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Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
Saturday, June 02 2007 @ 09:03 PM EDT

We have some new exhibits in SCO v. Novell that Chris Brown picked up at the courthouse on the 31st. They were filed in paper form. It's a lot of work, so thank you, Chris. I'll be posting the rest tomorrow. Today, we'll start with the deposition of Darl McBride, because I know it's the one you'd read first. It was taken on March 27, 2007 in the Novell litigation. It's Exhibit 63, attached to the Declaration of Kenneth Brakebill, offered in support of Novell's four summary judgment motions heard on May 31 and to be completed on Monday.

In this deposition, we learn quite a bit about SCOsource and how it all played out, according to Darl. What reverberates the most, more than the scuttlebut about negotiating with HP and Google, are the dreams of great wealth the SCOfolk fantasized about, with white boards and modeling.

First, he talks about the negotiations with HP, that he says fell apart. The theme is how Novell allegedly ruined SCO's chances to get licensees to sign up. He says, "We were in the hundred million, $200, $250 million range was basically what we were targeting. In the end, they were down at $30. We eventually got our arms around the idea that there was a way of doing a deal with them that was in closer to the range where they were $30, $40 million, but it would not be as wide a scope as what all of us had talked about initially. And that's when we started to make some progress with that, and then eventually that one fell apart." A later question to him reveals he had earlier in the deposition told them that the HP deal fell apart because of Novell saying it held the copyrights, which made the deal less "valuable" in HP's eyes.

$250 million dollars. Imagine how HP would feel today had it paid it, now that we are scouring the horizon diligently to try to find any copyright infringement. This all happened, McBride says, in the summer of 2003, August through September. Probably you, like me, remember the rumors. McBride says the the lead negotiator at HP was Joe Beyers, who told SCO he was in direct communication "with Carly". Others were peripherally involved, and he names a Rick Becker.

Why am I mentioning it when I find it hard to trust what SCO says? Because it's part of the history. So, Misters Beyers and Becker, forgive me for putting your names here. It wasn't me. Talk to Mr. McBride. According to McB, it was Beyers who told him that Novell skunked the deal. But here's something: according to the deposition, this was by phone. McB took no notes. There is no email. No letter confirming. Just Darl's word. That and a pony will take you around the track. Darl says maybe Sontag has something in writing, but we already heard his version, which was SCO walked away from the deal because there wasn't enough money offered.

Anyway, McBride says the license "had to do with HP customers being able to run Linux under our SCOsource program." No wonder HP came up with its indemnity program. No doubt it expected worse from SCO than actually happened, and in fact Darl tells the story that they told SCO that rather than take a license, they were going to indemnify. Then Darl also says that HP said that it would be hard to pay "more than that" since the Novell claim wasn't resolved. So it may in fact be true, or almost, what Sontag said, only Darl gives a more complete version. I say almost because the next question to Darl is, "Did he explain any other reasons why HP was not interested in proceeding further with negotiations?" And I note Darl doesn't say, "Oh they were interested but at a lower level," so I piece it together in my mind more like this; they were negotiating down from $250 million to $30 or $40, and then HP backed out altogether. Remember Sontag saying there were "legal reasons" too why the deal broke down. The haze is somewhat clearer.

Except next Darl says they didn't exactly tell them about the indemnification. "It came out shortly thereafter, and we became aware of it," he testifies. If I'm not getting the story exactly right, it isn't for a lack of trying. You can read the deposition yourselves and see if I'm at true north now or not.

Next he tells us about Google. Ultimately, Darl says, "what it came down to was, 'Until you get some court rulings on the ownership side, and on the infringement side, we can't move forward with you.'" He claims Google offered "some money but it was a big spread away from what we were asking for." They were asking hundreds of millions. Google offered tens. "There was a decimal problem," Darl says, in his inimitable way.

Novell's lawyer delicately asks, "So aside from these annotated reports, is there any other source that you can think of that would corroborate your recollections of particular licensees raising copyright ownership as an issue in the SCOsource negotiations?"

This is obviously an important issue. If the judge accepts SCO's story, then every deal sunk by doubts raised by Novell might come into play, if the judge also finds that it was improper for Novell to speak about its ownership. Both are relatively unlikely, but lawyers always plan for the very worst, so Novell here is trying to elicit information that can support Darl's recollection. Because if it is only his memory, a jury might not find that altogether enough. Darl can only think of one source, Larry Gasparro, then under Sontag in that division, and he's left SCO by now. No other writings? Just Gasparro's testimony and some reports from him? That seems a little thin. What about Sontag, at least?

CA paid $500 per seat, we find out next. I gather that was the same offer made to Google, which with all their servers would be a nice sum in the hundreds of millions, Darl computes.

SCO had sit down discussions with the Pentagon too, and they cited copyright issues with Novell, according to Darl. Ditto an investment house, maybe Morgan Stanley, he can't recall. Windham Hotels. Regal Entertainment, the movie theater chain. Just USA Sports. I didn't know those movies theaters ran on Linux, did you? Cool.

