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Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports
Sunday, February 14 2010 @ 07:18 AM EST

We finally get to read SCO's experts' reports, three of them, the ones from Dr. Christine A. Botosan, Dr. Gary Pisano, and G. Gervaise Davis III, because Novell has attached them as Exhibit A to each memorandum in support of their three motions for Daubert hearings, seeking to disqualify each expert's testimony. I say finally because the reports were written in 2007. Haven't I always told you that sooner or later, it all comes to light? It's what I love about litigation.

I don't know if I should describe the reports as absurdly fascinating or fascinatingly absurd. Their version of UNIX history and the history of SCO's litigation is an alternate universe far from any I know or think of as reality. If I may paraphrase the first Magistrate Judge in the SCO v. IBM litigation so many years ago, is this all SCO's got?

If you have forgotten what a Daubert hearing is, here you go. The short explanation is that it's a hearing to decide if an expert can testify, if he or she is qualified to do so and/or if the methods used are appropriate or admissible.

Novell objects to Dr. Botosan's methods, claims her proposed testimony is inadmissible, that she cherry picked the highest projections on damages for Novell's alleged slander of title, and says she is "a mere conduit for opinion testimony". She writes that she relied upon Dr. Gary Pisano's report, which I believe would be a mistake. What a story he tells. He claims that if Novell hadn't spoken out about its claim of copyright ownership, SCO would have sold between approximately 1 1/2 to 3 1/4 million SCOsource licenses. Is 'ridiculous' too small a word?

He also says Computer Associates sought out a SCOsource license. That's not what Computer Associates said happened at the time:

CA senior VP of product development Mark Barrenechea says that Bench’s claim is nonsense. CA has not paid SCO any Linux taxes, he said.

Drawing up short of calling SCO a liar, Barrenechea claims that SCO has twisted a $40 million breach-of-contract settlement that CA paid last summer to the Canopy Group, SCO’s biggest stockholder, and Center 7, another Canopy company, and has turned it into a purported Linux license.

As a "small part" of that settlement, Barrenechea said, CA got a bunch of UnixWare licenses that it needed to support its UnixWare customers. SCO, he said, had just attached a transparent Linux indemnification to all UnixWare licenses and that is how SCO comes off calling CA a Linux licensee.

Barrenechea said that SCO was dropping CA’s name to associate itself with the "third-largest software company in the world" and build support for its "lost cause."

But according to Barrenechea, not only are SCO’s IP ambitions doomed, but its Unix interests are a "trailing negative" on the road to dropping from 10% of the market to 3%-5% in a few years and then "SCO will be irrelevant," he said.

Does Dr. Pisano not know that? Shouldn't he? I mean, shouldn't he at least mention it, for accuracy's sake? Yet he writes this, on page 17:
37. On August 5, 2003, SCOsource formally announced the availability of the SCO Intellectual Property License for Linux, and that SCO would be meeting with commercial Linux users to present the details of this "right to use" ("RTU") license. The run-time license permits the use of SCO's intellectual property in binary form as contained in Linux. Within weeks of this announcement, a Fortune 100 company, Computer Associates, requested from SCO and purchased a SCO RTU license.
His report reads to me like he just took dictation from SCO, without doing any research to find out if what SCO told him was true. It is like a rehash of everything SCO has been saying since 2003, as if there were no answers to SCO's stories. He also relies on such folks as Laura DiDio and Daniel Lyons. I rest my case. Small world, though, isn't it?

As for Davis, he says something to the effect that he's never run into an implied license like Novell is claiming SCO got, and so he therefore believes SCO must have gotten the copyrights. I believe one of SCO's witnesses already said if they didn't get the copyrights, they'd have had an implied license, didn't he? But in any case, Novell says both that issue and the interpretation of the APA is for the jury, so Davis should not be permitted to give his opinion on the legal meaning of the contract or whether there was or was not an implied license. He also is not an expert, Novell points out, in running a software business, so he shouldn't be allowed to testify as to what is or isn't required to run such a business.

Hey, somebody get me a gig as an expert will you? If this stuff qualifies as expertise, I'd like some of that easy money, please. Or is there no market for simple truth?

Well, I'll tell you the truth anyway, as I see it. Let me tell you very simply three reasons off the top of my head why I believe SCO could not have sold millions and millions of SCOsource licenses, even if Novell had said nothing:

1. The first reason is because the SCOsource license conflicted with the GPL, the license on Linux. So people felt right away that SCO's demand was improper, at a minimum. I know for sure that was my reaction. SCO was asking us, as we saw it, to violate the copyrights of all the authors of the GPL'd code that makes up Linux. Groklaw even published an open letter to SCO in September of 2003, which it also mailed, telling them that, among other things.

The SCOsource license was purportedly a right to use SCO's alleged code, but if you paid for a SCOsource license, it blocked you from legally continuing to use the GPL'd Linux code that SCO definitely didn't own, and that would have meant that SCOsource licensees couldn't run Linux any more if they took a SCOsource license without risk of being sued by the GPL authors and copyright owners for copyright infringement. If you violate the GPL, you can't use the code any more, and if you do, you can be sued for copyright infringement, as SCO has learned in the SCO v. IBM litigation. It was a business proposition that made no sense from day one, to put it kindly. If I were a GPL author, I'd have also sued SCO for inducing copyright infringement, I think, if SCOsource had ever really taken off.

Besides, as soon as SCO announced the license, Eben Moglen said Linux users had no reason to fear and could rely on the GPL. He also said SCO's claims about the GPL were "moonshine". The thing is, you can't add terms on top of the GPL without violating the GPL. That is foundational, and it was stunning that SCO's lawyers didn't seem to know that. Would they deliberately try to get people to violate the GPL authors' copyrights? I can't imagine that. So I racked it up to cluelessness about the GPL. But considering that the GPL is part of the SCO v. IBM litigation, as one of IBM's counterclaims, how can an expert ignore that aspect of SCO's chances with SCOsource?

2. Here's a second reason I don't believe SCO could sell millions of SCOsource licenses: because copyrights are not patents. You can force people to license patented code, but it doesn't happen like that with copyrights. They may have to pay you for prior infringement, but there is no mechanism to force you to pay going forward. The remedy is to get the infringer to stop infringing, not to pay forever for code it didn't know about and doesn't want. Here are the remedies for copyright infringement, § 504. Remedies for infringement: Damages and profits.

When SCO first made its claims public, everyone asked SCO to tell the world what code was infringed, because if it were true, it would be removed. Groklaw's letter asked too. So did Linus and Richard Stallman and Moglen and Jon "maddog" Hall. Nobody in the Linux community wanted their code, if it were truly there in Linux. At the beginning we didn't know it was all a weirdly mean fantasy, so the initial reaction was, please show us the code you claim is infringing, because if it exists, we don't want it and we'd like to remove it. SCO *refused* to identify the code. And that's when the world figured out that this wasn't normal. It felt more like extortion, with SCO insisting on keeping the allegedly infringed code a mystery, right where it was, so any infringement couldn't be cured, with the only apparent goal being to force people to pay SCO to use Linux. Here's just one example of an attorney, Anupam Chander, Professor of Law at the University of California, Davis, School of Law, back in July of 2003, writing publicly that it was important for IBM to prevail over SCO's derivative code claims:

The final policy argument in favor of open source software is, of course, societal. At some point, information that is widely studied in universities, reprinted in college textbooks, and advanced through academic scholarship must be considered public domain.

