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SCO's Exhibit C - The AT&T/IBM Side Letter
Sunday, November 16 2003 @ 01:01 AM EST

Here is the "what's mine is mine and what's yours is yours" AT&T/IBM Side Letter, attached to SCO's Amended Complaint as Exhibit C. Thanks, once again, to the loyal and hard-working Scott McKellar for providing it to Groklaw.


[AT&T Technology Systems Letterhead]

O.L. Wilson
Manager, Software
Sales and Marketing
[address, phone]

February 1, 1985

Old Orchard Road
Armonk, New York 10504


Re:    Software Agreement Number SOFT-00015, Sublicensing Agreement Number SUB-00015A and Substitution Agreement Number XFER-00015B

This letter states understandings between our companies relating to the referenced agreements and amends certain sections in such agreements concerning SOFTWARE PRODUCTS subject to the referenced Software Agreement.

A. Software Agreement

1.   Regarding Sections 2.01 and 4.01, we will consider extending rights granted under Section 2.01 to include use of SOFTWARE PRODUCTS in countries other than the United States and giving written consent under Section 4.01 to export SOFTWARE PRODUCTS to such countries when specific needs arise.  In the case of additional DESIGNATED CPUs in such countries such extension and consents will be given by the Supplements for such CPUs prepared in accordance with Section 2.03.  In the case of your export of modified SOFTWARE PRODUCTS to our source licensees in such countries such consents will be given by an appropriate writing consistent with Section 7.06(b).  We are presently willing to grant such rights for the countries you have requested, namely, Australia, Austria, Belgium, Canada, Republic of China (Taiwan), Denmark, Finland, France, Federal Republic of Germany (West Germany), Greece, Hong Kong, Ireland, Israel, Italy, Japan, Republic of Korea (South Korea), Luxembourg, The Netherlands, New Zealand, Norway, Sweden, Switzerland, United Kingdom (England, Wales, Scotland, Northern Ireland), and Singapore.  We will not unreasonably withhold such permission for such listed countries or for other countries that you may identify.  Our concerns in this regard are the laws of the recipient country relating to protection of software and U. S. export control laws.

2.   Regarding Section 2.01, we agree that modifications and derivative works prepared by or for you are owned by you.  However, ownership of any portion or portions of SOFTWARE PRODUCTS included in any such modification or derivative work remains with us.

3.   You have requested that your contractors be permitted to use SOFTWARE PRODUCTS pursuant to the referenced Software Agreement.

Accordingly, notwithstanding any provision to the contrary in the Software Agreement, including Section 7.06(a) as amended hereby, it is agreed that, subject to the conditions set forth herein, the rights granted in Section 2.01 of the Software Agreement be extended to permit you to provide access to and allow use of SOFTWARE PRODUCTS by your contractors.

Such use may be on your DESIGNATED CPUs or on such contractors' CPUs that you designate as additional DESIGNATED CPUs pursuant to Section 2.03 of the Software Agreement.  Such use by contractors will be deemed to be for your own internal business purposes.  If such use is on a contractor's CPU, you may furnish a copy of a SOFTWARE PRODUCT to such contractor.  You shall secure from each such contractor, at the time of or before providing access to or furnishing any copy of a SOFTWARE PRODUCT, the agreement of such contractor in writing that any claim, demand or right of action arising on behalf of such contractor from access to or use of the SOFTWARE PRODUCT shall be solely against you and that such contractor agrees to the same obligations and responsibilities as to confidentiality and other restrictions pertaining to the use of the SOFTWARE PRODUCT as those undertaken by you under the Software Agreement.  Each such agreement shall also provide that, when a contractor's work for you is completed, all copies of the SOFTWARE PRODUCT and any software derived from or developed with the use of a SOFTWARE PRODUCT shall be returned to you by such contractor and such contractor shall erase any such software from any storage element of apparatus.  Copies of such agreements with contractors shall be provided to us at our request.  However, portions of such agreements not specifically required by this paragraph may be deleted.  Information furnished by LICENSEE relating to contractors shall be subject to Paragraph A15 in this Letter Agreement.

4.   Regarding Section 5.04, we agree that you shall not be obligated to pay any tax based on our net income in the United States or elsewhere.

5.    Regarding Section 6.03 of the Software Agreement and Sections 2.07 and 3.03 of the Sublicensing Agreement, we will not terminate your rights for breach, nor will we give notice of termination under such Sections, for breaches we consider to be immaterial.  We agree to lengthen the notice period referenced in such Sections from two (2) months to one hundred (100) days.  If a breach occurs that causes us to give notice of termination, you may remedy the breach to avoid termination if you are willing and able to do so.  In the event that a notice of termination is given to you under either of such Sections and you are making reasonable efforts to remedy the breach but you are unable to complete the remedy in the specified notice period, we will not unreasonably withhold our approval of a request by you for reasonable extension of such period.  We will also consider a reasonable extension under Section 2.07 of the Sublicensing Agreement in the case of a DISTRIBUTOR who is making reasonable efforts to remedy a breach.