These are excerpts, which is why sometimes they end in the middle of a sentence, by the way. But on page 14 of the PDF, we learn that SCOsource is technically still available on SCO's web site. Not too late, if you want a license. But SCO isn't pushing it currently until the litigation clarifies. "But in terms of going out and spending energy or cycles behind it, it just got to the point where there were so many problems of trying to get people to come to an understanding of where we were on this, given where Novell was coming from, that we basically said we've got to table this until we get through with our litigation with them."

So, if Novell and IBM lose, look for a letter in the mail followed by a phone call, I guess. So does that mean that Linux end users get to pay both SCO and Microsoft if they want to use Linux? That ought to thoroughly rub the freedom right out of Linux.

Is that the goal? You think? You can just see the SCOfolk, around the whiteboard, dreaming of money from Linux end users, can't you, in this remark from Darl when asked if SCO ever did any modeling on what SCOsource would likely generate:

Oh, we had -- usually I would sit down and go through it on the white board with Chris or Bob Bench. You know, guys on the finance side. We would kind of lay out what the number of units of Linux were that were in the marketplace against what our list price was for the SCOsource license, reduced by any kind of discounts that we might give for volume or for being an early adopter. And it was usually a pretty big number that we were talking about....

I remember that the models were showing -- we would look at IDC numbers, and there were X millions of servers and growing at a certain rate. And I remember specifically 4 million servers going to 6 million servers over some time frame. I'd have to go back and refresh what the time frames were, but I remember bracketing if you've got 4 million servers against our list price of $700, you multipy that out, you get $2.8 billion. If you go up to the full list -- or the list price against the 6 million then you are talking about $4.2 billion. So it was always -- it's a ridiculously big number. So okay. I guess we could get finite on whether the number is $5 billion or $1 billion or $6 billion. The point is it was a lot of money for the company, and the size of company that we were.

Well, he said it. Ridiculous is the exact word I'd have chosen. Wait. Isn't $6 billion what SCO wants from IBM? Nah. Only 3.

That was the fun part for SCO, dreaming of big money from Linux.

Followed by the "now we have to prove it" part.

Followed by, "uh oh."

And don't you get the flavor that what they wanted, and still want, is billions from perpetually infringed IP? And do you see that the idea wasn't to clear up any infringement by removing whatever was allegedly infringing? The idea was to leave it in there, not that anyone can find it in the end, but the idea was to make Linux end users pay a tax instead of fixing the infringement, had it existed. And the letters were to persuade the pragmatic that it was cheaper to pay than be sued. And so, company by company, Linux's doom was to be sealed.

As SCO told us long ago, Linux will still exist. It just won't be free any more.

And judging by the date of this deposition and by recent threats from Microsoft that sound quite a lot like this to me, it still is the dream. Catch the part about servers running Linux going from 4 to 6 million? Some folks who are not in the Linux business appear to want some of that action. Others prefer that Linux lie down and die or at least dump the GPL and become de facto proprietary, hence more controllable. But the SCO dream as I see it is simply this: they'd like those volunteer Linux programmers, who didn't charge one thin dime for their wonderful code, to, in effect, support SCO for life, based on alleged, but not specified, "infringement" that no one is allowed to fix. Does it get lower than that?


  


Deposition of Darl McBride in Novell: Dreaming of Billions From Linux | 266 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Off Topic..
Authored by: webster on Saturday, June 02 2007 @ 09:21 PM EDT
..
...and interesting

---
webster

[ Reply to This | # ]

Corrections Here
Authored by: martinm on Saturday, June 02 2007 @ 09:24 PM EDT
First time

Martin

[ Reply to This | # ]

Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
Authored by: JamesK on Saturday, June 02 2007 @ 09:27 PM EDT
Extortion plain and simple!


---
Let me know if you don't receive this message.

[ Reply to This | # ]

Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
Authored by: Anonymous on Saturday, June 02 2007 @ 09:29 PM EDT
A couple of weeks ago, I've interviewed someone from SCO (some engineer). He was
turned down because he WAS from SCO (although he was technically competent). One
of the questions we've asked him was how he felt about the whole case, and in
his own words he said: "disgusted".

[ Reply to This | # ]

I'd love to hear what Google has to say about this.
Authored by: Jaywalk on Saturday, June 02 2007 @ 09:43 PM EDT
He claims Google offered "some money but it was a big spread away from what we were asking for." They were asking hundreds of millions. Google offered tens.

CA paid $500 per seat, we find out next. I gather that was the same offer made to Google, which with all their servers would be a nice sum in the hundreds of millions, Darl computes.
Hmm. If I remember the CA story correctly, what actually happened (according to CA) was that CA paid SCO for a completely unrelated court case and SCO tacked on a "Linux license" for free. SCO then used that to claim that SCOSource had made a big score. Somehow I doubt that Google offered SCO "tens of millions" and then SCO turns them down. A better guess would be that Google kept them talking while analyzing their claims. That analysis showed that SCO's claims were faulty for at least three reasons: 1) SCO might not own the copyrights, 2) Linux didn't infringe the copyrights, 3) users wouldn't be liable for the infringements in any case. So even if SCO did own the copyrights, Google still wouldn't have paid off.

