I thought it would be fun to look at Chris Sontag's testimony as a whole, instead of just covering the SCO v. Novell trial according to the particular day. Sontag was called by Novell on the first day, April 29, 2008. They didn't finish so he was back on the stand on the 30th, so I've cobbled together the relevant sections from the two day's transcripts to show you the complete performance, stage front and center.
Two things stand out from his testimony: the attempt to assert that UnixWare and Unix are the same thing, which contradicts what SCOfolks used to say, not to mention reality, and his description of the Sun 2003 agreement.
As for UnixWare being what SCOsource and SCO's claims of infringement were all about, because allegedly UNIX System V means UnixWare, I give you a snip from page 4 of a Sontag Declaration from April of 2004, from early in the IBM litigation:
6. As to item 3, the kernels of AIX and Dynix/ptx in their entirety are modifications and derivative works based on UNIX System V. Nonetheless, SCO had its engineers and/or consultants identify all of the files in AIX and Dynix/ptx that have attributions to AT&T, SCO's predecessor in interest and the creator of UNIX.
AT&T is Unix System V, not UnixWare. UnixWare was Univel, a joint venture between Novell and USL. Duh. This declaration was before the Utah court told SCO that Novell retained the pre-APA (1995) copyrights to UNIX. And Sontag didn't mean UnixWare in this instance, since Sontag specifies AT&T copyrights. So the SCO story keeps morphing.
And with regard to what Sun was interested in, why they did the deal with SCO, Sontag says they met in 2002 to see if there were any business opportunities they could work on together, which raises some obvious questions, and Sontag later opines, when asked what code Sun was interested in, meaning, I gather, UnixWare or System V, that Sun was only interested in the latest and greatest, not legacy code. That is the opposite of what Scott McNealy told us, once Sun started to fess up to what Sun had done. In fact, one of the pieces Sun was interested in was Xenix, or so we were told, which was important to be able to open source Solaris. Xenix is as old as you get in SCO Unixland, pretty much, and there was an EU Commission complaint that eventually allowed Santa Cruz to remove it from its Unix products, despite Microsoft's desires, so clearly Sun wasn't interested *only* in the latest and greatest code in 2003. Besides, Sun is known for maintaining backward compatibility, so Sontag's description of what Sun wanted is puzzling.
As for the Sun license, according to Sontag, Sun under the 2003 liberalization of the earlier terms in Sun's 1994 license could open source Solaris, so long as they didn't use the GPL:
As part of the negotiations related to the
latest IP license from -- we entered into with
Sun, one of their desires of that license was the
ability to have a broader IP license where they
could to an extent open source Solaris with
restrictions that it could not be open sourced
into Linux or other open source licenses that did
not protect copyright ownership. That flies in the face of everything we've been told. How he can say it in the face of subsequent events is a bit hard to figure out, since Sun publicly said it's considering at least dual-licensing OpenSolaris, with the GPL being one of the two licenses. If what Sontag said were true, there'd be no way Sun could consider the GPL at all, let alone announce it publicly. And did SCO complain when Sun made the announcement? Or is this foreshadowing? I can't explain it, and without seeing the license, it's hard to have much of an opinion, but from all I do know, from all my sources, I don't think this is accurate. But that is what Sontag says. Sontag is a very difficult witness, but Novell's attorney, Eric Acker, simply compels him to admit certain things. When Sontag persists in saying that nobody paid for SysV, that it was thrown in as a freebie with UnixWare as a standard process, Acker shows him several agreements, one after another, where that didn't happen, and I found it funny. Here's a snip to show you how Acker pins Sontag to the wall, after Sontag tries to distinguish the Microsoft and Sun licenses from the other SCOsource licenses, and on the matter of UnixWare just being System V. SCO's position is that the other SCOsource licenses are not SVRX licenses, and the court has ruled that the Microsoft and Sun licenses are, at least in part: Q. But they were all SCOsource licenses; right?
A. They were all under the SCOsource division.
Q. Now, regarding the Sun agreement, if we could put
up Exhibit 187, Attachment 1, please.
Mr. Sontag, we put up on the screen Attachment 1 to
the 2003 Sun agreement. The first page of Attachment 1. And
you've testified that all of this software license, the 2003
license, was included in this attachment and licensed Sun
simply as legacy software or older versions of SVRX software
that was licensed along with the most recent version of
UnixWare.
A. Correct. And they already had a license to most of
this, anyways.
Q. And that was my next question. It's true, isn't
it, that Sun already had a license to all of this software on
the first page of Attachment 1 of 2002 license; right?
A. Yes. And that is -- again, that license for the
previous versions was just a standard practice. So, again,
licensing the latest version of UnixWare and incidentally
licensing all the previous versions.
Q. But because -- and that previous license, the 1994
Sun license to this exact same 30 versions of software was
fully paid up; correct?
A. Yes.
Q. And so Sun didn't need -- there was no need for Sun
to obtain a license. They didn't need a license, a re-license
to this additional 30 pieces of legacy software in 2004 except
that they wanted to expand their rights to distribute the
software; correct?
A. Again, this was all included just because it was a
standard practice of licensing the UnixWare source code.
Q. But Sun already had a license for this software;
right?
A. Yes.
Q. And what they wanted in the 2003 agreement was to
expand or, in your words, to soften the confidentiality
provisions relating to this software; correct?
A. Primarily, they wanted a license to the latest
version of UnixWare for their Intel work that they were doing.
Q. And with respect to this 30 versions of legacy
SVRX, they wanted to soften the confidentiality provisions
relating to the software; correct?
A. It was a minor part of the agreement.
Q. That's what Sun wanted; right?
A. Yes.
Q. And that's what SCO gave to them; correct?
A. Yes. It's all part of the agreement.
Q. Now, it's true, isn't it, that not all of this
pre-APA SVRX software is in the current version of UnixWare?
Correct?
A. Probably not. But I would suspect, you know,
anything that is valuable and important would still be in the
current version of UnixWare.
Q. But you've never done a line-by-line comparison to
determine what portions of this software, the legacy SVRX
software, is actually in the current version of UnixWare;
correct?
A. I have not.
Q. And you're not aware of anyone else having done
that analysis; correct?
A. I'm not aware of that analysis.
Q. And Sun didn't do that analysis, as far as you
know; correct?
A. Not that I know.
Q. And you're not aware of any expert for SCO doing
that analysis?
A. I'm not aware.
Q. And you're not aware of any technician or technical
person or engineer of SCO doing this analysis; correct?
A. No, I'm not. Novell in its opening statement already explained that when older versions of SVRX were attached without payment, it was because the company had already paid for those versions earlier. Anyway, I think you can see from this interchange how Acker demolishes SCO's position that UnixWare is just the latest version of UNIX System V, that SVRX code when it transferred was simply incidental to UnixWare, and that whole blah blah blah. You can see how Acker uses this testimony, with that from others, in his closing statement, but here's just a snip: Reason 5. Sun already had a license to all of the legacy software. There was no reason for that to be included in the legacy list or for them to get an additional list that included that software but for one reason, because they wanted to expand the confidentiality agreement, Your Honor. That's what the Sun 2003 license was about.
Reason number 6. In this very action in this Court, SCO has claimed that it suffered hundreds of millions of dollars of damages due to Novell's challenge to the ownership of the copyrights, the pre-APA copyrights. And yet, what they would have you believe now is that it's worthless. They come into Court and they say: You have challenged our title to those copyrights. We've been damaged hundreds of millions of dollars. You have stopped our SCOsource program.
That was the guts of this entire case, until now, when they have to explain why they're licensing SVRX revenue to Sun and Microsoft that all of a sudden -- and then they say, oh, no, no, no. No value, none. Negligible. Incidental. You can match each witness's testimony with the two sides' closing statements, to see why the lawyers asked the questions they did and how they use the answers. This is just one small example.
A couple of points I should probably explain so you'll understand some things that happened. First, you'll see in several places the lawyers for Novell objecting to leading questions. Here's what that is: a question phrased in such a way as to suggest the desired answer; a lawyer may ask leading questions on cross-examination Cross examination is when you get to ask questions of the other side's witness. Judge Kimball mildly restricts SCO, but not much. There is no jury, so he can be more relaxed about such things. At the end, you'll see quite a flurry of cross, redirect, recross. That tells you something important in the eyes of the lawyers happened. You might not see what it was on the surface, just like in chess a move by a knight might not immediately show what the strategy behind the move is. But a good chess player figures out the array of possibilities immediately and takes action. Indeed that is what happened here. Sontag was asked to compare the two licenses with respect to UnixWare rights, Microsoft's and Sun's, and he said they were about equal. Up pops Eric Acker for Novell immediately for redirect. I see it says "Time lapse" immediately after he indicates a desire to question Sontag on redirect. I'm guessing either someone on the team, like Michael Jacobs, for example, may have tugged on Acker's sleeve and they were in a huddle for a bit, or Acker himself was looking through documents and notes to prepare to question after this odd answer by Sontag. But you'll see that SCO's lawyer, Ted Normand, also gets into it, telling me neither side liked what Sontag said. They are in a duel that Sontag can't even see. Initially, Normand tries to establish the value of Microsoft's Section 4, which is where you find the long list of SVRX releases, as opposed to Section 3 which was about limited UnixWare rights, so he's trying to limit the value of Section 4, just in case SCO loses the argument that there was zero value to SVRX:
Q. Mr. Sontag, who was the principal negotiator for
SCO in the 2003 Sun and Microsoft agreements?
A. I was.
Q. Did either Microsoft or Sun have any UnixWare
license prior to entering into those 2003 agreements?
A. No, they did not.
Q. How much did Microsoft pay for its limited UnixWare
license in Section 3?
A. In Section 3?
Q. Including the option to exercise section.
A. About $8 million, I believe.
Q. If I told you 7 million, would that --
A. That's, yeah.
Q. Now, as between Microsoft's limited license to
UnixWare in Section 3 and Sun UnixWare license, who had the
broader license?
A. Can you repeat the question?
Q. As between Microsoft's Section 3 UnixWare license
and the UnixWare license that Sun obtained under its 2003
agreement, who had the broader license?
A. Sun did.
Q. In your view, did Microsoft obtain any additional
UnixWare rights under Section 4 of its agreement?
A. Yes.
Q. In your view, did Microsoft pay additional money
for its additional UnixWare rights under Section 4 on top of
the 7 million in Section 3?
A. Yes, it did. I mean, it was significantly
broadened, as I testified before.
Q. As between Microsoft's full UnixWare license under
Sections 3 and 4 and Sun's license, who had the broader
license?
A. I would view them as being equal.
Q. And how much did Sun pay under its 2003 agreement?
A. About $10 million.
MR. NORMAND: No further questions, Your Honor.
THE COURT: Thank you, Mr. Normand.
Anything else of this witness?
MR. ACKER: Just a second, Your Honor.
(Time lapse.)
MR. ACKER: One question.
REDIRECT EXAMINATION
BY MR. ACKER:
Q. You just testified in response to counsel that you
viewed the rights that Microsoft obtained under Section 4 of
its license as being equal to what Sun obtained; is that
right?
A. Effectively, yes.
Q. Do you believe that Microsoft had [the right to] open source
UnixWare under Section 4?
A. No, I don't.
MR. ACKER: Nothing else, Your Honor.
THE COURT: Thank you. I guess you meant two
questions.
MR. ACKER: I did. I apologize.
THE COURT: Mr. Normand?
That's all right.
RECROSS-EXAMINATION
BY MR. NORMAND:
Q. Mr. Sontag, having considered the question that was
just asked of you, in your view as between the full UnixWare
license that Microsoft had under Sections 3 and 4 and Sun's
UnixWare license, who had the broader UnixWare license?
A. Specifically to UnixWare, I view that they were
about equal. I mean, you also have to take into account,
which I don't think I fully explained with the previous
question, that Sun had significantly more rights in terms of
sublicensing and software distribution rights for their UNIX
technologies. So they're way further ahead in many ways. But
in terms of just distribution of UnixWare, they were
effectively comparable.
Q. All right. Would it be accurate to say that Sun
had broader rights with respect to UnixWare as to what counsel
described as open sourcing?
A. Modestly. I think I'm not an attorney, so it would
be difficult for me to be able to determine the differences in
terms of those agreements.
Q. Thank you.
THE COURT: Thank you.
Anything else?
MR. ACKER: No, Your Honor.
THE COURT: Thank you.
You may step down, Mr. Sontag. Sontag may have been trying to help SCO's argument that Sun got nothing special when it got the right to open source, certainly not anything worth money, because that is SCO's whole thread on that, that the open sourcing wasn't worth money, so they don't owe Novell money for that. SCO also argues that the 2003 license wasn't an amendment to the 1994 license, that no substantive new rights were added. But he gets into a tangled wood by what he says, that the two licenses are equal with respect to UnixWare rights, and Novell lawyer sees it, even if Sontag doesn't. First, there's the money angle. If Microsoft paid $7 million for Section 3, and that didn't give them parity with Sun, which is Sontag's testimony, and it did get parity for another $3 million, the implication might be that the value of open sourcing Solaris was at least $3 million. Or if you flip it over, what he says might implicate the value of the SVRX code listed in Section 4. But there are other thoughts that flood my mind. For example, if the two licenses really were equal with respect to UnixWare, then either Microsoft can open source UnixWare, and I gather from the testimony that isn't true, although Sontag never fully answers that question, or Sun *can't* open source UnixWare, only older System V, and SCO is trying to say the two are the same thing, so that doesn't help SCO. Sontag's answer raises questions about who paid for what? It impacts, conceivably, on what SCO owes Novell. Was it all just a cover? That would be one question. If not, you need to parse it out and break it down, not that SCO ever bothered. You can see how Novell breaks it down, based in part on this testimony, in the Acker closing statement: Your Honor, Novell here seeks for the Sun license, $9,143,809. That was the amount that was paid of the $10 million total.
For the Microsoft, we seek the revenues that were paid in Section 2 and Section 4, $9,750,000.
And for the other license, we ask for all of that money because there has been simply no breakdown between UnixWare and SVRX licenses. And that's $1,156,110.
So, the total that we are asking for from this Court is $19,979,561. Sontag's answer raises questions in my mind about Sontag's entire testimony, if one piece is so obviously wrong, which is perhaps why Normand helped him correct it. Sontag's painted as the chief negotiator, yet he gets some facts garbled. It raises another question: why didn't SCO call Sun or Microsoft to the stand to tell us what the deals were about, in support of SCO's story? It's a big hole, and leads to questions about whether they might not support SCO's story. Personally, I'd love to see a Sun representative on the stand under oath agreeing with SCO that System V and UnixWare are the same thing. And then why it needed to license UnixWare. Snark. That's why witnesses should just tell the truth on the stand, by the way, without trying to "help" any side. You won't see what the lawyers and the judge see, and you will mess up more often than not, if you try to put any spin on the ball. There's the ethics of it too, of course, but I'm just saying it pays to tell the truth, if you need another motive.
I've left the pagination as it is in the transcripts, so of course it doesn't start with page 1. Here are the two PDFs where you'll find this testimony: Day 1, Part 2, Day 1, Part 3 and Day 2, Part 1, all PDFs.
And here's a link to the end of the transcript.
******************************
Salt Lake City, Utah, Wednesday, April 29, 2008
1
THE COURT: You may call your next witness. 2
MR. ACKER:
Thank you, Your Honor. Novell 3 will
call Chris Sontag. 4
For the Court's convenience, there are exhibits 5
that I may refer to in binders that I left with your clerk 6
there. 7
THE COURT: Okay. 8
THE CLERK: And you're the witness.
Okay. Please 9 raise right hand.
10
CHRISTOPHER S. SONTAG, 11
called as a witness at the request of
Novell, 12 having
been first duly sworn, was examined 13
and testified
as follows: 14
THE WITNESS: I do. 15
THE CLERK: Thank you.
Please take the witness 16 stand. 17
Please state your name and
spell it for the record. 18
THE WITNESS: Christopher S. Sontag. 19
C-H-R-I-S-T-O-P-H-E-R. Sontag, S-O-N-T-A-G. 20
DIRECT EXAMINATION 21 BY MR.
ACKER: 22 Q. Good
morning, Mr. Sontag. 23 A.
Good morning. 24 Q.
You were formally employed at SCO; right? 25
A. That is correct.
77
1 Q. And
you joined SCO in 2002; right? 2
A. That's correct. 3
Q. Now, when you joined the company in 2002, the 4
company was not profitable; is that right? 5
A. No, it was not. 6
Q. In fact, SCO had a net loss for the
fiscal year 7 ending October 31, 2002, of more than
$24 million; is that 8 right? 9
A. Sounds about right. 10
Q. And the company told the investing public
at the 11 end of fiscal -- of that year ending
October 31st, 2002, that 12 if SCO did not achieve
positive cash flow from operation it 13 would not be
able to implement its business plan without 14
additional funding; isn't that true? 15
A. I suspect that's the case. 16
Q. And the SCOsource program was just
getting started 17 when you joined; right? 18
A. I don't know if it really
had been started. I 19 think some initial
thoughts of looking at all the assets 20 across SCO
were being considered. Among them were the UNIX 21
assets the company had. But anything and any form related
to 22 a SCOsource program had not been initiated when
I started. 23 Q.
That review was being done about the time you 24
started; is that right? 25 A.
It was just started.
78
1 Q. And
after you joined the company in October of 2 2002,
you were placed at the head of what was then called 3
SCO Tech; correct? 4 A.
Yes. 5 Q. And SCO
Tech eventually became SCOsource; right? 6
A. I had a number of roles that I was responsible for.
7 I mean, I was responsible as the senior
vice-president over 8 the operating system division,
and I also had responsibility 9 for some elements of
strategy as well as looking at what could 10 be done
with the UNIX assets within the company. 11
Q. But you were ahead of SCOsource from its
inception; 12 right? 13
A. Yes. 14 Q.
And you and others hoped that the SCOsource 15
campaign would become an important revenue generator for the 16
company; correct? 17 A.
Of course. 18 Q. In
fact, you thought it would generate billions; 19
right? 20 A. We
viewed the UNIX assets held by SCO to be a very 21
valuable asset and had potential to generate significant 22
revenues. 23 Q.
That included billions; right? 24
A. Potentially, yes. 25
Q. Now, let me show you what we have marked as and has
79
1 been admitted as Exhibit 147. 2
If I may approach, Your
Honor? 3
THE COURT: You may. 4
MR. ACKER: Bring that up, please. 5
Q. BY MR. ACKER: I'm
going to hand you what we've 6 marked, Mr. Sontag, as
Exhibit 147. 7
Have you had a chance to look at that, sir? 8
A. I have. 9
Q. And Exhibit 147 is a draft press release prepared
10 on or about October 22nd of 2002 regarding what
was then 11 referred to as the SCO Tech program;
correct? 12 A. Yes.
13 Q. And you're
quoted in the press release; right? 14
A. Yes. 15 Q.
And you had a chance to read that quote just now? 16
A. Yes. 17
Q. Is it accurate? 18
A. Yes. 19 Q.
Okay. And what you said back in October of 2002 20
about SCO Tech was, this is your quote: 21
As one of the earlier developers of the UNIX
22 operating system, SCO owns
several patents, 23 copyrights
and much of the intellectual property 24
around UNIX including the SVR4 and OSR5 software 25
libraries.
80
1
Correct? 2 A. Yes.
3 Q. So the only --
in this quote when you're talking 4 about SCO Tech in
October of 2002, the only version of SVRX 5 you
referred to was Version 4; right? 6
A. Well, UnixWare is an SVR4 version of the UNIX 7
operating system. 8 Q.
But it's not a version created by SCO; right? 9
A. That would be a hard thing to pars.
The creation 10 of UnixWare was derived out of
previous versions of UNIX. And 11
so, you know, it's a constant development process that's 12
occurred. 13 Q. But
SVR4 Version 4 was in existence before the APA; 14
correct? 15 A. I
think 4.0 was in existence before the AP A. 16 4.2 was
the basis of UnixWare 1. 17 Q.
And was in existence before the APA; correct? 18
A. I don't know the exact time
frame. All I know is, 19 I remember the
first version of UnixWare was based on 20 SVR4.2.
21 Q. And isn't it
true that both Version 4.0 and 4.2 are 22 listed in
the assets for which royalties have to flow back to 23
Novell in the APA? 24 A.
I don't know that I can characterize it that way 25
because a significant portion of UnixWare is based on, you
81
1 know, SVR4 and predecessors.
And it is a significant basis 2 for what was licensed
with UnixWare going forward in the 3 future. 4
Q. And my question was very
simple. 5 Isn't
it true that SVR4.0 and SVR4.2 are listed in 6 the
assets in the APA for which royalties must flow back to 7
Novell? 8 A. That's
not exactly my understanding. My 9
understanding was there was royalties for specific licensees 10
called the SVRX licensees that needed to be paid to Novell. 11
MR. ACKER: Can
we bring up Exhibit 1, please. 12
Q. BY MR. ACKER: Let me hand you a copy of
that, 13 Mr. Sontag. Let me hand you a
copy of the APA, Mr. Sontag. 14 And I want to direct
your attention to Schedule 1.1(a) 15 Section VI.
If you would bring that up. It's SCO 85952. 16
A. 952? 17
Q. Yes. If we could highlight
the section of the 18 bottom, please. 19
A. Schedule 1.1(a)? 20
Q. Yes, sir. 21
A. Okay. 22
Q. Do you have that? 23
A. I do. 24 Q.
And you understand, don't you, that Schedule 1.1(a) 25
in the APA lists:
82
1 All
contracts relating to SVRX licenses 2
listed below for which royalties must flow back 3
to the Novell in the APA. 4
Correct? 5
A. These are listed in the contracts that are part of
6 the assets that are transferred to SCO. 7
Q. Well, you know, don't you,
that this Court has 8 determined that all royalties
flowing from these contracts 9 flow back to Novell?
You know that; correct? 10 A.