We will consider arbitration if a dispute arises on payments.

In any event our respective representatives will exert their mutual good faith best efforts to resolve any alleged breach short of termination.

6.   Regarding Section 6.05 of the Software Agreement and Section 3.05 of the Sublicensing Agreement, we will offer new software and sublicensing agreements to your former SUBSIDIARIES on the same basis as to any other prospective licensee.  A former SUBSIDIARY would be unlicensed during the period between its ceasing to be your SUBSIDIARY and the effective date of such new agreements.  Therefore, new agreements should be in effect before a SUBSIDIARY is divested.

7.   Regarding Section 7.03, we are not aware of any patent or copyright infringement claim or action against us relating to SOFTWARE PRODUCTS.

8.   Regarding Section 7.05, we will cooperate with you in defending litigation arising from your use of SOFTWARE PRODUCTS (or sublicensing of SUBLICENSED PRODUCTS under the Sublicensing Agreement), but the extent of such cooperation cannot be determined until such litigation arises.

9.   Amend Section 7.06(a) by replacing such section with the following:

--7.06(a)  LICENSEE agrees that it shall hold SOFTWARE PRODUCTS subject to this Agreement in confidence for AT&T.  LICENSEE further agrees that it shall not make any disclosure of such SOFTWARE PRODUCTS to anyone, except to employees of LICENSEE to whom such disclosure is necessary to the use for which rights are granted hereunder.  LICENSEE shall appropriately notify each employee to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by such employee.  Nothing in this agreement shall prevent LICENSEE from developing or marketing products or services employing ideas, concepts, know-how or techniques relating to data processing embodied in SOFTWARE PRODUCTS subject to this Agreement, provided that LICENSEE shall not copy any code from such SOFTWARE PRODUCTS into any such product or in connection with any such service and employees of LICENSEE shall not refer to the physical documents and materials comprising SOFTWARE PRODUCTS subject to this Agreement when they are developing any such products or service or providing any such service.  If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, LICENSEE's obligations under this section shall not apply to such information after such time.--

10.   Regarding Section 7.06(b), this section covers the situation where one of our licensees wishes to furnish its modified version of our source code for a SOFTWARE PRODUCT to another of our licensees for the same product.  The last sentence of this section makes clear that you may receive source code from another such licensee, provided you treat such source code as if it were the source code we furnished to you.  This language is not intended to refer to an object-code product that you obtain from another of our licensees pursuant to that licensee's sublicensing rights.

11.   Regarding Section 7.06, we recognize that you may at some time be required to disclose a SOFTWARE PRODUCT to others (i) by law, (ii) by a valid order of a court or other governmental body, (iii) by your existing undertaking with the European Economic Community or (iv) in order to establish your rights under the Software Agreement.  You recognize the proprietary nature of SOFTWARE PRODUCTS and the need to protect SOFTWARE PRODUCTS from unrestricted disclosure.  Accordingly, you agree not to make any such disclosure without giving notice to us so that we have an opportunity to intervene.  We agree to respond to any such notice within a reasonable time, consistent with the requirement that you disclose.  You agree to obtain, or assist us in obtaining, a protective order appropriately limiting the extent of any such disclosure that may eventually be made.

12.   We agree that all SOFTWARE PRODUCTS, including enhancements to or new versions of existing SOFTWARE PRODUCTS, generally available under the Software Agreement will be made available to you at the fees and under terms, warranties and benefits equivalent to those offered to other licensees.

13.   Regarding Section 1(e) of the "Schedule for UNIX* System V, Release 2.0, Version 1.0" attached to Supplement 1 of the Software Agreement, Section 1(c) of the "Schedule for UNIX Documenter's Workbench** Software" attached to Supplement 2 of the Software Agreement, and the "Schedule for 370 DEVELOPMENT SYSTEM V" attached to Supplement 3 of the Software Agreement, we agree that the fees in such schedules are not subject to increase.

14.   Regarding the documentation listed in Section 2 of the Schedule for UNIX System V, Release 2.0, Version 1.0, the documents entitled "UNIX System V System Release Description" and "UNIX System V-International Release Description" are not presently available without restriction to the general public.  All other listed documents are available without restriction.

15.   We agree that the identities of your contractors, DISTRIBUTORS and AUTHORIZED COPIERS, as well as the types and serial numbers of DESIGNATED CPUs of such parties, are confidential and need only be disclosed to us as specified under the referenced agreements, as modified hereby, and that such information will be used by us only for the purposes of administering and enforcing such agreements and will not be disclosed to anyone except those having a need to know for the purpose of administering the referenced agreements.

