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IBM's Greatest Hits - Ex. 239, Declaration of Greg Jones on Behalf of Novell, Inc.
Sunday, November 05 2006 @ 03:36 PM EST

Here's another declaration, Exhibit 239 [PDF], the Declaration of Greg Jones on Behalf of Novel, Inc. This is another of IBM's Greatest Hits exhibits, all 597 of which you can find on this chart, offered in support of IBM's various summary judgment motions. Once again we have to thank Laomedon for doing the OCR to text and HTML for us.

Jones is an attorney at Novell and significantly, he's been there since 1992, but he isn't submitting this based on first-hand knowledge. Rather, his declaration is authorized by Novell and based on Novell's knowledge and understanding of the matters he addresses. So this is Novell speaking.

He testifies clearly to the following:

  • In the September 1995 APA, and the two amendments, Novell retained certain rights, for its protection, because SCO didn't have the money to pay full price for everything it originally wanted. It retained the right to be paid royalties on SVRX licenses, prior approval rights, the right to direct SCO to take certain actions regarding the SVRX licenses, the right to veto, and the right to audit.
  • Here's how he says SVRX Licenses are defined:
    "SVRX Licenses" are defined by the APA to include "[a]ll contracts relating to" the various UNIX System releases and auxiliary products enumerated at Schedule 1.1(a)(VI) and Attachment A to Amendment No. 1. The APA provided that Santa Cruz shall collect and pass through to Novell 100% of all "SVRX Royalties" -- a term defined in the APA as "all royalties, fees and other amounts due under all SVRX Licenses."
  • The September 19, 1995 APA did not transfer copyrights. They were excluded assets.
  • In late 2002, SCO repeatedly contacted Novell and said it needed access to or copies of all records concerning rights to UNIX, "including any agreements between Novell and Santa Cruz", which tells us that SCO didn't have them, at least not a complete record.
  • SCO asked Novell to partner with it in "a Linux licensing program" with the goal of getting a license fee from Linux end users. Novell refused. I know. You are saying to yourself that it refused that offer, but it accepted Microsoft's offer to pay it instead, leaving end users out of the payment part, but having to accept terms we didn't vote on. I can't explain it either.
  • SCO also asked Novell to amend the APA to transfer its UNIX copyrights to SCO, thus acknowledging that it didn't and hence doesn't have them. Novell refused.

I noticed one thing that really stood out to me, something I never noticed before. In paragraph 11, he notes that under Section 4.16(b) of the APA, "Novell retained the 'sole discretion' to direct Santa Cruz to amend, supplement, modify, waive or assign any rights under or to any SVRX Licenses."

If the copyrights had transferred to SCO, I don't see any way that phrase could be possible, "sole discretion". If, for example, there was a need to assign the copyrights, the copyright holder would have to be the one to make that assignment. There can be multiple copyright holders, of course, but here it says "sole discretion." Since the contract says Novell retained that "sole discretion" to assign rights, I think that presents proof positive that Novell here is being truthful that it retained the copyrights.

If you look on our chart, you will see that this declaration supports the following:

K Br. ¶¶134, 135, 136, 137, 138, 139, 140, 141, 142; Interference Br. ¶56; DJ Br. ¶¶34, 35, 38, 39, 129, 130, 296, 297, 298

That would be the motion regarding SCO's contract claims, the one regarding the interference claims, and IBM's motion for summary judgment on its non-infringement regarding its Linux activities.

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

SNELL & WILMER LLP
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address, phone, fax]

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[address, phone, fax]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC.,

Plaintiff/Counterclaim-Defendant,

v.

INTERNATIONAL BUSINESS MACHINES
CORPORATION,

Defendant/Counterclaim-Plaintiff.

DECLARATION OF GREG JONES ON
BEHALF OF NOVELL, INC.

Case No. 2:03CV0294 DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells

I, Greg Jones, declare as follows:

1. I am Associate General Counsel at Novell, Inc. ("Novell"). I have been employed as counsel in the Legal Department of Novell since 1992.

2. This declaration is submitted in connection with the lawsuit filed by the SCO Group, Inc. ("SCO"), against International Business Machines, Corporation ("IBM"), Caldera Systems, Inc. v. International Business Machines, Corporation, Civil Action No. 2:03CV-0294 DAK (D. Utah 2003).