For this reason, SCO's claims that its intellectual property rights extend to basic computing features of large operating systems cannot be allowed to stand. Otherwise, there will be no such thing as truly open, free software - and as a consequence, there will effectively be an economy-dragging tax on information technology.

In short, the overall feeling was that this was not a normal IP case, and people despised SCO for even thinking up SCOsource licenses for Linux. It surely wasn't Novell that created that righteous indignation.

3. Here's another reason I don't think SCO could sell millions of SCOsource licenses: because when SCO showed examples of allegedly infringing code, it turned out it wasn't their code. It was worse than a joke. Why would anyone pay SCO for code that turned out to be in the public domain or code belonging to other people? Yet I don't see, on my first quick reading of Pisano's report, any mention of this code-showing fiasco as a factor in people's reluctance to take a SCOsource license. But it surely was one. How can he ignore it? It was a huge, huge element in the world at large deciding that Linus was correct when he said that SCO was "full of it." Moglen responded immediately after the showing:

SCO's legal situation contains an inherent contradiction. SCO claims, in the letters it has sent to large corporate users of free software and in public statements demanding that that users of recent versions of the kernel take licenses, that the Linux program contains material over which SCO holds copyright. It also has brought trade secret claims against IBM, alleging that IBM contributed material covered by non-disclosure licenses or agreements to the Linux kernel. But it has distributed and continues to distribute Linux under GPL. It has therefore published its supposed trade secrets and copyrighted material, under a license that gives everyone permission to copy, modify, and redistribute. If the GPL means what it says, SCO loses its trade secret lawsuit against IBM, and cannot carry out its threats against users of the Linux kernel.

But if the GPL is not a valid and effective copyright permission, by what right is SCO distributing the copyrighted works of Linux's contributors, and the authors of all the other copyrighted software it currently purports to distribute under GPL? IBM's counterclaim against SCO raises that question with respect to IBM's contributions to the Linux kernel. Under GPL section 6, no redistributor of GPL'd code can add any terms to the license; SCO has demanded that parties using the Linux kernel buy an additional license from it, and conform to additional terms. Under GPL section 4, anyone who violates GPL automatically loses the right to distribute the work as to which it is violating. IBM therefore rightly claims that SCO has no permission to distribute the kernel, and is infringing not only its copyrights, but those of all kernel contributors. Unless SCO can show that the GPL is a valid form of permission, and that it has never violated that permission's terms, it loses the counterclaim, and should be answerable in damages not only to IBM but to all kernel contributors.

The GPL simply dooms SCO's claims, as far as I can see, and I thought so from day one. How could an expert not address this issue? It's the elephant in the room. Surely in trying to figure out "damages", one would have to at least touch on the fact that SCO, after making its public claims, continued to distribute the very same code under the GPL, which allows for copying, modification, and redistribution. So why would you take a SCOsource license, when you already have a better license for free? Can you sue people for doing what you told them they could do? You can, but you'll surely lose, which is exactly what Novell says everyone expects to happen, that SCO will lose. When SCO continued to distribute, it was telling us by its actions, as I understood them, that we could choose between a SCOsource license or the GPL, at our election, and if we chose the GPL, we were not infringing anything. I don't see Pisano addressing the GPL at all, but it played a major role, I would opine, in reluctance to take a SCOsource license.

Pisano also says that when Novell on May 28, 2003 said it owned the Unix copyrights, it was "the first public indication that there was any question regarding SCO's ownership of the UNIX copyrights." That may or may not be so. But it was not the first indication in public that people thought SCO was "full of it". The universal reaction in the Linux community was never fear. It was to answer SCO's slander point by point, and to laugh at them, frankly. I was laughing at SCO's claims publicly with a curled lip before Novell said a word, because of the GPL. And I still am, by the way.

That's the implied fourth reason, I guess, namely, that people aren't as stupid as SCO needs them to be.

If anyone has time to help with OCRing or doing a text version of any of the three Exhibit A's, please sing out. I think we should take them one at a time, and just answer *all* the mistakes in a methodical, geeky way. Are you with me? If so, let's get a text version of them, so everyone can work together. I'd like to start with Pisano's, so if someone could claim that one, that'd be great.

You know, I used to worry about these experts' reports. Because we couldn't read them, I imagined them differently than this. What if, I'd think, what if they know something we don't, some secret something that alters the picture in any significant way?

But no. They're just a rehash of all SCO's tall tales through the years, every one of which we have answered long ago.

Because we now have the exhibits as well as the motions and memoranda in support, I'll repeat the docket here, so you can easily check the PDFs, if you are so inclined. There are more exhibits now in the original article about Novell's motions in limine too, so swing by there and you'll enjoy getting the more complete picture.

Here are the filings:

655 - Filed & Entered: 02/08/2010
Motion for Daubert Hearing
Docket Text: MOTION for Daubert Hearing to Disqualify Dr. Christine A. Botosan filed by Defendant Novell, Inc.. (Attachments: # (1) Text of Proposed Order)(Brennan, Sterling)

656 - Filed & Entered: 02/08/2010
Memorandum in Support of Motion
Docket Text: MEMORANDUM in Support re [655] MOTION for Daubert Hearing to Disqualify Dr. Christine A. Botosan filed by Defendant Novell, Inc.. (Attachments: # (1) Exhibit A, # (2) Exhibit B, # (3) Exhibit C-Part1, # (4) Exhibit C-Part 2, # (5) Exhibit D, # (6) Exhibit E, # (7) Exhibit F, # (8) Exhibit G, # (9) Exhibit H, # (10) Exhibit I)(Brennan, Sterling)

657 - Filed & Entered: 02/08/2010
Motion for Daubert Hearing
Docket Text: MOTION for Daubert Hearing to Disqualify Dr. Gary Pisano filed by Defendant Novell, Inc.. (Attachments: # (1) Text of Proposed Order)(Brennan, Sterling)

658 - Filed & Entered: 02/08/2010
Memorandum in Support of Motion
Docket Text: MEMORANDUM in Support re [657] MOTION for Daubert Hearing to Disqualify Dr. Gary Pisano filed by Defendant Novell, Inc.. (Attachments: # (1) Exhibit A, # (2) Exhibit B, # (3) Exhibit C, # (4) Exhibit D)(Brennan, Sterling)

659 - Filed & Entered: 02/08/2010
Motion for Daubert Hearing
Docket Text: MOTION for Daubert Hearing to Disqualify G. Gervaise Davis III filed by Defendant Novell, Inc.. (Attachments: # (1) Text of Proposed Order)(Brennan, Sterling)

660 - Filed & Entered: 02/08/2010
Memorandum in Support of Motion
Docket Text: MEMORANDUM in Support re [659] MOTION for Daubert Hearing to Disqualify G. Gervaise Davis III filed by Defendant Novell, Inc.. (Attachments: # (1) Exhibit A)(Brennan, Sterling)

661 - Filed & Entered: 02/08/2010
Objections
Docket Text: OBJECTIONS to [625] Exhibit List(Proposed) Second Amended Supplemental Rule 26(a)(3) Pretrial Disclosures filed by Defendant Novell, Inc.. (Attachments: # (1) Exhibit A)(Brennan, Sterling)


  


Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports | 315 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here if Needed
Authored by: entre on Sunday, February 14 2010 @ 08:01 AM EST
For PJ

[ Reply to This | # ]

Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports
Authored by: Anonymous on Sunday, February 14 2010 @ 08:04 AM EST
Great job PJ.

