we knew what we could
tell Sun about. There were older drivers and older versions of
UnixWare. And this was really a question whether we had to do all
that hunting down to find out whether, you know, exactly what the
situation was with the older drivers. I don't think they were
important to Sun. That's why I wrote this e-mail.
Q. And those old drivers were from the older versions of
UnixWare. Those were a couple years old. How old were the versions
of UnixWare?
A. Yeah. It would have been the oldest 1995. And some of
the other ones would have been in the late '90s.
Q. Did you ask Andy whether he wanted you to provide him
with the even older drivers of pre-UnixWare releases?
A. No. That didn't come up.
Q. Why not?
A. Well, he didn't ask for them, and it wasn't spelled
out in the agreement. And the focus really was on the latest
drivers, again, because they were the most valuable and useful
things.
Q. Okay. Mr. Petersen, I'd like to show you one other
series of exhibits. And they're in your booklet. They begin with
Novell Exhibit 440. And I'm just going to list them for
618
the record. It's Novell Exhibits 440, 441, 442, 443, 444, 445,
446, 447, 448, 449, 450, 451, 452, 453, 454, 455, 456, 457, 458 and
459.
A. Right.
Q. And can you briefly look at those exhibits, Mr.
Petersen?
A. Yes, I have.
Q. The let's take the first one as an example. Exhibit,
Novell Exhibit 440. Can you describe what that is?
A. Yeah. It's a comparison of a file called diskusg.c in
OpenSolaris on the left-hand side; and on the right-hand side, it's
a file with the same name taken from the source code tree of System
V Release 4-386.
Q. As an engineer, have you had occasion to review source
files such as these?
A. Yes, I have.
Q. And this particular document, 440, is comparing, like
you said, two source files?
A. Right.
Q. And it was a source file from OpenSolaris on the
left-hand side and AT&T SVR4 on the right-hand side?
A. Yes.
Q. What does the comparison show?
A. It shows there is code in the OpenSolaris file that is
the same code in the SVR4 file. The two files aren't
619
identical. There's more code usually on the Solaris side, but
there are exact matches on many lines.
Q. So would you say these are similar?
A. Yes.
Q. Mr. Petersen, do you know whether the file that's
identified over here from OpenSolaris, the source file from
OpenSolaris, whether that also appears in UnixWare?
A. Yes, it does.
Q. It does.
A. UnixWare 1.1 in particular, that's the one that I
looked at, has the same file with the same name.
Q. I'd like to turn to Novell Exhibit 441. This is the
second of 21 exhibits that Novell has introduced on this front.
Can you briefly describe the relationship between in exhibit and
the previous one?
THE COURT: While he's finding that, I don't know what Kim's list
shows, but mine shows that 444 and 454 and 457 were not admitted.
They're your exhibits, though, so I assume you're going to use them
and you don't care.
MR. ACKER: They're fine.
MR. CYRULNIK: I will move to admit them.
THE COURT: 444, 454 and 457 are received.
(Whereupon, Novell Exhibits 444, 454 and
457 are received.)
620
Q. BY MR. CYRULNIK: I'll repeat the question. I'm just
asking if you can briefly describe to the Court what this Exhibit
441, Exhibit 441 depicts?
A. Yeah. This is the same format as the previous exhibit,
except it's now talking about a file called dispadmin.c. And again,
there's a Solaris version and there's a SVR4-386 version. And once
again, OpenSolaris lines superset, that is, many of the lines in
the right-hand side are present in the left-hand side.
Q. I'd just like to ask you the same question that I
asked you with respect to the previous exhibit. Mr. Petersen, do
you know whether the OpenSolaris source file on the left-hand side
of the page also appears in UnixWare?
A. Yeah. The same case as before, there's a file of
exactly the same name and UnixWare 1.1, and it's substantially
similar to both of these files.
Q. And I'm not going to bore everybody with all the
exhibits. But did you do a similar exercise in terms of researching
the 21 exhibits, the 21 source filings?
A. Yes.
Q. That are OpenSolaris and SVR 4?
A. Yeah. I looked at every one of these and found the
same file in UNIX 1.1.
