"'What ever happened to that SCO sales guy in Germany, Gregory Blepp, who said he was carrying 'millions of lines' of the disputed Linux code in his own briefcase last April?' I asked. 'That was an interesting story. He kind of fell off the map; I haven't heard about him lately.'

"Stowell laughed. 'Oh, he no longer works for us,' he said. 'But I think he might be doing some consulting. Anyway, do you know how many pages 'millions of lines of code' would be? A lot bigger than his briefcase, that's for sure. That should have been somebody's first clue.'"

I have interviewed Mr. Blepp, and he is telling me a different story, and much more. According to Mr. Blepp, he never was staff. He was a consultant for SCO from day one, and he still is, but he's spending much less time on SCO matters now. He has his own business. They announced his "appointment" as VP the way they did for legal reasons. Also, he says SCOSource, to his knowledge, has no full-time employees.

I guess a gaggle of lawyers doesn't count.

Joke. Joke. I know they are not staff either, most of them. No need to email me somber corrections. It's just my sense of humor.

I had heard that he had gone to work for an Irish firm, and so I contacted the company. Mr. Blepp got in touch with me and in a series of email conversations, he clarified in a straightforward way exactly his relationship with SCO now and in the past. He also gave Groklaw permission to publish the transcript we prepared of his speech at Jena University, and he reviewed the translation, as I was concerned that it be accurate.

I pointed out that the press release announcing he had been made a Vice President didn't indicate that he was hired as a consultant.He answered like this:

"I am only consulting with SCO since day one for a couple of reasons. I know it was taken up differently in many places, as some other facts, especially by Heise in Germany, but they did not as you, contact me directly (and I offered) so I did not bother any more correcting all the time.

"Due to this, in the first place, I always tried in parallel to establish my own business again after working with Network Associates and Suse. And, with Crannog, I am doing it now with a lot more focus then in the past, to establish a channel in Central Europe for this organization.

"Without getting into nondisclosure details of my contract with SCO, I am not spending as much time as before, as my main mission, to communicate to the European requests and make sure that the European view does not show SCO in a anti-OSS camp, has been half decent accomplished, with the news available at this point in time. It is a legal thing between IBM and SCO now, not about OSS against proprietary software.

"I personally strongly believe that there would be a lot to talk about between SCO and the OSS groups, but I also realize that this is very difficult right now. However, I always kept the position and do it still that both proprietary software vendors have to change and OSS has to open up as well a little referring to the painful licensing discussion. This is totally outside the SCO scenario. Also not regarding SCO property, more in general to 'work together' more efficiently. That's the luxury position as a consultant to remain *open*.

"Therefore it looks like I am the only one right around right now who advocates an open and honest relation with all of the various Open Source Groups I come across, and hope to do this in the future.

"I guess, I am the loudest advocate of establishing a business level structure and behavior inside OSS to start talking to the right people so they understand to meet the classic IT guy and partners with the main question. How do I establish a link to Open Source and include this in my offering without ruining my current income stream, being a partner?"

"BLEPP: With regard to the article, it is right that compared to before I reduced my consulting work dramatically for SCO. One reason is that SCO will concentrate on the US legal scenario, while we would need more attention and material in Europe to be as outspoken as in the US. Therefore we reached an agreement and I focus on my core business again, which is software. . . .

"PJ: One thing since we last spoke: I checked the press release announcing your hiring by SCO as VP. They didn't say you were a consultant. They indicated you were staff. Even now, the statement by Stowell indicates you were staff but now are consulting. Can you clarify? I understood that you were a consultant throughout.

"BLEPP: Yep, the announcement did say this. Being in Germany, we needed to make sure that I can talk at that time, facing the TRO's and at least try to inform the respective people about what SCO's position is. So, being employed in Germany was no option. I was always consulting SCO.

"PJ: Also I understand that there were at most 11 people in all of SCOSource. Is that accurate? How many now?

"BLEPP: I cannot confirm this. A handful plus engineering as required but no full time, as Stowell mentioned as well."

He also had a few words to say about that suitcase, a subject he brought up:

"BLEPP: I never said I have millions of lines of code in my briefcase. This whole story came after the Spiegel online interview, where I did exactly like in Jena, using exactly the same code. I mentioned in the interview that the code in question might be up to million lines of code....... subject to be proven in court and analyzed respectively depending on the view of the court to the general issues.

"This interview getting translated into English then was turned like me carrying million lines of code..... Pamela, I would need a big briefcase doing this, so this was really a 'made up...' either by the translator or somebody before or after.

"PJ: On the briefcase, I am sure Groklaw readers understood you didn't have millions of lines of code in a briefcase literally. That's why they made fun of it. But the article did say you said it.

"BLEPP: I am sure you guys got it. However, I was confronted over and over and yes, the article said, I talked to them right the first time, but......"

While I obviously can't know what he said or didn't say on that occasion, other than what I read in the article, I do know what it is like to be misquoted/misrepresented in the press, so I can empathize with anyone who feels it has happened to them. So I went back and checked carefully, and what I found was that what the article in Der Spiegel said and what was then translated on Groklaw, clearly mentioned that he said he had *proof* of millions of lines of infringing code in his briefcase, not the code itself. Here is the translation we provided on Groklaw:

"'I have proof right here in my suitcase,' says Gregory Blepp, Vice President of SCO and responsible for the licensing business."