---
===== Murphy's Law is recursive. =====

[ Reply to This | # ]

"Does it get any lower than that?"
Authored by: Anonymous on Saturday, June 02 2007 @ 09:49 PM EDT

Not until criminal fraud and/or extortion charges are filed against McBride and
his accomplices.

[ Reply to This | # ]

Dreaming of Billions From Linux results in Darl going ballistic
Authored by: Anonymous on Saturday, June 02 2007 @ 09:59 PM EDT
So these are the events preceding Darl going ballistic and writing his raving
lunatic letter to congress?
http://groklawstatic.ibiblio.org/article.php%3fstory=20040116165112326

[ Reply to This | # ]

Talk to the Pentagon?
Authored by: Anonymous on Saturday, June 02 2007 @ 10:05 PM EDT
That's interesting. The Pentagon is a building that houses the top staff of the
individual services and other DOD agencies. If you want to negotiate an IT
contract, you have to talk to each of the services and agencies, because the DOD
doesn't have any sort of monolithic IT support. The closes thing is the
Navy/Marine Corps IT Support Contract that EDS (think Ross Perot) has, and then
your negotiating with EDS not the DOD. All the little groups in the DOD tend to
buy their own software/support. So when Darl claims to be talking to the
Pentagon, as far as we know he's talking about new cash register software for
the cafeteria.

[ Reply to This | # ]

Darl as Butt-head: "He said beellions, huh huh huh"
Authored by: Aladdin Sane on Saturday, June 02 2007 @ 10:07 PM EDT
If I read this story another way, SCO can hardly be said to be "greedy."

Bear with me.

It looks like SCO went to lots of companies, asked for 100's of millions, got counter-offered 10's of millions, and turned it down.

What if they hadn't turned down the 10's of millions?

We'd be up against rich SCO, with poorer companies doing the indemnifying and litigating in Linux' name. I'd say SCO committed the ultimate act of altruism here by giving up that money.

Too bad for them, I guess.

---
"I have never had the courage to believe in nothing." 
  --Miguel de Cervantes, "Man of La Mancha", 1972

[ Reply to This | # ]

"A lot of money"
Authored by: bigbert on Saturday, June 02 2007 @ 10:15 PM EDT
So if there was such a lot of money in Linux, Mr. McB., why did your company not
do the sensible thing and participated in the market? You had a fairly OK Linux
distribution, some excellent engineers and, very importantly, a worldwide
distribution chain. You also had a number of Very Big Clients, that you could
have gently nudged over to Linux.

Or maybe you were simply too lazy and greedy?

---

--------------------------
Surfus, ergo sum.

[ Reply to This | # ]

So who "pretexted" who?
Authored by: Aladdin Sane on Saturday, June 02 2007 @ 10:18 PM EDT
McBride says the the lead negotiator at HP was Joe Beyers, who told SCO he was in direct communication "with Carly". Others were peripherally involved, and he names a Rick Becker.
Did Fiorina pretext Beyers, or Beyers Fiorina?

Or did McBride pretext them all?

---
"I have never had the courage to believe in nothing." 
  --Miguel de Cervantes, "Man of La Mancha", 1972

[ Reply to This | # ]

Dreaming of Billions
Authored by: webster on Saturday, June 02 2007 @ 10:55 PM EDT
********"A. There were -- discussions went back and forth. I know there
were things that were on paper. I can't remember if it was coming from them to
us or if those were things that we had. The short answer is I don't
know."********

p. 130. Good catch -- of hisself. He was in danger of expanding and
fabricating. Plus documents can be cross-checked if they exist. He would have
remembered if he wrote anything. So he answers about paper and then says I
don't know. He expanded before he said I don't know. Sontag, Becker, Beyer,
Carly, -- they can all be asked for cross-checking.

He goes on to introduce Google around page 136. Soemwhere he should have been
asked about what affect the reaction and protest of the Linusians had on his
SCOSource hustle. There were people saying Linux was clean. They wrote it and
didn't use UNIX. They had the copyrights. That should have discouraged HP and
Google too. But only Novell is in the suit, so they get the retrospective
blame.

These parts are loose and dependent on his memory and creativitiy. He is not
questioned with exhibits. He was not pinned down or too worried about the
corroboratin of others. It would be nice to place these negotiations he speaks
of in the perspective of the contemporaneous public statements he was making
about copyrights and stolen code.


---
webster

[ Reply to This | # ]

Goose
Authored by: Observer on Saturday, June 02 2007 @ 11:41 PM EDT
I don't know... I keep getting this image in my head of a bunch of farmers standing around a whiteboard, with a large goose sitting near by, watching a large golden egg on the ground in front of it. The farmers are all excitedly drawing diagrams of how they can carve up the goose to get the most gold out of it, without waiting for an egg each day.

Of course, the problem is that they can't even prove that they own the goose.

---
The Observer

[ Reply to This | # ]

I can see Darl and Yarro dancing around the office
Authored by: kawabago on Sunday, June 03 2007 @ 12:30 AM EDT
I can see Darl and Yarro dancing around the office dreaming of gold raining from
the sky! I hope it ends in a jail cell for both of them, That's the pot of gold
they deserve.