Q. Every one of the 21 filings in OpenSolaris are in
UnixWare, as well?
621
A. Yes.
Q. Thank you, Mr. Petersen.
No further questions, Your Honor.
THE COURT: Thank you, Mr. Cyrulnik.
Mr. Acker, you may cross-examine.
MR. ACKER: Thank you, Your Honor.
CROSS-EXAMINATION BY MR. ACKER:
Q. I hand you a copy of your prior testimony. It's
crowded up there.
Good afternoon, Mr. Petersen.
You testified a bit about your impressions regarding the Sun and
Microsoft license on direct; correct?
A. Yes.
Q. Is it fair to say that you were not involved in the
negotiation of the Microsoft license; correct?
A. No. I was involved a little bit in the negotiation of
the Microsoft license, the wording in Section 3.
Q. Okay. Why don't we take a look at your deposition.
It's your IBM deposition on February 27th, 2006. And it's at Page
150, Lines 1 to 10.
THE COURT: Has that been published?
MR. ACKER: If I could, Your Honor.
Q. BY MR. ACKER: And you provided this testimony back in
2006.
622
Okay. Do you know how many source code
licenses were sold during that time frame?
That's the question.
Answer. Two that I'm aware of.
Question. Two from October 2002 to fall
2003?
Answer. Right.
And who were those sold to?
Answer. Sun and Microsoft.
Question. And were you involved in the
negotiations for these source code licenses?
Answer. No.
A. Yes.
Q. Is that testimony accurate?
A. Yes, it was. If you read a little further, you'll see
that I modified that testimony.
Q. Well, what you modified when you testified further was
that you were involved in collecting and delivering source code
pursuant to the licenses; correct?
A. No. But I think if I read starting from Line 12, it
says:
Chris Sontag was. I don't know who else was
in both cases -- well, let me clarify that. I was
not involved at all in the Sun license. I was
involved in negotiating some of the details in the
623
Microsoft license now that I think about it.
Q. And those details related to the amendment of the
license; correct?
A. No. They related to the wording in Section 3.
Q. As to the Sun license, you never sat down with anyone
from Sun and engaged in negotiations with them about the license;
that is correct?
A. That's right. With Sun, no.
Q. So when you testified in direct that you made certain
assumptions about the Sun licenses and Microsoft licenses, those
were just that, assumptions; correct?
A. Yes.
Q. And that's not based on any interaction you had during
the negotiation process with anyone from Sun; correct?
A. I didn't negotiate with anyone from Sun during that,
yeah, during the contract negotiation, that's right.
Q. And you were actually part of the SCOsource program;
correct?
A. Yes. I worked for Chris Sontag at that point.
Q. You were Chris Sontag's deputy beginning the fall of
2002 in the SCOsource program; correct?
A. That's right.
Q. But you were not involved in the negotiation of the
Sun license; correct?
A. That's right.
624
Q. And you were only minimally involved in the
negotiation of the Microsoft license?
A. Right.
Q. And any testimony that you've given of either of those
licenses are simply assumptions; right?
A. That's right. Based on my technical understanding of
what was going on.
Q. But not based on discussions with anyone at Sun or
Microsoft during those negotiations; right?
A. The only exchanges I had were e-mail exchanges
clarifying things we could or couldn't do. So I got an impression
of what they were thinking about doing from that. But, you're
right. Nobody from Sun said precisely, this is what we're going to
do.
Q. And no one from Sun precisely said, this is why we
entered into this license; right?
A. That's right.
Q. And similarly, for Microsoft you talked about what
might or might not be delivered after the license was executed;
correct?
A. That's right.
Q. Now, as I mentioned, you were asked late in 2002 to
join Mr. Sontag to run the SCOsource licensing campaign at SCO;
correct?
A. Right.
625
Q. And you were brought in to help with SCOsource in
order to generate more revenue from SCOsource code licenses or to
generate new source code licenses; correct?
A. Well, to generate more revenue from SCO's intellectual
property, not necessarily limited to source licensing.
Q. All right. Why don't we take a look at your deposition
2-27-08, IBM deposition. At Page 117 Line 16 to 24.
If I could publish that, Your Honor.