Here is the German version in Der Spiegel:

"'Ich habe Beweise hier in dem Koffer', sagt Gregory Blepp, Vizeprädident von SCO und zuständig für das Lizenzgeschäft."

Somehow the story morphed, probably because of all the humor and horsing around that the report gave birth to, into Mr. Blepp lugging around the suitcase full of millions of lines of code literally (on paper, not on CD), as in the above Newsforge interview with Stowell. The point of our article was more to point out that at the same time SCO was not showing the court or IBM in discovery millions of lines of code, Mr. Blepp was claiming to have proof of millions of lines of infringing code. But what the poor man said in the interview with Der Spiegel was that he had proof in his briefcase, not the code itself.

Of course, I don't believe he has proof either, but that's another issue. It is important to be accurate and fair.

The real issue, though, isn't where the millions of lines of code are stored. The real question is: are there in reality millions of lines of copied code? And if SCO has proof, where is it? And if they have proof of it, why are they asking the court for more time to try to find it? If it is already in hand, why hasn't SCO shown it to the court and to IBM in discovery, as they should? And Mr. Blepp was neither the first nor the only person to mention millions of lines of code. CEO Darl McBride said the same thing in an interview in October, published in a French periodical. He said, "Replacing the illegal code seems unimaginable, even if we would be the first to approve such a solution. But we're talking about millions of lines of code and not a few dozen." [French: "Mais il s'agit de millions de lignes et non de quelques dizaines."]

Blepp's Jena speech was a 90-minute speech, a slide presentation, entitled "The Value of Intellectual Property," which covered the following points:

• OpenSource
• Economic effects - interest of the IT industry
• SCO vs. IBM
• Effects of “IP” on the economy - Values – reactions
• Discussion

We have translated only the introduction and the SCO v. IBM section and selected answers from the Q&A. By the way, the video was made available to the world, thanks to the students at Jena. Specifically, credit for the recording goes to Dennis Vocke and Campus TV [http://campustv.uni-jena.de/] and if any wish to send contributions in appreciation to help them with some equipment issues they have, I know it would be appreciated. I understand the university used to fund the student group, but due to austerity measures no longer do, and their camera has seen better days. Without them, this video would not have been done by anyone else. CampusTV can be contacted at campustv@uni-jena.de I also wish to thank all who helped to translate, and especially Matthias Schindler and our coordinator and primary translator, Christoph Schaefer.

The speech is in German, but I found it interesting to watch anyway, and if you'd like to do that, It's available at http://campustv.uni-jena.de/archiv/2004-06-22. Click on "Vortrag über geistiges Eigentum (Gregory Blepp, SCO)".

He mentions SGI in the speech, saying that they admitted to putting code illegally into Linux, and for your review, here, in part, is what SGI actually said:

"Over the past four years, SGI has released over a million lines of code under an open source license. Throughout, we have carried out a rigorous internal process to ensure that all software contributed by SGI represents code we are legally entitled to release as open source.

"When a question was raised by the community earlier in the summer about the ate_utils.c routine, we took immediate action to address it. We quickly and carefully re-reviewed our contributions to open source, and found brief fragments of code matching System V code in three generic routines (ate_utils.c, the atoi function and systeminfo.h header file), all within the I/O infrastructure support for SGI's platform. The three code fragments had been inadvertently included and in fact were redundant from the start. We found better replacements providing the same functionality already available in the Linux kernel. All together, these three small code fragments comprised no more than 200 lines out of the more than one million lines of our overall contributions to Linux. Notably, it appears that most or all of the System V code fragments we found had previously been placed in the public domain, meaning it is very doubtful that the SCO Group has any proprietary claim to these code fragments in any case.

"As a precaution, we promptly removed the code fragments from SGIs Linux website and distributed customer patches, and released patches to the 2.4 and 2.5 kernels on June 30 and July 3 to replace these routines and make other fixes to the SGI infrastructure code that were already in progress at SGI. Our changes showed up in the 2.5 kernel within a few weeks of our submission, and the 2.4 changes were available in the production version of the 2.4 kernel as of August 25 when the 2.4.22 kernel was released. Thus, the code in question has been completely removed."

Also, in the speech he says that Linus began developing Linux in 1999, and that there is no way it could progress as far as it has in only 4 years. As yesterday's interview in BusinessWeek correctly pointed out, Linus first began working on Linux 13 years ago, not 4.

One point he makes stands out in my mind, though I give it a different meaning than he does. He goes through the history of Unix, and he says that USL sold it to Novell in 1993 for just under one billion dollars and then Novell sold it to SCO two years later for less than 200 million dollars.

He implies that was a bad deal on Novell's part. My interpretation would be quite different. Might it not instead indicate that what SCO bought wasn't all of what Novell got from USL? We know the trademark, for example, went to the Open Group, for one thing. If, as Novell asserts, it retained the copyrights, that might explain why SCO bought at such a markedly lower price and that would make this piece a further substantiation of Novell's position. That is the one paragraph I didn't hear back on from Mr. Blepp by publication time. We work as a dispersed group on translations, and that paragraph was the final piece I got. If he wishes to make any corrections or additions or explanations on that paragraph, he is free to do so.

Of course, my favorite part is where he talks about the community response to the SCO challenge to Linux, which clearly came as a surprise to SCO. He says that if IBM wins, marketing books will have to be completely rewritten. Hmm. Maybe I'll write one. Not exactly about marketing, of course, since I am not a marketing executive. And I won't write it as just an IBM win, though I think they will win and I hope they will. I will write about the community's spontaneous contributions to a GPL/Linux victory.

