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SCO's Declaration of Steven Sabbath - as text
Wednesday, June 22 2005 @ 03:52 AM EDT

Here's SCO's Declaration of Steven Sabbath, one of the documents we scanned from the pile of exhibits SCO attached to the Declaration of Jeremy Evans, which in turn was in support of SCO's sealed Memorandum in Opposition to IBM's Motion for Partial Summary Judgment on Breach of Contract Claims, Docket Number 348.

Dr Stupid and I were talking about this declaration, because he noticed some interesting things about it. First, Sabbath says he is offering the declaration in connection with both SCO v. IBM and SCO v. Novell. But we couldn't find it as ever being filed in the latter case.

You can see why SCO might have decided not to use it in the Novell case, if you look closely at what Mr. Sabbath writes.

For example, he testifies thusly:

Amendment No. 2, however, was intended to confirm, among other things, the parties' intent that SCO would obtain ownership of the UNIX copyrights under the APA and that Novell had received no rights with respect to UNIX source code under the APA.

At first glance, it might seem that he means that the Asset Purchase Agreement was intended to be a copyright conveyance, which was confirmed in the Amendment 2. Aside from the question of why it would need to be confirmed, if there had been a copyright conveyance, that wording -- "this is a copyright conveyance" -- or some such language would surely have been used, if the intent was really to confirm it, since that is what the APA is lacking and what the law requires. Yet Amendment No. 2 says no such thing.

Note the first clause: "SCO would obtain ownership..." Now, stop and think. He doesn't say that SCO *had obtained* ownership, but rather that it would, even though he uses the expression "had received no rights" with respects to Novell. If the parties were confirming in 1996 that SCO "would obtain" ownership (someday?) of the copyrights, then it follows, might it not, that SCO did not *have* ownership in 1996? You can find the October 1996 Amendment 2 in our Contracts page.

Might Sabbath thus be carefully expressing, and lawyers know how to express themselves carefully, that neither party saw the 1995 Asset Purchase Agreement as a conveyance of a copyright, and -- crucially -- that Novell was still the owner on paper? Or, perhaps that the APA was insufficient as a copyright conveyance, even if that was the intent? Note that there is no time frame given for the "would obtain." Of course, this isn't an attempt to put words in his mouth. But if the case goes to trial, no doubt he would be asked to clarify this point. It is one thing to put something opaque in a written declaration. It is quite another to say it as a witness at trial, subject to questioning by the other side's attorneys.

As to the second clause, "Novell had received no rights with respects to UNIX source code under the APA," this is classic weasel wording. Of course Novell received no rights to UNIX source code under that document, because they had them already and were transferring to oldSCO some of their rights. How could oldSCO give Novell any UNIX rights? Significantly Sabbath does not say that Novell *retained* no rights, so really this clause is just smoke and mirrors. It doesn't mean anything, if you logically parse it out.

As usual with SCO, what they *don't* say can be just as important as what they do. Here's what Mr. Sabbath does not say:

1. He does not explicitly say that the UNIX copyrights were transferred from Novell to oldSCO. Surely if they had been, he would have said so. And in his position, surely he would have known.

2. He doesn't say that oldSCO transferred the UNIX copyrights to Caldera, despite being around at the time.

3. He doesn't explain why neither the APA nor Amendment No. 2 declares itself to be a copyright conveyance.

This might explain why SCO hasn't filed this declaration in the Novell case.

A year ago, Dr Stupid wrote an article for Groklaw in which he presented contemporaneous evidence that Novell continued to make improvements to UnixWare after Amendment No. 2, and that oldSCO acknowledged them as holding the copyrights. In fact, he found SCO leaving copyright notices for Novell dated as late as 1998 untouched in its updates to the UnixWare system, including updates to the manuals of which newSCO claimed copyright ownership in its complaint against AutoZone. You might want to reread that article in connection with the Sabbath Declaration.

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

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

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

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

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP,

Plaintiff,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant.

Case No. 2:03CV0294DAK

Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

DECLARATION OF
STEVEN SABBATH

1

I, STEVEN SABBATH, declare as follows:

1. I submit this Declaration in connection with the lawsuits entitled The SCO Group v. IBM and The SCO Group v. Novell, Inc..

2. From in or about January 1991 until in or about November 2003, I was employed by The Santa Cruz Operation, Inc. ("Santa Cruz"), which was subsequently renamed Tarantella, Inc. In 1995 and 1996, my position at Santa Cruz was Vice President of Law and Corporate Affairs.