[ Reply to This | # ]

GPL dooms SCOG
Authored by: rsmith on Sunday, February 14 2010 @ 08:09 AM EST

The arguments that the GPL pretty much dooms SCOG's efforts are well-founded, I think.

But why has Novell by and large ignored them? Even if the main angle of the Novell litigation doesn't revolve around the Linux kernel, I think they certainly could have used them. If even to cut some of these "experts" down to size.

I've always thought that SCOG's argument that they didn't knowingly distributed stuff under the GPL lame and dishonest, given the contributions made to the Linux kernel by employees of SCOG's predecessors. But nobody seems to be willing to call them on that.

---
Intellectual Property is an oxymoron.

[ Reply to This | # ]

Definition of "expert"
Authored by: tiger99 on Sunday, February 14 2010 @ 08:12 AM EST
Just in case anyone has forgotten.

"Ex" = has-been

"Spurt" = drip under pressure

Certainly true with some of SCO's "experts".....

As for traceability of evidence, they seem to be reliant on Lyings and the MOGster, so it would all seem to be hearsay, or even hearsay within hearsay. Maybe we even have hearsay within hearsay within hearsay......

PJ, thanks for providing such entertainment. This can't be a serious legal case!

[ Reply to This | # ]

Off topic here please
Authored by: tiger99 on Sunday, February 14 2010 @ 08:13 AM EST
Please remember the clickies, and the posting policy, and remember that preview
is your friend!

[ Reply to This | # ]

Newspick discussions here please
Authored by: tiger99 on Sunday, February 14 2010 @ 08:15 AM EST
As always, please identify which Groklaw newspick item you are referring to in
the title of your post. It helps us slow readers to pick the ones which are of
most interest.

[ Reply to This | # ]

Wow. Just wow.
Authored by: Vic on Sunday, February 14 2010 @ 08:44 AM EST
I'm working through Gary Pisano's statement (pdftotext introduced some bizarre
errors; it seems wholly unwilling to put the letters "SCO" in its
output). And I am astounded.

The guy claims to be a researcher and teacher of "technology
licensing", yet search for the string "GPL" gets no matches in
his statement. I've not finished reading it yet, so I can't definitively say he
doesn't mention the GPL - but you'd expect the term, wouldn't you? Unless his
knowledge of licencing omits the GPL, of course...

He also claims that "Based on my knowledge of the industry and my research
and analysis in this case, I am not aware of any causes for SCO' s loss of those
SCOsource license sales other than Novell's conduct during the relevant time
period." So the fact that the community, almost without exception, stuck
two fingers up at SCO's extortion attempt seems to have eluded the professor...

His history of UNIX is wonderous, too. Would anyone here expect some mention of,
say, BSD? UCB? They aren't there...

And his server shipments argument is hysterical. He argues that SCO had 80%
share on the Intel UNIX market, and that Gartner said that Intel-architecture
server shipments (*not* UNIX server shipments) had tripled. I haven't found the
conclusion yet (I've not got there yet), but this juxtaposition of irrelevancies
jsut screams "misrepresentation"...

I won't go on. This statement is just nonsense. I hope, for Mr. Pisano's sake,
that the Judge doesn't allow it to be used, because any halfway-decent legal
team will just shred it, and Mr. Pisano's reputation alongside. This could be a
seriously career-limiting document.

What concerns me most, though, is that this guy is *teaching*.

Vic.



---
http://solectronics.co.uk
Solving problems with Free Software

[ Reply to This | # ]

Damages and fraud
Authored by: ak on Sunday, February 14 2010 @ 09:01 AM EST
Preventing SCO from selling "SCO IP Licenses for Linux" in many
jurisdictions on this planet could not create damages.

You can not keep money which you got as a result of fraudulent activities. So
far SCO has not presented any evidence that Linux violates any rights owned by
SCO (or Novell). But there is evidence available (such as the Michael Davidson
mail) that SCO was aware that no such rights were violated when they began
offering "SCO IP Licenses for Linux".

BTW: SCO still offers those "licenses".

[ Reply to This | # ]