It is hard to imagine that anyone could be so stupid as to think this plan could
succeed when right from the start they knew they didn't have the copyrights and
there wasn't any infringement that they knew of.

They blew through 50 million dollars of other peoples money on a pipe dream that
had no real chance of success. If that isn't a criminal breach their fiduciary
duty, it should be.

No wonder Darl keeps getting fired.

[ Reply to This | # ]

I wonder how Darl likes MS cutting in on his turf?
Authored by: Anonymous on Sunday, June 03 2007 @ 12:41 AM EDT
Gee, Darl dreamed of getting lots of money from Linux users, without actually
giving them anything, except maybe a "covenant not to sue" as Sontag
put it.

Now Microsoft, who gave them a lot of money before for some supposed
"license," is trying to do the same thing...

Gee... if Darl and Ballmer BOTH took a cut of Linux installs, everyone would use
Windows, because it would cost less, wouldn't it?

So Darl, even if your fantasy were to work out somehow and you are able to
charge Linux users for some mysterious IP you say you own (very unlikely it
seems at this point, since you can't seem to point to any specific IP that was
being infringed, nonetheless any that you own), you fundamentally get
backstabbed by MS.

And MS gets exactly what they want.

Think on that.


[ Reply to This | # ]

  • Ummmm, well.... - Authored by: Anonymous on Sunday, June 03 2007 @ 02:24 AM EDT
Is it just me?
Authored by: rsteinmetz70112 on Sunday, June 03 2007 @ 01:00 AM EDT
Or is the only thing Darl is sure of is that they are due Billions and Billions
of Dollars?

There were sure a lot of "I don't know"s and "I'm not sure"s
for the CEO of a company that just bet its future on SCOSource.

You'd think he was following this major initiative he launched much more
closely.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

SCO knew that Amendment 2 was not clear on Copyright Transfer?
Authored by: ankylosaurus on Sunday, June 03 2007 @ 01:14 AM EDT
On p13 of pdf, p140 of transcript:
Q. 148 is a letter to you from Joe LaSala dated June 26, so twenty days after the June 6 press release. And he states, "Upon closer scrutiny, however, Amendment Number 2 raises as many questions about copyright transfers as it answers. Indeed, what is most certainly not the case is that 'any question of whether UNIX copyrights were transferred to SCO as part of the Asset Purchase Agreement was clarified in Amendment Number 2' (as SCO stated in its June 6 press release)." And he then goes on to say that Novell disagrees with SCO's public [...]

There's a big jump in the next page number of the deposition transcript - it would be interesting to see what is said on the next few pages of it...

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

Duck, dodge, dip, dive, and dodge
Authored by: belzecue on Sunday, June 03 2007 @ 01:17 AM EDT
If you have time on your hands, count the number of times McB says "I don't
recall..." or "I can't remember..." or "I don't
know..." or "I don't think".

Then count the number of times he says "probably" or "most
likely" or "I believe" or "I think".

This is how you weasle, folks. Reminds me of Politics-101: Don't answer the
question you were asked, answer the question you *wish* you had been asked.

Some weasling highlights:

"I can't remember if it was coming from them to us or if those were things
we had."

"It probably wouldn't have come to me directly."

"Most likely."

"I don't remember offhand right now the details of that."

"I don't know if there was or not."

"I don't know if Chris did or not."

"When I say 'copyright problem is the issue,' he didn't, as I recall, call
up and say, 'Novell owns the copyright so we are not doing this deal.' It was
not that direct. Embedded in his discussion..."

"I don't recall."

"I don't think he said the exact details of what path they were going
down."

"I don't remember for sure whether he said that in that call or whether
that was just something that was an outcropping of the fact that they did the
program."

"It would be hard for me to sit here today and attach the name to
them."

"I can't remember if it was Morgan Stanley, or Lehman Brothers or Merrill
Lynch, but it was one of those three, I'm pretty certain."

"If I recall correctly..."

"I don't remember the title."

"I don't know."

"I'm not sure."

"I don't know how I got access to it."

"He probably reported to..."

"I don't have the specifics. There was -- seemed to be some relationship to
the Novell deal."

"I would imagine I would have talked to them... but I don't recall offhand
which meeting or what form."

[ Reply to This | # ]

Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
Authored by: BobinAlaska on Sunday, June 03 2007 @ 02:43 AM EDT
This deposition shows what a lousy CEO Mr. McBride is. He seems to have no
clear idea how his company was organized or who was doing what. He also makes a
point of stating repeatedly how much he can't remember such as who sent him what
reports in what format. These are reports on the license that would be
generating multiple millions/billions for his company.

---
Bob Helm, Juneau, Alaska

[ Reply to This | # ]

If any potential customers did due dilligence on the SCOsource deal...
Authored by: veatnik on Sunday, June 03 2007 @ 03:38 AM EDT
Then they would immediatly know that if was not a deal they should make. I have
said this before so I'll let you look up the details...