3. This declaration is based on Novell's knowledge and understanding of the matters described herein. I am authorized to submit this Declaration on behalf of Novell.

Novell's Retention of UNIX Assets

4. In 1995, Novell and a company called Santa Cruz Operation, Inc. ("Santa Cruz") entered into negotiations over the sale of certain business assets of Novell relating to its UNIX and UnixWare software business.

5. On September 19, 1995, Novell and Santa Cruz executed an Asset Purchase Agreement ("APA"). The APA provided each party with certain rights and obligations.

6. The parties entered into two Amendments to the APA. On December 6, 1995, Novell and Santa Cruz executed "Amendment No. 1." Novell and Santa Cruz subsequently executed "Amendment No. 2" on October 16, 1996.

7. Under the APA and its Amendments, Santa Cruz obtained a variety of assets, including assignment of tens of thousands of contracts and licenses, various trademarks, source code and binaries to UnixWare products, and physical assets such as furniture and personal computers. Santa Cruz also obtained the right to develop a "Merged Product," a derivative work that would run on Intel platforms.

8. Santa Cruz did not have the financial capacity to pay the purchase price contemplated by Novell for these acquired assets and rights. In order to bridge the price gap and consummate the transaction, Novell and Santa Cruz agreed that Novell would receive Santa Cruz

1

stock and retain certain rights as protection. For example, Novell retained the right to receive royalty payments under SVRX licenses, prior approval rights relating to new SVRX licenses and amended SVRX licenses, the right to direct Santa Cruz to take certain actions relating to SVRX licenses and the right to conduct audits of the SVRX license program.

9. Santa Cruz assumed several related obligations. One such obligation that Santa Cruz assumed under the APA was responsibility for administering the collection of royalty payments from SVRX Licenses. "SVRX Licenses" are defined by the APA to include "[a]ll contracts relating to" the various UNIX System releases and auxiliary products enumerated at Schedule 1.1(a)(VI) and Attachment A to Amendment No. 1. The APA provided that Santa Cruz shall collect and pass through to Novell 100% of all "SVRX Royalties" -- a term defined in the APA as "all royalties, fees and other amounts due under all SVRX Licenses." In return, Novell agreed to pay Santa Cruz an administrative fee of 5% of those royalty amounts. Under the APA, Santa Cruz also agreed to pay additional royalties to Novell relating to other products.

10. The APA transferred certain assets from Novell to Santa Cruz. However, as specified by Section V.A of Schedule 1.1(b) to the APA, certain assets were excluded from the transfer. Among the "Excluded Assets" from the APA asset transfer were "[a]ll copyrights and trademarks, except for the trademarks UNIX and UnixWare," "all patents," and "all right, title and interest to the SVRX Royalties, less the 5% fee for administering the collection thereof." The APA as executed on September 19, 1995, therefore, did not transfer any copyrights.

11. Novell also retained rights to supervise Santa Cruz's administration of SVRX licenses. For example, under Section 4.16(b) of the APA, Novell retained the "sole discretion" to direct Santa Cruz to amend, supplement, modify, waive or assign any rights under or to any SVRX Licenses; if Santa Cruz fails to take any such action, the APA specifically granted Novell the right to take these actions on behalf of Santa Cruz. Novell also retained the right to veto Santa Cruz's attempts to amend SVRX Licenses, subject to two exceptions laid out in Amendment No. 1 to the APA (where the amendment (i) "may be incidentally involved through its rights to sell and license UnixWare software or the Merged Product .. . or future versions of

2

the Merged Product, or (ii) to allow a licensee under a particular SVRX License to use the source code of the relevant SVRX product(s) on additional CPU's or to receive an additional distribution, from [SCO], of such source code"). Novell also retained the right to veto Santa Cruz's attempts to enter into new SVRX Licenses, subject to one exception (as specified in (i) above or as otherwise approved in writing in advance by Novell on a case by case basis).

12. The APA gave Novell the right to confirm Santa Cruz's compliance with its contractual obligations under the SVRX licensing program. The APA explicitly provided that Novell "shall be entitled to conduct periodic audits" of Santa Cruz "concerning all royalties and payments due to Seller hereunder or under the SVRX Licenses." The APA required Santa Cruz to "diligently seek to collect all such royalties, funds and other amounts when due" and to "investigate and perform appropriate auditing and enforcement." The APA also required Santa Cruz to provide Novell monthly reports detailing the SVRX royalties it received.