With that introduction, here is the transcript of the Jena speech. Feel free to translate any other portions you feel we should have on the record.

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

Gregory Blepp, Friedrich Schiller university Jena, 06/17/2004

Well, first many thanks for the opportunity, and I believe you have experienced in the past days what it means when you offer a real statement about SCO, thus it is quite interesting to watch.

Thank you for the introduction. Yes, it's correct, I had to cooperate with the Open Source community quite a lot regarding UnitedLinux, in particular in the USA, and I offer to get back to that during the speech or the discussion, talking about what was the idea with UnitedLinux and why does the construct stand, where it stands now. There are really plain . . . reasons for it.

Otherwise, thanks again for the remark, what is reported in most media incorrectly. But that has taught me, thus in the past 12 to 15 months it doesn't surprise me too much any more -- that I am part of the board of directors of SCO, that since Baystar became invested, or rather was invested, that my fees have increased significantly -- that would all be wonderful, if that would indeed be the case, but unfortunately, it isn't.

The reason and my connection with SCO is relatively simple: I know Darl McBride, today's CEO and chairman from my time when we worked together at the UnitedLinux project. I have left SuSE for completely different reasons. I have been to the USA and I had the chance to see "live" a relatively large amount of the so-called source code that is subject to discussion now. I got relatively quickly to the point where I said "there appears to be substance to it". I am not a lawyer, although I have spent more time in the past 12 months with lawyers than I like, but I continue to not be a lawyer, neither for German nor for US law, very important. And I have discussed quite a lot of issues with him. And one of the topics was relatively simple: We have here a completely American situation, the legal quarrel with IBM, and there you get a little update tonight, how that stands.

We also have a worldwide situation, first the word communication and second the word influence, what happens when something results from this whole issue. Positive or negative is not relevant at the moment, and is not important for today. There is a quarrel, there will be a decision, period. And a few people will be leading a different life after that, that I'm telling you right now.

I'll try to emphasize and describe the differences between the US and the German legal system not too much, but at least, when there is an explanation, I'll provide some help, why it is the way it is. Otherwise, I'm looking forward to our active discussion afterwards. This here should not be a one-way-street.

If you take the agenda that I've thought up, there are basically four issues, the most important is the discussion at the end. I would like to start with an introduction and introductory remarks regarding Open Source, also what my understanding of Open Source is. Then, as an example, briefly present the economic opinion and the economic prospects of Open Source. Then you get an update regarding SCO vs. IBM. And then afterwards we'll delve a little into the general IP situation and what effects that has for us, and also a little on behavior regarding values.

If you consider Open Source as a whole issue, there are a few items that need to be simply said: Open Source, and that what Open Source currently [does] for the technological diversity in the IT area, the value, the usefulness, is absolutely undisputed. There is nothing, absolutely nothing to discuss. Compared to the previous decade, we have rarely had the speed of innovation that was similar to what has been the case in the last four, five years.

Item 2. Something that absolutely has to be said, is that, in its form and manner of cooperation, Open Source has completely freed itself from traditional structures as exist in large companies. The issue of organizational structures, how you communicate. With Open Source, there is no race, there is no age, there is no color, sex, if male or female, is completely irrelevant. Most people that communicate have never met, and will likely not meet in this life, but it works. They communicate. And that is something where quite a few groups could learn immensely. Certainly, this has something to do that we're dealing with a very homogeneous agenda here, that is,technology.

Another issue, globalization, is real here. And that means, there is communication across borders. And that is something that will keep some of the lawyers busy in the future. We have the situation that technology is being developed and communicated without any borders in between. But at some time, we have products or results of the work that will be used in a different legal environment than what we see today. In my personal opinion, that is a conflict that will keep a few people busy for some time.

The typical example, and I was there in person during my time at SuSE: I believe Open Source and Linux are a great chance for countries of the so-called Third World, to build their own technology base. That means, if today a country such as China, where a completely different installed base is predominant than in Western nations, says today that the relationship between traditional prioprietary software and Open Source is about 50/50, then this is indeed considerable. The main reason is the installed base.

[inaudible, microphone was switched off]

The second issue that I would like to mention, is that Open Source, including Linux, is still missing the proof how the business model should look like. And to the representatives of the community: Please don't tell me later that "support" is a business model. That discussion I've dealt with plenty.

[inaudible]

I don't say that a private person ... can't survive with it. [...] I would like to point out that due to the youth of Open Source and Linux, there is nothing else to expect. Now we're from kindergarden to pre-school, but we're not yet at high school. It's important to take that into account and behave accordingly.

The next item, there I've jumped ahead, with commercial users, and I talk about large enterprises, such as banks, insurance companies, stock exchanges, automobile manufacturers: Without traditional structures, Open Source and Linux is completely irrelevant, because they need maintenance 24x7, support, safety of their investment, thus a few issues that the procurement simply needs before you manage the first hurdle.

Think about it, or for those that are not acquainted so long, how was the entry of Open Source in the company: There was a PC, there was the traditional entry into the company, because it came at the time where it could establish itself completely separate from the rest of the IT landscape of the company. At the time the web invaded the companies, most IT managers didn't understand what was coming up at them. Today, this is all history, everything is established. But from webserver to database server, to application on the desktop, there is a very long way. And most importantly, you have completely different issues that you need to tackle.