1. GPL says that you cannot redistribute if there is any type of encumberment.
2. SCO says that their IP is in Linux
So if you accept the SCO deal you are saying you believe that there is some IP
that encumbers Linux. That means that if you buy SCOsource and distribute Linux
you are violating all the Linux copyrights that are not owned by SCO.

Obviously this is a really bad deal.

I am still unsure why this issue does not come up in these cases. The fact that
SCO offers SCOsource licenses and claims that you must have one to use or
distribute Linux means that they are committing a felony by attempting to modify
someone elses license agreement for their own gain.
(A Utah computer crime that I have mentioned before. Look for the other
reference to find the actual law.)

I keep thinking that the right questions in court to Darrel and crew would most
certainly make the court record for the IBM and Novell cases all that is needed
to prove they broke this law. In fact maybe this deposition would be enough by
itself.

(IANAL) Does anyone here know enough to comment on the ability to prove that
Utah Code 76-6-703 was broken by SCO selling SCOsource?

My previous comment was
http://groklawstatic.ibiblio.org/article.php%3fstory=20061015203855256#c492474

I

[ Reply to This | # ]

Questions for Darl...
Authored by: sproggit on Sunday, June 03 2007 @ 04:26 AM EDT
Like many others who have commented here, I am absolutely amazed at what little
awareness this CEO has of his own company. I would imagine that shareholders
might find this borderline negligent.

Anyway, a few silly questions.


1. Issue Tracking.
Given that SCO were in discussions with a number of large clients and given that
the clients were citing copyright ownership with Novell as a reason for not
progressing with the SCOsource licenses... and given that SCO had specifically
asked for damages in the Novell suit... why is it that you are now unable to
produce any evidence of these alleged objections? Surely that evidence would be
a cornerstone of your damages claim in the case against Novell, yet you testify
that you have no concrete records?

2. Projections and Business Models
Around page 16 of the pdf (220 of the deposition) you were asked about the
modelling and projections for the likely revenue that your SCOsource license
would generate. You talked about $700 per seat and quoted numbers such as 4 or 6
million servers in the industry today. You testified that all of this was done
as a white-boarding or brain-storming exercise and that you have no documented
notes on the topic.

OK, so now let's move to the conversations and deals that you had with Baystar.
Baystar Capital llc invested something like $50,000,000 in your company based on
the strength of your ongoing business. Now, an important point to note here, is
that prior to the time when SCO signed deals with the likes of Microsoft and (as
you now tell us) with CA, SCO had never generated a profit. So when Baystar
looked at SCO as an investment, it would not have been based on a review of past
performance, but of potential. What do you recall of those discussions? What
information, presentations, evidence, business plans, models, projections or
other information do you have or do you recall that were shown to the people at
BayStar as part of the process that persuaded them to come on board with you as
investors?

3. CA's Licenses
In this deposition you claim that CA came on board and paid you licensing
monies. This would have been a new overhead for them - a not inconsiderable
addition to their expense base. Since CA are also a listed company, would it be
fair to assume that in their SEC filings for that year we might find references
to this? Given - after all - that this would represent an unexpected increment
to their operating expenses?

4. The HP Deal
In pages 5-7 of the pdf (132-134 of the deposition) you describe the way that HP
contacted you in September, by telephone, to announce that the deal was
essentially off until such time as the copyright issue with Novell was resolved.
You stated that you did not take notes of the telephone conversation and that
you do not know if other members of your Team did or not.

Can you recall the date of the call and the names of those who participated? Do
you recall anyone in your organisation sending any emails or exchanging any
paper notes on this subject?

5. Business Planning
In the same section of the deposition that you discuss potential revenue income
from the SCOsource licensing deal, you explain how your approach was to
white-board ideas with a couple of members of your finance team. Obviously the
output from these white-board sessions would form a business-plan of sorts, or
at least contain ideas that you would be able to use to drive forward that
business model. What happened to those notes and ideas? Do they contain any
projections, action items, plans? calculations, issues or follow-up questions?
Did you do all that work and genuinely produce no documentation?


- + = + -

What's so interesting to me, as an outsider, is how little Darl claims to have
known about what was going on.

If you think back to the time and to the public announcements that he was making
in interviews with journalists, he was keen to give the impression that he knew
exactly what was going on and that he was deeply confident of the facts behind
his case and his company. Now, 3 years later, he has no notes, he can't recall,
it might have been this or that, but better ask someone else.

IANAL and don't understand how US malpractise law (or whatever is applicable
here) works, but to me it's so obvious that this is the deposition of a man who
is expecting to be served any day now...

[ Reply to This | # ]

Is Darl lying or dumber than a rock (or both)?
Authored by: Anonymous on Sunday, June 03 2007 @ 04:50 AM EDT
Pardon me. I just read Darl's deposition excerpts, and my mind is still aboggle.

If he's telling the truth, he and the other SCOGlings thought that their take from this scam would be huge. They based their 'huge' on assuming a 100% (or near to it) uptake, even at some discounted rate. The SCOG-scammers didn't give any thought to the options their marks had.

This is utter stupidity on their part, of course--but Darl admits it, and accuses the other SCOGlings of this stupidity. He admits this stupidity for himself, as well. Unless he's lying in the deposition, under oath.