B. Sublicensing Agreement
1.   A DISTRIBUTOR may also be your contractor pursuant to the terms set forth in item A3 above.

2.   We agree that "internal business purposes" in Sections 2.01(a) and 2.01(b) includes the right to offer data processing services to others.

3.   Regarding the following IBM form agreements:

Form No.     Title
1. S125-3358-0       Agreement for IBM Licensed Programs
2. S125-3419-0 IBM Usage License Amendment to Agreement for IBM Licensed Programs
3. S125-3301-0 IBM Program License Agreement
4. S137-0075-0 IBM Instruments, Inc. Program License Agreement
5. 04-83 Amendment to Agreement for IBM Licensed Programs (Value Added Remarketer)
6. 04-83 Agreement for IBM Licensed Programs (Value Added Remarketer's Licensed End User)
7. 6172208 IBM Program License Agreement
8. Unnumbered IBM Personal Computer Retail Dealer Agreement, Software
9. 926-2661-0D IBM Personal Computer Retail Dealer Agreement

We have reviewed such form agreements for use under the provisions of the Sublicensing Agreement and have no objections to such use, or the use of substantially similar forms, in the United States and Puerto Rico provided that:

(a)  In using forms such as 1 and 6 (our references), you will not specify "Installation License Applies" or "Location License Applies";

(b)  If your customer is permitted to make its own additional copies of "licensed program materials" for use on additional machines, as permitted under form 1, you treat such additional copies under the Sublicensing Agreement as if you had furnished such copies;

(c)  In the next revision of form 3 you correct the language in the second paragraph relating to title to indicate that title may be retained by a third party (or by your licensor);

(d)  In the next revision of forms 4 and 7 you include a provision prohibiting reverse assembly or reverse compilation, as appears in forms 1, 3 and 6; and

(e)  In dealing with AUTHORIZED COPIERS you obligate such parties to include in copies they make of SUBLICENSED PRODUCTS the notices required by Section 2.08(a) of the Sublicensing Agreement.

4.   Amend Section 2.02 by changing "written agreement on the package" to --written agreement on or accompanying the package--.

5.   Amend Section 2.05(b) by replacing such Section with the following:

--(b)  If an AUTHORIZED COPIER also has been granted a right to use a SOFTWARE PRODUCT, either as a licensee of AT&T (or of a corporate affiliate thereof) or as a contractor of LICENSEE (in accordance with requirements of AT&T), such AUTHORIZED COPIER may use such SOFTWARE PRODUCT to modify a SUBLICENSED PRODUCT derived from such SOFTWARE PRODUCT.  If the resulting modifications are owned solely by LICENSEE, then fees for copies of such modified SUBLICENSED PRODUCT distributed to customers by such AUTHORIZED COPIER may be paid to AT&T pursuant to this Sublicensing Agreement or pursuant to a Sublicensing Agreement between AT&T and such AUTHORIZED COPIER, as LICENSEE shall elect.  However, if such AUTHORIZED COPIER retains any ownership interest in such modifications, then fees for copies of such modified SUBLICENSED PRODUCT distributed to customers by such AUTHORIZED COPIER must be paid to AT&T only pursuant to a Sublicensing Agreement between AT&T and such AUTHORIZED COPIER.  Regardless of which Sublicensing Agreement is involved, only one fee shall be collected by AT&T for such copy.

6.   Regarding Section 2.06, "best efforts" need be no more than the efforts you would customarily use to enforce equivalent agreements (such as those listed in B3 above) with your customers, value added resellers, end users, and dealers.

7.   Regarding Section 2.08(a), only bona fide notices need be included, not irrelevant comments that may appear in a SOFTWARE PRODUCT.

8.   Regarding Section 2.09, we have not yet made any copies of software materials available under this Section.  If we do so, you may elect whether to make your own copies or purchase such copies from us.

9.   Regarding the references you are permitted to make to our trademark under Section 2.10, you are under no obligation to make such references.

10.   Amend Section 3.02, first and second lines, by deleting "or AT&T notifies LICENSEE in writing", and, third line, by changing "such party" to --LICENSEE--.

11.   The discount provisions in the Sublicensing Agreement are deleted.  We will exert our good faith best efforts to propose a new discount provision by April 1, 1985.  Such new discount provisions will be retroactive to the effective date of the Sublicensing Agreement and, at a minimum will:

(i)   provide a discount percentage, applicable to essentially yearly discount periods, of at least two percent (2%) for each whole one hundred thousand dollars ($100,000.00) of discounted per-copy fees up to a maximum of sixty percent (60%), or equivalent;

(ii)  require advance payment of per-copy fees by you no more frequently than quarterly;

(iii) require no advance commitment by you regarding volume of SUBLICENSED PRODUCTS furnished to customers or put into use; and

(iv)  provide for no retention by us of advance payments made by you unless mutually agreed.