I try to make that clear with a different example -- I get back to it soon. But first, for the discussion, when we look at IBM later: Open Source is not equal to Linux. And I consider it utterly unfair to the Open Source community if the so-called Linux people consider themselvesthe prime example for Open Source. What that, you're not doing the Open Source community a favor. Certainly, the operating system is the most uninteresting piece of IT that you can imagine. It becomes interesting when you're dealing with applications and about the usefulness for the end user on the street, the private user. And there, nobody should tell me "Linux is great", similarly with NT, similarly with Unix. Completely irrevant. That is a piece of software that everybody is frightened to touch seriously, because he would rather like to have it run in the background and concentrate what really is fun. And that is also where the Open Source community goes.

The real Open Source community, in my opinion, is already far beyond Linux. They deal with applications, they deal with databases. Some other vendors than a small Microsoft will be wondering what the Open Source community will be able to produce, so please, dear Linuxers, take the corner that belongs to you, you've provided an important detail, but that's it. After that, please deal with what is interesting in the future: the whole IT structure.

The other issue is what I believe I know: Linux is free. Linux is license-free, but that's all. Otherwise, you have at least as much work and pain as with any other software product of the world. And you also have to deal with maintenance and support and patches. The topic "free", I believe, is behind us. We are license-free as a first step, there I agree, and there the company SuSE went nearly bankrupt.

It is more secure. Sure, if I only have 10% of the market, I am less attractive. That's the provocative manner to present that. The real manner is: If you today ask one of the security vendors -- Symantec, NAI,TrendMicro -- whether there is a support or security call concerning Linux, Unix, or NT [it does not matter]. That's plain and simple the wrong view that the general Linux is the secure system. The problems are at least as big. They are solved differently, they are solved faster in part, and they are solved more effectively in part, no question.

[ . . . ]SCO v. IBM

Blepp: What I am talking about today, and it'll be partially in English, will be a snapshot of what's happening in the USA currently. It is the facts about the American legal system, its courts, the lawyers, and a corporation.

In short, a short history of Unix. I'm cutting a long story short, because it's not about dissecting source code into little pieces, and I will go into the meaning of this later on.

Some time around 1969, partially even before that date, AT&T in the USA said, "Operating system, ok, we'll do it. It's called Unix, even predecessors of it, and we'll start to distribute it. AT&T never was and never was planned as a service provider for infrastructure. Thus, AT&T regarded this originally from a completely different point ofview. In a roundabout way and intermediate mergers later, it was sold to Novell in 1993 for just under one billion dollars and was acquired for less than 200 million dollars two years later by SCO, another example of a botched Novell acquisition, an old story. And now wecome to the SCO/Caldera issue again. Now it belongs to the SCO Group,and I'll be available for detailed discussions about SCO/Caldera. I have some materials with me, so we can go through the contracts, if that's fun for you.

Well, let's just posit at this point in the discussion that the SCO Group bought Unix in 1994. I'll gladly dissect the Novell contract. It's the one I have the most fun with, because it's easier to understand than the AT&T contracts. SCO then took over the major part of the contracts and kept them. This means to sell a Unix derivative --derivative means you take a piece of code, you make something (of it), you also can write your name on it and off you go the market place. This means, you can see these derivatives as IBM AIX, Fujitsu, Irix, Sun, HP, and we have in our files 6,000 licenses. OK?

Question: I have a question. Well, my understanding was that SCO didn't buy Unix, but bought Unix System V, so . . .

Blepp: Unix System V, yes.

Question: . . . and BSD is no descendant of Unix System V, but from System IV.

Blepp: Yes, correct.

Question: Because you describe it as if . . .

Blepp: Correct, correct.

Question: Because you describe it as if SCO's was developed from it.

Blepp: Of course, we can can discuss this. There is a lawsuit from the year 1997 which was a continuation of the story of Novell vs. BSD, vs. Berkeley University. Because. . . Perhaps for people. . . BSD is code from Berkeley University. It was developed as some sort of self-advertising and to distribute it. The Berkeley University wanted to demonstrate its competence. You know the American university system, the more you beat the drums, the more students you get, the more fees you receive, the more royalties you can ask for. That's the way the economics play out.

But there is a subdivision of BSD, on which is based, and that's why we have to mention it . . . From this lawsuit against Novell, there is a claim and there is a settlement about System V which impacts use today of BSD with respects to the code. I can discuss the descendants of the code later, if you want to.

I have to mention BSD, if I want to desribe the whole picture. But I also have to say that we don't have an issue with most versions of BSD and that it has no part in the lawsuit at all. At the time some wanted. . . When we presented the first lines of code they said: Great, this is all BSD, everything was there before. We then took care of the lines of code again, selected them exactly. Unfortunately, there is just one thing with BSD, they made an obfuscated code again, and there was a copyright infringement somehow by eliminating the copyright and making it look like their own, which is explicitly against a court ruling from the year 1990. We don't insist here, because it's not important in this connection. But this complete exemption . . . BSD is under a cheese cover, I ask you to take care. There are some things in BSD code, which are quite exciting.

In general, I have to make clear, we don't have a problem with BSD. I agree with you, if you will, BSD mostly was built upon System IV code, whereas we are walking around on System V code. This is the base on which I'll continue now, acknowledging it's System V.