My understanding is that the contracts specified by 11
the agreement the royalties went back to SCO. I don't
know if 12 it's necessarily this listing or if it's
another listing that 13 specifies the SVRX contracts
specifically have royalties that 14 flow back to
Novell. But we honored those obligations. 15
Q. But you see in Schedule 1.1(a)VI
that UNIX System 16 Release 4.2 MP is listed;
correct? 17 A. As an
asset that was transferred. 18
Q. And System 4.2 MP International Edition was also 19
listed; correct? 20 A.
Again, as an asset transferred to SCO. 21
Q. And also 4.1; correct? 22
A. Again, yes. 23
Q. And if you turn to the next page, you see the 24
UNIX System V Release 4.0 also listed; correct? 25
A. You're on Page 4 now?
83
1 Q. The
following page. 2 A.
Yes. 3 Q. And you
see on the following page of 4 Schedule 1.1(a) of the
APA, UNIX System V Release 4.0 is 5 listed; correct?
6 A. Again, as an
asset that was transferred to SCO. 7
Q. And that was the release that you are referring to
8 that is SVR4 when you drafted your press release in
October of 9 2002; correct? 10
A. Again, going back to that press
release, it was a 11 draft press release.
And we often use different labels to 12 mean
the same thing. We'd often use System V to refer
to all 13 of our UNIX intellectual property.
We would use SVR4 to 14 describe UnixWare in
some cases. I mean, we were considering 15
renaming UnixWare and renaming it System V or possibly 16
System VI. 17
And so at different times different labels apply to 18
things in draft documents or in press releases that were put 19
out. But in the end, what we were talking about is SCO's
UNIX 20 intellectual property assets. 21
MR. ACKER: Go
back to 147, Mr. Sontag's quote. 22
Q. BY MR. ACKER: You say it's a draft press
release. 23 Do you now think that the press release
was inaccurate or 24 something is inaccurate in it?
25 A. No.
All I'm saying is that I don't know if this is
84
1 the press release that was released or if
we actually ended up 2 releasing this press release.
3 Q. When you
prepared it in October of 2002, you were 4 talking
about the SCO Tech program; correct? 5
A. We were talking about the SCO Tech program that we
6 actually changed the name of or just barely
starting to 7 initiate at this time frame. 8
Q. And when you were talking
about the SCO Tech 9 program, you were talking about
the SVRX releases you were 10 planning to release
under the SCO Tech program; correct? 11
A. To me, SVR4 could be easily replaced with UnixWare,
12 and it means the same thing to me. 13
Q. But you didn't say UnixWare;
right? 14 A. It
means the same thing. 15 Q.
And you didn't say SVR5; correct? 16
A. No. In this case, we said SVR4. 17
Q. Okay. Let me
show you what has been admitted as 18 Exhibit 143.
If you could take a look at that, sir. 19
A. Okay. 20 Q.
Exhibit 143 is an analyst briefing that was 21
prepared for Mr. McBride on or about October 22nd, 2002; 22
correct? 23 A. Yes.
24 Q. And it was an
analyst briefing regarding the 25 announcement of the
SCO Tech program; correct?
85
1 A. Yes.
2 Q. If we could
take a look at the third page in. It 3
announces you, Chris Sontag, joins the executive team; 4
correct? 5 A. Yes.
6 Q. It announces
that you will be the senior VP of 7 operating systems
with responsibilities for operating systems, 8 SCO
Tech and corporate marketing; correct? 9
A. Yes. 10 Q.
And that was all true; right? 11
A. Yes. 12 Q.
You go to the next page, I believe it's 4. On the
13 bottom of that page, there's a slide "Why SCO
Tech?" Correct? 14
A. Yes. 15 Q.
And what SCO said back in October of 2002 when 16
SCO Tech was starting is: 17
Partners and customers wish to license our 18
technology. 19
Correct? 20
A. Yes. 21
Q. And then you referred to specific
technology; 22 right? 23
A. Yes. 24 Q.
And the only release of SVRX that you referred to 25
was SVR4?
86
1 A.
Again, this is the same thing as saying UnixWare. 2
UnixWare was basically SVR4 operating system. 3
Q. SVR4 was not UnixWare that was created
by SCO; 4 correct? 5
A. You have dot releases. It basically would
be 6 considered SVR4.3 or 4. -- I mean 4.3 or 4.4 or
4.5. I mean, 7 it was an SVR4-based
operating system. It is the latest 8
version of UNIX System V. 9
Q. SVR 4 -- 10 A.
It is the referenced version that has had many 11
precedents. 12 Q.
And SVR4, that version of UnixWare was created 13
before the APA; correct? 14
A. The first version of SVR4 was created before the 15
AP A. Subsequent versions of SVR4 including UnixWare 1, 2,
you 16 know, up to 7.1.4 are all versions of SVR4.
17 Q. But each of
those versions of UnixWare created 18 after the APA
don't carry the SVRX Version 4 monitor; correct? 19
A. No. A lot of times
we've used SVR4 to refer to the 20 UnixWare code.
21 Q. Let me show
you what we've marked as Exhibit 159. 22 Bring up
159. 23
This has also been admitted, Your Honor. 24
THE COURT: Yes. 25
Q. BY MR. ACKER: This is
another draft press release
87
1 that was prepared regarding SCOsource on
December 11th, 2002; 2 correct? 3
A. Yes. 4
Q. And if we could bring up the next highlight. 5
Down at the bottom, there's
a description of what 6 SCOsource is; correct? 7
A. Yes. 8
Q. And what SCO wrote in December of 2002
was that: 9 SCO's
patents, copyrights and core technology 10
date back to 1969 when Bell Laboratories created 11
the original UNIX source code. 12
Correct? 13
A. Yes. 14
Q. SCOsource, a new division within SCO,
will 15 address the licensing of
this software technology. 16
Correct? 17 A.
Yes. Now, a couple things I would say on this. 18
SCO had a number of patents that are referred to in this that 19
could be licensed by SCOsource that were not related to the 20
core UNIX technology. 21 Q.
Well, when you said, this software technology that 22
you're going to license under SCOsource, you were talking 23
about technology that dated back to 1969 when 24 Bell
Laboratories created the original source code; correct? 25
A. That was part of the UNIX
tree that SCO had
88
1 purchased and acquired and was responsible
for continuing and 2 continuing to license and to
enforce the contracts with the 3 licensees. 4
Q. And this UNIX tree
that SCO had purchased, that was 5 what SCOsource
sought to license; correct? 6
A. In part. 7
Q. And that tree dated back to technology back to
8 Bell Laboratories; right? 9
A. Yes. 10
Q. Let me show you what we've marked and has been
11 admitted as 173. 12
Mr. Sontag, let me show you what we've
marked and 13 had been admitted as Exhibit 173.
If you could read that, 14 please. 15
A. I don't know if you
want me to read the whole 16 thing. 17
Q. Well, I'm going to direct
you to a certain portion. 18 I'm sure you're familiar
with this document; correct? 19
A. Most likely. Okay. 20
Q. And this is the
announcement in January of 2002 of 21 the SCO, you've
written the first portion or first version of 22 SCO
Tech; correct? 23 A.
I think we made some level of an announcement that 24
we're further announcing, you know, what we're doing with 25
SCOsource program in January of 2003.
89
1 Q. And
unlike the prior releases, this press release, 2
Exhibit 173, was actually released to the public; right? 3
A. I don't recall if the
previous one had also been 4 released or not.
I know we briefed analysts and so on about 5 the
concepts in the previous release, but I know that this 6
press release was released. 7
Q. And we can take a look at the highlighted portion 8
in the middle under the highlighted SCOsource. 9
Again, when SCO announced the SCOsource
program to 10 the public in January of 2002, you
again told the public what 11 it was; right? 12
A. January of 2003? 13
Q. Excuse me.
January 2003. You told the public what 14
it was; right? 15 A.
Yes. 16 Q. And what
you said was, again: 17
SCO's patents, copyrights and core technology 18
date back to 1969 when Bell Laboratories created
19 the original UNIX source
code. SCOsource 20
will manage the licensing of this software 21
technology. 22
Correct? 23
A. Yes. And basically we're saying we're
providing 24 licenses of SCO's intellectual property
including our UNIX 25 intellectual property as well
as other patents that SCO had
90
1 related to other technologies within the
company. 2 Q. And
that technology dates back to Bell Laboratories 3 in
1969; correct? 4 A.
Not all of the technology. 5
Q. But some of it does; correct? 6
A. Yes. 7
Q. And that was with SCOsource? 8
A. Yes. 9
Q. And that's what SCOsource sought to license in 10
SCOsource program; correct? 11
A. Well, in general we were licensing the most recent
12 versions of SCO's intellectual property mostly in
the form of 13 UnixWare licenses, source code
UnixWare licenses as well as 14 developing an
intellectual property licensing program related 15 to
customers who were concerned about intellectual property 16
issues with their use of Linux, such as the runtime libraries 17
and OpenServer UNIX. 18 Q.
But you wanted to mine this entire body of 19
intellectual property; right? That was the plan. 20
A. That was my understanding
of the intellectual 21 property body that we had
rights to license. 22 Q.
Going back to 1969; right? 23
A. Correct. 24 Q.
And this was what you hoped you would make millions 25
of dollars licensing; correct?
91
1 A. Well,
mostly around the latest versions of the 2
intellectual property. But the whole body
at work is part of 3 the buildup and legacy of that
intellectual property and 4 library. 5
Q. Now, if you take a look -- let me
go back, I'm 6 sorry, to Exhibit 173. 7
Take a look down at the
bottom, if you would, sir, 8 173. Under
the SCO System V for Linux. Do you see that? 9
A. Yes. 10
Q. And we have it up on the screen now.
11 SCO told
the public you were announcing this in 12 January of
2003: 13 In
the past SCO's UnixWare and OpenServer 14
license agreements did not allow these UNIX 15
libraries to be used outside of SCO's operating
16 systems. 17
Correct? 18 A. Yes.
19 Q. With this
announcement, customers can now run 20
these libraries from SCO for use with Linux without 21
having to license the entire SCO
operating system. 22
Correct? 23 A. Yes.
24 Q. So that means
you get access to this core UNIX 25 technology that
SCO believed it owned without having to
92
1 license the latest version in the entire
operating system; 2 correct? 3
A. Let me say that a different way. 4
Q. Well, could you answer that
question? Isn't that 5 right? 6
A. Well, to best answer your
question I can't just 7 answer yes or no.
We were licensing the libraries to the 8 latest
versions of OpenServer and UnixWare to these customers 9
who wanted to apply them to a version of Linux to allow them 10
to run OpenServer or UnixWare applications on top of Linux. 11
That is what we were licensing. 12
Q. But as you said in your press release in 2003, it
13 didn't require the licensee to license the entire
operating 14 system; correct? 15
A. Right. They were licensing a
portion of the 16 operating system, which were the
runtime libraries. 17 Q.
And that was the core UNIX technology that was a 18
part of the SCOsource program; correct? 19
A. I wouldn't call that the core. I would
call it a 20 part of the UNIX operating system
technology. The libraries 21 are just one
piece of an entire operating system. 22
Q. But in the SCOsource program, like if they didn't
23 have to license the entire operating system, they
could simply 24 license the libraries; right? 25
A. If they needed to be able
to run UnixWare or
93
1 OpenServer application on top of Linux,
they would need to be 2 able to gain access to the
runtime libraries to install them 3 into their Linux
product to allow them to run those 4 applications.
5 Part of
that license was also a license to all of 6 SCO's
intellectual property or a release from issues within 7
any of SCO's overall IP rights. So we were giving
them rights 8 to any IP that SCO had ownership of.
And if they needed the 9 runtime
libraries, they could obtain those, as well. That
was 10 the basis for the SCOsource, you know,
licensing program at 11 this time. 12
Q. Any IP that SCO had or
believed it owned dating 13 back to AT&T; right?
14 A. Any of
SCO's intellectual property was provided to 15 any of
those customers in a release or in a license. 16
Q. That was SCOsource; right? 17
A. That was
SCOsource. The runtime or right to use 18
license that was part of SCOsource. 19
Q. Now, after the initial announcement of these
20 library licenses under SCO Tech or SCOsource,
there was a 21 second phase to the program; correct?
22 A. No.
It was continuously evolving. It was -- the 23
names were even changing as we, you know, continued with the 24
program. 25 Q.
And the second phase or the evolvement or the
94
1 evolution of this program was this right
to license or right 2 to use program that you just
mentioned; correct? 3 A.
Could you repeat the question? 4
Q. Sure. Let me show you
an exhibit. Exhibit 194. 5
Let me show you what's been marked and
admitted as 6 Exhibit 194. If you could
take a look at that, Mr. Sontag. 7
A. Okay. 8
Q. And Exhibit 194 is a letter that Mr. McBride
sent 9 on May 12th, 2003, to the Fortune 1000
companies regarding 10 this SCOsource program;
correct? 11 A.
Yes. 12 Q.
And if we could take a look at the first sentence 13
of the letter that Mr. McBride wrote, he wrote: 14
SCO holds the rights to the UNIX
operating 15 system originally
licensed by AT&T to 16
approximately 6,000 companies and institutions 17
worldwide, the UNIX licensees. 18
Correct? 19
A. Yes. 20
Q. And that was the core
technology that was at the 21 heart of SCOsource;
right? 22 A.
No. That was just a portion of what was under 23
SCOsource. Those licenses were contracts for which we
had the 24 responsibility of enforcing.
In addition to that, there was 25 all the
source code and the latest versions of source code for
95
1 UnixWare and OpenServer and other SCO
products. 2 Q. And
it's your testimony that all of that was the 3 core
technology that SCO sought to monetize in the SCOsource 4
program? 5 A. Yes.
Any intellectual property inside of the SCO 6 was
potentially licensable IP within the SCOsource program. 7
Q. And if we could take a look at
Paragraph 5 of the 8 letter Mr. McBride wrote: 9
Many Linux contributors
were originally UNIX 10
developers who had access to UNIX source code 11
distributed to AT&T and were subject to 12
confidentiality agreements, including 13
confidentiality of the methods and
concepts 14 involved in software
design. 15
Correct? 16 A.
Yes. 17 Q. And what
SCO says is: 18
We have evidence that portions of UNIX 19
System V software code have been copied into 20
Linux. 21
Right? 22 A.
We claimed that we had, you know, different 23
intellectual property violations that we felt had been applied 24
into Linux, some in the form of, you know, literally 25
copyrighted code; others in the form of methods and concepts;
96
1 others in the form of derivative works;
and other IP issues 2 that we felt may be at issue
with Linux. 3 Q.
But in the letter that Mr. McBride wrote on 4 May
12th of 2003, he's talking about software IP that dates 5
back to AT&T and the developers of AT&T; correct? 6
A. I think he was -- you
know, we're not trying to be 7 specific about every
last area of intellectual property or 8 methods of
intellectual property from patents to copyrights to 9
contracts to derivative works and otherwise. It was
simply us 10 just trying to say that we have a broad
base of intellectual 11 property that we believe is
valuable that we are making 12 available and
licensing. The specifics of -- you know, if we 13
say, UNIX System V and not also saying OpenServer or UnixWare, 14
it doesn't mean when we say UNIX System V or we are talking 15
about UNIX, we're not also referring to them. 16
It's just like, I'll give an
analogy to ice cream. 17 I may say ice cream to my
kids. Would you like some ice 18 cream?
I don't have to be specific every time and say, would 19
you like chocolate ice cream or vanilla ice cream? I
might 20 just ask them first, would you like ice
cream? And I'm 21 referring to any
possible choice that might reside under that. 22
Q. What Mr. McBride referred to
specifically in his 23 letter in May of 2003 was
source code distributed by AT&T; 24 right? 25
A. Again, I believe what is
really being referred to
97
1 in this letter is SCO's broad intellectual
property portfolio, 2 not just specific versions of
early UNIX originally developed 3 by AT&T.
But I view that as part of that portfolio. 4
Q. The only specific
reference that Mr. McBride makes 5 in the letter is
to source code distributed by AT&T; correct? 6
A. In this particular paragraph,
that's what he is 7 referring to.
But, again, the intent was to talk about the 8 entire
portfolio of SCO's intellectual property. 9
Q. And Mr. McBride sent this letter to
1,000 different 10 companies asking them to take a
license under the SCOsource 11 program; correct? 12
A. Yes. Or
at least consider it, get themselves 13 educated,
find out if they should have concerns or issues or 14
not. 15 Q.
Take a look at the first paragraph on the next 16
page. 17
Mr. McBride also wrote: 18
We believe that Linux infringes our UNIX 19
intellectual property and other
rights. We intend 20
to aggressively protect and enforce these rights. 21
Consistent with this effort, on March 7,
we 22 initiated legal
action against IBM for alleged 23
unfair competition and breach of contract with 24
respect to our UNIX rights. 25
Correct?
98
1 A. Yes.
2 Q. And you
understood, didn't you, that the basis for 3 this
letter going out to these 1,0000 different companies 4
across the United States was the same basis for which SCO 5
brought action against IBM; correct? 6
A. And again, when we're talking about SCO's UNIX 7
rights, I view that we're referring to all of SCO's 8
intellectual property portfolio related to UNIX. 9
Q. All of it from time to memorial; correct?
10 A. All that is
under the purview of SCO, yes. Why 11
would you only enforce a portion of your rights if you have a 12
broader portfolio of rights? 13
Q. But it was the same basis that there was some 14
portion of SCO's intellectual property that was in Linux that 15
caused Mr. McBride to write this letter. It was also for
the 16 basis for the action against IBM; correct?
17 A. We believe in
part some of the actions that we 18 undertook against
IBM were a significant portion of the IP 19 that we
were concerned about within Linux. 20
Q. Okay. And it's true, isn't it, that the
only UNIX 21 code that SCO's experts in the IBM case
found in IBM's version 22 of Linux was UNIX System V
Version 4.2? Isn't that true? 23
A. I couldn't characterize what specifically
was found 24 by our experts. That would
have to be presented by them. 25
Q. Let me show you what we've marked as Exhibit 428.
99
1 A.
I assume you don't want me to read all of this 2
right now. 3 Q.
No, I don't. 4
If you could take a look at -- first of all, 5
Exhibit 428 is a report of Dr. Thomas Cargill of The 6
Infringement of Unix System V Release 4 Operating System By 7
the Linux Operating System. 8
Do you see that title? 9
A. Right. And I believe this is just
one of many 10 reports. 11
Q. Well, I'm going to ask you about that.
But take a 12 look at Page 3, if you would, the
summary of opinions. 13
You see in Paragraph A, summary of opinions, 14
Dr. Cargill wrote: 15
It is my opinion that Linux 2.4 and Linux 2.6 16
are substantially similar to the UNIX System V
17 Release 4 operating system in
satisfaction of that 18 element
of copyright infringement. 19
Do you see that? 20
A. Okay. 21
Q. And then if you go down, you see,
he wrote: 22
Overall, Linux is a substantial copy of the 23
UNIX System V Version 4 operating system. 24
Do you see
that? 25 A.
Yes.
100
1 Q. And
if you take a look at the next page -- 2
A. For which I would view UnixWare is the latest 3
version of that. 4 Q.
I understand that's your position. But take a look 5
at the next page. You'll see the last part of Dr.
Cargill's 6 opinion. He writes: 7
Instead, it is my
opinion that significant 8
design choices and code incorporated in Linux were 9
copied from UNIX System V Version 4. 10
Correct? 11
A. Yes. 12
Q. And it's true, isn't it, that no other
expert in 13 the IBM case ever came to the conclusion
that anything else 14 other than SVR4 was allegedly
in IBM's version of Linux? 15 Isn't that true? 16
A. I can't characterize
specifically what the rest of 17 the expert testimony
and reports -- I don't -- I did not read 18 them, so
I can't characterize that one way or another. 19
Q. Are you ware -- are you aware of any
expert in the 20 IBM case retained by SCO finding any
code in IBM's version of 21 the Linux other than
System V Version 4? 22 A.
Again, since I did not read any of the expert 23
reports I couldn't characterize it one way or another. 24
Q. Well, you made some public
disclosures with respect 25 to what code SCO believed
was in IBM's version of Linux;
101
1 correct? 2
A. Yes. 3 Q.
And you made those disclosures both publicly and 4
under nondisclosure agreements; correct? 5
A. Yes. 6 Q.
And let me show you what we've marked as 7 Exhibit --
SCO Exhibit 379. 8
Now, SCO Exhibit 379 is a PowerPoint presentation 9
that you gave at a SCO forum in 2003; correct? 10
A. Yes. 11
Q. And you gave it along with your lawyers; right? 12
A. Yes. 13
Q. And the purpose of it was to tell the
public what 14 portions of SCO's core intellectual
property SCO believed was 15 in IBM's version of
Linux; right? 16 A.
I don't know if I characterize it that way. I
17 viewed it as a presentation intended to provide a
high-level 18 education as to SCO's position. 19
Q. And if you could take a
look at Novell document -- 20 Novell Bate Number
12733, this is part of the presentation 21 where you
and your lawyers actually laid out what you believed 22
was the infringing code; correct? 23
A. No. Not laid out the infringing code.
We laid out 24 one example, one very small example.
25 Q. And this
example is the Malloc example; right?
102
1 A. I
don't have a file name on here, so I can't be 2 sure
if this happens to be the Malloc code. But certainly 3
that was one example that we did show. 4
Q. And it's true, isn't it, that this forum when you 5
told the public what it is that you believe was in IBM's 6
version of Linux that infringed your core IP, all of the 7
examples you gave and the only examples you provided were for 8
System V Release 4; correct? 9
A. No. The most important point that I tried
to 10 stress in this presentation would be actually
the slide on 11 Page 8, which would be Novell
12731. And this is the slide 12 where I
would present -- show that there's different forms of 13
intellectual property protection. Literal copying;
literal 14 copyright infringement, which is word by
word the same, being 15 copied by somebody;
nonliteral, which would be some amount of 16 munging
and changing the code or obfuscating the code; 17
derivative works, which the point I was trying to make was the 18
most important area, which was to contractually protect any 19
areas specifically around derivative works code being 20
contributed into Linux from UNIX by companies such as IBM. 21
That was the most important
point. And if you had 22 been sitting in
on this presentation, that was the big point 23 that
I tried to make of this whole presentation was that right 24
there. 25 Q. But the
only examples of literal copying that you
103
1 showed was of System V Version 4; correct?