THE COURT: Yes, you may.
THE WITNESS: I'm sorry. What page was that again?
Q. BY MR. ACKER: Sure. 117.
A. Okay.
Q. Line 16 to 24.
MR. CYRULNIK: You said 2-27-08. Did you mean 2-27-06?
MR. ACKER: I did.
Q. BY MR. ACKER: Do you have that page, sir?
A. Yes, I do.
Q. And we have it up on the screen for you. And you were
asked the following questions and provided the following
answers:
And why don't you then help me explain
that. You said you were brought on to help
626
generate more source code license sales; is that
correct?
There's an objection and you answered:
No. Yeah, I was brought on to explore new
ways of generating revenue from our source code
licenses or generating new source code licenses.
Correct?
A. Right.
Q. And that's why you were asked to join -- that's why
you understood why you were asked to join SCOsource; right?
A. Right.
Q. And the source code that was going to be licensed in
the SCOsource program was SCO's UNIX source code; correct?
A. Right.
Q. And after you were assigned to SCOsource, you soon met
with lawyers including Darl McBride's brother Kevin McBride to map
out the strategy for the SCOsource campaign; correct?
A. Yes. I was involved in that, yes.
Q. So you come on in October, and immediately you're
meeting with lawyers including Mr. McBride's brother in order to
map out how SCOsource is going to work; right?
A. Yes.
Q. And that included working out a litigation strategy;
right?
627
A. There was some discussion of litigation at that point,
I think. Yeah.
Q. And it's true, isn't it, that the SCOsource licenses
and the SCOsource program are broader than the traditional AT&T
licenses and give broader source code rights? Isn't that right?
A. Well, I'm not an expert in licensing. My impression
is, yes, they do give broader rights.
Q. And the SCOsource licenses were licensing the, quote,
same materials as the traditional AT&T source code licenses;
right?
A. I'm not sure I understand what you mean by the same
materials.
Q. Okay. Let's take a look at your deposition again at
Page 315 Line 24 carry over to 316-7.
If I could publish that?
THE COURT: Yes.
Q. BY MR. ACKER:
Question. What's the difference, then? Why
were some of them SCOsource licenses as opposed to
just source code licenses?
And your answer:
As much as anything it's the time when
they sign the license. The licenses are broader,
give broader source code rights than some of
628
the -- than the traditional AT&T licenses. But
nonetheless, they're licensing the same materials.
The rights are just different.
Correct?
A. Okay. That's what I said, yes.
Q. That's a true statement; right?
A. Yes. And this -- yes. And what I meant here by it was
the same materials, meaning the source code, the intellectual
property and that source code.
Q. And when you referred to that, you were referring to
the UNIX, the SCO UNIX source code; correct?
A. Yes.
Q. And the source code rights under the SCOsource
licenses were broader than other SCOsource codes licenses -- strike
that.
And the SCOsource licenses under the SCOsource program were
broader than other SCO regular code licenses because they had fewer
restrictions on sublicensing and distribution and exposure of the
source to the licensing customers; correct?
A. That's right. Given as shown by the two examples that
we've already seen, the Sun and the Microsoft license.
Q. And in both the Sun and the Microsoft licenses, they
obtain broader rights, that is, Sun and Microsoft did, to
sublicense the code they got to their customers; correct?
629
A. Yes.
Q. And that was the SCOsource program; right?
A. Yes. That was part of it.
Q. Both were part of the SCOsource program; correct?
A. Yes.
Q. Let me show you an exhibit. Exhibit 233.
Have you had a chance to look at that exhibit that we marked as
Exhibit 233?
A. Okay.
Q. Why don't we start at the bottom. And if you could
highlight -- this is an e-mail. In the middle of the document is an
e-mail from you, and you've attached to the bottom a snippet from
an article or it looks like a link to an article regarding Sun
OpenSolaris; right?
A. Right.
Q. And you sent the e-mail to Chris Sontag on the 6th of
August 2003; right?
A. Yes.
Q. And what the article is talking about is that, Sun
takes a crack at desktop Windows, eWEEK. Do you see that?