He's claiming $billions in damages, based on the calculation from this stupidity (or untruth). SCOG blew the gaff with HP, but didn't bother asking themselves "Why does HP think that indemnification is cheaper than our scam?" Well, maybe they did, but the answer they came up with was a dumb as their calculations.

It seems that the HP misadventure taught them a little about the real world, but not much--they accepted the 'write any infringement out' option as a valid one for their marks, and addressed it by refusing to specify anything except the amount of their scam.

In the 1970's, I read a book, Up the Organization, by Robert Townsend. As one of his many points, he considers it mandatory for any organization to have someone in power whose job is to scream loud and long about such patently bad ideas. (Townsend's apt, descriptive title for this job cannot be expressed under Groklaw rules. Sorry.) Caldera had someone doing this--Ransome Love left when Darl's stupidity (or cupidity) became obvious to him.

What the case seems to boil down to is two torts against Darl's self-confessed stupidity:

  • Novell refused to go along with Darl's scam, by failing to give Darl all the copyrights he wished he had, and
  • When SCOG went ahead with the scam, Novell blew the whistle on it.

    ---
    --Bill P, not a lawyer. Question the answers, especially if I give some.

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  • Some should inform Mr. McBride...
    Authored by: rsmith on Sunday, June 03 2007 @ 05:20 AM EDT

    ... that greed is a capital sin.

    ---
    Intellectual Property is an oxymoron.

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    CA "bought" licenses? Not per my recall
    Authored by: Anonymous on Sunday, June 03 2007 @ 06:10 AM EDT
    Hmm, from what I recall, the CA "licenses" where slipped into the
    language of some settlement for some unrelated matter with Canopy.

    I am certain there was either a Groklaw story or section of a story regarding
    this.

    If true, then Darl lied under oath during this deposition. In fact, I am also
    pretty certain, but no other information on this, that there were no such
    license negotiations with CA. Could be wrong, but I don't think so.

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    OK
    Authored by: Ian Al on Sunday, June 03 2007 @ 06:23 AM EDT
    Doesn't time fly? Four year's and we haven't summed up yet. Would you mind if I had a go?

    A long, long time ago when Santa Cruz were selling UNIX, they had an internal audit of Linux that reported there were no UNIX copyright violations in Linux. They decided to pay for an external audit and that came to the same conclusion.

    They sold their UNIX business to Caldera who renamed themselves SCOG. Even though they knew there was no UNIX in Linux they decided to offer a SCOSource licence to Linux users and to make billions of dollars by claiming that there was.

    They sent 1500 letters to America's biggest companies saying that they needed SCOSource licences to use Linux and that SCOG were prepared to litigate against those who did not take up the licence.

    At a conference for investors (not reported on Groklaw) a member of the external law firm planning the litigation confirmed that there were mountains of UNIX in Linux and they were arranging to litigate on behalf of SCOG. They would be paid in shares when they won. The share price went TOO TEH MUNE, increasing more than ten-fold. The key boardmembers of SCOG who were promoting this business plan made lots of money.

    They got resistance from programmers, users and distributors. They litigated against one or two users. The litigation against Autozone was on the basis that Autozone must have used SCOG's UNIX stuff to migrate to Linux because the migration went so smoothly. The person who masterminded the migration said that was a lie. The case against Daimler-Chrysler collapsed when SCOG's claims that they had not carried out an audit on UNIX use foundered because there had been nothing to report for seven years because that's how long it was since Daimler-Chrysler stopped using UNIX.

    SCOG knew from the work done at the time of transfer of assets from Santa Cruz to Caldera that the chain of transfer could not be demonstrated. Worse, they knew from the BSDI v USL litigation preceding Novell (which they had been hiding from the public) that most of the copyrights were not defendable. Both SCOG and Santa Cruz asked Novell to transfer the UNIX copyrights. Novell refused. They litigated against Novell because Novell had said that SCOG did not own the copyrights that were the basis for the business plan. They knew there was no basis for their slander of title claim. They decided to register UNIX copyrights in their own name even though they knew there was no demonstrable chain of transfer of title.

    They litigated against IBM because... because... because IBM were, in part, both Linux contributors and UNIX licencees and were in a position to put UNIX into Linux. However, SCOG already had two experts reporting that there was no UNIX in Linux. Knowing that, they litigated anyway.

    What do you think? Have I missed anything important? Let me have a final read...

    Oh dear! You know, I think both SCOG and the law firm running the litigation might have done some illegal things. You think?