2 A. I could have
put up a version showing an example of 3 UnixWare
7.1.3 in the Malloc code versus Linux, you know, the 4
latest release of Linux, and you would receive substantially 5
the same copied code, because that same code in Malloc was 6
substantially similar between UnixWare 7.1.3 and previous 7
versions of UNIX, such as UNIX, you know, 4.2 DS. 8
Q. But the only versions of the
literal copying that 9 you showed at the SCOsource --
or SCO forum of 2003 was the 10 Malloc example;
correct? 11 A. It
was the only example that we intended to show. 12
Q. And that example was a System V Release 4
code; 13 correct? 14
A. I believe it was System V Release 4.2 DS. 15
Q. And isn't it true that you
are not aware of any 16 other expert at any point
ever coming to the determination 17 that there was
literal copying of any code beyond System V 18
Version 4.2; correct? 19 A.
Again, I have not read any of the expert reports, 20
so I'm not aware of if there are examples or not. 21
Q. Let me show you what we marked as
Exhibit 274. 22
Exhibit 274 is a letter written to the chairman of 23
Lehman Brothers by general counsel SCO Mr. Ryan Tibbits on 24
December 19, 2003; correct? 25
A. Yes.
104
1 Q. And in
it he is essentially accusing 2 Lehman Brothers of
violating SCO's core intellectual property; 3
correct? 4 A. I
don't know if I would characterize it that way. 5
Q. Well, in the first sentence he wrote: 6
In May 2003, SCO warned
about enterprise use 7 of the
Linux operating system in violation of its 8
intellectual property rights in UNIX technology. 9
Without exhausting or explaining all
potential 10 claims, this letter
addresses one specific area in 11
which certain versions of Linux violate SCO's 12
rights in UNIX. 13
Right? 14
A. Yes. 15 Q.
And in the second page of the letter, he gives, 16
provides Mr. Fuld with a list of code; correct? 17
A. Yes. 18
Q. And down below that Mr. Tibbits wrote: 19
The only code identified -- the
code 20 identified above was
also part of a settlement 21
agreement entered between the University of 22
California at Berkeley and Berkeley Systems 23
Development, collectively BSDI, regarding
alleged 24 violations by BSDI
and USL's right to UNIX system 25
technology.
105
1
Right? 2 A.
Yes. 3 Q.
And it's true that that settlement was reached 4
between Berkeley and BSDI in February in 1994; right? 5
A. Yes. 6
Q. And so the code that we're talking
about here is 7 code that existed long before the
APA; correct? 8 A.
The one example that is given here. Again, I'd go 9
back to the first paragraph, though, as one of potentially 10
many is this example. 11 Q.
Isn't it true, Mr. Sontag, that neither you or 12
anyone at SCO ever said that there has been taking of code 13
from UnixWare intellectual property by Linux users?
Isn't 14 that right? 15
A. Again, I think we also referred to SCO's 16
intellectual property which is all inclusive of all of SCO's 17
intellectual property portfolio including UnixWare, including 18
OpenServer, including preceding versions of UNIX, as well. 19
Q. Isn't it true that
neither you or anyone at SCO 20 ever said that there
has been a taking of code from UnixWare 21
intellectual property by Linux users? Isn't that an
accurate 22 statement? 23
A. Again, I think it's a mischaracterization. 24
Q. You testified under
oath in deposition on 25 March 17th -- excuse me --
April 30th of 2007; correct?
106
1 A.
I had several depositions. 2
MR. ACKER: And, counsel, this is at Line 45
-- 3 Page 45 Line 21, Page 46 Line 9.
If we could play that clip, 4 please. 5
THE COURT: You
want that deposition published, I 6 believe. 7
MR. ACKER:
Yes, sir. 8
THE COURT: The deposition is published. 9
(A portion of the
deposition was played.) 10 Q.
BY MR. ACKER: So it's true, isn't it, sir,
that 11 either you or as far as you know anyone at
SCO has never said 12 that there has been a taking of
code from UnixWare 13 intellectual property by Linux
users; right? 14 A.
Again, whenever we're referring to UNIX 15
intellectual property, as far as when I was saying that, I was 16
speaking of all of SCO's UNIX intellectual property, UnixWare, 17
OpenServer and otherwise. So specifically
mentioning UnixWare 18 or OpenServer I didn't feel
was necessary if I was talking 19 about SCO's UNIX
intellectual property because those were 20 included
as part of that. 21 Q.
But neither you nor anyone at SCO has ever said to 22
a Linux user, you're infringing UnixWare; right? 23
A. Simply because -- I think
you're splitting semantic 24 hairs.
We're saying, you've been, you know, violating SCO's 25
UNIX intellectual property rights which include UnixWare and
107
1 OpenServer. We didn't
necessarily have to list out all of our 2 products
every time we were talking to somebody. 3
Q. But never at any point have you listed out
UnixWare 4 and said, Linux user, you're violating
UnixWare; right? 5 A.
Again, if we were saying SCO's intellectual 6
property rights, that includes UnixWare, that includes 7
OpenServer, that includes all of SCO's intellectual property 8
rights. 9 Q.
But you never told the Linux community, you're 10
violating UnixWare; right? 11
A. Don't know why that would be necessary if we're
12 saying, you're violating our UNIX intellectual
property 13 rights. That includes all of
our UNIX intellectual property 14 rights. 15
Q. But we can agree,
can't we, that you or no one at 16 SCO has said that,
that you, Linux user, are violating 17 UnixWare;
right? 18 A.
I'm not aware that I specifically said UnixWare. I 19
know I often said UNIX intellectual property rights. 20
Q. And you're not aware of
anyone at SCO saying, Linux 21 users, you're
violating UnixWare; right? 22
A. I'm not aware one way or the other. 23
Q. Let me show you the
Sun license agreement what's 24 been admitted as
Exhibit 187. 25
You're familiar with that document, I assume, sir?
108
1 A. Yes,
I am. 2 Q. And
Exhibit 187 is the license that was entered 3 into
between SCO and Sun on February 25th of 2003; correct? 4
A. Yes. 5
Q. You were one of the principal negotiators for SCO;
6 is that right? 7
A. Yes. 8 Q.
You actually signed this document for SCO? 9
A. Yes. 10
Q. And you would agree that the Sun license
is a 11 SCOsource license; correct? 12
A. It's a SCO intellectual property
license executed 13 by the SCOsource division. 14
Q. Part of the SCOsource
program; correct? 15 A.
The overall SCOsource program. 16
Q. And if we take a look at the first three clauses,
17 the "whereas" clauses of the document,
please. 18
The recitals of the document are accurate; correct? 19
A. I'm not an attorney, but I assume
those are 20 accurate. 21
Q. And what those say is that: 22
Whereas, Sun and UNIX System
Laboratories or 23 Novell are
parties to a software license and 24
distribution agreement dated January 1st, 1994, 25
the original agreement.
109
1
And then, whereas, Novell has transferred 2
and assigned the original agreement to SCO. 3
And,
whereas, Sun and SCO desire to amend 4
and restate the original agreement by the 5
execution of this agreement. 6
Correct? 7
A. That's what it says. 8
Q. And that was what
this agreement did, is it amended 9 and restated the
original 1994 agreement between Novell and 10 Sun;
correct? 11 A.
Well, I don't know if I necessarily characterize it 12
that way. I view that the majority of the document was
13 dealing with a UnixWare license. It
was only portions that 14 dealt with I think anything
related to the older agreement. 15
Q. But you would agree, wouldn't you, that the
16 statement is accurate, that this agreement, 187,
the 2003 Sun 17 agreement, amended and restated the
earlier agreement between 18 Novell and Sun? 19
A. In part. 20
Q. No doubt about that;
right? 21 A.
Again, in part. 22 Q.
Let me show you Exhibit 5, which was the original 23
agreement. Novell Exhibit 5, which has been admitted
into 24 evidence, is the original 1994 agreement
between Novell and 25 Sun; correct?
110
1 A.
Yes, I believe so. 2 Q.
And you're familiar with this document; correct? 3
A. To a certain extent. 4
Q. And in the original
agreement Sun paid 82.5 million 5 in order to obtain
a license that included UNIX System 5 6 software;
right? 7 A.
Yes. 8 Q. And
Attachment 1 of the original agreement lists 9 that
UNIX System V software that Sun licensed in 1994; 10
correct? 11 A.
Yes. 12 Q.
And we have that up on the screen. Do you see 13
that? 14 A. I
do. 15 Q. And
then if we go back to 187, Attachment 1 of the 16
2003 Sun license lists the software licensed to Sun in the 17
amended and restated 2003 license; correct? 18
A. Did it have a listing? 19
Q. Sure.
It's SCO 1287218. It's the Attachment 1 to 20
the 2003 agreement. 21
A. Okay. 22
Q. Now, if we take a look at Attachment 1 to the 1994
23 agreement here on the left and we compare it to
the first page 24 of Attachment 1 -- there we go, and
we compare it to the first 25 page of Attachment 1 of
the later agreement, you'd agree with
111
1 me that those listing of 30 items of
software, 30 pieces of 2 code are identical. 3
A. They appear to be
very similar. I would take much 4 longer
to be able to say that definitively they were 5
identical. But they look very similar. 6
Q. So other than this asterisk
and "not currently 7 licensed by Sun but
considered to be by the parties as a 8 licensed
product," other than that language they are 9
photocopies, aren't they? 10 A.
Again, they are substantially similar. 11
Q. They're identical, aren't
they? 12 A.
If you want me to look letter by letter to say 13
they're absolutely identical, I can do that. 14
Q. Well, you negotiated the 2003
deal; right? 15 A.
Yes. 16 Q.
And you know what happened was in the 2003 deal for 17
the first page of Attachment 1, you simply took the old 18
Attachment 1 from the earlier deal and made a copy of it; 19
right? 20 A.
I suspect that's the case. I wasn't involved in 21
drafting that page of the contract. 22
Q. And what's on the left is a list of what was
23 licensed in 1994 by Novell to Sun; correct? 24
A. Yes. 25
Q. And what is on the right,
with an exception that
112
1 we're going to get to on the second page
of this attachment in 2 a second, is what was
licensed to Sun by SCO in 2003; right? 3
A. Well, it's a listing of technologies much of which
4 Sun had already licensed. So I view
that as belt and 5 suspenders. 6
Q. You view that as belt and suspenders.
7 Now, the
2003 Sun license also granted license to 8 seven
additional versions of software; correct? 9
A. Yes. I believe that to be
the case. 10 Q.
This is Page 2 of the attachment to the 2003 Sun 11
license. This is what in addition to the 30 identical
pieces 12 of software that had been part of the
earlier agreement, these 13 seven pieces of software
that we have on the board now are 14 what the
additional software was that Sun got in the later 15
agreement in 2003; correct? 16
A. Yes. 17 Q.
And of those seven pieces of software, five of them 18
are System V Release 4.2 or earlier; correct? 19
A. Yes. 20
Q. And the only two pieces of software that came into
21 existence after the APA that were licensed to Sun
in 2003 are 22 these last two, System V Release 5 and
Open UNIX 8; correct? 23 A.
Yes. And the primary license product was the 24
UnixWare 7.1.3 product. 25 Q.
So just to be clear for the Court, if we drew a
113
1 line right here above System V Release 5,
that's -- from a 2 time standpoint, that's when the
APA was executed; right? 3 A.
I believe that to be the case. 4
Q. And these UNIX 4, the UNIX 4.1
grant that SCO 5 provided to Sun in 2003, that was
expressly omitted from the 6 earlier license to Sun;
correct? 7 A.
Well, my understanding was those weren't yet in 8
existence at the time of the prior Sun agreement. 9
Q. Why don't we take a look at
the earlier agreement, 10 Exhibit 5. If
we could go to Attachment 2. 11
System V -- are you there, sir? 12
A. Attachment 2? 13
Q. Yes. 14
A. Yes. 15
Q. So you see there's a section there
in the early 16 agreement that refers to deliberately
omitted software; right? 17 A.
Yes. 18 Q.
So back in 1994 when Novell and Sun entered into an 19
agreement, Novell expressly did not license to Sun 20
System V Release 4.1; right? 21
A. Yes. 22
Q. But SCO granted a license to that software to
Sun 23 in 2003; correct? 24
A. Yes. For the purpose
of them having a complete set 25 of all the
versions. And again, that was primarily -- those
114
1 prior versions were all intended to just
be used for source 2 comparison. The
latest version we provided to them, 3 UnixWare 7.1.3,
was the version that was primarily intended 4 and
licensed to them for development. 5
Q. Now, Section 3 of the original Sun license of 6
Exhibit 5 sets out what rights were granted to Sun in 1994 for 7
the technology; correct? If you turn to Section 3 of the
8 earlier license. 9
A. Section 3? 10
Q. Yes. 11 A.
Okay. 12 Q. And it
was a worldwide, royalty-free, paid-up 13 license to
the UNIX System V software in the Attachment 1 that 14
we looked at; right? 15 A.
Yes. 16 Q. And what
those rights granted in the original 1994 17
agreement do not grant to Sun the right to publicly display 18
the source code and object code of the license UNIX 5 19
software; right? 20 A.
Where are you reading that? 21
Q. Well, you know, don't you, that the early agreement
22 did not allow Sun to publicly display the software
that was 23 licensed in 1993? 24
A. I know that they had -- the whole
agreement allowed 25 them to broadly distribute the
source code to their licensees
115
1 who in turn could distribute the, you
know, Solaris source 2 code to sublicensees.
So Sun had very broad rights with this, 3 you know,
'94 agreement to effectively license the source code 4
extremely broadly to a large customer base. 5
Q. Isn't it true that they couldn't open
source that, 6 Sun could not open source that
software code under the early 7 agreement? 8
A. It depends on what your
definition of open source 9 is. 10
Q. Well, why don't we take a look at 11
paragraph 3.2 (A)(b) of the earlier license. 12
A. 3.2? 13
Q. Yes, sir. Do you see that?
And what that required 14 was: 15
The Sun source sublicensees will
protect the 16 licensed
products contained in their derivative 17
works, and Novell's trade secrets and other 18
intellectual property embodied in such licensed
19 products, to at least the
degree to which Sun 20 protect
its own most valuable proprietary source 21
code. 22
Correct? 23 A.
Yes. 24 Q.
And if we take a look at 3.2(B), this was another 25
requirement in the earlier license.
116
1
In the event that Sun becomes aware, whether 2
through notification by Novell or otherwise, that 3
a Sun source sublicensee is not complying
with its 4 obligations under the
applicable Sun source code 5
license agreement, including obligations to 6
protect the confidentiality of the source code of 7
licensed products, to the extent that such
8 obligation impacts licensed
products contained in 9
derivative works, Sun agrees to take appropriate 10
steps to rectify such noncompliance. 11
Correct? 12 A.
Yes. 13 Q.
And Sun made it clear during the negotiations that 14
they wanted a broader license so Sun could open source 15
Solaris; correct? 16 A.
Actually, Sun believed that they had almost all the 17
rights they needed or had all the rights they needed.
Now, 18 that was their posturing and positioning
going into the 19 negotiations, that they did not
need anymore rights to be able 20 to do a form of
open sourcing and be in compliance with this 21
agreement. Now, that was their position coming into the
22 negotiations. 23
Q. Isn't it true that Sun made it clear during
24 negotiations that they wanted a broader license so
Sun could 25 open source Solaris? Isn't
that accurate?
117
1 A. I
don't know that I necessarily would say that it 2 was
-- you know, it was a part of what they asked for.
But 3 the most important thing they were asking for
was the ability 4 to quickly take the Solaris product
and make it available on 5 an Intel compatible
platform, which they would be able to do 6 with the
UnixWare 7.1.3 source code license and the software 7
drivers for UnixWare. 8 Q.
Now, you gave a number of depositions in this case 9
and in the IBM litigation including a deposition on 10
December 21st, 2005; correct? 11
A. Yes. 12
MR. ACKER: And, counsel, I'm going to publish 13
Page 144 Lines 13 to 22 from that testimony. 14
Q. BY MR. ACKER: It's true, sir,
that when you 15 testified on December 21st of 2005,
you wrote: 16
When did SCO become aware of the facts that 17
Sun had open sourced -- or the Solaris system. 18
As part of
the negotiations related to the 19
latest IP license from -- we entered into with 20
Sun, one of their desires of that license was the 21
ability to have a broader IP license where
they 22 could to an extent open
source Solaris with 23
restrictions that it could not be open sourced 24
into Linux or other open source licenses that did 25
not protect copyright ownership.
118
1
Is the testimony accurate? 2
A. Yes. I would also add to that
they basically had 3 the rights necessary to do that,
anyways. 4 Q.
But that's what they wanted in the negotiations, 5
broader confidentiality provisions; correct? 6
A. Yes. I don't believe
that was an important part to 7 them. 8
Q. But it's part of what they
wanted and part of what 9 they paid for; correct?
10 A. Yes.
11 Q. And Sun
Solaris operating system is a derivative 12 work of
UNIX System V; right? 13
A. Yes. 14
Q. Why don't we take a look at Exhibit 187. 15
But it's also true,
isn't it, that it's SCO's 16 position that Sun was
entitled to open source Solaris as a 17 result of the
2003 agreement with SCO? Correct? 18
A. I would view that -- well,
open source as in -- 19 with the limitations set
forth in the agreement. 20
Q. So you would agree with me that as a result of the
21 2003 agreement, Sun was able to open source open
Solaris? 22 A.
Again, with the caveat that I just mentioned. 23
Q. Yes. They were able to
do that as a result of the 24 agreement? 25
A. Yes.
119
1 Q. Now,
if we could take a look at Exhibit 187 and 2
specifically Paragraph 3.1. 3
Now, in addition to being able to having broader 4
confidentiality rights with respect to that software, you 5
actually delivered copies of the software to Sun; right? 6
A. Yes. Primarily
UnixWare 7.1.3. 7 Q.
But you didn't just deliver that version. You 8
delivered all of it; right? 9
A. We delivered at least a number of other source 10
takes or previous versions. But the primary one that was
of 11 importance to Sun was the 7.1.3 source and the
source for the 12 hardware drivers for UnixWare. 13
Q. But Sun didn't say to you,
we're not interested in 14 that other code.
Don't bother delivering it to us. Just give 15
us the latest version and the drivers; right? Sun didn't
say 16 that to you? 17
A. No, I don't believe they did; nor did we ask them.
18 We were just delivering on our obligations under
the contract. 19 Q.
And the obligations under the contract were to 20
provide copies of all of the software; right? 21
A. Yes. 22
Q. And that's what SCO did; correct? 23
A. Yes. 24
Q. And SCO was paid just under $10 million by Sun for
25 this license; right?
120
1 A. Yes.
2 Q. And not a
single penny of that was paid to Novell; 3 correct?
4 A. No. 5
Q. And before entering into
the 2003 Sun license, SCO 6 did not obtain permission
from Novell to do the deal; right? 7
A. We did not believe we needed their permission. 8
Q. In fact, you didn't even
inform them about the deal 9 before it was done;
correct? 10 A. No.
Again, this was primarily a UnixWare license. 11
Q. But it's true, isn't it, that SCO
understood that 12 the APA requires prior written
approval from Novell for all 13 new agreements or
changes to current agreements relating to 14 UNIX
System V? Correct? 15
A. Again, this agreement was primarily about -- and
16 the value of this agreement was primarily about
UnixWare. And 17 since Sun already
had a buyout to, you know, the previous 18 System V
technologies, there was no need to have Novell 19
involved in a primarily UnixWare license. 20
Q. But isn't it true that SCO understood
that the APA 21 requires prior written approval from
Novell for any new 22 agreements or changes to
current agreements relating to UNIX 23 System V that
you understood that at the time you did the deal 24
with Sun? 25 A.
Yes. And again this was not a System V license.
121
1 This was a UnixWare license. 2
Q. There's over 35 versions of System
V software that 3 was licensed to Sun; correct? 4
A. Those were ancillary
products. The primary product 5 being
licensed was UnixWare. 6 Q.
Is there anywhere in the APA that says you only 7
have to obtain permission for licensing the primary product 8
and not the other 38 UNIX System V versions that you give -- 9
you license? 10 A.
Since Sun had a buyout of any royalty obligations, 11
I would not believe that would be necessary because there was 12
no revenue impact for Novell. 13
Q. So that was just a unilateral decision that Sun 14
made that, because we believe that the primary portion of this 15
agreement is the latest version of the software even though it 16
includes the earlier versions, we're not going to ask for 17
Sun Novell's permission? 18 A.
We did not believe we needed Novell's permission. 19
Q. Let me show you what we've marked
as Exhibit 27. 20
I show you Exhibit 27. 21 A.
Okay. 22 Q. Exhibit
27 is a letter from senior contracts 23 manager or
John Luehs of SCO to Miss Cynthia Lamont of Novell 24
dated May 20th, 1996; do you see that? 25
A. Yes.
122
1 Q. In the
first paragraph of that letter, Mr. Luehs 2 wrote to
Novell on behalf of SCO: 3
The agreement between the Santa Cruz 4
Operations, SCO, and Novell, Inc., Novell, 5
requires prior written approval from Novell for
6 all new agreements or changes
to current 7 agreements relating
to UNIX System V. 8
Correct? 9
A. Yes. 10 Q.
And you would agree with me, wouldn't you, that Sun 11
2003 is an agreement relating to UNIX System V?