656
Authored by: Serria on Sunday, February 14 2010 @ 09:08 AM EST
WORKMAN | NYDEGGER A PROFESSIONAL CORPORATION
Sterling A. Brennan (Utah State Bar No. 10060; E-mail: sbrennan@wnlaw.com)
David R. Wright (Utah State Bar No. 5164: E-mail: dwright@wnlaw.com)
Kirk R. Harris (Utah State Bar No. 10221; E-mail: kharris@wnlaw.com)
Cara J. Baldwin (Utah State Bar No. 11863; E-mail: cbaldwin@wnlaw.com)
1000 Eagle Gate Tower
60 E. South Temple
Salt Lake City, Utah 84111
Telephone: (801) 533-9800
Facsimile: (801) 328-1707
MORRISON & FOERSTER LLP
Michael A. Jacobs (Admitted Pro Hac Vice; E-mail: mjacobs@mofo.com)
Eric M. Acker (Admitted Pro Hac Vice; E-mail: eacker@mofo.com)
Grant L. Kim (Admitted Pro Hac Vice; E-Mail: gkim@mofo.com)
425 Market Street
San Francisco, California 94105-2482
Telephone: (415) 268-7000
Facsimile: (415) 268-7522
Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
THE SCO GROUP, INC., a Delaware
corporation,
Plaintiff,
vs.
NOVELL, INC., a Delaware corporation,
Defendant.
Case No. 2:04CV00139
MEMORANDUM IN SUPPORT OF
NOVELL, INC.’S DAUBERT
MOTION TO DISQUALIFY
DR. CHRISTINE A. BOTOSAN
Judge Ted Stewart
AND RELATED COUNTERCLAIMS.
i
TABLE OF CONTENTS
Page
I. INTRODUCTION AND SUMMARY OF ARGUMENT
............................................. 1
II. LEGAL PRINCIPLES
................................................................................
....................... 2
III. ARGUMENT
................................................................................
...................................... 2
A. Dr. Botosan’s Proposed Testimony on the Amount of Damages Is
Inadmissible
................................................................................
............................ 2
1. Cherry-Picking the Highest Projections Is Not a Reliable
Method
................................................................................
........................ 3
2. Dr. Botosan Is a Mere Conduit for Opinion Hearsay
................................. 4
B. Dr. Botosan’s Proposed Testimony on Causation Is Inadmissible
......................... 5
1. Dr. Botosan’s Event Study Is Irrelevant
..................................................... 6
2. Dr. Botosan’s Event Study Is Based on a Statistically
Invalid Model and a Statistically Insignificant Regression
........................ 6
3. Dr. Botosan’s Reasoning from her Event Study Is Logically
Invalid
................................................................................
......................... 8
4. Dr. Botosan’s Opinion Is Based on Insufficient
Data................................. 9
IV. CONCLUSION
................................................................................
................................. 10
ii
TABLE OF AUTHORITIES
Page(s)
Cases
6816.5 Acres of Land v. United States,
411 F.2d 834 (10th Cir. 1969)
................................................................................
.................... 4
Daubert v. Merrell Dow Pharmaceutical, Inc.,
509 U.S. 579, 113 S. Ct. 2786 (1993)
................................................................................
..... 2, 6
General Electric Co. v. Joiner,
522 U.S. 136, 118 S. Ct. 512 (1997)
................................................................................
......... 10
Gilliam v. Nevada Power Co.,
488 F.3d 1189 (9th Cir. 2007)
................................................................................
.................... 9
Green Ridge v. Kreisel,
25 S.W.3d 559 (Mo. Ct. App. 2000)
................................................................................
........... 9
Griffin v. Board of Regents of Regency University,
795 F.2d 1281 (7th Cir. 1986)
................................................................................
................ 7, 8
Hensel Phelps Construction Co. v. United States,
413 F.2d 701 (10th Cir. 1969)
................................................................................
.................... 4
Hutchinson v. Groskin,
927 F.2d 722 (2d Cir. 1991)
................................................................................
....................... 5
Hynes v. Energy West, Inc.,
211 F.3d 1193 (10th Cir. 2000)
................................................................................
.................. 2
In re Enron Corp. Sec. Derivative & ERISA Litigation,
529 F. Supp. 2d 644 (S.D. Tex. 2006)
................................................................................
........ 6
Kay v. First Continental Trading, Inc.,
976 F. Supp. 772 (N.D. Ill. 1997)
................................................................................
............... 2
LASERS v. McWilliams,
996 So. 2d 1036 (La. 2008)
................................................................................
........................ 8
Mitchell v. Gencorp, Inc.,
165 F.3d 778 (10th Cir. 1999)
................................................................................
................ 2, 9
Norris v. Baxter Healthcare Corp.,
397 F.3d 878 (10th Cir. 2005)
................................................................................
............ 2, 4, 6
Paulson v. Texas,
28 S.W.3d 570 (Tex. Crim. App. 2000)
................................................................................
..... 9
Pirtle v. Cook,
956 S.W.2d 235 (Mo. 1997)
................................................................................
....................... 9
United States v. Davis,
40 F.3d 1069 (10th Cir. 1994)
................................................................................
.................... 6
iii
United States v. Stone,
222 F.R.D. 334 (E.D. Tenn. 2004)
................................................................................
...... 4, 5, 6
United States v. Tomasian,
784 F.2d 782 (7th Cir. 1986)
................................................................................
...................... 4
Statutes/Rules
Federal Rule of Evidence 702
................................................................................
................. 2, 3, 4
Federal Rule of Evidence 703
................................................................................
......................... 5
1
Dr. Christine A. Botosan has two basic opinions: SCO lost at least $137 million
in
profits, and Novell caused that loss. As explained below, neither is
admissible.
I. INTRODUCTION AND SUMMARY OF ARGUMENT
In January 2003, SCO launched SCOsource, “an effort to obtain license fees from
Linux
users based on SCO’s claims to UNIX intellectual property allegedly contained in
Linux.” (Dkt.
542 at 13.) SCO then reported in publicly-available Forms 10-Q filed with the
SEC (reproduced
as Exs. B & C hereto) that “[d]ue to a lack of historical experience and the
uncertainties related
to SCOsource licensing revenue,” it was “unable to estimate the amount and
timing of future
[SCOsource] licensing revenue, if any”; and “SCOsource licensing revenue is
unlikely to
produce stable, predictable revenue for the foreseeable future.” (Ex. B at 33;
Ex. C at 33.)
In contrast to what SCO said then, its expert now says SCOsource would have
generated
at least $137 million in profits, but for the fact that Novell questioned
whether SCO owns the
rights it was trying to license. To arrive at lost profits, Dr. Botosan first
calculates lost revenues,
by subtracting SCO’s actual licensing revenues from what they were projected to
be. She then
deducts what she estimates SCO’s costs would have been to generate those
revenues, in order to
arrive at lost profits. Two basic flaws infect this part of her analysis, both
going to her starting
point. First, she cherry-picked the highest projections she could find. Second,
instead of
performing any meaningful analysis of those cherry-picked projections, such as
applying
discounts based on the recognized risk factors, she just parrots them.
Dr. Botosan’s causation analysis is even more deeply flawed. First, she bases
her opinion
on an event study purporting to show that Novell caused SCO’s stock price to
drop, but the Court
has already ruled “that decline in stock price is not an appropriate claim for
special damages.”
(Dkt. 621 at 12.) Second, her event study is invalid, as is her reasoning
therefrom. Finally, she
cannot bridge the gap between the conclusion she draws from her event
study—viz., that Novell
caused SCO’s stock price to drop—and her opinion that Novell caused SCO to lose
sales.
2
II. LEGAL PRINCIPLES
If … specialized knowledge will assist the trier of fact … a witness …
may testify thereto in the form of an opinion … if … the testimony is
based upon sufficient facts or data … [and] is the product of reliable
principles or methods … applied … reliably to the facts of the case.
Fed. R. Evid. (“Rule”) 702. Under this Rule, “expert testimony must be both
reliable and
relevant.” Hynes v. Energy West, Inc., 211 F.3d 1193, 1203 (10th Cir. 2000)
(citing Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589-92, 113 S. Ct. 2786 (1993)).
Regarding reliability,
“[u]nder Daubert, any step that renders the analysis unreliable renders the
expert’s testimony
inadmissible. This is true whether the step completely changes a reliable
methodology or merely
misapplies the method.” Mitchell v. Gencorp, Inc., 165 F.3d 778, 782 (10th Cir.
1999) (citation
omitted). As for relevance, “the court must ensure that the proposed expert
testimony logically
advances a material aspect of this case,” i.e., has “a valid scientific
connection to the disputed
facts in the case.” Norris v. Baxter Healthcare Corp., 397 F.3d 878, 884 n. 2
(10th Cir. 2005).
III. ARGUMENT
A. Dr. Botosan’s Opinion as to the Amount of Lost Profits Is Inadmissible
Dr. Botosan calculates SCO’s alleged damages in three steps. She first
identifies
projected revenues. (Report & Decl. of Christine A. Botosan [“Report,”