Back to our earlier thread. We have some 6,000 licenses worldwide, and if you briefly talk about the licenses, there are three types of licenses. First license: I give you a piece of software, you can use it and that's it. Nothing more, nothing less. The second one is: I give you a piece of software and I also give you the source code, because you are running a nuclear power plant with the software. And if we or someone else don't exist any more, you have to be legally obliged to have all source code in your filing cabinet. This is called use to write. Then there's the third type, which is a license to use. You buy a license and pay the fee to the seller. You also receive the source code, and you may build your own products from this source code, and you may also sell and put these products on the market under your own brand. This is the third kind of license. And IBM is a licensee of this license, as are BMW, HP, Sun, and DaimlerChrysler. They have contracts like these with SCO. From the AT&T heritage.

If we assume for a moment, that Unix System V code is ours, then we also assume in this connection, that the copyrights from these contracts, that all claims for lapses from these contracts are ours. And also that we control the derivatives, according to the contracts, because it was written in the contracts. I show... I don't want to present to you thirty, twenty pages of contracts, but I want to draw your attention to three points. On the one hand, the paragraph in the middle [referring to a presentation]: "provided that any such modification or derivative work that contains any part of a SOFTWARE PRODUCT subject to this agreement is treated hereunder the same as such SOFTWARE PRODUCT."

Now, to put the legalese in plain words, once again: You can do what you want with the product. You can redirect [sic] it, develop new products based on it, sell it, put it on the market, as long as you recognizethat the new product is regarded as part of the original license. It means, I reserve the right that if you, by selling the new product, that I agree. Or, if you want to sell it, you please ask me.

The interesting point here is that it worked really well with IBM until recently. When they sold their AIX licenses to someone else and the customer said: "Guys, I want to use the source code," then a fax from IBM arrived, both sides signed, OK, source code goes to BMW. Ready, thank you, go on. This is possible to a certain degree. A second point which is not uninteresting: The last line: "Nothing in this Agreement grants to LICENSEE the right to sell, lease or otherwise transfer or dispose of a SOFTWARE PRODUCT in whole or in part." And at this point we come quite close to the Linux issue again.

Now we need to mention something about the IBM matter briefly. IBM took a clear stand in 2000 by saying that from 2000 on: We will, we have and we will in the future support Open Source or Linux by making available parts of AIX, in whole or in part. [inaudible. Something about the German Software Association] In 2000, the issue wasn't so titilating. Today it's very titilating indeed.

Well, now we get to someone who is much more important. SGI, Silicon Graphics is known to some of you. It's no minor player in this issue, even though they are are financially not quite well at the moment, they simply admitted in a statement on October 1st that they had taken a look at their code sequences and saw that they had given away three fragments of code, about 200 lines, by mistake but also illegally to Linux.

I took this [inaudible] because I'm going to show a piece of the code now, which is definitely System V code. And it is no longer about ...It's always said "show", the community's issue always was, Show us the code. We will either remove it or show us the code [inaudible] the origins. Folks, it is no longer about code. It simply is no longer about it. The problem we have with IBM is not about the origin of the code, but about a software contract we had with IBM. And we think this contract has been breached. What the community made of it is a completely different issue, a mere side issue. This shouldn't beforgotten.

Maybe, in this connection, and then I'll show you the code, we should have a short look at the history of Linux. In 1999 [sic], Linus Torvalds had a great idea. He developed Linux. But everyone will agree with me when I say that in 1999 it was a very technical software, in the widest sense. I don't really like the word hobbyist, but let's say a very technical software. It was quite hard for normal people to communicate with it, if they didn't have a very, very advanced technical understanding. I simply want to claim this. Two, two CPUs anda bit of availability was also there. What became of it with 2.6 within only four years is impossible to achieve with usual development work, is absolutely impossible to achieve with usual development work.

And there are enough people admitting that code comes from somwhere else, so now we have to deal somehow with the legality. [inaudible].That there was help from outside is not disputed by most of the people in the community, at least not by those in the higher ranks of the hierarchy. That's a fact. Now it's only about, was it good, was it wrong, was it honest, in a moral, compared to a legal sense.

But let's talk about the issue of copying. What you can do with it? There are differences -- and this is not my issue, and it isn't my problem either, but it's the American legal system. In Germany things are partly different. There are differences between four ways of infringing copyrights. The problem lies already in the structure of copyrights themselves. What was thought to be good for books was used because there never was a copyright explicitly designed for IT or digital media.

Above on the left [referring to his presentation] is an example of literal copying. Literal copying means cut and paste. I take a piece ofcode and paste it as it is. Nothing more, nothing less.

Underneath is obfuscation. Obfuscation is a bit more exciting. I take some code, copy it, delete the copyright sequence [sic] and replace it with another copyright sequence. I'm going to show an example of that soon.

Then there are derivative works. This means, I take the original source code, modify and insert it with or without deliberately ignoring existing contracts.

And last there is something, which in Europe is hard to prove, but which has clear legal grounds based on court rulings in America. This will answer a future question: Why do we concentrate with [inaudible]financial situation strongly on the USA. I'm talking about nonliteral transfer. It means, it's about methods, structures and sequences.

I'll give you two examples. The one is from IT, the application launcher. So for people who have a bit of experience with operating systems: the application launcher is what brings your spreadsheet or your presentation up to the monitor, to put it simply. Incidentially, this takes 23 steps in both Unix and Linux, steps which are also similar in their structure. Of course you can say, somehow I have to get an application to my monitor. Compare this to NT, or even OS/2,where not only the manner of launching is different but also the number of steps. And so this is an example of methods, structures and sequences.