Wouldn't you? 12 A.
Yes and no. Yes, that UNIX System V was a portion
13 of that and that UnixWare in my view, we would
describe under 14 UNIX System V. But --
15 Q. Because --
16 A. But the
primary -- primarily that agreement was 17 related to
a UnixWare source code license. 18
Q. And because the 2003 agreement with Sun was an 19
agreement relating to UNIX System V, SCO needed Novell's 20
approval before they did the deal; isn't that true? 21
A. I do not agree with that
statement. 22 Q. So
you disagree with the senior contracts manager, 23
what a senior contracts manager of SCO wrote in 1996; is that 24
right? 25 A. If it
was a SVRX older license, that's how I would
123
1 view that. This was a
UnixWare license primarily with Sun, 2 which is
different. 3 Q.
Let me show you what we've marked as Exhibit 30. 4
(Time lapse.) 5
Have you had a chance to read
Exhibit 30, sir? 6 A.
I scanned it. 7 Q.
Exhibit 30 is a letter from the management, law and 8
corporate affairs, Mr. Broderick of SCO on May 26, 1996, to 9
Novell; correct? 10 A.
Yes. 11 Q.
And you know who Mr. Broderick is; correct? 12
A. Yes, I do. 13
Q. What his current position at SCO?
14 A. Very
similar position. He's in the -- 15
Q. Management, law and corporate
affairs -- 16 A.
Yes. 17 Q. --
currently of the company? 18 A.
Yes. 19 Q.
And going to testify in this trial? 20
A. Yes. 21
Q. And let's take a look at what Mr. Broderick
wrote 22 on May 26, 1996, to Novell.
Take a look at that first 23 sentence.
Again, he wrote: 24
The agreement between Santa Cruz Operations, 25
Inc., SCO, and Novell, Inc., Novell, require
prior
124
1 written approval from
Novell for all new 2 agreements
or changes to current agreements 3
relating to UNIX System V. 4
Correct? 5
A. Yes. 6 Q.
And you don't have any reason to doubt 7 Mr.
Broderick's understanding of the APA; correct? 8
A. No. 9
Q. And you have no reason to doubt the statement that
10 Mr. Broderick made back in May of 1996; correct?
11 A. No.
And I would add that -- 12 Q.
Let me ask -- 13 A.
-- Mr. Broderick would view that UNIX System V in 14
this context is referring to older System V licenses and 15
source codes. And if we were doing a UnixWare code
license, 16 there was no permission required from
Novell. 17 Q. And
I'm sure Mr. Broderick can speak for himself, 18 and
I'm sure he will. 19 A.
All right. 20 Q. Let
me show you what we marked as Exhibit 189. 21
THE COURT: You didn't offer
27 or 30. 22 MR.
ACKER: Yes. I move for their admission. 23
THE COURT: I
don't know if they object. 24
MR. NORMAND: No objection, Your Honor. 25
THE COURT: 27
and 30 are received.
125
1 MR.
ACKER: Thank you, Your Honor. 2
(Whereupon, Novel Exhibits 27 and 30 were received.) 3
Q. BY MR. ACKER: I
show you what's been marked and 4 admitted as Exhibit
189. 5 A. All right.
6 Q. Now, Exhibit
189 is the Microsoft license entered 7 into between
SCO and Microsoft in April of 2003; right? 8
A. Yes. 9
Q. And you were the principal or one of the 10
negotiators in this agreement, as well? 11
A. Yes. 12 Q.
And prior to the execution of the agreement, there 13
were term sheets that were exchanged; correct? 14
A. Yes. 15
Q. And let me show you what we have marked and has 16
been admitted at Exhibit 171. 17
Exhibit 171, you'll see there's an e-mail chain at
18 the top where an e-mail was sent to you from a
Mike Anderer on 19 January 15th, 2003; correct? 20
A. Yes. 21
Q. And he wrote: 22
Mike, here is the first cut at the TS to
MS. 23 Feel free to mark up.
And we will see you in 24
Lindon tomorrow afternoon. Regards, Chris. 25
Do you see
that?
126
1 A. Yes.
2 Q. And down below
is a proposed term sheet of the 3 Microsoft deal with
SCO; right? 4 A.
Yes. 5 Q. And in
Paragraph 3 of that, you set out what the 6 license
code would be; correct? 7 A.
I view this as a kind of an al a carte list of 8
various areas and things that we could discuss with Microsoft. 9
Q. And on the top of the list
is UNIX System V; right? 10
A. Yes. 11 Q.
And in January of 2003 when you're going into these 12
negotiations, you understood that UNIX System V was part of 13
what was going to be licensed to Microsoft if the deal 14
happens; right? 15 A.
It was an area that could be licensed. Again, I'm 16
almost being redundant in saying UNIX System V and UnixWare. 17
But in order to have more items on the list to potentially 18
discuss, that was -- those were all items placed on the list. 19
Q. Well, you separately
culled it out here, didn't 20 you? 21
A. Yes. But in a lot of
cases, we're referring to the 22 same thing.
If they're taking a UNIX or a license they're 23
gaining access to a majority of the System V source code that 24
preceded it. 25 Q.
But in the same OU, you didn't just say UnixWare
127
1 and OpenServer; right? 2
A. No. We're trying to
provide as many possible areas 3 of discussion for
deal points as we can. 4 Q.
And one of those areas of discussions and deal 5
points was UNIX System V; correct? 6
A. Yes. 7 Q.
Take a look at the next page. Paragraph 5. 8
It's written: 9
SCO will recognize a retroactive license
in 10 favor of Microsoft against
any present or previous 11
violations of SCO's UNIX IP rights, as follows. 12
Correct? 13
A. Yes. 14 Q.
And this is eventually what matured into Section 2 15
of the Microsoft deal; right? 16
A. To an extent, that release. 17
Q. And that release is what you call the
retroactive 18 license in favor of Microsoft includes
other System V UNIX 19 technologies. 20
Right? 21
A. Yes. And to me in this case,
that would refer to 22 UnixWare, potentially
OpenServer and prior releases. 23
Q. And prior releases; correct? 24
A. Yes. 25
Q. And so Microsoft was concerned that there might be
128
1 some of SCO's intellectual property in
their products; right? 2 A.
Yes, potentially. 3 Q.
So in Section 2, they wanted a release that 4
included releases for all of SCO's IP and all of Microsoft's 5
products; right? 6 A.
Yes. 7 Q. And during
negotiations, they expressed concern 8 that they may
have inadvertently used SCO's IP in their 9 products,
including SVRX code; right? 10
A. Potentially yes. 11
Q. And Microsoft's concerns about having SCO's IP in
12 its product would not have been assuaged if the
license in 13 Section 2 had granted rights merely to
the current UnixWare 14 technology; right? 15
A. I don't know if I would
characterize it that way. 16 This ended up not being
an area that we discussed. But the 17
vast majority of the active and important code, you know, 18
significant percentage was available in the UnixWare product. 19
Q. Okay. You
testified on March 14th, 2007, at your 20 deposition
-- 21 And,
counsel, this is Lines 162-24 to 163-5. 22
-- you were asked the following questions and
gave 23 the following answers. 24
(A portion of the deposition was played.)
25 Q. BY MR.
ACKER: But Microsoft's --
129
1
MR. NORMAND: Your Honor, to complete this, I would 2
like to publish the remaining testimony from that portion of 3
the deposition. 4
MR. ACKER: Well, he certainly will have that 5
opportunity. 6
MR. NORMAND: I'm not sure of Your Honor's 7
practice. On occasion to save time, we play it at the
time of 8 the playing of the deposition. 9
THE COURT:
You prefer that he do it when he does 10 his
examination? 11
MR. ACKER: Yes. Absolutely. 12
MR. NORMAND:
Thank you, Your Honor. 13
THE COURT: You can do it then. 14
Q. BY MR. ACKER:
But Microsoft's concerns about 15 having SCO's IP in
its products wouldn't have been taken care 16 of,
wouldn't have been assuaged in Section 2 had they only 17
gotten rights to UnixWare; right? 18
A. That's a hypothetical because we never had that 19
discussion. 20 Q.
All right. Why don't we play your deposition at 21
Page 163 Lines 16 to 20. 22
(A portion of the deposition was played.) 23
Q. BY MR. ACKER: So
that was true; right? 24 A.
I don't know. I mean, possibly not.
But I think 25 if that had been an issue, we could
have likely convinced
130
1 Microsoft that the, you know, the vast
preponderance of the 2 code of UnixWare was all they
needed to provide the IP 3 protection they needed.
But we didn't at that time consider 4
that an issue in view that we had the rights to license them 5
the entire portfolio. 6
Q. But wasn't it your understanding that Microsoft 7
also needed the rights to the older UNIX technology to address 8
its concerns? 9 A.
Again, we never specifically had a discussion of 10
this. It was our standard practice and SCO's
predecessor's 11 when licensing UNIX technology to
also always license the 12 preceding versions of the
UNIX code, as well. That's what we 13
were doing in this case. 14
Q. Why don't we take a look at your deposition on 15
March 14, 2007, at Page 64 Lines 10 to 14. 16
(A portion of the deposition was
played.) 17 Q.
BY MR. ACKER: That testimony was accurate, wasn't 18
it? 19 A.
Again, I don't view that in conflict with what I'm 20
saying right now. 21 Q.
So part of what Microsoft wanted in negotiation 22
around Section 2 was a license that protected them against 23
potential claims relating both to UnixWare and to older SVRX 24
technology; right? 25
A. That was the license that was provided to them.
131
1 Q.
So the license that was provided to them included 2
both protection against violation of UnixWare and also older 3
UnixWare technology; right? 4
A. Older UnixWare technology, yes. 5
Q. And for this release in
license, Microsoft paid 6 $1 1/2 million; right? 7
A. Yes. 8
Q. And none of that money was
provided to Novell; 9 correct? 10
A. No, it was not. 11
Q. And you never sought
Novell's permission before 12 entering into that
portion of the deal; correct? 13
A. No. Again, this was a UnixWare
license. And the 14 standard matter of
course was to provide a license to all 15 preceding
versions of UNIX. That was, you know, the standard
16 practice that had always been performed. 17
Q. Let me turn to
Section 4 of the Microsoft 18 agreement. 19
Now, in order to be
entitled to take the license in 20 Section 4 of the
agreement, Microsoft first had to pay 21 $7 million
for the license in Section 3; correct? 22
A. Correct. 23
Q. And Section 3 of the Microsoft agreement is
titled, 24 if we could bring that up, "Option to
Purchase UnixWare 25 License."
Correct?
132
1 A. Yes.
2 Q. So they have
paid $7 million in this section, 3 Section 3 in order
to both take an option to get the UnixWare 4 license
and to actually get the license; correct? 5
A. That option for that UnixWare license had
6 significant limitations to it. 7
Q. And the Section 3 provides for licenses
of software 8 in Exhibits A and B of the agreement;
right? 9 A. Yes.
10 Q. And the
license in Section 4 licensed the software 11 listed
in Exhibits A, B and C; right? 12
A. Now, the primary component of Section 4 was an 13
expansion of that UnixWare license. 14
Q. I didn't ask you that. What I asked you
was, in 15 Section 4, isn't it true that the license
that was granted was 16 to Exhibits A, B and C of the
agreement? 17 A.
Yes. 18 Q. And
Exhibit C of the agreement contains UNIX 19 System V
Versions 1 through 4.2; correct? 20
A. Yes. 21 Q.
So if we look up on the screen, here's Exhibit C. 22
Everything that is highlighted that was granted as part of the 23
Section 4 license is UNIX System V Version 4.2 or earlier 24
software; right? 25 A.
Yes.
133
1 Q. And
not only did Microsoft purchase a license to 2 all of
this software, that is, the versions that we've 3
highlighted, but you also delivered actual copies of the code 4
to Microsoft; right? 5 A.
As many as we possibly could. 6
Q. So they not only got a license to use it, but they
7 also got physical possession of the software? 8
A. Yes. And those
older versions, by the way, were, 9 the sole intent
for them was for a source analysis repository. 10
Q. And before this license was signed, the
2003 deal 11 with Microsoft, Microsoft did not have a
preexisting license 12 for any of this code that
we've highlighted that is UNIX 13 System V code
Versions 1 to 4.2; right? 14
A. They at a previous time had a license, but I think
15 that license had been revoked or discontinued.
So at this 16 time, they did not have a
license. 17 Q. So
at this time when they entered in 2003, they 18
didn't have a license to any of this code; correct? 19
A. Correct. 20
Q. And you gave them a license to this
code; correct? 21 A.
As part of a broader UnixWare source code license, 22
yes. 23 Q. And that
code includes UNIX System V Versions 1 to 24 4.2;
right? 25 A. Yes.
134
1 Q. And in
order to obtain this license in Section 4, 2
Microsoft paid, initially paid an option amount of $250,000; 3
right? 4 A. Yes. 5
Q. And then they paid another
$8 million; right? 6 A.
Yes. 7 Q. So this
license in Section 4 cost Microsoft 8 $8 1/4 million?
9 A. Yes.
Now, again, the majority of the value of that 10 $8
million was for an expansion of the UnixWare distribution 11
lines. 12 Q. And
they already paid $7 million in Section 3 for 13
UnixWare license; right? 14 A.
For UnixWare source code license that was limited 15
to a very limited set of Microsoft products called Services 16
for UNIX and Connectix. And with the Section 4, they
were 17 allowed to use the UnixWare source code
across their entire 18 product line, which is a
significant increase in their rights. 19 And that was
where the value was. 20 Q.
Do you know of Microsoft ever distributing copies 21
of UnixWare with their products? 22
A. I don't know if they have or not. 23
Q. You don't know if they've ever
done that; right? 24 A.
(Witness indicates by shaking head side to side.) 25
Q. You have to answer yes or no.
135
1 A. I do
not know. 2 Q. Let
me show you a chart of -- a list of SCOsource 3
revenue licenses. It's Exhibit 383. 4
What I've handed to you and what's been
admitted 5 into evidence is Exhibit 383, which is,
SCO's Supplemental 6 Responses and Objections to
Novell's Second and Third Set of 7 Interrogatories.
And I want to direct your attention to a 8
chart that's at NOVTR, and the page is 4238. 9
A. All right. 10
Q. And can you make out that chart on your screen? 11
A. I'll look at it on the
screen as opposed to 12 potentially having a big mess
with a loose set of papers. 13
Q. Now, this is a listing, is it not, provided by your
14 lawyers of all of the licenses that were entered
in the 15 SCOsource program? Correct?
16 A. Yes. 17
Q. And the total amount that
Novell -- or SCO 18 collected as a result of the
SCOsource program and these 19 licenses was
$26,956,260.14; correct? 20 A.
Yes. 21 Q. And the
largest portions of that were the Microsoft 22 deal
at $16,680,000; correct? 23 A.
Yes. 24 Q. And then
the Sun deal at $9,143,450.63; correct? 25
A. Yes.
136
1 Q. And if
my math is correct, what we have left is a 2 series
of licenses to smaller entities for 1.1 million -- or
3 $1,132,809.51; correct? 4
A. Yes. 5
Q. And those licenses that you entered into, those 6
other licenses Sun and Microsoft that you entered into as part 7
of the SCOsource program were done in a variety of ways; fair? 8
A. They were intended to be
effectively the same 9 license, but the license I
think evolved over time. 10 Q.
And sometimes the licenses were done by what was 11
called a click-through on the SCO website; right? 12
A. Yes. 13
Q. Let me show you what we've marked as Exhibit 422. 14
Again, this has been
admitted, Your Honor. 15
(Time lapse.) 16
THE WITNESS: Okay. 17
Q. BY MR. ACKER: Exhibit 422, the second
page that 18 we'll bring up on the screen is a screen
shot of the SCO 19 website regarding this SCO
intellectual property license; 20 correct? 21
A. Yes. 22
Q. And if you take a look, there's
definitions that 23 are provided on the SCO website
as to what is being licensed 24 if one comes on line
and enters into one of these agreements 25 with SCO;
right?
137
1 A. Yes.
2 Q. And the first
line says: 3 The
agreement is the agreement between you and 4
the SCO Group, Inc., relating to rights acquired 5
by you. 6
Correct? 7
A. Yes. 8
Q. And then there's a definition of SCO IP.
It says: 9 SCO IP
shall mean the SCO intellectual 10
property included in its UNIX based code in object 11
code format licensed by SCO under SCO's standard
12 commercial license. 13
Correct? 14 A. Yes.
15 Q. And then you
define for potential licensees what 16 UNIX based
code shall mean; right? 17 A.
Yes. 18 Q. And you
define it by saying: 19
It is both UNIX System V and UnixWare. 20
Correct? 21
A. It says UNIX System V or UnixWare. 22
Q. It's both of those things;
correct? 23 A. Yes.
24 Q. So when
someone comes on line and clicks through 25 and gets
one of these license, they're obtaining a license to
138
1 UnixWare System V and UnixWare; right? 2
A. Yes. 3
Q. You know how many of these
licenses you entered 4 into, the online click method?
5 A. A
handful. Less than 20 or 30. 6
Q. Let me show you -- I'm going to show you a
series 7 of documents. 8
(Time lapse.) 9
I'll hand you these as a group.
But I'm going to 10 hand you -- I'll put them upside
down so you can flip them 11 back over.
But Exhibit 257, which has been admitted; 12 Exhibit
237, also been admitted; Exhibit 426, also been 13
admitted; Exhibit 301, which has also been admitted; 14
Exhibit 310, which has also been admitted; Exhibit 312, which 15
has also been admitted; Exhibit 322, also been admitted; 16
Exhibit 286, also been admitted; Exhibit 423, which has also 17
been admitted. 18
If we could start with Exhibit 257, sir. 19
A. Okay. 20
Q. Exhibit 257, if you could bring
that up, if we 21 could go to the next page, the
invoice. 22
You see there on the second page of Exhibit 257 23
there's an invoice where an entity CDM purchased one of these 24
SCO source licenses and paid SCO a total of $9,865.45; 25
correct?
139
1 A. Yes.
2 Q. And this was
done as part of the SCOsource 3 licensing program?
4 A. Yes. 5
Q. The click-through program;
right? 6 A. Yes. 7
Q. And you didn't ask
permission of Novell before 8 entering into that
agreement; correct? 9 A.
No. 10 Q. And you
didn't remit any of those -- any of that 11 $9,865 to
Novell; correct? 12 A.
No. 13 Q. Take a
look at Exhibit 237. 14
Exhibit 237 is a license agreement between Computer 15
Associates International, Inc., and the SCO Group; correct? 16
A. Yes. 17
Q. And this one is a written agreement;
correct? 18 A. Yes.
19 Q. Signed by you?
20 A. I believe so.
21 Q. And if you
take a look at the definition section, 22 Paragraph
1.11, you define that you're granting a license to 23
software products commonly known as UNIX System V and/or, 24
and/or UnixWare; right? 25 A.
Yes.
140
1 Q. That
was the license that you were granting to 2 Computer
Associates; right? 3 A.
Yes. 4 Q. And for
that license, Computer Associates paid 5 you -- paid
SCO $20,000; right? 6 A.
Yes. 7 Q. And you
didn't ask Novell's permission before 8 entering into
this license; correct? 9 A.
No. 10 Q. And didn't
remit any of those funds to Novell; 11 correct? 12
A. No. 13
Q. Take a look at Exhibit 426.
This is another 14 written agreement that was entered
into between SCO and an 15 entity referred to as
Cymphonix; correct? 16 A.
Yes. 17 Q. And
again, we have a written agreement; right? 18
A. Yes. 19
Q. And it looks like there was as part of a 20
development agreement between Cymphonix and SCO, Cymphonix 21
also entered into one of the SCO intellectual property 22
agreements; right? 23 A.
I believe that to be the case. 24
Q. And if you take a look at that Exhibit A of this 25
license, which is the intellectual property agreement --
141
1 A. Yes.
2 Q. -- and
specifically the next page and look at the 3
definitions, what was licensed to SCO under the -- license to 4
Cymphonix under the intellectual property agreement was 5
SCO UNIX based code; right? 6
A. Yes. 7 Q.
And the definition of SCO UNIX based code was 8 UNIX
System V or UnixWare; right? 9
A. Yes. 10 Q.
And Cymphonix paid Novell $8,112 for this license; 11
right? 12 A. I
believe that would be the case. 13
Q. And none of that money -- paid SCO $8,112; correct?
14 A. Yes. 15
Q. And none of that money went
to Novell; right? 16 A.
I believe that to be the case. 17
Q. And you didn't ask Novell's permission before 18
entering into that agreement; correct? 19
A. No. 20 Q.
Take a look at Exhibit 301. 21
301 is another intellectual property license under
22 the SCOsource program between SCO and an entity
called 23 Everyones Internet; right? 24
A. Yes. 25
Q. And again, you signed the agreement on behalf of
142
1 SCO? 2
A. Yes. 3 Q.
And if we go to the definitions, we can again see 4
what it was that was licensed; correct? 5
A. Yes. 6
Q. And what was licensed was SCO UNIX based code; 7
correct? 8 A. Well,
UNIX System V or UnixWare. 9
Q. Okay. Well, SCO UNIX based code is the
definition 10 of what the license is being granted
for, but the definition 11 of UNIX based code is UNIX
System V or UnixWare; correct? 12
A. Yes. 13 Q.
And for getting this license, Everyones Internet 14
paid SCO $534,444; correct? 15
A. Yes. 16 Q.
None of that money went to Novell; right? 17
A. No. 18
Q. And you didn't ask permission of Novell before 19
entering into that agreement; correct? 20
A. No. 21
Q. Why don't we take a look at Exhibit 310. 22
Exhibit 310 is
another intellectual property 23 agreement that you
signed on behalf of SCO with an entity 24 called HEB
or HEB. HEB Grocery Company LP; right? 25
A. Yes.
143
1 Q. And
this is a similar license. If we take a look 2
at the definitions -- well, what was licensed was something 3
called SCO IP; right? 4 A.