    ---
    Regards
    Ian Al

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    • Nearly - Authored by: sproggit on Sunday, June 03 2007 @ 07:00 AM EDT
      • 7. - Authored by: Anonymous on Sunday, June 03 2007 @ 09:34 AM EDT
      • IBM in 2003 - Authored by: brooker on Sunday, June 03 2007 @ 12:01 PM EDT
      • Nearly - Authored by: proceng on Sunday, June 03 2007 @ 06:01 PM EDT
    • OK - Authored by: papafox on Sunday, June 03 2007 @ 09:26 AM EDT
      • OK - Authored by: Ian Al on Monday, June 04 2007 @ 03:55 AM EDT
      • Got it - Authored by: Ian Al on Monday, June 04 2007 @ 04:48 AM EDT
    • OK - Authored by: Anonymous on Sunday, June 03 2007 @ 06:59 PM EDT
      • OK - Authored by: Ian Al on Monday, June 04 2007 @ 03:58 AM EDT
    Judge Judy and the Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
    Authored by: Anonymous on Sunday, June 03 2007 @ 08:11 AM EDT
    I know, Judge Judy has nothing to do with SCO. I was watching a
    "case" where someone ordered a couch, and got the wrong color. The
    guy had to take a couple of days off from work, and wanted the store to
    re-imburse him for lost wages, because of trying to get the right couch before
    he finally said to heck with it, take the couch back and give me my money.

    Judge Judy said do you have any paperwork that shows how much you lost in wages.
    The guy said no. She berated him for not having anything, and denied the lost
    wages, granted the refund for the couch and told the store to pick it up.

    Why is it, that when you have millions, possibly hundreds of millions at stake,
    you are not better prepared for the deposition? This speaks of gross
    incompetance for any company officer.

    "Q. Were drafts exchanged?"

    "A. There were -- discussions went back and forth. I know there were
    things that were on paper. I can't remember if it was coming from them to us or
    if those were things that we had. The short answer is I don't know."

    The feeling I have here is that this is a company that was being run with a slap
    on the back, lets do lunch, we'll do a deal, but we don't need anything on
    paper, we can trust each other. From the way they "purchased" the
    Unix business from SCO on up, I get the feeling this is a company more
    interested in operating on the fringes than in being a real business. (Same
    order as employing programmers but handling them as independent contractors so
    they don't have to pay social security, etc. or those deals where you buy
    foreclosed houses on nothing down, then flip them for a profit.)

    It seems to have worked for a while, but finally their multi million dollar
    house of cards came tumbling down.

    When it comes to running a real business, they just can't do it.

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    Ah...It's A Coding Error!
    Authored by: TheBlueSkyRanger on Sunday, June 03 2007 @ 08:28 AM EDT
    Hey, everybody!

    Darl goofed on a function argument. Instead of:

    if (Linux == Unix)
    { }

    which compares, he uses an assignment operator:

    if (Linux = Unix)
    { }

    which means, anytime the code hits that point, it makes them equal for the
    program's purposes instead of evaluating them.

    Now, this, in and of itself, is nothing to be ashamed of, I've done it plenty of
    times (in fact, I think I do that more than leaving off the semicolon). The
    difference? I test my stuff first and fix the problems! Instead, he's been
    pushing this for four years. No wonder people think he's a M$ shill--they use
    the same testing department!

    Dobre utka,
    The Blue Sky Ranger

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    Tivo to switch to BSD?
    Authored by: Anonymous on Sunday, June 03 2007 @ 08:53 AM EDT
    A possible effect of GPL3 is that it will act as FUD against Linux in the
    embedded space. So Linux could go on servers that hosted non-critical content,
    but be benched for important tasks.

    tivo, banking, anything important --> will migrate to BSD.

    Maybe we'll look back and see this as a turning point.

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    Undisclosed balance sheet liability
    Authored by: Anonymous on Sunday, June 03 2007 @ 10:12 AM EDT
    "So, if Novell and IBM lose, look for a letter in the mail followed by a
    phone call, I guess. So does that mean that Linux end users get to pay both SCO
    and Microsoft if they want to use Linux?"

    Wouldn't that suggest that if SCO win, they have an "undisclosed balance
    sheet liability" to Microsoft?

    ... just asking

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    Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
    Authored by: Anonymous on Sunday, June 03 2007 @ 12:58 PM EDT
    ??? CA paid $500 per seat, we find out next. I gather that was the same offer made to Google, which with all their servers would be a nice sum in the hundreds of millions, Darl computes.

    I thought CA got those licenses as part of a settlement agreement. SCO sort of threw those in with the costs. I would not put it above SCO to write them down as $500 a piece and then expense it all as legal settlement costs. But checking on the CA end would probably show CA did not pay at all for those licenses.

    As we have found out by now SCO's word is not worth much and is often far form the hard truth even if it does contain grains of fact.

    Info World News Article

    -- quote

    On Thursday, however, a CA executive said that his company had purchased no such license, but had instead acquired a large number of licenses for SCO's UnixWare operating system as part of a $40 million breach of contract lawsuit settlement in August 2003 with SCO investor The Canopy Group Inc.

    -- quote

    Greenblatt strongly objected to the portrayal of CA as a IP License for Linux customer. "To represent us as having supported the SCO thing is totally wrong," he said. Greenblatt had harsh words for SCO and the company's CEO, Darl McBride, whose tactics were "intended to intimidate and threaten customers," he said. "We totally disagree with his approach his tactics and the way he's going about this."

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    Dreaming of Billions From Linux
    Authored by: mtew on Sunday, June 03 2007 @ 01:18 PM EDT
    Hmm...

    Crazy as a bed-bug...