3. In that capacity, I participated with others in numerous meetings and discussions leading up to the 1995 Asset Purchase Agreement (the "APA") whereby Novell sold its UNIX business to Santa Cruz. Those individuals included Jim Wilt, Geoff Seabrook, and Doug Michaels, who represented Santa Cruz in the negotiations; Ed Chatlos, the principal negotiator for Novell; and in-house and outside counsel for Novell.

4. Based on my involvement with the APA, I understand that the parties' intent and purpose in executing the APA was to transfer to Santa Cruz Novell's entire UNIX-related business, including all rights to UNIX and UnixWare and the UNIX copyrights; that the parties agreed to permit Novell to retain an interest in future System V binary royalties to enable SCO to afford the asset purchase; and that the parties never intended to give Novell any right with respect to any of Santa Cruz's future source code interests in UNIX and UnixWare, including under the SVRX licenses.

5. I understand that IBM has argued that Section 4.16(b) of the APA gave Novell the right to require Santa Cruz to waive any breach of the intellectual property protections provided in the SVRX licenses. That argument is contrary to the intent of Paragraph 4.16(b) as I understood it. Indeed, Santa Cruz would never have agreed to

2

give Novell the right under the APA to waive such protections under the SVRX licenses because such a right could have eviscerated the entire purpose of the APA and the value of the assets transferred to Santa Cruz under the APA.

6. In October 1996, Novell and Santa Cruz executed Amendment No. 2 to the APA. I was involved the discussions leading up to Amendment No. 2, and I signed Amendment No. 2 on behalf of Santa Cruz. Amendment No. 2 arose as a result of a dispute between Novell and SCO concerning Novell's attempt to execute, on Santa Cruz's behalf, a royalty buy-out with IBM. That dispute was ultimately resolved through an amendment to IBM's SVRX license that was jointly executed by Santa Cruz, Novell, and IBM. Amendment No. 2, however, was intended to confirm, among other things, the parties' intent that SCO would obtain ownership of the UNIX copyrights under the APA and that Novell had received no rights with respect to UNIX source code under the APA. Paragraph B.5 of Amendment No. 2 was specifically intended to make clear that Novell had no right to increase any SVRX licensee's rights to SVRX source code, no right to grant any new SVRX source code licenses, and no right to prevent Santa Cruz from exercising the rights it obtained under the APA with respect to SVRX source code.

I declare under penalty of perjury that the foregoing is true and correct.

Executed: 19 Nov 2004
Santa Cruz County, California

____[signature]_____
Steven Sabbath

3

I declare under penalty of perjury that the foregoing is true and correct.

____[signature]_____
Edward Normand


CERTIFICATE OF SERVICE

Plaintiff, The SCO Group, Inc. hereby certifies that a true and correct copy of
DECLARATION OF EDWARD NORMAND was served on Defendant International Business
Machines Corporation on this 30th day of November, by depositing it in U.S. Mail, first class,
postage prepaid, to their counsel of record as indicated below:

Evan R. Chesler, Esq.
Cravath, Swaine & Moore LLP
[address]

Donald J. Rosenberg, Esq.
[address]

Alan L. Sullivan, Esq.
Todd M. Shaughnessy, Esq.
Snell & Wilmer L.L.P.
[address]

Attorneys for Defendant/Counterclaim Plaintiff IBM Corp.

___[signature]_____


  


SCO's Declaration of Steven Sabbath - as text | 152 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections
Authored by: IRJustman on Wednesday, June 22 2005 @ 04:02 AM EDT
Post 'em if ya got 'em!

[ Reply to This | # ]

OT linkage
Authored by: IRJustman on Wednesday, June 22 2005 @ 04:12 AM EDT
Be sure to make clicks linkable per the posting instructions, and be sure to
post as HTML.

[ Reply to This | # ]

SCO's Declaration of Steven Sabbath - as text
Authored by: Anonymous on Wednesday, June 22 2005 @ 04:25 AM EDT
"Amendment No. 2, however, was intended to confirm, among other things, the
parties' intent that SCO would obtain ownership of the UNIX copyrights under the
APA and that Novell had received no rights with respect to UNIX source code
under the APA."

A thought occurs to me...

could this not also be read as "Novell doesn't have the copyrights to the
UNIX source and SCO will obtain them from whoever does have them" ?

And the second bit could be read as "Novell received no rights to SCO
source code (ie derivative works) under the APA"

Probably wrong, but you never know.



[ Reply to This | # ]

Rights and Fees
Authored by: Anonymous on Wednesday, June 22 2005 @ 05:02 AM EDT
"...and that the parties never intended to give Novell any right with
respect to any of Santa Cruz's future source code interests in UNIX and
UnixWare, including under the SVRX licenses."