Yes. 5 Q. And the
definition of SCO IP is SCO UNIX based 6 code; right?
7 A. Yes. 8
Q. And that means UNIX System
V or UnixWare; right? 9 A.
Yes. 10 Q. And HEB
paid SCO a half million dollars, $500,000 11 for this
license; correct? 12 A.
Yes. 13 Q. And none
of that money went to Novell? 14
A. No. 15 Q.
And you didn't ask Novell's permission before 16
entering that that agreement; correct? 17
A. No. 18 Q.
Why don't we take a look at Exhibit 312. 19
THE COURT: Unless you're about done
with this 20 witness, let's take our second break.
21 MR. ACKER:
Very well, Your Honor. 22
THE COURT: Are you about done? 23
MR. ACKER: 15 minutes.
24 THE COURT:
Let's take our second break. 25 15 minutes.
144
1
(Short recess) 2
THE COURT: You may proceed. 3
MR. ACKER: Thank you,
Your Honor. 4 Q. Mr. Sontag,
before the break, I believe we left 5 off with Exhibit 312.
If you would look at that, please. 6 This is another
intellectual property agreement between 7 the SCO Group and Lane
Furniture, correct? 8 A. Yes.
9 Q. And, again, if you take a
look at the 10 definitions -- if you would go to the next one,
please -- 11 what's being licensed here is SCO IP, and, again,
the 12 definition is SCO UNIX-based code in Section -- in 13
paragraph 1.7, and then the definition of what that is is 14 UNIX
System V or UnixWare, correct? 15 A.
Yes. 16 Q. Did Lane Furniture
pay SCO any money for this 17 license? 18
A. I believe so. 19 Q.
Do you know how much? 20 A. I do
not. 21 Q. Were any of those
funds remitted to Novell? 22 A.
No. 23 Q. Did you ask permission
before entering into 24 this agreement with Lane Furniture? 25
A. No.
145
1 Q. Would you take a
look at Exhibit 332. This is 2 another SCOsource IP
license, this time between OCE 3 printing and SCO, correct? 4
A. Yes. 5 Q.
And if you would take a look at the 6 definitions, if you
go to the second page, please, again, 7 it's the same
definition. SCO IP means SCO UNIX-based 8 code,
correct? 9 A. Yes. 10
Q. And the definition of what that is, SCO
11 UNIX-based code, is UNIX SCO System V or UnixWare, 12
correct? 13 A. Yes. 14
Q. And you were paid -- or SCO was paid
$49,500 15 actually by Siemens for this license, correct?
Does that 16 sound right? 17
A. I believe that to be the case. 18
Q. And, again, none of that money was remitted to 19
Novell, correct? 20 A. No. 21
Q. And you didn't seek permission before
entering 22 into this agreement, correct? 23
A. No. 24 Q. Take a
look at the Exhibit 286. This is 25 another SCO group
intellectual property license, correct?
146
1 A. Yes. 2
Q. And this time it's entered into with Questar,
3 correct? 4 A. Yes. 5
Q. And why don't we take a look at the
definition 6 section of this agreement. Here the
definition was a 7 little different as to what SCO IP rights
were, correct? 8 A. Yes. 9
Q. And what was licensed to Questar was
SCO IP 10 rights, which shall mean SCO's intellectual property
11 rights in any and all past, current or future versions 12
of -- or portions of SCO's software products commonly 13 known as
UNIX System V and/or UnixWare correct? 14 A.
Yes. 15 Q. That's what
the license grant was, correct? 16 A.
Yes. 17 Q. And if you take a
look at paragraph 114 -- I'm 18 sorry, 2.1 -- well, let's go back
to -- if we could 19 highlight 114. 20
And, again, the definition of UNIX-based code 21
there includes both UNIX System V or UnixWare, right? 22
A. Yes. 23 Q.
And Questar paid SCO $19,125 for this license, 24 correct? 25
A. Yes.
147
1 Q. And none of that
money was remitted to Novell, 2 correct? 3
A. No. 4 Q. And you
didn't seek Novell's permission before 5 entering into that
license, right? 6 A. No. 7
Q. One last exhibit to show you.
Let me show you 8 what we've marked as Exhibit 227, Novell 227.
And, 9 Mr. Sontag, please feel free to look at any
part of the 10 exhibit, but I'm going to ask you about the e-mail
on the 11 second page in the middle of the page. 12
A. Okay. Just a moment. 13
Q. Sure. 14 A.
Okay. 15 Q. Now, if you
could take a look at that e-mail on 16 the second page, in the
middle of the page, it's an 17 e-mail from Jeff Hunsaker at SCO
to yourself, Mr. McBride 18 and others at SCO. And
it's sent on July 31, 2003, 19 correct? 20
A. Yes. 21 Q. And
what was Mr. Hunsaker's position -- his 22 position at SCO was
Senior Vice President of Worldwide 23 Sales and Marketing, right?
24 A. I believe that to be the
case. 25 Q. And Mr. Hunsaker
currently is the president and
148
1 CEO of SCO, right? 2 A.
I think at least the president of SCO 3 Operations or
something like that. I'm not sure what his 4 exact
title is now. 5 Q. And what he
said in the middle of 2003, this 6 e-mail followed a conference
call about this SCOsource 7 licensing program, right? 8
A. Yes. 9 Q.
And the subject line there is: SCOsource 10
issues and buyoff, correct? 11 A.
Yes. 12 Q. And he wrote Darl,
Chris, Kim and Kevin, 13 correct? 14 A.
Yes. 15 Q. And then he
wrote: 16 During our
SCOsource con call today, we 17 discussed and would like to
propose the following. The 18 official name
of this program will be the SCO UNIX IP 19 Compliance License
Program. 20 Correct?
21 A. Yes. 22
Q. And that's the name that was eventually used 23
for this program of these contracts that we have 24 just been
through, right? 25 A. Yes, at
least for a period of time.
149
1 Q. And then he
wrote: 2 This is
not a Unixware 7.13 SKU, right? 3 A.
Yes. 4 Q. And then he
wrote: 5 The
license is called a SCO UNIX IP license for 6 Linux.
The only rights that this license provide is for 7 Linux binary
runtime copies. When we are ready to issue 8
a similar license for AIX, it will be called the SCO UNIX 9
license for AIX. 10
Correct? 11 A. Yes. 12
Q. Then he followed up with these
words: 13 There is
no connection between UnixWare, 14 OpenServer and the SCO UNIX IP
license whatsoever. 15
Right? 16 A. Well, I
wouldn't agree with that 17 characterization.
These licenses are based on the same 18 underlying IP that is in
UnixWare and OpenServer. 19 Q.
He is the current president of SCO, 20 Mr. Hunsaker, right? 21
A. Yes. 22
Q. And what he wrote, at the time this program was
23 taking off, in July of 2003, is: 24
There is no connection between UnixWare, 25
OpenServer and the SCO UNIX IP license whatsoever.
150
1 Right? 2
A. I disagree with that characterization.
3 Q. And then he continued: 4
They are independent. 5
Correct? 6 A.
Yes. That's what he put. 7 Q.
And in 2003, that's what the Senior V.P. of 8 Worldwide Sales and
Marketing of SCO, how he 9 characterized the SCOsource program,
right? 10 A. They are not the
same product, but they are -- 11 the SCOsource license is IP
based upon the UnixWare and 12 OpenServer products. 13
MR. JACOBS: I don't
have anything further, 14 Your Honor. 15
THE COURT: Thank you. 16
Mr. Normand, you may examine. 17
MR. NORMAND: Thank
you, Your Honor. 18
CROSS EXAMINATION 19 BY MR.
NORMAND: 20 Q. Good afternoon,
Mr. Sontag. 21 A. Good afternoon.
22 Q. Is it fair to say that,
during your tenure at 23 SCO, you used the terms UnixWare and
System V 24 interchangeably from time to time? 25
A. Yes.
151
1 Q. Why did you do
that? 2 A. One of the primary
reasons is that we were 3 thinking about possibly renaming
UnixWare to be System V, 4 and that was under serious
consideration until we 5 determined there would be a lot of
certification and a 6 substantial amount of costs in renaming
UnixWare, and so 7 we determined that that was not possible.
But, in terms 8 of describing UnixWare, OpenServer, all of
that, we would 9 often use UNIX System V as the overall umbrella
name for 10 all of SCO's UNIX technologies. 11
Q. What was the point of using the phrase System V 12
as an umbrella or a short name for all that technology? 13
A. It was just short for saying UNIX
System V. 14 Q. Were you always
careful to draw distinctions 15 between the UnixWare trade name
for the latest release 16 and other uses of System V? 17
A. No. 18 Q.
I want to start, Mr. Sontag, where Mr. Acker 19 started,
with Novell Exhibit 147. This was a document 20 that
referred to SVR 4 software libraries. Do you recall 21
looking at that document? 22 A.
Yes. 23 Q. This was the draft
press release that you went 24 through. Do you recall
that? 25 A. Yes.
152
1 Q. Now, do you know
what libraries are? 2 A.
Libraries are a portion of an operating system 3 that are used
for applications to communicate with 4 operating system. 5
Q. Do you know whether there are SVR 4
libraries 6 in UnixWare? 7 A.
I suspect that may be very well what those 8 libraries are
called. I don't specifically remember, but 9 those
libraries are referring to the UnixWare runtime 10 libraries.
11 Q. Are libraries the same as
releases of a 12 software product? 13 A.
No. Libraries are just a portion of an 14
operating system release. 15 Q.
OSR 5 libraries you refer to in this document 16 as well.
Do you know what that's a reference to? 17
A. I believe that's referring to the OpenServer 18
Version 5 runtime libraries. 19 Q.
And what was OpenServer? 20 A.
OpenServer was a version of UNIX developed by 21 Santa Cruz that
was based on UNIX System V, Release 3. 22 Q.
Let me take a step back, Mr. Sontag. When did 23
you join SCO? 24 A. October of
2002. 25 Q. And with whom did
you deal in acquiring an
153
1 understanding of the subject matter that has been 2
discussed? 3 A. Of a lot
of individuals inside of SCO, Bill 4 Broderick, John Maciaszek,
the attorneys, Jeff Hunsaker, 5 a whole host of people. 6
Q. Had you worked at Novell
previously? 7 A. Yes, I
have. 8 Q. Turn to Novell
159. 9 THE
COURT: What number? 10
MR. NORMAND: 159. 11
Q. This is the document, Mr. Sontag, in which SCO
12 makes the statement that it is the developer and owner of 13
SCO UnixWare and SCO OpenServer, both based on UNIX 14 System V
technology. Do you recall reading the 15
document? 16 A. Yes. 17
Q. And do you recall Mr. Acker
referring to the 18 tree of a software system? 19
A. Yes. 20 Q.
And what did you understand him to mean? 21
A. Well, what I understand it to mean is:
When 22 software is developed, you build a version.
You build a 23 release and then usually, if you're going to
create a 24 subsequent release of that software, you create a new
25 branch of software, start again, and make modifications
154
1 to that version of software and so on and so on, just
2 like when you're developing a document, a legal document, 3
maybe, in a legal environment with a number of 4 colleagues, you
may create a first version of a document, 5 circulate that, make
modifications, you know, get the 6 responses back, publish a new
revision of that document 7 and so on and so on. 8
Q. Now, you testified earlier about your 9
understanding of the relationship between SVR 4 and UNIX 10
System V, Release 4 and Unixware. Do you recall that 11
testimony? 12 A. UnixWare is
based on SVR 4. It's developed out 13 of SVR 4 and
actually the first version of UnixWare is 14 based on SVR, I
think, 4.1. 15 Q. Mr. Sontag,
this is attachment 1 to the Sun 16 agreement. Do you
recall viewing this earlier today? 17 A.
Yes. 18 Q. And do you see Section
2, a description of 19 technology, additional technology? 20
A. Yes. 21 Q.
And do you see the fourth line there, System V, 22 Release 4.2
and products? 23 A. Yes. 24
Q. And then do you see the parenthetical
there? 25 A. Yes.
UnixWare 1, UnixWare 1.1, UnixWare
155
1 1.1.1. 2 Q. You
took part in negotiating this agreement, 3 correct? 4
A. Correct. 5 Q.
What did you understand that reference in 6 attachment 1 to mean,
that parenthetical reference? 7 A.
Well, that was previous releases of UnixWare. 8
Q. What is your understanding of when UnixWare was 9
developed? 10 A. UnixWare was
developed in the early '90's, 11 primarily when Novell was -- had
ownership for the UNIX 12 intellectual property. 13
Q. And do you see the next line in this 14
attachment, System V, Release 4.2 MP and products? 15
A. Yes. 16 Q.
I take it your intent was the same, by using 17 that
parenthetical? 18 A. Yes. 19
Q. Okay. 20
Will you pull up Novell Exhibit 173, and at the 21
bottom of the third page. 22
This is the document, Mr. Sontag, that the 23 first paragraph at
the top in the blowup, it says: 24
In the past SCO's UnixWare and OpenServer 25 license
agreements did not allow these UNIX libraries to
156
1 be used outside of SCO's operating systems. 2
Do you see that language?
3 A. Yes, I do. 4
Q. Do you know whether a Unixware
license relates 5 to technology that goes back to the days of
AT&T? 6 A. Yes. 7
Q. Do you know whether SCO ever paid
Novell any 8 money for the technology going back to AT&T that
was part 9 of the UnixWare license? 10
A. No, I don't believe they did. 11
Q. Do you have a view as to whether the
UnixWare 12 license allowed the licensee to use the SVR 4 13
libraries? 14 A. I believe
they would. 15 Q. And
what's the basis for that understanding? 16
A. That was the libraries that were included with
17 UnixWare. 18 Q.
Now, at the time of the SCOsource agreements 19 that you reviewed
in some detail, were you concerned 20 about the use of UnixWare
and OpenServer technology with 21 Linux? 22
A. Yes. 23 Q.
In what way? 24 A. That
any of that IP had been misappropriated in 25 any form or fashion
into Linux.
157
1 Q. Okay. 2
Will you pull up SCO Exhibit
402. 3 Mr. Sontag,
SCO Exhibit 402 is SCO System V for 4 Linux sales guide, internal
use only. Are you roughly 5 familiar with this
document? 6 A. Yes. 7
Q. Could we go to the first page.
And this is the 8 executive summary of the document.
I take it you've seen 9 this before? 10
A. Yes. 11 Q.
Who is Jay Peterson? 12 A.
Jay Peterson was an employee of the SCOsource 13 division.
He worked for me. 14 Q.
Do you see in the middle of the paragraph, it 15 says: 16
The first product is called
SCO System V for 17 Linux Release 1.0, SCO UNIX runtime
libraries. 18 A. Yes. 19
Q. And the next sentence: 20
It licenses the SCO
OpenServer COFF static 21 shared libraries. 22
Do you see that? 23
A. Yes. 24 Q.
What was your understanding of what that 25 meant?
158
1 A. That the
primary product of that first release 2 of the SCOsource runtime
library was the OpenServer COFF 3 runtime libraries. 4
Q. And what is your basis for that
understanding? 5 A.
Because that's what I understood it to be at 6 the time. 7
MR. NORMAND:
Would you go to page 8 and blow 8 up the top part of that. 9
Q. This paragraph, the first one in
the section 10 called SCO UNIX Applications, has the following
sentence: 11 ELF
is the newer and current System V format 12 and is used in
UnixWare. 13 A. Yes. 14
Q. What does that reference mean?
15 A. That's referring to
that the primary runtime 16 libraries in UnixWare are also called
ELF. 17 Q. Now, if you
look at page 11, the bottom 18 paragraph. 19
If you would pull that up. 20
The following language appears:
21 Some of our
existing OpenServer UnixWare 22 customers may be considering a
migration to Linux. If 23 they are, the SSVL
product may be attractive to them, 24 since it can enable them to
run existing OpenServer or 25 UnixWare applications on Linux.
159
1 What does that
language signify? 2 A. It's just
saying, you know, that kind of a 3 basis for actually starting
this program was that we had 4 some of our existing customers
that came to us and said: 5 Hey, we would like to be able to run
our UNIX 6 applications either for OpenServer or UnixWare on
Linux. 7 Can you help us, you know, come up with a method to be
8 able to do that? 9
And that was the basis for starting SCOsource. 10 And the first
product that was released was intended to 11 provide that
solution for those customers. 12 Q.
One more snippet from this document. The next 13
page, second full paragraph, contains the following 14 statement:
15 In some cases we
believe they may be using our 16 libraries already to run
OpenServer or UnixWare 17 applications. 18
Do you see that language? 19
A. Yes. 20 Q. Is this
reflective of a view that at the 21 beginning of the SCOsource
program, you were concerned 22 about the use of OpenServer in
UnixWare technology? 23 A. Well,
we had customers that came to us and said 24 that they were doing
this very thing. They were using 25 the runtime
libraries on Linux, and their review of the
160
1 end user license agreement for OpenServer or UnixWare
2 made them come to, I believe, the correct conclusion that 3
that was not appropriate. They wanted to be able to 4
accomplish that in an appropriate manner, and so they 5 came to
SCO asking for us to provide a method for them to 6 license those
libraries to use with Linux. 7 Q.
And the date of this document is February, 8 2003, right? 9
A. I believe so, yes. 10
Q. Is it fairly early in the SCO program
process? 11 A. Yes, it is.
12 Q. Novell Exhibit
194. This is a document you 13 were asked about
earlier, a letter to Fortune 1000 14 companies? 15
A. Yes. 16 Q.
Do you recall going over this document?
And 17 this document contains a statement that there had been,
18 in SCO's view, System V code copied into Linux.
Do you 19 recall that? 20 A.
Yes. 21 Q. Was it your
view, at the time, that the System 22 V code that had been copied
into Linux was part of 23 UnixWare? 24
A. It very well could be. I mean, the
vast 25 majority of the code is, you know, identical to what is
161
1 in UnixWare, that we had concerns with. 2
Q. We have in the second paragraph from the 3
bottom, the statement that we have evidence that portions 4 of
UNIX System V software code have been copied into 5 Linux and
that additional other portions of UNIX System V 6 software code
have been modified and copied into Linux. 7
Do you see that statement? 8
A. Yes. 9 Q. Are
there methods and concepts, in your view, 10 that were developed
by AT&T that are in UnixWare? 11 A.
Yes. 12 Q. In your view, is there
code developed by AT&T 13 that is in UnixWare? 14
A. Yes. 15 Q.
And, in your view, did you have the right to 16 license that
material to customers without submitting any 17 payment for those
rights to Novell? 18 A. Yes. 19
Q. Next page, top. You say:
20 Consistent with this
effort, on March 7 we 21 initiated legal action against IBM for
alleged unfair 22 competition and breach of contract with respect
to our 23 UNIX rights. 24
Do you see that sentence? 25 A.
Yes.
162
1 Q. In your
agreements with Microsoft, Sun 2 SCOsource agreements, did you
ever purport to license 3 anything other than SCO's IP rights?
4 A. No. 5
Q. You were asked about Mr.
-- or Dr. Cargill's 6 expert report. Do you
recall that? 7 A. Yes. 8
Q. 428, page 3. 9
And if you would blow up that bottom
paragraph. 10 Dr.
Cargill states in this report: 11
Overall, Linux is a substantial copy of the 12 UNIX
SVR 4 operating system. 13
Do you see that language? 14 A.
Yes. 15 MR.
NORMAND: And can you side-by-side that 16 with page
12 of the Sun agreement? 17 Q.
We went over, Mr. Sontag, this language in the 18 bottom of the
divided documents. System V, Release 4.2 19
and products, and then the parenthetical in UnixWare? 20
A. Yes. 21 Q.
And Dr. Cargill is concluding that Linux is a 22
substantial copy of the SVR 4 operating system.
Do you 23 see that? 24 A.
Yes. 25 Q. You were told
in your examination that
163
1 Dr. Cargill had concluded that Linux is substantially
2 similar to SVR 4. Do you recall that? 3
A. Yes. 4
Q. Is it fair to say that one could equally 5
accurately say that Linux is substantially similar to 6 UnixWare?
7 A. Yes. 8
Q. Had you had occasion to read this report
-- 9 A. I had not. 10
Q. -- before it was presented or
given to you 11 today? 12 A.
No, I had not. 13 Q.
You're familiar with Malloc code? 14 A.
Yes, I am. 15 Q.
And how did your -- or SCO's reliance on Malloc 16 code come to
unfold? 17 A. I think it
was in February or March or April of 18 2003, that we became
aware of the Malloc code example 19 of -- you know, kind of some
fairly obvious and 20 easy-to-see literal copyright infringement
that had 21 occurred, was code that was in a Silicon Graphics set
of 22 open source software that was part of Linux that was 23
substantially the same as the UNIX System V, Release 4.2 24 ES
code that it had licensed to Silicon Graphics. 25
And it was very plain and apparent to see
that
164
1 there was a substantial amount of direct, literal
copying 2 that had occurred, which was actually surprising to me
3 that it would be so obvious and not munged up more than 4
it was. 5 Q. The Malloc code is
from UNIX System V, Release 6 3, is that correct? 7
A. The Malloc code is in many previous releases of
8 UNIX and small modifications or additions made to that 9
code with each additional release, but it's been 10 substantially
similar for many UNIX releases, and the 11 code is substantially
similar between UnixWare and many 12 previous, you know,
releases, at least through the last 13 10 or 20 years and. 14
Q. And in your view, when you were with
SCO, did a 15 license to UnixWare permit the licensee to use the
Malloc 16 code? 17 A. Yes.
18 Q. Novell 274. You
were shown this letter from 19 Mr. McBride to Lehman Brothers.
Do you recall briefly 20 reviewing this document? 21
A. Yes. 22 Q.
And in the document, Mr. McBride makes 23 reference to, quote,
SCO's rights in UNIX. 24
Do you recall that? 25 A. Yes.