SCO's Attempts to Acquire the UNIX Copyrights

13. In late 2002, SCO repeatedly contacted Novell. SCO requested access to or copies of any records concerning rights to UNIX, including any agreements between Novell and Santa Cruz. SCO also expressed its interest in a campaign to assert UNIX infringement claims against users of Linux. SCO asked Novell to partner with SCO in a Linux licensing program, under which SCO contemplated extracting a license fee from Linux end users to use the UNIX intellectual property purportedly contained in Linux. Novell refused to participate.

14. SCO further requested that Novell transfer its UNIX copyrights to SCO, thereby acknowledging that it did not own the UNIX copyrights. SCO contacted Novell on multiple occasions in late 2002 and early 2003. For example, SCO's CEO, Darl McBride, repeatedly contacted Novell and asked Novell to amend the Novell-Santa Cruz agreement to give SCO the UNIX copyrights. Novell rejected all of these requests.

3

15. Notwithstanding Novell's rejections, SCO embarked on a campaign in which it falsely asserted ownership over the same copyrights via public statements, a series of letters to Linux end users, several lawsuits against Linux distributors and end users, and a licensing program purporting to offer SCO's Intellectual Property Licenses for Linux. SCO has falsely claimed that Novell acquiesced to SCO's claims. Novell has not acquiesced to SCO's claims.

16. To the contrary, Novell vigorously contested SCO's claims in private correspondence with SCO at the very same time SCO was publicly claiming otherwise. For example:

a. On May 12, 2003, SCO's CEO, Dar] McBride, sent Novell a letter asserting that it owned the UNIX copyrights and that Linux end users were infringing those copyrights.
b. On May 28, 2003, Novell's CEO, Jack Messman, responded by letter, asserting in no uncertain terms that "SCO is not the owner of the UNIX copyrights."
c. After SCO registered its claim to the UNIX copyrights with the U.S. Copyright Office, Novell's General Counsel, Joseph LaSala wrote to SCO, again disputing its claim to ownership of the copyrights. In his August 4, 2003, letter, Mr. LaSala stated, "We dispute SCO's claim to ownership of these copyrights."

17. In September and October 2003, Novell attempted to protect its ownership of the UNIX copyrights and to correct SCO's erroneous registrations claiming ownership, by filing its own copyright registrations.

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

Executed on this 21 day of September, 2006 in Provo, Utah.

____[signature]____
Greg Jones

4

  


IBM's Greatest Hits - Ex. 239, Declaration of Greg Jones on Behalf of Novell, Inc. | 339 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please
Authored by: Erwan on Sunday, November 05 2006 @ 03:38 PM EST
If any.

---
Erwan

[ Reply to This | # ]

Off topics, here.
Authored by: Erwan on Sunday, November 05 2006 @ 03:43 PM EST
Clickies are nice.

---
Erwan

[ Reply to This | # ]

IBM's Greatest Hits - Ex. 239, Declaration of Greg Jones on Behalf of Novell, Inc.
Authored by: XORisOK on Sunday, November 05 2006 @ 03:59 PM EST
WOW! Astronomers refer to the "Event Horizon" of a black hole. This
is where the last bit of energy escapes from the object being swallowed before
it goes into the hole, never to be seen again.

SCO seems to have just passed that threshold.

It also appears IBM has done some amazing work getting ready for this since the
PSJs were put on hold the last time :)

---
Cogito Ergo ZOOM - "I think, Therefore I drive fast!"

[ Reply to This | # ]

Game over? Red dress imminent?
Authored by: tiger99 on Sunday, November 05 2006 @ 04:04 PM EST
IANAL, but it seems fairly obvious that unless the SCOundrels can seriously challenge this in some meaningful way, they have nothing left. If they don't own at least some of the copyrights, they don't have a case. (Did they ever? No evidence, for a start....)

But as Novell have played into the hands of the Malignant Monopoly, and the battle has entered the next phase, the Puppetmaster has no need whatsoever for SCO now. Expect them to be discarded like all of Bill's other castoffs. Novell will be next, of course, once their task is accomplished.