12.   Regarding Section 5.01, we agree that neither you nor your AUTHORIZED COPIERS or DISTRIBUTORS will be required to provide or disclose the identity of customers to us or our accredited auditing representatives.

13.   Regarding Section 5.02(a), we agree that the notification in writing required by such Section may be within thirty (30) days after the date you begin furnishing copies of a SUBLICENSED PRODUCT to customers or DISTRIBUTORS or putting such copies into use on your CPUs, and that you may pay any sublicensing fee for the SOFTWARE PRODUCT on which such SUBLICENSED PRODUCT is based at the time of such notification.

14.   Regarding Section 5.02(c), you need not pay a per-copy fee for copies of SUBLICENSED PRODUCTS that are returned without having been used or are furnished in place of a defective copy.  You are not required to pay an additional per-copy fee for an enhancement if the enhancement does not increase the number of users supported by a product into the next higher category.  However, when we furnish later versions of a SOFTWARE PRODUCT with new features, we may require payment of additional sublicensing fees to upgrade your earlier SUBLICENSED PRODUCTS to include the new features.

15.   Regarding the documentation you may furnish to a customer or end user, which documentation is defined as part of a SUBLICENSED PRODUCT, you may furnish the number of copies necessary to reasonably support the product without paying an additional sublicensing fee.  You may also furnish to prospective customers the number of copies of such documentation necessary to reasonably support the marketing of the SUBLICENSED PRODUCT without paying a sublicensing fee for such copies.

16.   Regarding your obligation under the Sublicensing Agreement to pay per-copy sublicensing fees for SUBLICENSED PRODUCTS furnished to customers (or put into use on your internal CPUs), we recognize that certain of your SUBLICENSED PRODUCTS may comprise a set of parts, with one major part being a prerequisite for the other, minor part(s), such that if you furnished (or put into use) all the parts together you would be obligated to pay only one per-copy fee.  However, we understand that you wish to furnish (or put into use) the parts separately, paying the full per-copy fee when you furnish (or put into use) the major part and no fee at all when you furnish (or put into use) the minor part(s).  We agree that you may do this, provided that you report, pursuant to Section 5.02 of the Sublicensing Agreement, the quantities of each major and minor part furnished (or put into use) and that such quantities be reconciled periodically to determine whether the quantity of any minor part ever exceeds the quantity of major parts, and that if there is such an excess, you pay an additional per-copy fee for each excess minor part.  We will exert our good faith best efforts to propose by April 1, 1985 methods for such reconciliation and for determining such additional per-copy fees.  We would expect such fees to be based on a proportional reduction of the full per-copy fee with the objective of achieving an equitable fee arrangement, taking into account the excess quantities of minor parts over major parts.  The discount arrangement applicable to the full per-copy fees will also apply to the additional per-copy fees.

C. Substitution Agreement
Regarding SUBLICENSED PRODUCTS based on LICENSED SOFTWARE under the prior Software Agreement listed in the Substitution Agreement, we agree that you may elect to pay per-copy sublicensing fees for some such SUBLICENSED PRODUCTS at the rates set forth in Sections 4.01(a) and (b) of the prior Supplemental Agreement (Customer Provisions) ("the old rates") and other such SUBLICENSED PRODUCTS at the rates set forth in Section 1(c) of the Schedule for UNIX System V, Release 2.0 ("the new rates"), provided:

(a)  You pay the Initial Sublicensing Fee specified in Section 2(c)(i) of such Schedule when you begin paying some per-copy fees at the new rates while continuing to pay other per-copy fees at the old rates.  (Such Initial Sublicensing Fee will be waived if you elect to pay all per-copy fees at the new rates.)

(b)  Per-copy fees you pay under the old rates do not apply to the determination of any discount percentage under the new Sublicensing Agreement and per-copy fees you pay under the new rates do not apply to the "Cumulative Total of Fees Paid" under the prior Supplemental Agreement (Customer Provisions).

(c)  In the statements furnished pursuant to Section 5.02(b) of the new Sublicensing Agreement you clearly distinguish whether you are applying the old rates or the new rates for relevant SUBLICENSED PRODUCTS.

Capitalized terms in this letter agreement are defined in the referenced agreements.

If you agree with the above understandings and amendments, please so indicate by signing and dating the attached copy of this letter agreement in the spaces provided therefor and returning such copy to us.

  Very truly yours,


By {signature: illegible}
for O. L. Wilson



By {signature: illegible}

Title {illegible}            

Date {illegible}            

*UNIX is a trademark of AT&T Bell Laboratories.
**Documenter's Workbench is a trademark of AT&T Technologies.

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