165
1 Q. Again, in
all these agreements we are talking 2 about, did SCO purport to
release or license any 3 technology other than the ones that it
thought it had 4 rights to? 5 A.
No. 6 Q. Page 2, towards
the bottom. Do you recall 7 looking at that long list
of files and going through this 8 language? 9
A. Yes. 10 Q.
Is there ABI code in UnixWare? 11 A.
Yes, there is. 12 Q. How
do you know that? 13 A. I
have been made aware of that through the 14 course of our
investigations, and so I was aware that 15 there was ABI code in
UnixWare. 16 Q. Let's look
at Novell 57. Maybe SCO 57. 17
Do you recall going over the Sun agreement with
18 Mr. Acker? 19 A.
Yes, I do. 20 Q. Can you
take a step back and tell me how it 21 came to be that there was
a 2003 Sun agreement? 22 A.
Back in the late fall of 2002, we had a 23 business and
engineering meeting with Sun; some of Sun's 24 executives, some
of SCO's executives, some our engineers, 25 their engineers,
trying to determine if there was, you
166
1 know, business opportunities working together, and I
2 think at that time, we had told them that we had, you 3
know, additional SCO intellectual property that we would 4 be
willing to discuss with them and license; that we were 5 also
interested in potential joint marketing 6 opportunities and
otherwise. 7 And
in early 2003, we started having 8 discussions with Sun about
licensing UnixWare into their 9 products. Sun was --
had a substantial UNIX business in 10 the form of Solaris that,
at the time, only ran on a 11 specialized version of a processor
called a spark 12 processor. They had a desire to be
able to run their 13 Solaris operating system software on a more
general 14 PC-type, Intel-compatible processors, which is the 15
primary capability of SCO's UnixWare releases and all of 16 the
software drivers that we had available with UnixWare. 17
So they became interested in taking
a license 18 for the UnixWare source code and the drivers in
order to 19 develop an Intel-compatible version of Solaris, and
that 20 was the primary motivation for the discussions and the
21 ultimate license agreement that was entered into in 2003. 22
Q. You referred to drivers.
What are drivers? 23 A.
Drivers are additional pieces of code that 24 allow peripherals,
a network card, a keyboard, different 25 components or portions
of the computer hardware to be
167
1 able to interact and operate with the operating
system. 2 They are an important piece that if you don't have a 3
broad array of software drivers available, that operating 4
system will not work with a wide variety of hardware 5 that's
available out there, limiting your potential 6 customer base. 7
Q. And did Sun get drivers? 8
A. Yes, they did. 9 Q.
In the 2003 agreement? 10 A.
Yeah. It was very important for them. 11
Q. Drivers for what? 12
A. For UnixWare. 13 Q.
Did they get drivers for the older System V 14 technology? 15
A. No, they did not. 16
Q. Do you think they could use the older System V 17
releases as a stand-alone product without the drivers for 18
them? 19 MR. ACKER:
Objection. Calls for 20 speculation. 21
THE COURT: I'll let him
testify as to his 22 understanding of that. 23
THE WITNESS: It wouldn't make
sense. If 24 you're developing a software product,
you want to use the 25 latest version of the source code of that
software to
168
1 develop that product because it would have the latest
bug 2 fixes and features and capabilities. Same with
being 3 necessarily compatible with the hardware drivers that 4
would be associated with that operating system product. 5
Q. You went through a couple of attachments to
the 6 1994 Sun agreement and then the 2003 Sun agreement. 7
Could we pull those up
side-by-side? It's 8 Novell 187 and Novell 5.
And at 187, go to page 11, and 9 in 5, would you pull up page 19.
10 Do you recall
going through these attachments, 11 Mr. Sontag? 12
A. Yes, I do. 13 Q.
And I think, although you haven't had time to 14 pore over
it, these are the same list of products, 15 correct? 16
A. Yes. They appear to be
basically the same. 17 Q. Now,
as of 2003, Sun already had rights to all 18 of these products,
correct? 19 A. Yes.
I believe so. 20 Q. And this
will be a little bit redundant to what 21 you've testified to,
but in general, what did you 22 understand those rights to be as
of 2003? 23 A. As of 2003, Sun
had the most substantial rights 24 of any UNIX licensee.
They had source code for, you 25 know -- they had source
sublicensing rights, very broad
169
1 source sublicensing rights that no other UNIX licensee
2 had, which is why they had paid a substantial amount of 3
money because they had the ability, without any 4 involvement of
Novell or SCO or whoever was in control of 5 the UNIX contracts,
to be able to license the Solaris 6 source code to their
customers who, in turn, could also 7 sublicense the software.
That was a substantial right. 8 Q.
Sun had paid 82 1/2 million dollars for those 9 rights, correct?
10 A. Correct. 11
Q. Could Sun, under that 1994 agreement, 12
distribute its Solaris product to as many as a hundred 13
licensees? 14 A. Yes. 15
Q. A thousand? 16
A. A thousand. A million. They,
in turn, could 17 sublicense that source code to their customers,
so, it 18 could -- Solaris could be very broadly distributed very
19 easily, with the rights that Sun had in the 1994 20
agreement. 21 Q. Now, what do you
recall discussing with Sun 22 about whether there were
confidentiality restrictions in 23 the 1994 agreement? 24
A. I had raised that there were
confidentiality 25 provisions. They, as part of the
negotiating, tit for
170
1 tat, kind of strongly stated that they believed that
most 2 of those confidentiality provisions had been undermined 3
or waived by disclosures of the UNIX code over the years. 4 They
gave examples of the Lion's Book and some other 5 examples to
make their point. I, in doing my job, tried 6 to
press back and emphasize that I thought it was 7 important that
they, you know, had confidentiality 8 provisions. 9
Their position was that, with their broad
10 licensing rights and what they were intending to do, they 11
felt that they had the right to basically, in a, you 12 know,
Sun's sort of style, release an open source version 13 of Solaris
with the rights they had in 1994. 14 Q.
And do you think that position by Sun bore on 15 the price that
was negotiated for the agreement? 16 A.
For the 1994 agreement? 17 Q. The
2003. 18 MR. ACKER:
Objection. That calls for 19 speculation.
He can't possibly know what's in Sun's 20 mind. 21
MR. NORMAND: Mr. Sontag
negotiated the 22 agreement. He can recall parts of
negotiations, 23 inferences, and can make conclusions from what
Sun was 24 telling them how much they might be willing to pay.
25 THE COURT:
Overruled. Go ahead.
171
1 THE WITNESS:
Certainly Sun felt like they 2 already had substantial
rights and they had already paid 3 a substantial amount of money
for their -- you know, the 4 UNIX rights that they already had in
the 1994 agreement. 5 Their primary interest was in being able to
enable a 6 Solaris-on-Intel version, and their primary interest
was 7 then the UnixWare rights that we would be licensing to 8
them. And that was, I believe, where they viewed the 9
preponderance of the value to lie. 10 Q.
Would it be fair to say that, as of the 2003 11 agreement,
Sun was already in the business of 12 commercially licensing its
derivative work, Solaris? 13 A.
Yes. 14 Q. And the SVRX material
therein? 15 A. Yes. 16
Q. Now, you mentioned, in response to one
of 17 Mr. Acker's questions, that there was an important 18
restriction on what was described to you as open source 19 rights
in the 2003 agreement. Can you expand on that a
20 little? 21 A. Well, this
was one area that they wanted to be 22 able to make sure they --
you know, that the open 23 sourcing that they intended to do,
which they believed 24 they already had rights to do, that they
had complete 25 coverage for. So this is
another kind of
172
1 belt-and-suspenders sort of addition they wanted in
the 2 agreement was to broaden the confidentiality provision to
3 allow them to, you know, under a -- you know, a specific 4
version of an open source license that was not Linux, 5 that
valued the software, they could, you know, with the 6 addition of
the 2003 agreement, open source in a manner 7 that was, you know,
defined by the 2004 agreement. 8 Q.
This is the for-value language that you're 9 talking about? 10
A. The for-value language, that it was
intended 11 that they could not release Solaris under the Linux
GPL 12 open source license that would not pass muster with the
13 for-value provision in the 2004 agreement. 14
Q. And, again, a little redundant, but why did 15
that matter to you, that restriction? 16 A.
Well, we wanted to make sure that Solaris was 17 not just,
wholesale, dumped into Linux, that that would 18 be a problem,
but we felt that Sun had substantial rights 19 and that if they
were doing another version of open 20 source that met with the
requirements in the agreement, 21 that they had the rights to do
so. 22 MR. NORMAND:
Would you pull up Novell Exhibit 23 5 at page 20 -- let's do
Novell 187. 24 Q. This is, when
we get to it, the second page of 25 the attachment to the Sun
agreement that goes over the
173
1 technology that was licensed to them. 2
Do you recall going over that? 3
A. Yes. 4 Q.
And there were various SVR 4.1 and 4.2 releases 5 listed on that
second page. Do you recall that? 6
A. Yes. 7 Q. And do
you recall being asked about releases 8 identified in a schedule
to the APA? 9 A. Yes. 10
Q. I take it you had occasion to review the
APA 11 during your tenure at SCO? 12 A.
I did review it a number of times. 13 Q.
And you were asked about the schedule that 14 identified what you
called products. Do you recall that? 15
A. Yes. 16 Q.
And I wanted to ask you some questions about 17 the similarity
between that list of products and this 18 list of products in
attachment 2, page 2 of the Sun 19 agreement. Page 2
of the Sun agreement -- I'll just read 20 to you until we get
this up -- lists the following two 21 products as -- may I
approach, Your Honor? 22
THE COURT: You may. 23 Q.
As the most recent two new releases to which 24 Sun gained rights
under the 2003 agreement. Do you see 25 that?
174
1 A. Yes. 2
Q. And could you read what those two releases are?
3 A. Open UNIX 8, also known as
UnixWare 7.1.2, and 4 System V, Release 5 and, parenthetically,
UnixWare 7.0, 5 7.01, 7.1, 7.11, 7.1.1 plus LKP. 6
Q. At the top of the page are there SVR releases
7 listed? 8 A. Yes. 9
Q. And what are those releases? 10
A. System V, Release 4.1 ES, 3B2; System V,
11 Release 4.1 C2, 3B2; System V, Release 4.1 ES; System V, 12
Release 4.2 and products; UnixWare 1.0, 1.1 and 1.1.1; 13 and
System V, Release 4.2 MP and products; UnixWare 2.0, 14 2.1 and
2.12. 15 Q. And what is the MP?
16 A. Multiprocessor. 17
Q. And what can you tell me about how that
release 18 of System V came about? 19
A. Different versions of UnixWare were released, 20
some that would support a single computer processor, 21 other
versions that allowed for the software to be run 22 across
multiple processors at the same time, to allow 23 more work to be
accomplished at the same time, allowing 24 the processing to
occur more quickly. 25
MR. NORMAND: May I approach, Your Honor?
175
1 THE
COURT: You may. 2 Q.
I'm handing you, Mr. Sontag, a copy of the APA. 3 Turn to the
schedule that you were asked about earlier. 4
A. Schedule 1.1A? 5
Q. Yes. 6 A.
Assets? 7 Q. Yes. 8
And if you would blow up the
bottom line, item 9 66. 10
Now, with reference to attachment 1 to the Sun 11
agreement that we were looking at earlier -- 12
A. Yes. 13 Q.
-- the most recent releases of System V that 14 were included in
the attachment to the Sun agreement, 15 System V 4.1 ES/3B2, is
that product included in the list 16 in the APA? 17
A. Yes, it is. 18
Q. 4.1 C2/3B2, is that included in the list in the 19
APA? 20 A. Yes. 21
Q. Do you see an ES/3B2 product
listed? 22 A. I'm assuming
that's it right there, but maybe 23 I'm reading it wrong. 24
Q. Does that say ES/3B2? 25
A. No, it does not.
176
1 Q. Does it say
ES/C23B2? 2 A. No. 3
Q. So those two most recent System V
releases in 4 the Sun agreement aren't listed in the APA as
products, 5 are they? 6 A.
No. 7 Q. What have you
understood the term "open source" 8 to mean during your
tenure at SCO? 9 A. Well,
it varies. There's different open source 10 licenses,
but, in general, the high level, it is making 11 the source code
available to various parties, your 12 customers or others, that
they can then view or modify 13 that source code. In
some cases, there are requirements 14 on returning the
modifications back or making the 15 modifications available to
others. 16 Q. And your
understanding of the 2003 Sun 17 agreement is that such rights,
at least in full, were not 18 given to Sun; is that correct? 19
A. Prior to the 2003 agreement? 20
Q. In the 2003 agreement. 21
A. The 2003 agreement gave them
limited open 22 source rights. There were
restrictions to what they 23 could do in terms of open sourcing
in the 2003 24 agreement. 25 Q.
You were asked, Mr. Sontag, whether you knew
177
1 why two System V releases in the 1994 Sun agreement
had 2 been described as deliberately omitted. Do you
recall 3 those questions? 4 A.
Yes. 5 Q. And do you recall what
your answer was? 6 A. I do not.
7 Q. Do you know whether Sun had
already had a 8 license to those releases of System V before the
1994 9 agreement? 10 A. I do
not know. 11 Q. Do you know
whether they had already had a 12 license and terminated the
license? 13 A. Sun? 14
Q. Yes. 15 A.
I do not know. 16 Q. Who, at SCO,
might know the answer to that? 17 A.
I suspect Bill Broderick, John Maciaszek would 18 be the ones
that most likely would know that answer. 19
Q. Now, to state the obvious, at the time of the 20
2003 Sun agreement, Sun was an existing licensee of UNIX; 21 is
that right? 22 A. Yes. 23
Q. And I think you testified earlier that
part of 24 what Sun obtained under the 2003 agreement was the
right 25 to obtain copies of the older versions of System V; is
178
1 that right? 2 A.
Yes. 3 Q. This is from amendment
number 1 to the APA. I 4 take it you had occasion to
review that amendment during 5 your tenure at SCO? 6
A. Yes. 7 Q.
This amends part of the APA to state as 8 follows, paraphrasing
of course: Buyer, Santa Cruz, 9 shall be entitled to
retain 100 percent of the following 10 categories of SVRX
royalties. And Rule 2 says that 11 source code
right-to-use fees under existing SVRX 12 licenses and the
licensing of additional CPU's, and from 13 the distribution by
buyer of additional source code 14 copies. 15
Do you see that language? 16
A. Yes. 17 Q. As of
the 2003 agreement, Sun already had 18 source code copies to all
of the System V releases that 19 were listed in the 1994
agreement, correct? 20 A. Yes.
21 Q. And when you were shown
earlier, by Mr. Acker 22 and by myself, the similarity of System
V releases 23 between the 2003 agreement and the 1994 agreement,
what 24 Sun is obtaining is additional copies of those same 25
releases, correct?
179
1 A. Yes. 2
Q. You were asked by Mr. Acker, paraphrasing, 3
whether, to your understanding, SCO had the right to 4 license
the prior System V products with the UnixWare 5 license.
Do you recall that question? 6 A.
Yes. 7 Q. Mr. Sontag, I want to
show you language from, 8 again, amendment 1 to the APA, which
provides as follows: 9
Buyer, Santa Cruz, shall have the right to 10 enter into
amendments of the SVRX licenses as may be 11 incidentally
involved through its rights to sell and 12 license UnixWare
software. 13 Do you see
that? 14 A. Yes. 15
Q. And then, at the bottom, it says: 16
Buyer shall not enter into new
SVRX licenses 17 except in the situation specified in little "i."
18 Do you recall
reviewing this language during 19 your tenure at SCO? 20
A. Yes. 21 Q.
Do you recall forming a view as to what it 22 meant for
SCO to have the right to license SVRX material 23 incidentally to
licensing UnixWare? 24 A. That
was the basis of my belief that SCO had 25 that right.
180
1 Q. You were shown
this language earlier, 2 Mr. Sontag -- well, the first paragraph,
the letter in 3 which Mr. Luehs, I think it is, says that the
agreement 4 between Santa Cruz and Novell requires prior written
5 approval from Novell for all new agreements or changes to 6
current agreements relating to System V. 7
Do you see that language? 8 A.
Yes. 9 Q. Is it your
understanding that if Santa Cruz was 10 executing a Unixware
license that it didn't need to get 11 Novell's approval to
license SVRX material with that 12 UnixWare license? 13
A. That was my understanding. 14
Q. Now, this document is dated May 20,
1996, 15 correct? 16 A. Yes.
17 Q. This is a letter from
Novell three days later, 18 May 23, 1996, in which Novell says
that it has 19 transferred to SCO Novell's existing ownership
interest 20 in UNIX system-based offerings and related
products. Do 21 you see that language? 22
A. Yes. 23 Q.
Was it your understanding, during your tenure 24 at SCO, that SCO
could license UnixWare however it 25 wanted?
181
1 A. Yes.
That was my understanding. 2 Q.
And was it your understanding that SCO could 3 license System V
products with UnixWare? Was that your 4
understanding? 5 A. Yes.
6 Q. You were asked about
the Microsoft agreement. 7 Do you recall that? 8
A. Yes. 9 Q.
And, again, in summary, can you tell me how it 10
came to be that you ended up in negotiations with 11 Microsoft
regarding that agreement? 12 A.
In early 2003, we came in contact with 13 Microsoft
representatives who were interested in pursuing 14 a possible
license to UnixWare technologies to use in 15 some of their, what
they called UNIX-compatibility 16 products within Microsoft
Windows. It started a set of 17 negotiations
that occurred through the early part of 2003 18 culminating in
the UnixWare license agreement with 19 Microsoft. 20
Q. Now, in the time leading up to the
beginning of 21 those negotiations, had SCO made any public
statements or 22 assertions that there was any SCO IP in any
Microsoft 23 products? 24 A.
I believe there had been some, you know, broad 25 discussion that
there might be IP issues, and not only in
182
1 Linux but other operating systems, including possibly
2 Windows. 3 Q. And
was that a focus of your discussions with 4 Microsoft or was it
more collateral? 5 A. It
certainly was a portion of the discussion 6 because they
certainly wanted to have, you know, 7 appropriate IP coverage for
their products. 8 Q. Now,
in Section 2 of the Microsoft agreement, 9 SCO releases any
claims it might have against Microsoft; 10 is that right? 11
A. Yes. 12
Q. In that agreement, Section 2, did SCO purport
13 to release any of Novell's claims that it might have 14
against Microsoft? 15 A.
No. 16 Q. Did SCO claim to
have the right to release 17 claims for IP that it didn't own?
18 A. No. 19
Q. Section 2.2 of the Microsoft agreement
which 20 you spoke about earlier is a license for Microsoft 21
products. 22 A. Yes. 23
Q. Does that section pertain to any
particular 24 technology? 25 A.
It pertains to UnixWare.
183
1 Q. Did you purport to
license to Microsoft any 2 intellectual property that you didn't
have rights in? 3 A. No. 4
Q. This is the term sheet that was shown
to you 5 earlier. Can you tell me a little bit about
how this 6 came to be created? 7 A.
I think there was a desire to -- that Microsoft 8 wanted
to know what we could possibly have available to 9 license to
them. They had, you know, certain things that 10
they were interested in. And I, you know, with the help
11 of others, put together a list of possible topic areas 12
that could be of interest to Microsoft that was the basis 13 for
starting a discussion. 14 Q. Is
that list of products in paragraph 3 in any 15 particular order?
16 A. No, they are not. 17
Q. The System V term that you assumed
Microsoft 18 would be familiar with? 19
A. I think they would be. 20 Q.
Perhaps even more so than UnixWare? 21
A. Yes. 22 Q.
Section 3 of the Microsoft agreement was a 23 Unixware license,
correct? 24 A. Yes, it was. 25
Q. Was it a full UnixWare license?
184
1 A. It was a
limited UnixWare license to only a 2 limited set of Microsoft
products. 3 Q. Your
understanding of this Court's August '07 4 order is that Novell
owns the SVRX copyrights that are in 5 UnixWare. Is
that fair to say? 6 A. I
do understand that. 7 Q.
So, when you licensed Microsoft UnixWare, you 8 were licensing
the right to use Novell copyrighted 9 material under the Court's
order; is that right? 10 A.
That would be a determination that you could 11 come to. 12
Q. Did you pay Novell any money for
that Section 3 13 UnixWare license? 14
A. No, we did not. 15 Q.
Do you know if Novell is seeking any money from 16
that Section 3 license? 17 A.
I don't believe they are. 18 Q.
Section 4 of the Microsoft agreement. Could 19 you
describe your discussions with Microsoft regarding 20 that
section. 21 A. Microsoft
was interested in having a couple of 22 options when they
undertook the source code license for 23 UnixWare.
They wanted to be able to first evaluate the 24 source code and
determine if it would be useful to them. 25 So that was provided
to them under the initial agreement.
185
1 They wanted to have the option to be able to use the
2 technology in a set of products, which was the first 3
option or Section 3 of the agreement. And then they also
4 wanted to have the rights to use the UnixWare source code 5
and derivative products in all of their products, broadly 6
across all of Microsoft products. And that was the 7
primary component of Section 4. So that was a second 8
option that they could obtain. 9 Q.
In your discussions with Microsoft regarding 10 this agreement,
what did you say to them about the 11 subject matter of the
expanding UnixWare license in 12 Section 4? What do
you recall discussing with them? 13 A.
That it was a significant expansion of their 14 rights for how
they could utilize that UnixWare source 15 code, that it wasn't
just a limited set of products that 16 had a fairly small, you
know, distribution footprint, but 17 it was all of Microsoft's
products and millions and 18 millions of products.
And that was a substantial 19 expansion in how they could use
that UnixWare 20 technology. 21 Q.
Now, in Section 4 you also licensed Microsoft 22 OpenServer
source code; is that right? 23 A.
Yes. 24 Q. What do you recall
discussing with Microsoft 25 about the utility of that license?