I really do expect the SCO vs IBM case to collapse very soon indeed, as it no longer serves any purpose for the Puppetmaster. SCO's quickest way out will likely be to admit that they owe Novell lots of money, and declare bankrupcy. That may emerge from the arbitration anyway. But nothing they can do is going to appease IBM, or the SEC, or any other interested party. If anyone in Utah has nothing better to do, it may be worth watching the airports for the sudden departure to foreign parts of certain individuals.....

[ Reply to This | # ]

Another indication
Authored by: IMANAL on Sunday, November 05 2006 @ 04:33 PM EST
"Since the contract says Novell retained that "sole discretion"
to assign rights, I think that presents proof positive that Novell here is being
truthful that it retained the copyrights."

The jungle drums has it that the hyaena has started to follow the larger piece
of meat, rather than the dying suricate. If Microsoft chose to make Novell an
ally, how more indicative could it be of the outcome?





---
--------------------------
IM Absolutely Not A Lawyer

[ Reply to This | # ]

I don't understand.
Authored by: Dark on Sunday, November 05 2006 @ 04:58 PM EST
Novell is a corporation. Corporations don't have minds. What does it mean for
Novell to have knowledge or understanding of anything? Surely this would have to
be narrowed down to specific people at Novell, who can then testify about their
personal knowledge? I have no idea what conclusions could be drawn from this
declaration.

[ Reply to This | # ]

SCO "expected to underperform ...with above average risk"
Authored by: Anonymous on Sunday, November 05 2006 @ 07:44 PM EST
According to the Scouter Report, "The SCO Group, Inc., a micro-cap value
company in the technology sector, is expected to underperform the market over
the next six months with above average risk." Rated 3 out of 10. 10 being
the highest rating.

Well, that says it all.

http://moneycentral.msn.com/investor/srs/srsmain.asp?Symbol=scox

Link not made clicky. Prob needs cookies, script etc

[ Reply to This | # ]

Those whom the Gods would destroy...
Authored by: The Mad Hatter r on Sunday, November 05 2006 @ 07:44 PM EST


But this isn't a case of ordinary madness - this is so far past ordinary madness
that it's in the next galaxy. So what do we have:

1) Ransom Love totally contradicts everything TSCOG says.

2) A lawyer from Novell does the same.

3) A bunch of programmers do the same.

4) A bunch of software licensing staff do the same.

A very few people agree with TSCOG - and they are mostly lower level staff who
would not be expected to know of all the details. Which begs the question - if
you know you don't have a case, why file it?

1) Management are stupid.

2) Management are insane.

3) Management are crooks.

4) One of the above, and they were paid to do it.

Early on in the case I thought it possible that they did have something. It was
the only reasonable explanation for filing the lawsuit. I have to admit that I
hadn't considered 1-4 above - under the natural assumption that management who
were that far off the beaten track wouldn't be able to get a job!

Obviously I was wrong, wrong, wrong. They had nothing from the word go. The
Nazgul are going to make mincemeat out of the company.

You know that if you wrote a novel using this plot, your editor would probably
tell you to make it more realistic?





---
Wayne

http://urbanterrorist.blogspot.com/

[ Reply to This | # ]

Linux licensing offers: different Novell CEOs
Authored by: Anonymous on Sunday, November 05 2006 @ 07:51 PM EST

Novell refused SCO's offer and accepted Microsoft's for one reason, it seems to
me. Novell had different CEOs: the previous CEO refused the first offer, the
current CEO accepted the second.

[ Reply to This | # ]

In a nutshell
Authored by: Anonymous on Sunday, November 05 2006 @ 08:46 PM EST
So it seems SCO and all its business "derivatives" (Caldera, tSCOg)
appear to have bought the rights to MARKET UNIX, not the right to OWN UNIX.
Rather like buying the rights to a product brand name, ie, you buy the rights
(from XYZ, the company) to sell XYZ printers. Someone else entirely could make
them for you, but you have bought the right to sell them as XYZ printers. You
still don't own the XYZ company or the schematics or manufacturing documents.
You purchased the rights to USE those documents.

How many people here actually OWN M$ Windows? You paid money to USE it, but I
don't think M$ sold you the rights to distribute it. However, if you run
software on a Windows machine, M$ don't own the songs you write, or graphics you
designed, or the children's stories you write. At least not yet.