Seems to mean that they didn't want Novell to have any right on their (Old Scos)
derivate works and that the proceeds of licenses coming from these derivative
works wouldn't count for Novell cut.

So Novell would get a (big)portion of the license income for existing customers.


Also, of note, is the fact that if they need to specify that Novell doesn't have
any right on derivative works, that would say that they still have rights on the
original.

Bym

[ Reply to This | # ]

  • Rights and Fees - Authored by: Anonymous on Wednesday, June 22 2005 @ 09:15 AM EDT
intent to convey
Authored by: codswallop on Wednesday, June 22 2005 @ 05:36 AM EDT
I think the most plausible reading is that at the time of the APA, Novell
represented to Santa Cruz that they would convey some unspecified set of
copyrights necessary for the purchase. Since there were actually only a few
valid copyrights, and very likely nobody knew which ones they were, this was not
only difficult to do, but mostly a formality.

It wasn't something they wanted to postpone the closing for. Who knows how long
it would take to find the valid copyrights and decide which ones to convey?
Novell was keeping a fair bit of OS code involved with their networking. In
fact, most of the valid copyrights would be in areas recently coded by USL and
Novell. Undoubtedly there were files that contained code that Novell wanted to
keep and also code that Santa Cruz would find necessary. Even if it wasn't the
same code, it would have to be disected out. What a mess.

A year later Santa Cruz comes back and asks Novell to make good on their
promise. Novell clearly felt it had made one, or it wouldn't have agreed to any
amendment concerning copyrights. The problem may have been that the parties were
no closer to solving the practical problems or to agreeing about the scope and
timing of the conveyance. The result is a clause in effect memorializing the
prior agreement and in some sense giving Santa Cruz a way to force progress on
the issue. I have no doubt that the two sides interpreted this new agreement
differently, as, it seems, they had differently interpreted parts of the
original one.

It will be interesting to see the details come out. How did Santa Cruz follow it
up? How did Novell respond? Did Santa Cruz disclose all this to Caldera? Reading
the Santa Cruz - Caldera agreement, which is missing the crucial schedule of IP
assets, my gut feeling is that the disclosure was less than completely candid.

If SCO was induced to sue in part by being misled by Tarantella, I can see why
Tarantella wants to keep a low profile.


---
IANAL This is not a legal opinion.
SCO is not a party to the APA.
Discovery relevance is to claims, not to sanity.

[ Reply to This | # ]

It might be meant as said
Authored by: darkonc on Wednesday, June 22 2005 @ 06:36 AM EDT
Remember that the APA said that Novell retained all copyrights. It could be argued that this would mean that Novell got copyright on all of the changes that SCO had made to UNIX prior to the agreement. Thus the intent would be to assure SCO that they had lost no rights WRT their own UNIX code. (viral licensing and all that stuff).

---
Powerful, committed communication. Touching the jewel within each person and bringing it to life..

[ Reply to This | # ]

Query regarding Parole evidence
Authored by: wHo on Wednesday, June 22 2005 @ 08:49 AM EDT
Does USA law allow parole evidence such as in this statement, all jurisdictions
I have practised in prohibit evidence regarding the meaning of a written
contract except in particularly narrow circumstances (eg fraudulent
misrepresentations, duress). Nothing I see in the pleadings seems to point this
way in this case.

Perhaps Allparadox or another USA legal eagle could comment on this aspect.

---
IAAL but not in the USA - My comments here are not legal advice and maybe only
worth what you paid me for them.

[ Reply to This | # ]

SCO's Declaration of Steven Sabbath - as text
Authored by: Anonymous on Wednesday, June 22 2005 @ 09:28 AM EDT
Section 4 indicates that at one time there was an "intent" by both
parties to transfer the copyrights to SCO. It also indicates that there was a
problem: SCO did not have enough money to get everything that they wanted.
Steven mentions that Novell retained rights to the "binaries", and
possibly tried to conceal by this statement that the copyrights were also part
of what SCO could not afford to purchase.

[ Reply to This | # ]

SCO's Declaration of Steven Sabbath - as text
Authored by: Anonymous on Wednesday, June 22 2005 @ 09:29 AM EDT
> Novell had received no rights with respect to UNIX source code under the
APA

read

Novell received nothing it didn't already have.

[ Reply to This | # ]

Old SCo did have some "unix" rights that Novell/USL/AT&T did not.
Authored by: seanlynch on Wednesday, June 22 2005 @ 09:34 AM EDT

Old SCO may have had rights to code in Xenix based products that they alone owned. Because Novell's product line is x86 based, it may have been important to old SCO that they clearly state no rights from Old SCO's Unix (Xenix) were being transferred to Novell (a competitor in the x86 server market).