186
1 A. That allowed
Microsoft to also have the ability 2 to have compatibility with
a, you know, broad range of 3 OpenServer applications that were
out there for which it 4 was a large installed base and large
customer base of 5 OpenServer so that it was another very big and
6 substantial part of that, you know, Section 4 agreement 7
was an OpenServer source code agreement. 8
I do not believe there is anybody else that has
9 ever been able to license the OpenServer source code. 10
Q. SCO had never licensed the
OpenServer source 11 code? 12 A.
No. It was contemplated, I think, with a few 13
possible customers but was never executed with any 14 licensee.
So OpenServer had never been licensed in 15 source code
before. 16 Q. OpenServer
was the more profitable of the two 17 main products at SCO,
correct? 18 A. It was 2/3
of the business. 19 Q.
Openserver had a larger installed base than 20 UnixWare did,
correct? 21 A. That's
correct. 22 MR.
ACKER: Objection. Leading. 23
THE COURT: Sustained.
It is leading. 24 Q. When
you were negotiating the 2003 Microsoft 25 agreement, did you
have a view as to the value of the
187
1 OpenServer license relative to the value of the
expanded 2 UnixWare license in Section 4? 3
A. I would view them both as, you know, 4 substantial
portions of the value of Section 4. How I 5 would
split between them, I'm not sure. I mean, the 6
expansion of UnixWare distribution was significant.
The 7 source code, you know, license for OpenServer on its own 8
was significant. 9 Q. And, in
your view at the time, why was it 10 relevant to Microsoft's
business, for us lay people, that 11 there was a large installed
base of OpenServer users? 12 A.
It provided Microsoft with potential 13 opportunities to sell
products to that large installed 14 base of OpenServer customers,
and so, in some cases, for 15 the first time Microsoft
Windows-based products to a set 16 of customers that they may
have never dealt with 17 before. 18 Q.
Now, having exercised the options in Section 3 19 and Section 4,
and with the Section 4 license, Microsoft 20 now had a full
UnixWare license, correct? 21 A.
That is correct. 22 Q. And
Section 4 is also a license to older System 23 V releases; is
that right? 24 MR.
ACKER: Your Honor, it's still leading, the 25 last
two questions. Every question ends with "correct"
188
1 or "is that right?" It's
his witness. 2 MR.
NORMAND: This is a cross examination, but 3 if we
want to do a hard and fast rule, I'll ask only 4 open-ended
questions. 5 THE COURT:
It sort of is and sort of isn't. 6
MR. ACKER: I understand that, but, given
the 7 relationship between counsel and the witness, I think 8
it's appropriate to be a non-leading question. 9
THE COURT: Try not to lead.
I'll sustain the 10 objection. Where are you? 11
MR. SONTAG: You're
asking where I am with the 12 witness? 13
THE COURT: No, just on this last
series of 14 questions. 15
MR. SONTAG: As to the Microsoft agreement? 16
Probably five minutes. 17
THE COURT: Just the last couple of questions. 18
MR. SONTAG: Do you
want me to start over? 19
THE COURT: Just the last couple of questions. 20 I
don't know that he answered them. We got a
leading 21 objection. 22
MR. SONTAG: I'm sorry. I understand. 23
Q. By Mr. Sontag: I guess the
question was: Why 24 were you willing to enter into
a license to prior 25 releases of System V in Section 4 of the
Microsoft
189
1 agreement? 2 A.
Well, it was typical with a, you know, UnixWare 3 and preceeding
UNIX source code licenses, to provide a 4 license to the prior
products. The fact we broke it up 5 and put it into
the second release was just, in some ways 6 a convenient place to
put it. But it was not 7 something -- the prior
products was not something that 8 Microsoft was viewing as highly
valuable. I mean, we did 9 not provide all the
versions that -- of prior product. 10
And we had told them that we may not be able to 11
provide them all because they are very old, you know, 12 source
tapes that, in some cases, had turned to dust. 13 But there was
no objection on the part of Microsoft that 14 they didn't receive
all the versions that were listed on 15 that schedule.
We provided them with the ones that we 16 were able to get, and
that was sufficient for them, and 17 there was no desire or need
on Microsoft's part to alter 18 the value of, you know, that
agreement based on that. 19 Q.
Did you have any understanding, at the time of 20 the execution
of the agreement, as to whether Microsoft 21 was going to use
those prior releases of System V as 22 stand-alone products? 23
A. No. We had no
expectation that they would use 24 it. If you are
developing a software product, again, as 25 I've said a number of
times previously today, you would
190
1 want to utilize the latest version of the source code
for 2 the development of a new product. And
especially with a 3 UNIX-based operating system product that has
built into 4 it a high degree of backward compatibility, you
would 5 want to use the latest to take advantage of all the new
6 features and bug fixes, and you would still have that 7
backward compatibility. There is no need to go to a 8
prior release. 9 Q. Do you recall
entering into an amendment 3 to 10 the Microsoft agreement? 11
A. Yes. 12 Q.
And can you recall -- 13
Actually, can you bring it up? And blow up 14 that
paragraph B. 15 Do you
recall discussing and negotiating this 16 paragraph in the
agreement? 17 A. Yes. 18
Q. It says, and I understand it's hard to
read: 19 The parties
recognize that, A, parts of the 20 software, excluding material
portions of the kernel, 21 may be distributed by Microsoft by
default in the 22 majority of the editions. 23
This is in section 3, right? 24
A. yes. 25 Q.
Section 3 is a license for UnixWare, correct?
191
1 A. Yes. 2
MR. ACKER: Same
objection, Your Honor. 3 Leading. 4
MR. NORMAND: We are talking about
the text of 5 an agreement. We can take five
minutes and walk through 6 it. 7
THE COURT: You can answer that, which you
did. 8 THE
WITNESS: Yes. 9 Q.
What is your understanding as to what rights 10 Microsoft gained
in this paragraph B of amendment 3? 11
A. That they would be able to license the UnixWare 12
software into a majority of their, you know, Windows 13 products.
14 Q. Did you have any
view, at the time of the 15 execution of the agreement or its
amendments, as to 16 whether Microsoft had any intention to use
the older 17 System V releases in its Windows products? 18
A. My understanding is they had no
intention of 19 using the older UNIX versions for anything other
than a 20 source analysis project that they were contemplating.
21 Q. Now, I asked you a
similar question earlier as 22 about Sun, as to whether you had a
view as to whether 23 they intended to use the older System V
releases as a 24 stand-alone product. Do you
recall my asking you that 25 question?
192
1 A. I kind of
recall that. 2 Q. We
discussed drivers. Do you recall that? 3
A. Yes. 4 Q.
Did there come a time when you entered into a 5
clarification agreement as to the Sun 2003 agreement 6 regarding
the subject matter of drivers? 7 A.
Yes. There was an amendment to the agreement 8 that
was related to the drivers, binary and source code 9 drivers for
UnixWare. 10 Q. This is
SCO Exhibit 189. I think you might 11 have
objected to it. Let me ask one foundational 12
question. Were the drivers sent? 13
A. The drivers were -- 14
Q. The drivers addressed in this agreement, were
15 they sent to Sun? 16 A.
Yes, they were. 17
MR. NORMAND: I would like to move the document 18
into evidence, Your Honor. 19
MR. ACKER: No objection. 20
THE COURT: SCO 189 is
received. 21 (SCO Exhibit
189 received in evidence.) 22 Q.
And can you quickly summarize for me how this 23 came about? 24
A. I don't recall the specifics, but
I think it 25 was very important to Sun that they receive all the
193
1 drivers that they possibly could to UnixWare that --
for 2 which there were not restrictions that we could not 3
provide them to them, and this amendment was just for 4 them to
ensure that they were receiving all of the 5 drivers for UnixWare
that we could provide them. And we 6 did, in
turn, provide those UnixWare drivers to them. 7
Q. Do you know whether Sun received the rights to
8 OpenServer drivers? 9 A.
I believe we provided those drivers to them as 10 well. 11
Q. Do you know whether Sun received
any rights 12 under this clarification to drivers to older System
V 13 releases? 14 A.
No. I believe they did not. 15
MR. NORMAND: Novell 422, if you
could blow 16 that up. 17 Q.
Do you recall reviewing this document, 18 Mr. Sontag, with Mr.
Acker? 19 A. Yes, I do.
20 Q. And do you recall a
reference -- I think it's 21 on page 2. This is a
reference to SCO IP. Do you see 22 that reference?
23 A. Yes. 24
Q. And do you see, in the second line in
the top 25 paragraph, SCO's intellectual property ownership or
194
1 rights? 2 A. Yes,
I do. 3 Q. In this agreement, did
you purport to release 4 or license anything other than SCO's
intellectual 5 property rights? 6 A.
No, we not. 7 Q. Did you pruport
to release or license any of 8 Novell's rights? 9
A. No, we did not. 10 Q.
There's a reference, I believe, in that 11 agreement to
UNIX-based code. Do you recall that? 12
A. Yes. 13 Q.
Is UnixWare UNIX-based code? 14 A.
Yes, it is. 15 Q. Is OpenServer
UNIX-based code? 16 A. Yes, it
is. 17 Q. To the best of your
knowledge, did you ever pay 18 Novell anything for the System V
code or old SVRX code in 19 any release of UnixWare or
OpenServer? 20 A. No, we did not.
21 Q. There is a reference in
Novell Exhibit 422 to, 22 quote, SCO's standard commercial
license. Do you recall 23 that phrase? 24
A. Yes. 25 Q.
Do you have an understanding as to whether,
195
1 under its standard commercial license for UnixWare, 2
whether SCO licensed prior System V products? 3
A. I know that in the UnixWare source code 4
agreement that was provided, up until the most recent 5 versions
of the UnixWare source code agreement, that the 6 prior versions
were specifically listed. In the most 7 recent
version of the UnixWare license, that was omitted 8 only for the
purpose of reducing the size of the 9 agreement, but my
understanding is that it was still 10 provided to a customer if
they requested it, and it was 11 implicitly included. 12
Q. Do you have an understanding as
to why that 13 was? 14 A.
Because that was the standard practice of SCO 15 and its
predecessors in terms of licensing the UNIX 16 software, that
source code licensees of different 17 versions could interact
with each other or share code in 18 certain cases, if they were
of a similar licensing level, 19 and that was enabled by the fact
that they would be 20 licensed to all prior versions, depending
on the version 21 they licensed at that point. 22
So, that was a standard practice
that had been 23 used by SCO, by Novell, by AT&T, USL and
part of the 24 licensing of the UNIX code, and it continued with
25 UnixWare.
196
1 Q. You were
shown a series of agreements towards 2 the end of Mr. Acker's
questions, and I think we can 3 safely lump those together and
call them SCOsource 4 agreements. Do you recall
doing that? 5 A. Yes. 6
Q. How did you come about arriving
at a price for 7 these SCOsource agreements? 8
A. I -- we determined that we wanted to price it
9 basically at the same price as UnixWare, so a comparable 10
capability of UnixWare, if it was a 1-CPU system, was 11 priced
at, you know, $1400, which was the same price for 12 UnixWare.
13 Q. And who did you
speak with on that issue? 14 A.
Oh, I had gotten input from John Maciaszek and 15 also from Jeff
Hunsaker, who were more familiar with the 16 UnixWare price list
than I was. 17 Q. Now, was
there any source code given to a 18 licensee under a SCOsource
license? 19 A. No, there
was not. 20 Q. Could you
describe, to the best of your view, 21 what the license was in
the SCOsource license? 22 A.
It was primarily a release, aspects of a 23 covenant not to sue
and a Unixware license and SCO IP 24 license. 25
Q. Now, you were shown the phrase in
several of
197
1 the agreements, quote, SCO's IP rights.
Do you recall 2 that? 3 A.
Yes. 4 Q. In these SCOsource
agreements, did SCO purport 5 to release anything other than its
rights? 6 A. No, we did not. 7
Q. Did SCO purport to license anything
other than 8 its rights? 9 A.
No. 10 Q. You were shown Novell
Exhibit 227. This is the 11 Jeff Hunsaker e-mail.
Do you recall that? 12 A.
Yes. 13 Q. And in that e-mail,
Mr. Hunsaker's says that 14 this is not a Unixware 7.13 SKU.
Do you recall that? 15 A.
Yes. 16 Q. Do you know what SKU
is? 17 A. Stock-keeping unit or
-- a box of UnixWare 18 software, in this case. 19
Q. Were these SCOsource agreements simply UnixWare
20 licenses for purposes of stock keeping? 21
A. No. They were a separate package and
agreement 22 and separate SKU. 23 Q.
Now, you were asked further about 24 Mr. Hunsaker's statement
that -- 25 If we could
pull it up.
198
1 Mr. Hunsaker's
says: 2 There is no
connection between a UnixWare 3 OpenServer and the SCO UNIX IPC
license whatsoever. 4 Do
you see that statement? 5 A. Yes.
6 Q. Now, taking it alone, just
pulled out of that 7 document, do you agree with it? 8
A. There is no similarity of the license?
Yes. 9 The licenses are not the same. 10
Q. Now, did Mr. Hunsaker negotiate these 11
agreements, by the way? 12 A. No,
he not. 13 Q. Who did? 14
A. I was involved in that, along with our
15 attorneys. 16 Q. What was
Mr. Hunsaker's position at the time 17 that he made this
statement? 18 A. I believe he was
over worldwide sales for the 19 UNIX business. He did
not have responsibility for 20 primary sales for
SCOsource-related products. That was 21 done by me
through my own sales group. 22 Q.
Did you ever speak with Mr. Hunsaker in 23 conjunction with your
negotiation of the SCOsource 24 agreements? 25
A. No.
199
1 Q. Did you have
discussions, Mr. Sontag, with 2 Novell in late 2002? 3
A. Yes, we did. 4
Q. Can you describe the nature of those 5
discussions? 6 A. We had a number
of back and forth discussions 7 between representatives from
Novell and myself and, in 8 some cases, with Darl McBride.
In our case, we were 9 interested in clarifying the language of
the Asset 10 Purchase Agreement related to excluded assets.
In the 11 case of Novell, they were interested in finding
out or 12 interested in SCO's involvement with United Linux.
That 13 was the overall nature of the conversations in
late 14 2002. 15 Q. Can you
recall who you had discussions with? 16 A.
I had a number of conversations with Gregg 17 Jones and at least
one conversation with another 18 gentleman from Novell, whom I
can't remember his name at 19 this moment. 20
Q. And did you have occasion to speak with 21 Mr.
McBride about his discussions with Novell? 22
A. I did. 23 Q. And
what was the general nature of those 24 discussions? 25
MR. ACKER: Objection.
Hearsay, Your Honor, if
200
1 he's going to relate what Mr. McBride told him. 2
MR. NORMAND: This goes
to state of mind, but 3 we can cut it short if there are
concerns, Your Honor. 4
THE COURT: He can answer the question asked, 5 the
general nature, without saying what somebody else 6 said.
So, talk about the general nature. 7
THE WITNESS: His discussions, as I understood 8
it from Mr. McBride, were very similar to my discussions 9 that I
had primarily with Gregg Jones. 10 Q.
Did you, in your discussions with Novell, ever 11 ask Novell to
partner in the SCOsource program that you 12 were contemplating?
13 A. No, I did not. 14
Q. Did you, when you were speaking with
Novell, 15 ever ask Novell to participate in the SCOsource 16
program? 17 A. No, I did not.
18 Q. Did you have a view, at
the time of these 19 discussions, as to whether Novell would have
any right to 20 any monies you might receive under the SCOsource
21 program? 22 A. No.
I did not believe they would have any 23 rights. 24
Q. Did anyone from Novell suggest to you that
they 25 thought they had some right to the monies you might
201
1 receive under this program? 2
A. No. 3 Q. Did you
have a view, at the time of these 4 discussions, as to whether
SCO had the authority to 5 execute the SCOsource agreements it
was contemplating? 6 A. I
believed we had those rights. 7 Q.
Did anyone, in your discussions with Novell, 8 ever suggest to
you that they thought they could limit 9 your authority to
execute these agreements that you were 10 contemplating? 11
A. No. 12 Q.
Did you ever have discussions with Novell 13 about -- before the
execution of the agreement -- your 14 authority to excute the
2003 Sun agreement? 15 A. No, we
did not. 16 Q. Did you have any
trepidation about whether SCO 17 had the authority to execute
that agreement? 18 A. No.
I had no concern. 19 Q. Now, the
1994 Sun agreement, that concerned a 20 buyout; is that right?
21 A. Yes, it did. 22
Q. In what sense? 23 A.
It was a buyout for Sun of their binary 24 distribution of
Solaris, so they would not have to make 25 payment for every copy
of Solaris that they sold.
202
1 Q. Do you know
whether, at the time of the 1994 2 agreement, Sun was paying
binary royalties? 3 A. Prior to
the 1994 -- 4 Q. Yes. 5
A. -- time frame? I believe
they likely were 6 making royalty payments. 7
Q. Do you know whether, as of the 2003 agreement, 8
Sun was paying any binary royalties? 9 A.
No. They would not be. 10 Q.
How come? 11 A. Because they
already had a buyout in the 1994 12 agreement. 13
Q. In the 2003 agreement, did you amend or change
14 that 1994 buyout? 15 A.
No, we did not. 16 Q. Can you
explain what you mean? 17 A. The
buyout related to -- you know, to Solaris 18 for SVR code binary
distribution and was taken care of by 19 the '94 agreement. 20
Q. And did you have any understanding, as
of the 21 2003 agreement, as to whether Sun was intending to use
22 the UnixWare technology and license? 23
A. It was my understanding they were intending to 24
use the UnixWare technology. 25 Q.
Did you have an understanding, at the time of
203
1 that 2003 agreement, as to whether any of the code
that 2 was in Solaris was also in UnixWare? 3
A. There would be substantial portions that would 4
be very much the same because Solaris was, you know, 5 based on,
you know, a previous version of UNIX System V, 6 similar to
UnixWare. 7 Q. Did you have a
view, as of the time of the 2003 8 agreement, as to whether Sun
would have paid UnixWare 9 royalties for its distribution of
Solaris if not for the 10 terms of the 2003 agreement? 11
MR. ACKER: It calls for
speculation and 12 hearsay, Your Honor. 13
MR. NORMAND: It does call for
speculation. I 14 don't know that that's
necessarily a basis for precluding 15 him from answering. 16
THE COURT: I'll let him
answer. 17 Go ahead. 18
THE WITNESS: No.
I don't believe Sun would 19 have to be paying a UnixWare royalty
for what they were 20 doing with Solaris prior to the 2003
agreement. 21 Q. Now, what about
what they would do with Solaris 22 after the 2003, if all they
had gotten was a Unixware 23 license and if there was code in
UnixWare that was also 24 in Solaris? What kind of
royalties would Sun be 25 paying?
204
1 A. Similar to the
royalties that we would have 2 other UnixWare source code
licensees pay. 3 Q. And can you
explain what kind of royalties 4 those were? 5
A. It would vary, but it would be on the order of 6
tens to hundreds of dollars per unit shipped on an 7 ongoing
royalty basis. 8 Q. Now, at the
time of the execution of the 9 Microsoft agreement, what was your
view as to the 10 relative value of the SVRX component of that
agreement? 11 A.
Insignificant. It was licensed as a matter of 12
course. I don't believe that Sun -- or Microsoft was 13
valuing it at all. What they were valuing was the 14
UnixWare source code, the UnixWare binary distribution 15 rights
and broad binary distribution rights and 16 OpenServer source
code distribution rights. 17 Q.
And at the time of the 2003 Sun agreement, what 18 was your view
as to the relative value of the new 19 SVRX-related rights that
Sun had acquired? 20 A. They had
almost all of those rights already. 21 What they acquired were
new rights to UnixWare, which is 22 what they needed to develop
their, you know, 23 Solaris-on-Intel product offerings. 24
MR. NORMAND: No
further questions, Your 25 Honor.
205
1 THE COURT:
Thank you. I assume your redirect 2 will be more
than three to five minutes? 3
MR. ACKER: Yes. That's a good assumption, 4
Your Honor. 5 THE
COURT: My hearing starts at 2:30 so we 6 will take up
again at 8:30 in the morning. If you want 7
to leave stuff here, if you just push it aside a little, 8 nobody
is going steal it. I don't think they would want
9 it. We'll see you at 8:30 in the morning. 10
And you get to come back, Mr.
Sontag. 11
MR.
NORMAND: Thank you, Your Honor. 12 13 14 15
16 17 18 19 20 21 22 23 24 25
(Whereupon the proceedings were
concluded.)