reproduced as Ex. A
hereto] at ¶¶ 41-48.) Then she calculates lost revenues by subtracting actual
from projected
revenues. (Id.) Finally, to derive lost profits, she deducts from lost revenues
what she estimates
SCO’s additional costs would have been, had it generated those revenues. (Id. at
¶¶ 49-59.) The
differences calculated in steps two and three can be no more reliable than the
projections from
which Dr. Botosan starts, and as explained below, “fundamental flaw[s]” in her
identification of
projected revenues “cause[] the overall … opinion to be the Rule 702 equivalent
of what in early
computer vocabulary bore the label ‘GIGO’ (‘garbage in, garbage out’).” See Kay
v. First Cont’l
Trading, Inc., 976 F. Supp. 772, 776 (N.D. Ill. 1997).
3
1. Cherry-Picking the Highest Projections Is Not a Reliable Method
No defensible methodology supports the projected revenues figure from which Dr.
Botosan derives lost profits. Dr. Botosan draws her projections from three sales
forecasts: one
by Renaissance Research Group (“RRG”) on March 6, 2003; another by SCO itself on
June 26,
2003; and a third by Deutsche Bank (reproduced as Ex. E hereto) on October 14,
2003. (Report
at ¶¶ 32, 37, 38.) In her Report, she discounts two other forecasts—one by RRG
on February 24,
2003, and the other by SCO on August 11, 2004—which projected much lower
revenues; and
she entirely ignores still other (less favorable) forecasts.1 (Id. at ¶¶ 32,
39.) Instead of trying to
reconcile the forecasts she does use, she adopts the highest figure from among
them:
• For 2003, Dr. Botosan adopts the SCO forecast, the only one of the three to
project revenues higher than those actually achieved. (Id. at ¶¶ 35, 42.)
• For 2004, Dr. Botosan adopts Deutsche Bank’s $53 million projection (rather
than
SCO’s $40 million2 or RRG’s $15 million projection). (Id. at ¶ 43 & Exs. 4,
5.)
• For 2005, Dr. Botosan adopts Deutsche Bank’s $52 million projection (SCO
made no projection; RRG projected $10 million). (Id. at ¶ 44 & Exs. 4, 5.)
• To maximize projected revenues for 2006, Dr. Botosan combines figures
cherrypicked
from the various forecasts, adding together $42 million for end user
licensing (carried over from Deutsche Bank’s 2005 forecast) to $10 million
projected by RRG for 2006. (Id. at ¶ 45.)
1 E.g., Dr. Botosan never mentions a Decatur Jones forecast (Ex. D hereto),
issued just two
months before Deutsche Bank’s, which rated SCO stock to “underperform” and
forecast much
lower revenues. The Deutsche Bank forecast also is based on faulty information.
To support its
inflated projections, Deutsche Bank relies heavily on two separate licensing
agreements, one for
which Microsoft paid SCO $16 million and another for which Sun paid SCO $10
million. (See
Ex. E at 18.) However, SCO’s former CEO testified during the bench trial in this
matter that
those agreements were not SCOsource licenses: “Q. Were the Sun and Microsoft
licenses
SCOsource licenses or not? A. No. They were UnixWare licenses.” (Ex. F at
246:13-15.)
2 According to Dr. Botosan, the SCO forecast was made before SCO began
separately targeting
both Linux vendors and end users, and thus projects only the revenue component
projected by
Deutsche Bank as $30 million. But that gloss ignores the fact that there is a
tradeoff between
vendor and end user licensing (because the end user of Linux acquired from a
licensed vendor is
protected by the vendor’s license). The bottom line is that SCO projected it
could extract $13
million less from the market than Deutsche Bank did, by whatever means. (Report
Ex. 5.)
4
• For 2007, Dr. Botosan carries over the figures from 2006. (Id. at ¶ 46.)
Finding the most generous forecasts available, and then selecting the highest
projections from
within those, is not a reliable principle or method. See Rule 702; Norris, 397
F.3d at 886
(rejecting testimony of experts who ignored contrary studies).
2. Dr. Botosan Is a Mere Conduit for Opinion Hearsay
Rule 702 requires expert testimony to be “based upon sufficient facts or data.”
In this
context, “‘data’ is intended to encompass the reliable opinions of other
experts.” Advisory
Comm. Notes to 2000 Ams. But expert testimony based upon the opinions of other
experts is
not the same as testimony that simply repeats the untested opinions of others.
While the former
may be admissible expert testimony, the latter is inadmissible hearsay; and Dr.
Botosan’s
testimony regarding projections falls into the latter category.
The Tenth Circuit applied this distinction in Hensel Phelps Constr. Co. v.
United States,
413 F.2d 701 (10th Cir. 1969), to distinguish 6816.5 Acres of Land v. United
States, 411 F.2d
834 (10th Cir. 1969). In 6816.5 Acres, the court responded to the appellant’s
contention “that the
testimony of the Government’s mineral valuation expert … was based on his
opinion of a
colleague’s opinion” with the admonition: “the trial court must take steps to
exclude any expert
opinion that is predicated upon another opinion.” 411 F.2d at 839-40. Then, in
Hensel, the court
explained that 6816.5 Acres “is not controlling here because Henley used the
independent
estimates” of other experts “to corroborate the figure which he, Henley, had
reached through his
own analysis.” 413 F.2d at 704. Other cases from other Circuits are to the same
effect. In
United States v. Tomasian, 784 F.2d 782, 783, 786 (7th Cir. 1986), to ascertain
the value of “a
pair of large elephant tusks” stolen from “a private club in Tucson,” “Stone
consulted outside
sources to ascertain the price per pound of ivory and then multiplied that
figure by the weight of
the tusks.” The Seventh Circuit affirmed the trial court’s exclusion of Stone’s
testimony,
explaining: “Stone could only relay another’s opinion of the price per pound of
ivory. He had
5
no opinion of his own on that matter …. Rule 703 does not sanction the simple
transmission of
hearsay; it only permits an expert opinion based on hearsay.” Id. at 786.
So too, here, Dr. Botosan is simply relaying the (highest) revenue projections
she could
find, modified only by calculations no more meaningful than Stone’s
multiplication of price per
pound by the weight of an elephant’s tusk. See also Hutchinson v. Groskin, 927
F.2d 722, 725
(2d Cir. 1991) (“By asking Dr. Bronson to identify the documents … and then
state whether his
opinion was consistent with those expressed in the documents, defense counsel
used Dr. Bronson
as a conduit for hearsay testimony. Defense counsel thereby introduced the
purported opinions
of Doctors … whom plaintiff had no opportunity to examine.”)
B. Dr. Botosan’s Proposed Testimony on Causation Is Inadmissible
According to Dr. Botosan, “Novell’s actions … were a substantial factor in
undermining
SCO’s ability to sell its SCOsource products.” (Report at ¶ 18.) That opinion
has four supports:
1. “depositions of SCO personnel … revealed that customers were deterred from
purchasing SCOsource licenses by Novell’s actions” (id. at ¶ 18);
2. a letter from Merrill Lynch “citing the ‘legal and factual uncertainty
surrounding
[SCO’s] assertions regarding intellectual property ownership and infringement’”
(id. at ¶ 19 [bracketing in original]);
3. “SCO’s RTU program did not meet with the customer acceptance that was
projected” (id. at ¶ 20); and
4. “an independent event study to evaluate the market’s reaction to Novell’s May
28,
2003 open letter asserting ownership” (id. at ¶¶ 21-27).
As shown below, none of the foregoing is a proper basis for Botosan’s proposed
testimony.
First, if “SCO personnel” have percipient knowledge, they can testify to it
(either live or
through deposition). An expert is not needed to parrot what percipient witnesses
could say for
themselves—unless it is to sidestep the hearsay rules that would otherwise bar
admission, which
is not a permissible use of an expert. See United States v. Stone, 222 F.R.D.
334, 341 (E.D.
Tenn. 2004) (“the trial court … must ensure that the expert witness is truly
testifying as an expert
6
and not merely serving as a conduit through which hearsay is brought before the
jury”). Second,
the Merrill Lynch letter cites uncertainty about both ownership and
infringement, and a letter
identifying two sources of uncertainty cannot support the inference that one was
the cause of
Merrill Lynch’s decision not to take a license. Third, to reason that because
SCO’s licensing
program fell short of projections and that Novell must have caused SCO’s
licensing program to
fall short of projections, is merely to assume what Dr. Botosan supposedly set
out to prove. So
Dr. Botosan’s opinion stands or—as shown below—falls with her event study.
1. Dr. Botosan’s Event Study Is Irrelevant
An event study examines the association between newly disclosed
information about a company and its stock price movements. Where the
price movements are unexplained by factors affecting the market as a
whole, and are statistically significant, a “causal connection” is established
between the event considered and the price movements.
(Report at ¶¶ 21, 22.) But the Court has already ruled “that decline in stock
price is not an
appropriate claim for special damages” (Dkt. 621 at 12) and “[e]xpert testimony
which does not
relate to any issue in the case is not relevant and, ergo, non-helpful,”
Daubert, 509 U.S. at 591
(quoting 3 J. Weinstein & M. Berger, Weinstein’s Evidence ¶ 702[02], p.
702-18 (1988)); see
also United States v. Davis, 40 F.3d 1069, 1075 fn. 6 (10th Cir. 1994)
(“improperly applied
science cannot assist the trier of fact”). Because this is a lost profits case,
and Dr. Botosan’s
event study—even if valid—could only explain why the stock price declined, it is
irrelevant.
2. Dr. Botosan’s Event Study Is Based on a Statistically Invalid Model
and a Statistically Insignificant Regression