Another example, a bit farfetched: A herring is swimming in the Atlantic. He lost his father, and the shoal is following, when the fishing boat caught him and tried to get him out the fishing net. Now take the herring and replace it with a clownfish and replace the fishing boat with a motorboat. Then you are in the area of methods and concepts. And this is the support the American legal system was still unable to clear up. But it's absolutely legal to point to these structures and sequences. And this will become one of the major points in the lawsuit against IBM, because Unix Lab -- i.e., laboratory -- employees, developers, which were called Unix Lab three years ago -- was renamed Linux Lab, including the staff. The persons are all known, they are partially listed as witnesses in the lawsuit. This is ... This is copyright infringement in the area of methods, structures and concepts.

Now we have a look at something closely to understand the structures and concepts. We take the code which is [inaudible] in the General Public License as so-called malloc or memory allocation code. And what you here, what you see now is identical from Version 2.4, namely memory allocation. If you go down, you see up here, "This file is subject to the terms and conditions of the General Public License."

Question: Could you enlarge the characters? [laughter in the audience]

Blepp: The characters are ... I can place the file at your disposal later on. That's no problem. [inaudible] The issue in green [refering to his presentation], if you replace this on the other hand with System V, if you compare the data, and replace it with System V, you absolutely have an obfuscation. In fact, the original makes absolutely clear that it's System V code, which slipped in via AT&T, Bell Labs, Novell and SCO [inaudible].

Then follows a bit of black-colored code. There, nothing has been done, these are simply steering sequences. Here is also black-colored code which serves to steer for sequences from Linux. And now it becomes a bit red. All sequences you see in red from now on, are line-by-line, via copy and paste from System V, thus from Unix code, line-by-line, including comments. Only if you see a deadlock comment, it is a syntax line in Linux which summarizes the elements under Linux, so it can do the same things under Linux it does under Unix. And this example are [sic] in quotation marks "only" just under 200 lines of code. From these 200 lines, 55 are affected, which were copied into Linux. From these files, this is a quite simple, but handy example, we have approximately 40 files.

In other words, the entire kernel 2.4 -- experts may correct me -- is estimated, I believe, to contain 5 million lines, something like that, give or take something. At the moment, we assume 1.5 million lines of this code to be affected. Partially by structures, partially by sequences, but partially also by line-by . . . by copying.

Well, before the discussion begins drifting away to dissecting single lines of code, which, in my opinion, is not useful, I want to point at the following. I want to point out to the community that in the whole context between IBM and SCO, who caused this discourse and who have the most information available, that it's wise to assume that neither on SCO's side nor on IBM's side are overpaid complete idiots at work.

Who ever managed to stay in court for one year and a half without any reason? Recently there was a court ruling which was commented in my favorite magazine heise as follows: "SCO suffered a partial defeat in court, because an extension of a deadline was denied". The extension was reduced from four months to two. OK, can you consider it as a success for the one side or the other?

What I am aiming at is something completely different. The lawsuit has gone on for more than one year in the USA. This means, even a judge, who is, let's assume that, no expert, I think I may assume that after one year he half-way understands what this case is about. We can assume that. And do you really think he would have granted an extension, if he thought SCO's performance is absolute nonsense? We think he'd have already thrown us out of court.

I don't say that what you see here is a) everything -- [inaudible] -Try it under another issue [inaudible]. We have 23 attorneys in [inaudible] different law firms working on this case. Only in the USA. The whole lawsuit costs us a seven figure number of dollars. Heretics say this is the only way out. OK, maybe, but then we still can continue a bit at least. And we delivered 1.8 million pages of printed paper to IBM. It went to the extent that IBM's lawyers demanded my mailbox from the PC, from my hard disk, the mailbox, to be printed. Every single email is sent to the lawyers, will be classified and made available to IBM's lawyers. This means you can't imagine how transparent SCO has become to IBM. So much for the absolutely notorious stupid chain of argumentation, that we were financed by Microsoft.

Regarding the amount of information exchanged, do you really think IBM or Novell wouldn't have capitalized on the fact if that we were financed by Microsoft? Especially if you believe in the assumptions that financing happens unoffically, through the backdoor. If you are already in the public, ask yourself how crazy one has to be to -- a 50 million, or sometimes it was even 80 million payed to us by Microsoft. How can I hide this in a balance sheet of 75 millions? Now, God praise creativity, but I really want to [inaudible] the accountant. What I say is a bit exaggerated, okay. But it actually refelects the suspicious level of communication on which is communicated [sic]. Which is on the lowest level with absolutely insufficient information. And it is - this is the most annoying for me - in part simply badly translated from English to German. And then I say, this is not uninteresting.

Now, the status about the IBM case is quite simple. In April 2005, there's a date. The first official date, when both parties usually meet before a jury. If you're asking what happens until then? Everything can happen. Absolutely everything can happen. There is . . . There are no indicators for a settlement at the moment. Nothing is impossible. We still have IBM's financial report ahead of us.

Oh, what I didn't mention yet, we had a contract with IBM. On the issue AIX/Unix. We terminated the contract within the agreed time limit on June 6th of last year. IBM contuinues to sell AIX, although the contract doesn't exist anymore. That's the reason for . . . if you're talking about the amounts of money we are discussing with IBM, there was originally an amount of 3 billion dollars at stake. This amount was raised to 5 million, billion dollars. This is exactly the contract issue with AIX.