[ Reply to This | # ]

I can explain it...
Authored by: swmcd on Sunday, November 05 2006 @ 10:52 PM EST
SCO asked Novell to partner with it in "a Linux licensing program" with the goal of getting a license fee from Linux end users. Novell refused. I know. You are saying to yourself that it refused that offer, but it accepted Microsoft's offer to pay it instead, [...]. I can't explain it either.
It's very simple. Microsoft made them an offer they couldn't refuse.

[ Reply to This | # ]

IBM's Greatest Hits - Ex. 239, Declaration of Greg Jones on Behalf of Novell, Inc.
Authored by: belzecue on Sunday, November 05 2006 @ 11:12 PM EST
SCO asked Novell to partner with it in "a Linux licensing program" with the goal of getting a license fee from Linux end users. Novell refused. I know. You are saying to yourself that it refused that offer, but it accepted Microsoft's offer to pay it instead, leaving end users out of the payment part, but having to accept terms we didn't vote on. I can't explain it either.

Easily explained, I think: Ronald W. Hovsepian.

Mr. Hovsepian, 45, joined Novell in June 2003 as President of North America, and has most recently served as President and Chief Operating Officer.

Hovsepian became CEO early this year. My gut feeling so far is that he remains clueless about SCO and Novell's history with SCO. I reserve my opinion about whether he is clueless in general, but that's the way I'm leaning.

[ Reply to This | # ]

IBM's Greatest Hits - Ex. 239, Declaration of Greg Jones on Behalf of Novell, Inc.
Authored by: Limulus on Monday, November 06 2006 @ 08:20 AM EST
New SUSE logo (feel free to reuse/modify this wherever you want... sorry if someone else thought of it first :)

[ Reply to This | # ]

What did SCO think they had?
Authored by: belboz on Monday, November 06 2006 @ 10:18 AM EST
14. SCO further requested that Novell transfer its UNIX copyrights to SCO, thereby acknowledging that it did not own the UNIX copyrights. SCO contacted Novell on multiple occasions in late 2002 and early 2003. For example, SCO's CEO, Darl McBride, repeatedly contacted Novell and asked Novell to amend the Novell-Santa Cruz agreement to give SCO the UNIX copyrights. Novell rejected all of these requests.

So SCO had planned the suit in late 2002, and desperately tried obtaining the copyrights from Novell. After Novell again and again refused through the beginning of 2003, SCO called it quits and filed against IBM in March 2003.

OK - so they are ethically challenged (claiming ownership of something, they know they don't own), but WHY did they feel it was so important to have the Copyrights?

Did they

  1. Really believe they had a case in the beginning or
  2. Want the copyrights to have the extra "threat" against IBM? Would IBM have been less willing to fight if SCO really had the Copyrights of UNIX? Perhaps buying them (and thus obtaining the UNIX copyright, might be attractive to spending 4 years and +100 Millions (just a guess) fighting this.
  3. Something entirely else?
---
Henrik
Denmark

[ Reply to This | # ]

...on Behalf of Novel, Inc.
Authored by: Anonymous on Monday, November 06 2006 @ 02:42 PM EST
it's still: Novell, Inc.

unless they've lost an 'L' as part of the Microsoft deal already :-)

[ Reply to This | # ]

Why?
Authored by: Yossarian on Monday, November 06 2006 @ 02:49 PM EST
I read what PJ had posted, and I am impressed.
It seems like SCO's coffin is nailed shut, and IBM still
has a nail guns loaded with a couple of hunders nails.

So the question is why?
Why does not SCO raise a big white flag and ask for mercy?
I can think about 3 possible answers:

1) They are stupid. They think that despite all evidence
the judge/jury can be convinced by a good speech. Even
though IBM's case looks great on paper, they don't believe
that IBM will hire good enough lawyers to convince the jury.

2) Loot. The situation is like Enron before Chapeter 11.
The stock was going down and Ken Lay used Enron's last
cash reserves to buy his stock. Somebody in SCO cooked a
method to take all the cash, 5 minutes before Novell gets
a court order. The method is not finished yet, so the
goal of the game is delay till the "take the money and
run", trade secret method, will finish draining SCO.

3) Lawyers. IBM is not just after SCO, it has serious
legal issues with the lawyers. The lawyers try to convince
the court/bar that they did not know that there was no case.

Any other guesses?

[ Reply to This | # ]
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