“[C]orrelation does not equal causation.” Norris, 397 F.3d at 885. A successful
event
study can support an inference that there is a causal connection between
correlated events by
eliminating alternative explanations. See In re Enron Corp. Sec. Derivative
& ERISA Litig., 529
F. Supp. 2d 644, 720 (S.D. Tex. 2006). In the present case, Dr. Botosan claims
her event study
proves that Novell’s May 28 announcement caused SCO’s stock price to drop by
showing that
7
the movement in SCO’s stock price was out of step with the broader market. But
as shown
below, her event study is unsound because the underlying regression is
statistically insignificant.
As Dr. Botosan explains in Appendix 1 to her Report (separately reproduced as
Ex. G
hereto), the essential starting point for her study is a market model developed
by conducting a
regression analysis to ascertain how the performance of SCO’s stock performs
relates to the
broader market. Once that relationship is established, the broader market is
used as a baseline
against which to measure SCO’s stock and thereby identify abnormalities; i.e.,
movements in
SCO’s stock price that vary to a statistically significant degree from the
relationship with the
broader market established by the regression analysis. When an otherwise
unexplained
abnormality correlates with an event, Dr. Botosan infers that the event caused
the abnormality
because broader market forces have been ruled out by the underlying regression
analysis.
To assess the statistical validity of such models and analyses, courts have
considered the
coefficient of determination, denoted R2 (or R2); the t-statistic; and the
probability (or P) value.
See Griffin v. Board of Regents of Regency Univ., 795 F.2d 1281, 1290-91 &
nn. 18-20 (7th Cir.
1986).3 The R2 value of the underlying regression analysis measures the
explanatory power of
the market model around which Dr. Botosan’s event study is built, which
“[o]bviously … is a
factor that may legitimately be considered … in deciding whether the model may
be relied
upon.” Griffin, 795 F.2d at 1291 n. 20, 1292. The explanatory power of the model
considered
by Griffin (R2=0.45) was more than one hundred times greater than Dr. Botosan’s
(R2=0.003),
yet Griffin upheld the trial court’s determination that inferences could not
reliably be drawn from
it. Id. at 1291. Here, the R2 value indicates that broader market forces explain
movements in
3 To estimate the costs she subtracts from lost revenues to calculate last
profits in the last step of
her damages calculation, Dr. Botosan performed three other regression analyses,
and carefully
documented the R2 and P-values for each. (See Report, Exs. 9-11.) Dr. Botosan
did not provide
that information for the analysis on which her event study is based, so Novell
had someone else
calculate them: the R2 value is 0.003964 (adjusted, 0.002639) and the P-value is
0.084062.
(Decl. of Terry L. Musika, attached hereto as Ex. H.)
8
SCO’s stock price less than one half of one percent of the time. See Griffin,
795 F.2d at 1291 n.
20. The virtually unchecked volatility of SCO’s stock price relative to the
market as a whole
means there is no valid baseline against which SCO’s stock can be measured to
identify
abnormal returns, and thus no meaningful event study can be done with SCO’s
stock price.
The P-value (and the t-statistic), in turn, measures the statistical
significance of the
underlying regression. Griffin, 795 F.2d at 1290 n. 18, 1291 n. 19. “[T]o be
statistically
significant” the regression should have “[a] P-value below .05.” Griffin, 795
F.2d at 1291 n. 19
(emphasis added). Dr. Botosan’s P-value (0.084062) is nearly twice that.
3. Dr. Botosan’s Reasoning from her Event Study Is Logically Invalid
The process by which Dr. Botosan reasons from her event study is as invalid
logically as
the study is statistically. That study can be summarized in the following
conditional syllogism4:
1. If “newly disclosed information about a company” coincides with “stock price
movements,” and “the price movements are unexplained by factors affecting the
market as a whole, and are statistically significant,” then “a ‘causal
connection’ is
established between the [information] and the price movements.” (Report at ¶
22.)
2. Novell’s May 28, 2003 announcement regarding copyright ownership coincided
with a statistically significant drop in the price of SCO stock, and that drop
is
unexplained by factors affecting the market as a whole. (Id. at ¶ 23.)
3. Therefore, Novell’s May 28, 2003 announcement caused SCO’s stock price to
drop. (Id.)
No. 1 states the principle on which event studies are based. No. 2 states facts
allegedly
supported by the empirical data. No. 3 is the conclusion inferred from the nos.
1 and 2. Building
on that conclusion, Dr. Botosan continues:
4 See LASERS v. McWilliams, 996 So. 2d 1036, 1049 (La. 2008) (Calogero, C.J.,
dissenting)
(“most legal arguments and conclusions are based on … a conditional syllogism,”
which “begins
with a major premise … stated as an if-then proposition”; continues with “a
minor premise that
… applies the … principle stated in the major premise to the specific facts of
the case”; and ends
with “the conclusion”).
9
4. “If market participants had expected Novell’s announcement to diminish SCO’s
expected future cash flows, firm value would have declined in response to
Novell’s statement.” (Report at ¶ 23.)
5. “In fact, firm value did decline in response to Novell’s statement.” (Id.)
6. Therefore, market participants expected Novell’s announcement to diminish
SCO’s cash flows.
Novell assumes arguendo that no. 4 has some justification, and no. 5 just
restates the conclusion
from the event study. But drawing the conclusion stated in no. 6 from those
premises “is like
saying, ‘Pneumonia makes you cough; therefore, if you cough, you have
pneumonia.’” Paulson
v. Texas, 28 S.W.3d 570, 572 (Tex. Crim. App. 2000). “This form of argument is
referred to in
basic logic textbooks as the ‘Fallacy of Affirming the Consequent’ and is
universally condemned
as invalid.” Pirtle v. Cook, 956 S.W.2d 235, 248 (Mo. 1997) (Price, J.,
dissenting) (citing Irving
M. Copi, Introduction to Logic, p. 292 (5th ed.)).5 An opinion arrived at by a
“form of argument
… universally condemned as invalid” is inadmissible. See Mitchell, 165 F.3d at
782 (“any step
that renders the analysis unreliable renders the expert’s testimony
inadmissible”)
4. Dr. Botosan’s Opinion Is Based on Insufficient Data
Dr. Botosan’s invalid argument from her invalid event study still does not get
to her
conclusion that Novell caused SCO to miss Deutsche Bank’s revenue projections.
To get there,
Dr. Botosan must make still further unwarranted and unsupportable leaps of
logic, which she
does not even attempt to justify. Specifically, to reach her conclusion Dr.
Botosan must infer,
from the “fact” that market participants expected Novell’s announcement to
diminish SCO’s cash
flows the conclusion, that the announcement did diminish SCO’s cash flows; and
indeed that all
discrepancies between projected and actual revenues were caused by Novell.
Manifestly, that
5 See also Gilliam v. Nevada Power Co., 488 F.3d 1189, 1196 n. 7 (9th Cir. 2007)
(rejecting
“Gilliam’s argument” because it “rests on the logical fallacy of affirming the
consequent”);
Green Ridge v. Kreisel, 25 S.W.3d 559, 563 n. 2 (Mo. Ct. App. 2000) (“The
fallacy is often
expressed as ‘If p, then q; q; therefore p.’ The statement is not true because
there may be things
other than p that also occur with q.”).
10
some stock traders thought Novell’s announcement would have a negative effect on
sales is
insufficient data from which to infer that it did; and even if there were some
basis from which to
infer that Novell caused SCO to lose some sales, there is no basis, whatsoever,
for Dr. Botosan’s
conclusion that Novell proximately caused SCO to lose each and every sale
Deutsche Bank
incorrectly predicted SCO would make.
[N]othing in either Daubert or the Federal Rules of Evidence requires a
district court to admit opinion evidence that is connected to existing data
only by the ipse dixit of the expert. A court may [and this Court should]
conclude that there is simply too great an analytical gap between the data
and the opinion proffered.”
General Electric Co. v. Joiner, 522 U.S. 136, 146, 118 S. Ct. 512 (1997).
In addition to being unfounded, Dr. Botosan’s theory also is belied by more
nearly
contemporaneous evidence, such as the very Deutsche Bank projection that she
adopts as her
damages base. That projection was made five months after Novell’s May 28 letter.
Apparently
Deutsche Bank did not think Novell’s announcement would prevent SCO from
reaching its
targets. Moreover, between Novell’s May 28 letter and Deutsche Bank’s October 14
forecast,
SCO’s stock price rose from $6.60 to $15.53; and on October 15, closed at
$20.50.6 If stock
price is a measure of investor optimism about SCOsource license sales, that
optimism rose to
fever pitch in the months following Novell’s letter. It is hard to conceive a
more conclusive
demonstration of the unreliability of the prognostications by investors whose
imputed predictions
Dr. Botosan wants to tell the jury must have been right.
IV. CONCLUSION
Because Dr. Botosan’s opinions are predicated on unsound and indefensible
methodology, they are inadmissible and she should be precluded from testifying.
6 Daily historical information is available from several sources, including
yahoo.com. The
overall trend is graphically illustrated in the chart reproduced as Ex. I
hereto, from the July 30,
2007 rebuttal report by Novell’s expert.
11
DATED: February 8, 2010 Respectfully submitted,
By: /s/ Sterling A. Brennan
WORKMAN NYDEGGER
MORRISON & FOERSTER LLP
Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.