Some additional words on amounts: It is interesting to state that amounts are only mentioned by outsiders. Because in the end, it is for the court to fix the contractual penalty. But you will often stumble over a number of 5 billion dollars.

In this context some final remarks about the IBM issue: we basically have two issues or problems. On the one hand, we have contracts. On the other hand, we have copyright. They don't have necessarily anything to do with each other. We have an issue, copyright. This is another frontline of claims different from the one with IBM. I'll try to explain it another way.

Originally there were two parties having a contract, namely SCO and IBM. And you won't believe it, but both parties talked to each other. They even talked to each other for quite a long time, namely for nearly a year. I mean, now, forget for a moment who is behind it. Use your common sense, without being inside the context of IT business. You don't wake up one morning and say: Now we'll sue IBM. They have more lawyers than we have employees, just in the USA. So you really have to be out of your mind to start such a case without being prepared.

Originally it wasn't our intention, we didn't even touch the Linux issue. We didn't even know that there was something inside, but the people saw that copies of their code slipped in via AIX into Linux. Only a few lines. Then we approached IBM, or Darl and some others. I didn't participate in the first meetings. And they said: There's a problem, folks. And then followed a reaction no one thought to be possible, which was "bang!" A total explosion. And then one went back and said: What kind of reaction was that? Under normal circumstances IBM is always some kind of, let's do this way, you live, we live, we'll get a bit more money than you. And you can handle IBM really good that way.

So we leave the problems under the carpet or we'll solve them internally. As long as for IBM dollar, cash is behind it, you can do anything with IBM. Is absolutely normal, an American public company. It works with any other company as well. You only have to find the hot spot. And IBM's is [inaudible].

So, getting back, assume that we said: What kind of reaction was that? Then we started in laboratories to take a look. And then it started, that we found what was important as it seemed. Then we had a look at the contracts and went to IBM again. I tell you, the whole game took more than 7 months. Until LinuxWorld two years ago, when Steve Mills, boss of, I don't know, 160 or 250,000 employees, now ... anyway, he owns the whole software group of IBM, including his 1.5 billion license earnings per year. When this company went to LinuxWorld and opposed SCO, we had no choice but to say: One moment please. If we want to bring this issue to an end, we need legal help.

Now, and then the following happened. We went to court and since that time, communication with IBM is slightly disturbed and it's more in writing than verbal. And then something stupefying happened. IBM didn't start communicating, but a torrent hit us with the community, which became the spokespeople. Over issues which didn't concern them in the first place. Not clumsy. In my opinion books on marketing have to be rewritten in ten years. If IBM wins this case, every book on marketing will be rewritten.

To see a company of such a size making itself so small that it can make a community rally round it. To get so many spokespeople for such a minor investment, for such a minor investment. There are some IBM trade fairs which are more expensive than their investment in Linux. But there is a sponge soaking it up. And this community took over communication. And since then, our PR budget has been raised exponentially, to be able to react to this. And at that point, mea culpa at first... what SCO did in these periods with respect to communication in the USA, was certainly nothing great. I would even go so far as to say some things were a real disaster. It was simply clumsy.

But, at this point you have to understand that the war will finally be decided in the USA, if you will. This means what Europeans and Asians think about the issue, is, I don't want to say of secondary importance, but if it is about counting your cash and to look what it means for your own accounts and for the balance sheet. Decisions are finally made in the USA. And we on the European level are unfortunately the ones who suffer, with respect to the legal system as well as understanding.

[...]

Then we started another chapter with Novell. You see, Novell's fun for me. Novell has a real gift. Since they don't know how to run their NetWare business and announced the end of life of a whole OS line -- but this needs to be explained by someone who understands it -- they came up with, we already had a conflict with them a year ago about the issue of copyright, because we said: No, no. You didn't sell us everything [unclear]. What? You didn't sell us everything? No, no. We retained parts of the copyright when you paid us 200 million dollars for Unix. Then the first thing was: One moment, please. Why do you license the software from us right now and pay us money for it every month, if you didn't sell it in the first step? Please explain!

Oh, well, that's another point in the contract. We still have rights in Unix. We then rummaged in the contracts, found Amendment 2, sent Amendment 2 to Novell. One week later, Novell issued a press release. Interestingly, it has disappeared from their website since November. For those who don't know: In November IBM paid the 50 million dollars for buying SuSE to Novell. In the press release they wrote that it seems as if SCO bought the rights to Unix. OK, we were out of the woods with that problem. In November, as I told you, Novell buys SuSE, IBM finances the deal partially with 50 million dollars. Suddenly, someone from Novell goes to the PTO and registers Unix System V and parts of the code.

Now you have to know how the American legal system works. You can go there, and I can tomorrow register the trademark of Coca Cola, if I have an idiot before me at the PTO. He will confirm that the Coca Cola trademark is mine. Without any problem. He doesn't say that I have the right to do so. He only confirms that I stood before him, wrote Coca Cola on a sheet, handed him over that sheet and told him, please stamp it and he returns the paper to me. And that is exactly what Novell did. They went there and said we have rights in Unix System V source code, please confirm.