A. Yes.
Q. And it says:
A Sun Microsystem executive told a Linux world
audience that its new Mad Hatter product, a
unified desktop offering based on Linux, will be
630
priced at half of the Microsoft charges for a
Windows environment. Sun's chief software
engineer, Jonathan Schwartz, also said that Sun
would protect its customers from any potential
Linux-related legal action from SCO.
Do you see that?
A. Yes.
Q. And you were the deputy of the SCOsource program
--
A. Yes.
Q. -- at this time?
A. Yes.
Q. In July of 2003?
A. Yes, I was.
Q. And the purpose of that program was to give -- take
licenses or get licenses of people who are using Linux;
correct?
A. No, not necessarily. The licenses we've just talked
about are for Sun and Microsoft, and they didn't use Linux.
Q. But the focus of the SCOsource program was to -- 1,000
letters went out from Mr. McBride to Linux users all over the
country; correct?
A. That was one of the aspects of that program.
Q. And in that letter, Mr. McBride told those users of
Linux, Hey, we think our IP is in Linux; correct?
631
A. That's correct.
Q. And he told them, you better take a license from us or
you're going to get sued; correct?
A. I don't remember exactly how he said that. But, yes,
that was the impression.
Q. And that was the SCOsource program; right?
A. Yes.
Q. And when you see this, you become concerned;
correct?
A. Yes. Yeah.
Q. And why don't we take a look at your e-mail up
above.
You wrote to Chris Sontag, your boss, head of SCOsource:
Hi, Chris. Looks like Sun intends to use its
broader license to protect its Linux customers.
Do you see that?
A. Yes, I do.
Q. And then you wrote:
That's fine. But I hope they don't decide to
go after the rest of the market.
Do you see that?
A. Yes.
Q. What did you mean when you wrote that?
A. Well, I knew that Sun had broader rights and that
632
they could sublicense some of those rights. And I was wondering
whether they were going to -- whether that was the interpretation.
What they were talking about here was their Linux stuff, their
Linux program. And I wondered whether they would try to take that
and do anything more than that.
Q. You were worried that they were going to provide
indemnity to all of these Linux users out there; right?
A. I didn't know if they could or not, but I wondered if
whether that was an issue.
Q. And that was a concern for you as a deputy at
SCOsource; correct?
A. Yes.
Q. And that would have been a commercial -- that would
have commercial value for Sun if they could provide indemnity to
customers that were using their OpenSolaris product; right?
A. It would.
Q. It would be valuable, extremely valuable; right?
A. Yes.
Q. And it would seriously undermine the SCOsource
program; correct?
A. It could, yes.
MR. ACKER: I don't have anything else, Your Honor.
THE COURT: Thank you, Mr. Acker.
Any redirect, Mr. Cyrulnik?
MR. CYRULNIK: No, Your Honor.
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THE COURT: You may step down Mr. Petersen.
I assume this witness may be excused?
MR. ACKER: Yes. On behalf of Novell, Your Honor.
MR. CYRULNIK: And on behalf of SCO.
THE COURT: You don't want to do another witness today? You
better tell me where we are and whether we need to come in at 8
o'clock to get out at 1:30.
MR. SINGER: Your Honor, we only have one remaining witness. It
will be a short witness, Mr. Nagle. I think the direct will be 10
or 15 minutes. I don't know about cross.
THE COURT: Do you have any rebuttal?
MR. JACOBS: I don't think we'll have a rebuttal case, Your
Honor. The last thing we need to do is there are a few exhibits we
need to move in.
THE COURT: So you only have one more witness, and the witness
won't take very long?
MR. SINGER: That's right, Your Honor.
THE COURT: Well, let's come in at 9:00, then.
How long will your closing arguments?
MR. SINGER: I think 30 minutes would be sufficient.
MR. ACKER: 30, 45, Your Honor.
THE COURT: So maybe an hour and a half total.
All right. So let's see. We'll see you at 9 o'clock in the
morning.
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MR. SINGER: Thank you, Your Honor.
THE COURT: You'll get an extra half hour of sleep or worry.
Thank you. We'll be in recess.
(Whereupon, the court proceedings were concluded.)
* * * * *
635
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 May 1, 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
503 through 636 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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