    (1) Microsoft does per seat. If I recall correctly, they charge less than 699$.
    They also provide some (minimal) service for that license. (Yeah, most of that
    service is in the form 'you will have to pay extra for that' and 'we don't trust
    you so we are including spy code to make sure you are not cheating'.) tSCOg's
    base unit price is out of line by a significant amount.

    (2) Microsoft has real control over most of the code they are licensing. tSCOg
    MIGHT have control of as much as 0.1% of the code they are trying to license to
    others. Any license fees would realistically have to be discounted to reflect
    the difference.

    As a guess:
    ___________ .2 . . . Multiplier for effect (1)
    ___________ .001 . Multiplier for effect (2)

    ___________ .0002 Combined effect
    5,000,000,000. . . . . Roughly what they are talking about
    --------------------------
    ___ 1,000,000. . . . . What the idea is probably worth.

    They can't even get a good license writen for that amount, much less market it.
    Enforcement would be a joke.

    Crazy as a bed-bug...

    ---
    MTEW

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    • Question - Authored by: Anonymous on Monday, June 04 2007 @ 08:13 AM EDT
    Its time to declare infringement by Linux dead
    Authored by: Anonymous on Sunday, June 03 2007 @ 01:47 PM EDT
    Early in the history of Groklaw, PJ wrote about what the law requires copyright
    holders to do to protect their copyrighted material. I remember there are two
    requirements:
    1. Attempt to stop the infringement and to mitigate damages caused by the
    infringement
    2. within three years

    Based on this, four years later and with no attempt to mitigate infringement SCO
    has forfeit its copyright claims against the open source community.

    This document now proves there was no intent to mitigate damages. With
    declarations from the Linux kernel, the GNU project, and any other open source
    threatened by SCO that no contact was made then this requirement is dead.

    The three years? That expired last year, take you pick of when the IBM suit was
    filed, when SCO sent letters to 1500 companies, or when Groklaw and the
    GNU/Linux community published their open letter to SCO as the date for know what
    the infringements were. I like the data of the 1500 letters. If SCO didn't know
    what the infringements were when the letters were sent then the postal
    inspectors need to open an investigation into possible mail fraud.

    To make this stronger it would be helpful to have a lawyer agree and then have
    or a judge stamp their approval. I think that Red Hat would be the best party to
    do this as proving their claim that GNU/Linux does not infringe is a major part
    of their lawsuit. IBM could also file this as a PSJ.

    Any other IP claims are already dead. We already know that SCO does not have any
    patents. The open source community is not a part of any proprietary right
    agreement so they cannot be held to any proprietary rights agreement even though
    any such agreement ends when the secret is revealed (but, if they were asked to
    remove some code that should not have been released I am sure they would have
    done so anyway). Of course, the name UNIX (R) is owned by the Open Group.

    Disclaimer: I am just a Groklaw reader so this is just an
    opinion, but I think it can be made much more.


    _Richard

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    Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
    Authored by: DaveJakeman on Sunday, June 03 2007 @ 04:10 PM EDT
    Reading that deposition transcript gives another unpleasant glimpse inside the
    mind of one of the chief puppets, if not the architect of this scam. Ugh. I'd
    better not say here exactly how that makes me feel, but suffice to say, I found
    the experience distinctly unsavoury.

    ---
    Only two things are infinite: the universe and human stupidity and I'm not
    sure about the former. -- Einstein

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    There was a decimal problem..
    Authored by: Anonymous on Monday, June 04 2007 @ 01:22 AM EDT
    "There was a decimal problem"
    Made my day!
    snort coffee | /usr/nose >
    /dev/keyboard; echo "HAHAHAHAHAHA"

    -Andy

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    No signature form the court reporter
    Authored by: Anonymous on Monday, June 04 2007 @ 08:05 AM EDT
    If there is no sworn signature from the court reporter who supposedly typed this
    up, then couldn't it be entirtely made up by the Novell lawyers?

    Isn't this one of the same problems that Novell complained about on a bunch of
    the SCO deposition exhibits?

    I wouldn't think that the Novell legal team could be so sloppy.

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    Tipping point
    Authored by: philc on Monday, June 04 2007 @ 10:28 AM EDT
    When faced with a hundreds of millions shakedown vs a tens of millions lawsuit,
    bring on the lawyers would be the way to go. It would not take the lawyers long
    to get to an understanding of what they faced.

    If any company ends up in a law suit everyone else sits on the sidelines until
    its resolved.

    There was never a chance of hundreds of millions in shakedown without winning a
    lawsuit first.

    They stood a much better chance of making 5 million from 50 companies that 250
    million from one.

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    I just noticed the lyrics to this song fit:
    Authored by: Sunny Penguin on Monday, June 04 2007 @ 02:59 PM EDT
    Some lines from "The Hustle" unchanged;

    Look here's a dance
    So old it's new
    'Cause trash disco is seventies cool
    Like country line dance, to some it's fine
    Sadly though, you gotta lose your mind
    Get organized, discipline is fun
    I want to encourage everyone
    To coordinate your steps and clap
    Avoid the individuality trap
    Take a walk on the wild side


    ---
    If you love your bike, let it go.
    If it comes back, you high sided.....

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