But now you have the problem, and then it's red tape all the way, they created a legal status. And the only way to get rid of it is to go to court. So there was nothing left ... we didn't even think about this chapter with Novell any more. Of course, if you get involved with IBM, you can't open much more front lines, if you don't have to. I wouldn't do so either. Anyway, we told Novell the issue is over. Suddenly those blockheads, sorry for the word, register something. The only thing they do by that is to set back the whole case for nine months with respect to communication. This is my personal opinion again. I respect other people's opinions. But that fact caused a lot of unrest, because the basic issue, and here I get to the Unix community, sorry, Linux community and Open Source. Let's forget the issue of copying code up and down, top and bottom. This is no longer relevant. It's not even relevant, it's meaningless. If SCO gets no ruling in its favor, that Unix System V is theirs in the first hop, everything thereafter is a complete flop. That's why it is for me partially ...

I'm so tired of discussing this stupid code. Because we are acting here, yes, here I can say it, on a meta level, while most of the others are discussing down below and try to dissect some lines of code. There is Torvalds' kernel developer, Andrew Morton, who says, nonsense happened.

Question: Well, I have a question from two different areas. The first is a legal one of course. I recognized with astonishment, probably with pity, that the American legal system is sometimes unclear about things worth to be protected, and where violations are made. If I understand you right, this matter with IBM is an essential problem for SCO. Why did you start a lawsuit with such an uncertain time frame, if this is clear from the beginning? Why don't you try a jurisdiction in which you can discuss the facts, Germany for instance? If you show the lines of codes there, it would be possible to get a ruling within a few weeks or months. So you had facts. There is unfortunately, and I see ...

Blepp:May I answer the question immediately?

Question: Of course.

Blepp: Why in the USA? Three reasons: SCO - an American public company, IBM - an American public company, Novell - an American public company. And there's more money to get. Period. Well, I'll take the first pointas interesting. What I ..I would do in the interest of time, if I wanted to challenge the GPL -- forget about the IBM/SCO lawsuit for a second. If it's about challenging Linux as such, I would never try in the USA, but I would feel better with German, French, Dutch or Spanish law. Because results are much faster brought forth.

Question: Here, a second area is interesting, the philosophy. What do you want to achieve? You are talking a lot about intellectual property, but what is it? What do you want to do with it? You presented many proofs or derivations which were explained economically. I'm sorry, but the important good intellectual property must not be so closely connected to economical reasons that the former becomes the justification for the way you treat IP. If a legislator grants protection of intellectual property, I have to return a favor. And these famous examples, like Amazon's one-click patent and things like that, where you can hardly determine the achievement. And precisely ...now for example in the American legal system ... What is this lawsuit really about? Why, and I'd like to hear your opinion, what is the intellectual achievement here? Where does intellectual achievement begin? When is it trivial? When can I receive a patent on breathing, simply because I'm first, and then collect tons of money? Is this morally justified? I don't think morality should be left out.

Blepp: Well, this is a quite good question ... An excellent question, absolutely. An excellent question. There are ... It contains four to five aspects. I try to give it a structure. One part of the question was: Why are we acting like we do, when we have to deal with economical aspects. There's a simple answer. We are fighting for survival. Quite sober. We are a public company without having Amnesty International behind us. Quite simple. It's about cash, readies. The more the better.The better for our shareholders. Comma. If you are CEO and you know now it's about finding your way out ... The basis of the company is selling Unix. This has been the basis for 25 years. On August 2nd we celebrate our 25th anniversary, I believe. For 25 years selling an operating system called Unix has been the basis of the company. We also tried some other businesses, including Linux, but didn't succeed. So our basis is selling Unix. Now we recognize an upcoming OS, which, in our view, contains exactly our code, but it's for free. So you can see the whole thing running to the ground very quickly. Leave aside the question, if we actually own the code for a moment. Right now it's simply [inaudible]. That's the point. It means we defend the basis of the company. . . .

[Translator: Some explanations on patents; Blepp criticizes trivial patents and condemns the decision of the EU commission, but wants sequences and structures to be protected by copyright.]

Question: Now, I specifically ... Well, I want to contradict the previous speaker, because I think intellectual property can have a value, and think I agree with SCO. If I have a look at the announcement of UnixWare some days ago, what components are shipped with it: Apache, Tomcat, PHP, Samba, Sendmail, Mozilla, MySQL ... These are really good products ...

Blepp: All Open Source components, by the way.

Question: Correct. What I don't understand is criticism of the GPL,especially Darl McBride, who said the GPL would destroy intellectual property. Then Mark Heise, SCO's attorney, who declared the GPL null and void. So shipping a GPL'd product like Samba with UnixWare is simply stealing, because you don't have the right to do so, if the product is not under the GPL. I mean, I don't understand SCO's attitude towards the GPL. Do you think it is invalid? Which means ... first Caldera distributed Linux code for years and you still distribute Samba illegally. I don't have the licenses of the other products handy. Or theGPL is valid. But then I have the problem that SCO themselves contributed to Linux and distributed Linux...

Blepp: May I answer the question directly, because otherwise it would become a bit difficult? Copyright is a basic assumption in American law. For instance, you can't transfer copyrights, you ... only by writing. So you can't say you did it and everything was fine, but it has to be in writing. We didn't transfer Unix System V code to the GPL.

[...]

The bigger problem at SCO is we are fighting with a licensing model for our software against a different model, against a free software (Linux) which in our opinion contains in important areas of the OS sequences of our IP.