[ Reply to This | # ]

  • 655 - Authored by: Serria on Sunday, February 14 2010 @ 09:08 AM EST
  • 657 - Authored by: Serria on Sunday, February 14 2010 @ 09:09 AM EST
  • 658 - Authored by: Serria on Sunday, February 14 2010 @ 09:10 AM EST
  • 656 Ex A - Authored by: Serria on Sunday, February 14 2010 @ 09:12 AM EST
Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports
Authored by: dyfet on Sunday, February 14 2010 @ 09:08 AM EST
What you have from SCO is a juicy emotional story. It does not matter that it
is factually untrue; it is meant to be presented in a manner intended to
"move" a jury, I am sure. Where there have been soap operas and space
operas, what we have here is a license opera!

[ Reply to This | # ]

Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports
Authored by: cwr on Sunday, February 14 2010 @ 09:21 AM EST
"The trouble with you Americans is that you never make
any clear-cut stupid moves, only complicated stupid moves
that leave the rest of us scratching our heads and wondering
if we may have missed something."

Gamel Abdul Nasser, of all people.

[ Reply to This | # ]

Just you wait
Authored by: inode_buddha on Sunday, February 14 2010 @ 10:28 AM EST
I'm just waiting for IBM's counterclaims re the GPL and don't I recall something
about the Lanham act? I would *love* to know when, if ever,that would start
happening. Also remember, in particular regarding GPL, that those who percieve
things in a complicated way will behave in a complicated way. Either that, or
they're trying to get off with something.

---
-inode_buddha
Copyright info in bio

"When we speak of free software,
we are referring to freedom, not price"
-- Richard M. Stallman

[ Reply to This | # ]

  • Why? - Authored by: Anonymous on Sunday, February 14 2010 @ 01:24 PM EST
    • Why? - Authored by: inode_buddha on Sunday, February 14 2010 @ 06:44 PM EST
      • Indeed so - Authored by: Anonymous on Monday, February 15 2010 @ 04:06 AM EST
      • Why? - Authored by: tiger99 on Monday, February 15 2010 @ 08:00 AM EST
        • Dune? - Authored by: Anonymous on Monday, February 15 2010 @ 03:29 PM EST
        • Why? - Authored by: dwiget001 on Monday, February 15 2010 @ 04:19 PM EST
          • Why? - Authored by: tiger99 on Monday, February 15 2010 @ 04:36 PM EST
        • Why? - Authored by: Anonymous on Monday, February 15 2010 @ 06:26 PM EST
    • Napolian Bonapart - Authored by: ThrPilgrim on Tuesday, February 16 2010 @ 11:58 AM EST
Novell's Daubert Motions: We Finally Get to Read 3 of SCO's Experts' Reports
Authored by: Anonymous on Sunday, February 14 2010 @ 10:37 AM EST
This may all be nice and well (and has been true from day 1).

However, if SCO convinces a jury that the free software community is an
essentially communist thing, and here are the communists threatening free
enterprise, we may be out of luck.

Everyone here knows very precisely what free software is and what it isn't, but
not out there in the real world. What if you make that argument to people who
think that software is something that's sold by Microsoft or Apple? (without any
technical understanding, or understanding of copyright law). SCO has a great
case then.

One should not underestimate the implied "communism" argument. For a
wild number of people to think the Obama administration 'socialist' - the same
administration that has just grudgingly co-bailed out Wall Street, because else,
my little credit union might have collapsed, too ... just like everyone else's -
someone may use the words, but it is surprising to see how many people appear to
believe them.

[No further argument about administrations and their views intended. All I am
saying is, I have a very hard time seeing any socialist bail out Wall Street,
just like I have a hard time viewing Novell or Red Hat as communist enterprises.
Still, enough people appear to believe such stuff, in essence because they want
to. So SCO may still try their hands at this game.]

[ Reply to This | # ]

So, it's all fluff. But the point is -
Authored by: Anonymous on Sunday, February 14 2010 @ 10:38 AM EST

The "open letter to SCO" in September 2003 made it clear that SCO had no case. From then - at the latest - SCO's legal team knew that SCO had no case.

Now here we are in 2010, and nothing has really changed. In the real world, we know that SCO's lawyers are just blowing smoke. But in the Alice-in-Wonderland world called "the US courts", it goes on, and on, and on, and on.

And all this cost Microsoft only $10 million. Ballmer probably reckons that was the most effective $10 million that Microsoft has spent this century.

[ Reply to This | # ]

Not easy money
Authored by: ailuromancy on Sunday, February 14 2010 @ 10:57 AM EST

I am not convinced that being an expert witless is easy money. If you look at SCO's creditors list you will find Christine A Botosan and Gary Pisano. I did not find G. Gervaise Davis III, or two of his employers. Perhaps he got paid, or perhaps he didn't bother to invoice because it is customary to pay your witnesses.

[ Reply to This | # ]

Lemonade from lemons
Authored by: Anonymous on Sunday, February 14 2010 @ 11:10 AM EST
A footnote from 656, page 3 contains this:

To support its inflated projections, Deutsche Bank relies heavily on two
separate licensing agreements, one for
which Microsoft paid SCO $16 million and another for which Sun paid SCO $10
million. (See Ex. E at 18.) However, SCO's former CEO testified during the bench
trial in this matter that those agreements were not SCOsource licenses: "Q.
Were the Sun and Microsoft licenses SCOsource licenses or not? A. No. They were
UnixWare licenses." (Ex. F at 246:13-15.)