206
***********************************
***********************************
1 | Salt Lake City, Utah, Wednesday, April 30, 2008 |
2 | * * * * * |
3 | THE COURT: You may resume the stand, Mr. Sontag. |
4 | You may proceed, Mr. Acker. |
5 | Good morning, everyone. |
6 | MR. ACKER: Good morning, Your Honor. Thank you. |
7 | CHRISTOPHER S. SONTAG, |
8 | called as a witness at the request of Novell, |
9 | having been previously duly sworn, was examined |
10 | and testified further as follows: |
11 | REDIRECT EXAMINATION |
12 | BY MR. ACKER: |
13 | Q. Good morning, Mr. Sontag. |
14 | A. Good morning. |
15 | Q. You testified yesterday in response to questions of |
16 | counsel that the price for the SCO intellectual property |
17 | licenses, that series of licenses we looked at yesterday |
18 | afternoon, those prices were set as the price equal to the |
19 | most current version of UnixWare; is that right? |
20 | A. The most current and applicable version of |
21 | UnixWare. So single CPU or multi CPU version of UnixWare. |
22 | Q. So if a potential licensee was using an older |
23 | version of SVRX, say an older version of 1992 or 1994, and |
24 | wanted to take one of these licenses, under the SCOsource |
25 | program, SCO would still charge that licensee the same price |
210
1 | they would pay for the most current version of UnixWare; |
2 | correct? |
3 | A. That is correct. |
4 | Q. And that was true for all of the SCOsource IP |
5 | licenses; correct? |
6 | A. Yes. |
7 | Q. Counsel asked you a very direct question yesterday |
8 | regarding whether or not there is any UnixWare code in Linux. |
9 | And I wrote down your answer, and you said that there very |
10 | well could be; correct? |
11 | A. Yes. |
12 | Q. But the bottom line is that you simply do not know |
13 | if there was any unique UnixWare code in Linux; right? |
14 | A. I believe your question was about uniquely UnixWare |
15 | code. Given that UnixWare has developed out of, you know, |
16 | many versions of the UNIX, you know, development tree, much of |
17 | that code is uncommon. And to uniquely parse out something |
18 | that's different with UnixWare versus previous releases, I've |
19 | never done that analysis, never seen this analysis. |
20 | Q. Do you know if that analysis has ever been done, |
21 | that is, someone has sat down and parsed out what is unique to |
22 | the most recent version of UnixWare as opposed to what exists |
23 | in pre APA SVRX? |
24 | A. I don't know if that has been done. |
25 | Q. But the bottom line is that given that testimony, |
211
1 | you simply don't know if there's any code that is unique to |
2 | UnixWare that is in Linux; correct? |
3 | A. I do not. |
4 | Q. Counsel also asked you a series of questions about |
5 | the first phase of the SCOsource program that was referred to |
6 | initially in late 2002 and early 2003 as the SCO Tech program; |
7 | correct? |
8 | A. Yes. |
9 | Q. And you answered his questions regarding the |
10 | licensing of libraries of UNIX code; correct? Do you recall |
11 | that testimony? |
12 | A. Yes. |
13 | Q. Now, no licenses were ever issued under that |
14 | program, that is, the first phase of the program in which it |
15 | was contemplated that the libraries would be licensed; isn't |
16 | that right? |
17 | A. I do not believe there was any specific licenses |
18 | under that first release of the SCO Tech or early SCOsource |
19 | license. |
20 | Q. So the SCO Tech or the SCOsource licenses that |
21 | actually were issued were the Sun and the Microsoft license as |
22 | well as the series of additional licenses that we looked at |
23 | yesterday; correct? |
24 | A. Yeah. And I would separate out the Sun and the |
25 | Microsoft licenses from the series that you speak of. They're |
212
1 | separate types of licenses. |
2 | Q. But they were all SCOsource licenses; right? |
3 | A. They were all under the SCOsource division. |
4 | Q. Now, regarding the Sun agreement, if we could put |
5 | up Exhibit 187, Attachment 1, please. |
6 | Mr. Sontag, we put up on the screen Attachment 1 to |
7 | the 2003 Sun agreement. The first page of Attachment 1. And |
8 | you've testified that all of this software license, the 2003 |
9 | license, was included in this attachment and licensed Sun |
10 | simply as legacy software or older versions of SVRX software |
11 | that was licensed along with the most recent version of |
12 | UnixWare. |
13 | A. Correct. And they already had a license to most of |
14 | this, anyways. |
15 | Q. And that was my next question. It's true, isn't |
16 | it, that Sun already had a license to all of this software on |
17 | the first page of Attachment 1 of 2002 license; right? |
18 | A. Yes. And that is -- again, that license for the |
19 | previous versions was just a standard practice. So, again, |
20 | licensing the latest version of UnixWare and incidentally |
21 | licensing all the previous versions. |
22 | Q. But because -- and that previous license, the 1994 |
23 | Sun license to this exact same 30 versions of software was |
24 | fully paid up; correct? |
25 | A. Yes. |
213
1 | Q. And so Sun didn't need -- there was no need for Sun |
2 | to obtain a license. They didn't need a license, a re-license |
3 | to this additional 30 pieces of legacy software in 2004 except |
4 | that they wanted to expand their rights to distribute the |
5 | software; correct? |
6 | A. Again, this was all included just because it was a |
7 | standard practice of licensing the UnixWare source code. |
8 | Q. But Sun already had a license for this software; |
9 | right? |
10 | A. Yes. |
11 | Q. And what they wanted in the 2003 agreement was to |
12 | expand or, in your words, to soften the confidentiality |
13 | provisions relating to this software; correct? |
14 | A. Primarily, they wanted a license to the latest |
15 | version of UnixWare for their Intel work that they were doing. |
16 | Q. And with respect to this 30 versions of legacy |
17 | SVRX, they wanted to soften the confidentiality provisions |
18 | relating to the software; correct? |
19 | A. It was a minor part of the agreement. |
20 | Q. That's what Sun wanted; right? |
21 | A. Yes. |
22 | Q. And that's what SCO gave to them; correct? |
23 | A. Yes. It's all part of the agreement. |
24 | Q. Now, it's true, isn't it, that not all of this |
25 | pre-APA SVRX software is in the current version of UnixWare? |
214
1 | Correct? |
2 | A. Probably not. But I would suspect, you know, |
3 | anything that is valuable and important would still be in the |
4 | current version of UnixWare. |
5 | Q. But you've never done a line-by-line comparison to |
6 | determine what portions of this software, the legacy SVRX |
7 | software, is actually in the current version of UnixWare; |
8 | correct? |
9 | A. I have not. |
10 | Q. And you're not aware of anyone else having done |
11 | that analysis; correct? |
12 | A. I'm not aware of that analysis. |
13 | Q. And Sun didn't do that analysis, as far as you |
14 | know; correct? |
15 | A. Not that I know. |
16 | Q. And you're not aware of any expert for SCO doing |
17 | that analysis? |
18 | A. I'm not aware. |
19 | Q. And you're not aware of any technician or technical |
20 | person or engineer of SCO doing this analysis; correct? |
21 | A. No, I'm not. |
22 | Q. Now, you testified yesterday and you've already |
23 | testified today that SCO has a history of including older |
24 | versions of software when it licenses the most recent versions |
25 | of software; correct? |
215
1 | A. Yes. And SCO's predecessors in the UNIX business |
2 | did the same thing. |
3 | Q. But you also testified in answer to your questions |
4 | to counsel that you'd seen older licenses in which the legacy |
5 | software was routinely licensed, but recently there had been |
6 | contracts in which that hadn't been done; correct? |
7 | A. My understanding was in the most recent release, |
8 | most versions of the UnixWare source license, they removed the |
9 | long listings and prior products solely for the purpose of |
10 | reducing the size of the contract, though the older versions |
11 | were still implicitly included in those contracts. |
12 | Q. Well, when you say most recent, what time frame are |
13 | we talking about? |
14 | A. I think the chain was made with 7.1.3 versions of |
15 | the UnixWare source agreements. |
16 | Q. And what time frame was that? |
17 | A. That would be within the last, you know, five to |
18 | seven years. Prior versions 7.1.2, 7.1.1, my understanding is |
19 | that they did include the listings of all of the prior |
20 | releases. |
21 | Q. When you say listings, they would have that long |
22 | laundry list of the prior SVRX software? |
23 | A. That's correct. |
24 | Q. If I could show what we've marked and been admitted |
25 | as Exhibit 69. |
216
1 | (Time lapse.) |
2 | THE WITNESS: Okay. |
3 | Q. BY MR. ACKER: Exhibit 69 is a SCO license with a |
4 | company called CyberGuard; correct? |
5 | A. Yes. |
6 | Q. And what is being licensed with CyberGuard is |
7 | UnixWare 7.0; correct? |
8 | A. Yes. |
9 | Q. And this agreement was entered into 10 years ago; |
10 | right? 1998? Look at the bottom of the first page. See on |
11 | the signature page? |
12 | A. Yes. |
13 | Q. Mr. Broderick signed the license March of '98? |
14 | A. Yes. |
15 | Q. And if we take a look at -- we go back to SCO, |
16 | SCO 0978321. It's Paragraph 4.7 in the attachment. |
17 | A. 4.7? |
18 | Q. Yes. |
19 | A. Okay. |
20 | Q. See there's a heading there, Prior Products; |
21 | correct? |
22 | A. Yes. |
23 | Q. And the only prior products listed there are |
24 | UnixWare; correct? |
25 | A. Yes. |
217
1 | Q. And so there is no -- in this contract 10 years |
2 | old, there is no list of all the prior legacy software; |
3 | correct? |
4 | A. It appears to not be the case. |
5 | Q. So your testimony or your understanding about SCO's |
6 | practices isn't that always all the legacy software is |
7 | licensed is not accurate; right? |
8 | A. It appears in this case for this one particular |
9 | license. However, my understanding on this practice comes |
10 | from Bill Broderick who is the one who signed this contract. |
11 | Q. Kind of curious, isn't it? |
12 | A. And what he had told me was even if they did not |
13 | include it, if somebody asked for it, they would provide them |
14 | with a supplement that did include it. |
15 | Q. Let me show you what we've marked and admitted as |
16 | Exhibit 70. Will you take a look at that? |
17 | A. Okay. |
18 | Q. Exhibit 70 is another license. And this time it's |
19 | on behalf of Santa Cruz' predecessor to SCO, an entity called |
20 | DASCOM, Inc.; correct? |
21 | A. Yes. |
22 | Q. And again, this license was entered into 10 years |
23 | ago; correct? |
24 | A. Yes. |
25 | Q. And what was licensed was UnixWare operating |
218
1 | system; correct? |
2 | A. 7 operating system. |
3 | Q. And then if you go to the attachment, |
4 | paragraph 4.7, which is on SCO 1043328 -- |
5 | A. Yes. |
6 | Q. -- do you have that? We have it on the screen. |
7 | Again, the only prior products listed are SCO UnixWare |
8 | Release 2.1 and 2.0; correct? |
9 | A. Those are the only ones listed. |
10 | Q. And again, we don't have a laundry list of all the |
11 | prior SVRX product; correct? |
12 | A. Not in this case. |
13 | Q. So this is another example that is inconsistent |
14 | with your understanding of what you've been told about SCO's |
15 | historical licensing practices; corrects? |
16 | A. Again, I was told that it was removed at some point |
17 | to simplify the contract. However, it was provided to any |
18 | customer that requested those prior releases. |
19 | Q. Let me show you what we've marked and has been -- |
20 | of what SCO has marked and been admitted as SCO Exhibit 369. |
21 | A. Okay. |
22 | Q. SCO Exhibit 369 is a license between a Japanese |
23 | subsidiary of SCO and an entity called Alps Electric Company; |
24 | correct? |
25 | A. Yes. |
219
1 | Q. It's dated March 29th, 1996; right? |
2 | A. Yes. |
3 | Q. And if you take a look at SCO 1042588, you see -- |
4 | we have it on the screen. This is a license for UNIX |
5 | Release 2.0. Do you see that? |
6 | A. Yes. |
7 | Q. And then if you go back to SCO 1042612, and the |
8 | attachment here is actually a listing of these prior products, |
9 | and this exhibit was intentionally left blank. So there was |
10 | no legacy software included in this license in 1996; correct? |
11 | A. In this particular license, no. |
12 | Q. Is it fair to say what we have here in Exhibits 69, |
13 | 70 and 369 are examples that are inconsistent with your |
14 | understanding of SCO's historical licensing practices? |
15 | Correct? |
16 | A. Yes. |
17 | Q. And you weren't at SCO until 1992; correct? |
18 | A. At SCO? |
19 | Q. I mean you weren't at SCO until 2002; correct? |
20 | A. That is correct. |
21 | Q. So anything that you've learned about historical |
22 | licensing practices of the company were simply as a result of |
23 | something that's been told to you; correct? |
24 | A. That is correct. |
25 | Q. In questioning by counsel yesterday, you were asked |
220
1 | about -- I want to turn your attention to Section 2.2 of the |
2 | Microsoft agreement. In response to questions from counsel |
3 | you testified yesterday that the release and license in |
4 | Section 2 pertained to UnixWare. Do you recall that |
5 | testimony? |
6 | A. Yes. |
7 | Q. But it's true, isn't it, that Microsoft -- that |
8 | release and license didn't pertain just to UnixWare, it also |
9 | pertained to prior SR VX products because Microsoft's concerns |
10 | about those products being in their products would not have |
11 | assuaged unless they got released from the earlier products? |
12 | A. Actually I think the release was for all of SCO's |
13 | intellectual property rights. |
14 | Q. And when it includes all of SCO's intellectual |
15 | property rights that means both UnixWare and prior SVRX |
16 | products; correct? |
17 | A. And OpenServer and all of SCO's units and |
18 | intellectual property rights. |
19 | Q. And you also testified yesterday that Section 4 of |
20 | the Microsoft agreement, in that section Microsoft wanted to |
21 | use UnixWare and other System 4 products in their products; |
22 | right? Excuse me. They wanted to use UnixWare and other |
23 | System V products in their products, which is why they took |
24 | out the license in Section 4 in the Microsoft agreement? |
25 | A. They took out the license in Section 4 to expand |
221
1 | their rights for UNIX to a broader set of products. |
2 | Q. But your testimony yesterday was Microsoft was |
3 | considering including in their products both UnixWare and |
4 | other System V products; right? |
5 | A. No. The only thing that I would expect that they |
6 | were intending to include in their products was the latest |
7 | version of UnixWare. They also might possibly have included |
8 | some of the OpenServer source code software that we licensed |
9 | to them. The prior versions would not make sense to include |
10 | in new products. |
11 | Q. But it's true you're not aware of Microsoft ever |
12 | including any of either OpenServer, UnixWare or prior SVRX |
13 | products in their products; correct? |
14 | A. I do not know what they have done. |
15 | MR. ACKER: That's all I have, Your Honor. |
16 | THE COURT: Thank you, Mr. Acker. |
17 | Mr. Normand? |
18 | RECROSS-EXAMINATION |
19 | BY MR. NORMAND: |
20 | Q. Good morning, Mr. Sontag. |
21 | A. Good morning. |
22 | Q. Could you pull up Novell 187? Attachment 1. |
23 | Mr. Sontag, do you recall being asked about this |
24 | attachment this morning? |
25 | A. Yes. |
222
1 | Q. This is a list of System V prior products you said |
2 | earlier? |
3 | A. Yes. |
4 | Q. Do you know whether under the 1994 agreement with |
5 | Sun, Sun had already obtained copies to these System V |
6 | releases? |
7 | A. Source tapes or just rights to them? |
8 | Q. Either. |
9 | A. My understanding was that they had rights to all |
10 | these previous releases. I do not know if they had source |
11 | tapes for any of these previous versions. |
12 | Q. They had rights to use these -- do you have a view |
13 | as to whether or not they had rights to use these releases on |
14 | their CPUs? |
15 | A. Yes. |
16 | Q. You were asked about what was described as softened |
17 | confidentiality restrictions in the 2003 Sun agreement. Do |
18 | you recall that? |
19 | A. Yes. |
20 | Q. Were the confidentiality restrictions that |
21 | pertained to the older System V technology the same as the |
22 | confidentiality restrictions that pertained to UnixWare in the |
23 | 2003 agreement? |
24 | A. I don't necessarily know. My understanding is |
25 | applied to all the new confidentiality provision in the 2003 |
223
1 | agreement. My understanding is it applied to all the |
2 | versions. |
3 | Q. In your view, was there any difference in the way |
4 | that Sun could deal with the UnixWare source code as opposed |
5 | to the older System V releases? |
6 | A. No. |
7 | MR. NORMAND: Would you pull up Novell 369. |
8 | MR. ERIC WHEELER: 369? |
9 | MR. NORMAND: Yes. |
10 | THE COURT: SCO 369? |
11 | MR. NORMAND: Yes, Your Honor. |
12 | Q. BY MR. NORMAND: Do you recall being shown this |
13 | document by counsel? |
14 | A. Yes. |
15 | Q. This is the Alps agreement, the Nihon Alps |
16 | agreement? |
17 | A. Yes. |
18 | Q. Do you know whether Alps ever told Santa Cruz in |
19 | the negotiations of this agreement that they had no interest |
20 | in listing the prior products? |
21 | A. I do not know. |
22 | Q. That's not something that you ever discussed with |
23 | Mr. Broderick? |
24 | A. No. |
25 | Q. Pull up the bottom half. |
224
1 | What is the date of this agreement, Mr. Sontag? |
2 | A. March 29th, 1996. |
3 | MR. NORMAND: Could you pull up SCO 141. Go to the |
4 | next page. Blow up the bottom half. |
5 | Q. BY MR. NORMAND: What is the date of this document, |
6 | Mr. Sontag? |
7 | A. March 31st, 1997. |
8 | MR. NORMAND: And could you blow up the top half. |
9 | Q. BY MR. NORMAND: What do you understand this |
10 | document to be? |
11 | A. This is a supplement. |
12 | Q. Which company is it with? |
13 | A. With NCR. And I'm not sure what specifically it |
14 | would be related to. |
15 | Q. BY MR. NORMAND: Are you able to recognize now what |
16 | this document pertains to? |
17 | A. This looks like a UnixWare Release 2.1 |
18 | International Edition right to use sublicensing-type fees and |
19 | agreement. |
20 | MR. NORMAND: Would you go to Page 24. Can you |
21 | blow up the top two thirds. |
22 | Q. BY MR. NORMAND: And do you recognize what this |
23 | represents on this page, Mr. Sontag? |
24 | A. A list of prior products. |
25 | Q. Now, this document is dated after the Alps license; |
225
1 | correct? |
2 | A. That is correct. |
3 | Q. And is this document dated after the APA? |
4 | A. No, it is not. |
5 | Q. Is it dated after the asset purchase agreement? |
6 | A. I'm sorry. Yes, it is. Yes, it is. |
7 | Q. Do you have any idea as to of all the UnixWare |
8 | licenses that were executed how many of them list the earlier |
9 | releases of System V? |
10 | A. I don't specifically, no. But my impression was it |
11 | was the majority. |
12 | Q. Who would be the person at SCO who would know that? |
13 | A. Bill Broderick is the person who would know. |
14 | Q. Mr. Sontag, who was the principal negotiator for |
15 | SCO in the 2003 Sun and Microsoft agreements? |
16 | A. I was. |
17 | Q. Did either Microsoft or Sun have any UnixWare |
18 | license prior to entering into those 2003 agreements? |
19 | A. No, they did not. |
20 | Q. How much did Microsoft pay for its limited UnixWare |
21 | license in Section 3? |
22 | A. In Section 3? |
23 | Q. Including the option to exercise section. |
24 | A. About $8 million, I believe. |
25 | Q. If I told you 7 million, would that -- |
226
1 | A. That's, yeah. |
2 | Q. Now, as between Microsoft's limited license to |
3 | UnixWare in Section 3 and Sun UnixWare license, who had the |
4 | broader license? |
5 | A. Can you repeat the question? |
6 | Q. As between Microsoft's Section 3 UnixWare license |
7 | and the UnixWare license that Sun obtained under its 2003 |
8 | agreement, who had the broader license? |
9 | A. Sun did. |
10 | Q. In your view, did Microsoft obtain any additional |
11 | UnixWare rights under Section 4 of its agreement? |
12 | A. Yes. |
13 | Q. In your view, did Microsoft pay additional money |
14 | for its additional UnixWare rights under Section 4 on top of |
15 | the 7 million in Section 3? |
16 | A. Yes, it did. I mean, it was significantly |
17 | broadened, as I testified before. |
18 | Q. As between Microsoft's full UnixWare license under |
19 | Sections 3 and 4 and Sun's license, who had the broader |
20 | license? |
21 | A. I would view them as being equal. |
22 | Q. And how much did Sun pay under its 2003 agreement? |
23 | A. About $10 million. |
24 | MR. NORMAND: No further questions, Your Honor. |
25 | THE COURT: Thank you, Mr. Normand. |
227
1 | Anything else of this witness? |
2 | MR. ACKER: Just a second, Your Honor. |
3 | (Time lapse.) |
4 | MR. ACKER: One question. |
5 | REDIRECT EXAMINATION |
6 | BY MR. ACKER: |
7 | Q. You just testified in response to counsel that you |
8 | viewed the rights that Microsoft obtained under Section 4 of |
9 | its license as being equal to what Sun obtained; is that |
10 | right? |
11 | A. Effectively, yes. |
12 | Q. Do you believe that Microsoft had open source |
13 | UnixWare under Section 4? |
14 | A. No, I don't. |
15 | MR. ACKER: Nothing else, Your Honor. |
16 | THE COURT: Thank you. I guess you meant two |
17 | questions. |
18 | MR. ACKER: I did. I apologize. |
19 | THE COURT: Mr. Normand? |
20 | That's all right. |
21 | RECROSS-EXAMINATION |
22 | BY MR. NORMAND: |
23 | Q. Mr. Sontag, having considered the question that was |
24 | just asked of you, in your view as between the full UnixWare |
25 | license that Microsoft had under Sections 3 and 4 and Sun's |
228
1 | UnixWare license, who had the broader UnixWare license? |
2 | A. Specifically to UnixWare, I view that they were |
3 | about equal. I mean, you also have to take into account, |
4 | which I don't think I fully explained with the previous |
5 | question, that Sun had significantly more rights in terms of |
6 | sublicensing and software distribution rights for their UNIX |
7 | technologies. So they're way further ahead in many ways. But |
8 | in terms of just distribution of UnixWare, they were |
9 | effectively comparable. |
10 | Q. All right. Would it be accurate to say that Sun |
11 | had broader rights with respect to UnixWare as to what counsel |
12 | described as open sourcing? |
13 | A. Modestly. I think I'm not an attorney, so it would |
14 | be difficult for me to be able to determine the differences in |
15 | terms of those agreements. |
16 | Q. Thank you. |
17 | THE COURT: Thank you. |
18 | Anything else? |
19 | MR. ACKER: No, Your Honor. |
20 | THE COURT: Thank you. |
21 | You may step down, Mr. Sontag. |
22 | I assume this witness may be excused? |
23 | MR. ACKER: Yes, Your Honor. |
24 | THE COURT: You can stay or go as you choose, |
25 | Mr. Sontag. |
229
|