"Novell had received no rights with respects to UNIX source code under the APA"

This phrase can be parsed to mean that, but it could state it more clearly than it does.

Of course under new SCO's derivatives theory, old SCO would have no rights to code in Xenix, because it was based on Unix and therefore belonged to AT&T/USL/Novell!

[ Reply to This | # ]

Speaking of weasle words
Authored by: Anonymous on Wednesday, June 22 2005 @ 10:51 AM EDT
Taking a look at paragraph 6 I noticed this:

"Amendment No. 2 arose as a result of a
dispute between Novell and SCO concerning Novell's attempt to execute, on Santa
Cruz's behalf, a royalty buy-out with IBM. That dispute was ultimately resolved
through an amendment to IBM's SVRX license that was jointly executed by Santa
Cruz, Novell, and IBM."

If this dispute was resolved by all three companies being involved in writing a
new SRVX license for IBM, then certainly SCOX must know that Novell has the
right to waive a breach of contract and that it is to IBM's SRVX license one
must look to confirm this not the APA.

[ Reply to This | # ]

SCO's Declaration of Steven Sabbath - as text
Authored by: jpvlsmv on Wednesday, June 22 2005 @ 10:55 AM EDT
In paragraph 6, Mr. Sabbath testifies that amendment 2 to the APA resulted from
IBM wanting Novell to execute "a royalty buy-out".

Two things come to my mind when I read that:

Why would IBM be negotiating with Novell about royalties, and why wouldn't
Novell have just said "Talk to SCO about that"?

Did IBM actually get the "royalty buy-out"? What were the terms of
that buy-out? Would it happen to give IBM a non-terminable license to use the
UNIX code?

--Joe

[ Reply to This | # ]

Novell & the Declaration of Steven Sabbath
Authored by: MplsBrian on Wednesday, June 22 2005 @ 11:51 AM EDT
If, as pointed out, this declaration is not submitted by SCO in the SCO v.
Novell lawsuit, could Novell subpoena for it (or whatever the appropriate legal
process is)? Because Mr Sabbath says "1. I submit this Declaration in
connection with the lawsuits entitled The SCO Group v. IBM and The SCO Group v.
Novell, Inc.. " but then fails to actually do so (i.e. submit in SCO v.
Novell), it seems like Novell should be able to use the document, if they so
choose.

[ Reply to This | # ]

SCO's Declaration of Steven Sabbath - as text
Authored by: Anonymous on Wednesday, June 22 2005 @ 01:36 PM EDT
I don't know that I would agree with some of the speculation as to what Sabbath
"really" meant by this declaration.

I would say that I think that this declaration demonstrates to me some of the
really lousy legal work SCO is getting from BSF. The purpose of this
declaration was supposedly to oppose IBM's motion for summary judgment. So it
should just provide evidentiary support to put an essential fact into dispute.
Its averments should be short and to the point. Not vague almost conclusory
statements that would allow the other party the opportunity to question them,
question their actual evidentiary value nor statements that might be found in
conflict with later found evidence too easily.

This really isn't very good work.

[ Reply to This | # ]

Clarification on intent please
Authored by: Anonymous on Wednesday, June 22 2005 @ 02:35 PM EDT
To my mind the intent in writing a contract is not always what gets written up
and agreed then signed. If they intended A and B was signed does that not make A
void? Negotiation always starts from and intent but they final deal may be
different. Can anyone aid an addled IANAL brain.

TIA

[ Reply to This | # ]

SCO's is a cadaver and the body is cooling.
Authored by: SilverWave on Wednesday, June 22 2005 @ 07:03 PM EDT
SCO's is a cadaver and the body is cooling.

R&D and head count way down!

I wonder what that smell is?


---
"They [each] put in one hour of work,
but because they share the end results
they get nine hours... for free"

Firstmonday 98 interview with Linus Torvalds

[ Reply to This | # ]

re. point 5
Authored by: Anonymous on Wednesday, June 22 2005 @ 08:40 PM EDT
Point 5 of the declaration says something like: "4.16 (b) of the APA
doesn't mean what IBM says it means." OK so my question is: what does it
mean then?

At a minimum, I interpret 4.16 (b) as prohibiting tSCOg from trying to cancel
IBM's license. I fail to see how being able to prohibit tSCOg from suing
eviscerates the contract worse than the (seemingly) obvious interpretation of
the clause already does. Am I missing something here?

I love the guy's use of the word eviscerate because it reminds me of a roast
turkey and turkey describes so many things about this case.

[ Reply to This | # ]

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