[ Reply to This | # ]

SCOSource blocked you to use Linux ?
Authored by: Anonymous on Sunday, February 14 2010 @ 11:13 AM EST
Hi PJ,

you say

The SCOsource license was purportedly a right to use SCO's alleged code, but if you paid for a SCOsource license, it blocked you from legally continuing to use the GPL'd Linux code that SCO definitely didn't own
I would have thought that it would at most prevent you to redistribute the code, but to use it ?
Are you positive it blocks you from using it ?
I have always thought that if I buy a license for a super-secret patent-encumbered technology, I could mix it with any GPL code as long as I don't redistribute the result. I would have expected roughly the same for SCOSource: as long as you don't redistribute the code, you are free to pay as much money as you wish to SCO to limit your rights. (This freedom does not apply for convicted monopolists).

Let me be precise: SCO was not allowed to limit the rights of its Linux users, it's protection business is probably vetoed by anti-racketeering laws, etc. But if I got Linux from RedHat, I would have thought (once again) that I'm allowed to buy a SCOSource license and continue to use Linux.

Loïc

[ Reply to This | # ]

Pisano's assumption ignored UCB
Authored by: Anonymous on Sunday, February 14 2010 @ 01:17 PM EST
Pisano also ignored the the UCB settlement. The UCB settlement gutted the core
UNIX(tm) copyrights. Something neither Novell nor SCO really want to
acknowledge, but something a real expert should acknowledge.

Pisano ignoring the UCB settlement and "assuming SCO owns the
copyrights" shows either his lack of expertness or the fact SCO hid
information from him. A real expert would be aware that in fact the core
copyrights in question really are not anything.


[ Reply to This | # ]

Something I do not understand here.
Authored by: Anonymous on Sunday, February 14 2010 @ 02:53 PM EST
Why exactly are the contents of these "expert reports" relevant in the
present trial anyway? To this naive observer, they would seem to have nothing at
all to do with the question of whether "the copyrights" were supposed
to have been transferred to SCO by the APA combined with Amendment 2.

It would seem to me that the contents of these expert reports are simply not
germane to the question of ownership. Thus, I am puzzled that one of the prongs
of Novell's argument is not something like, "Your Honor. In this trial,
these expert reports have nothing to do with the issues on the table and should
be excluded on grounds of total irrelevance."

What exactly am I missing?

[ Reply to This | # ]

Another reason SCO would not have sold all of those imaginary licenses
Authored by: Anonymous on Sunday, February 14 2010 @ 04:26 PM EST
RedHat and other Linux providers were getting all set up to indemnify their
users. (There's a RedHat lawsuit waiting in the wings as I recall...)



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What Copyrights?
Authored by: Anonymous on Sunday, February 14 2010 @ 04:47 PM EST
This trial is supposed to be about a set of copyrights, but I do not think that
SCOG has ever asked Novell to provide a list of the copyrights they hold. I
suspect that SCOG and Novell both prefer that no such list is made public,
because I suspect that the list of valid copyrights that were NOT explicitly
enumerated and conveyed in the APA, is an empty list.

Novell and oldSCO both knew this when the APA was written: tjhis is the real
reason they were excluded initially, and it is the real reason that Ammendment 2
is worded the way it is.

But if the Jury awards this entiore set of copyrights to Novell, Novell may
decide that there is not further value to Novell in keeping the secret, and may
choose to disclose that the set is null.

[ Reply to This | # ]

You can use GPL code no matter what... it's distributing it that is the problem
Authored by: Anonymous on Sunday, February 14 2010 @ 05:02 PM EST
If you violate the GPL, you can't use the code any more, and if you do, you can be sued for copyright infringement
PJ, I think you misspoke here. It is my understanding that you can only violate the GPL by distributing it against the wording of the GPL license. I don't think that you can violate the GPL by merely using the software. If you violate the GPL, which you can only do by distributing it against the terms of the GPL, you lose your right to distribute it, but you do not lose the right to continue using it.

From the wording of the GPL v2 itself:
Activities other than copying, distribution and modification are not covered by this License; they are outside its scope. The act of running the Program is not restricted, and the output from the Program is covered only if its contents constitute a work based on the Program (independent of having been made by running the Program). Whether that is true depends on what the Program does.
I do believe that other aspects of the GPL will be the ultimate downfall of SCO, like the fact that they continued to distribute Linux under the GPL even after they made public claims that there was proprietary SCO owned IP in Linux.

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an economy-dragging tax on information technology
Authored by: SpaceLifeForm on Sunday, February 14 2010 @ 10:28 PM EST
We already have an an economy-dragging tax on information technology, courtesy of Microsoft.

But, that's just coincidence, tSCOG has nothing to do with Microsoft! Riiiight.

The darkside wants to, at minimum, monetize Linux, so they can financially squeeze it via inflation and other monetary machinations.

---

You are being MICROattacked, from various angles, in a SOFT manner.

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WhoNovell's Daubert Motions: We rtsFinally Get to Read 3 of SCO's Experts' ...
Authored by: Anonymous on Monday, February 15 2010 @ 11:09 AM EST
"get me a gig as an expert will you"

Let's see, spent seven years evaluating all SCO lawsuits in detail, including in
depth analysis of all filings.

Sounds to me like you qualify as an expert.

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  • Overqualified - Authored by: Anonymous on Monday, February 15 2010 @ 04:37 PM EST
SCO really means
Authored by: Anonymous on Monday, February 15 2010 @ 12:24 PM EST
Shooting Crack in ORBIT
this is why they so messed up

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Justice delayed is justice denied - nt
Authored by: SilverWave on Monday, February 15 2010 @ 01:01 PM EST
.

---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

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Gary Pisano statement
Authored by: ak on Tuesday, February 16 2010 @ 04:17 AM EST
People should think about how that document signed by Gary Pisano can be used against The SCO Group, Inc. Think about Red Hat or IBM for example.

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The lynchpin of G. Gervaise Davis III's argument
Authored by: Anonymous on Tuesday, February 16 2010 @ 11:37 AM EST
"In 1995, SCO purchased the entire UNIX software
business, a long standing software development and licensing business, from
Novell."

The rest of the argument follows from this assertion. Only there appears to be
plenty of evidence that SCO wanted to purchase the "entire UNIX software
business" from Novell, but didn't have enough money to do this, so ended up
purchasing only some sort of role as Novell's agent. The nature of the
agreement in which SCO would collect license fees for Novell, and Novell would
pay back 5% of those fees to SCO fits this picture of SCO as an agent for
Novell, rather than SCO obtaining the entire business. If SCO was acting as
Novell's agent, then an implied license of some set of separable, non-exclusive
set of rights, but not actual transfer of the copyrights makes entire sense.

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why does SCO want to ban mention of Groklaw?
Authored by: Christian on Wednesday, February 17 2010 @ 03:30 PM EST
People thought it was odd that SCO would want to stop mentions of Groklaw when jurors are strongly cautioned to not seek other sources of information.

Something PJ mentioned shed some light on this, I think. I suggest that what SCO really doesn't want is an expert witness saying that no Linux enthusiasts would have bought licenses no matter what Novell said because they all knew someone who read Groklaw so they knew SCO's claims were nonsense.

Imagine someone from iBiblio on the stand talking about monthly page hits from unique IP addresses after links starting showing up on slashdot.

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