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To read comments to this article, go here
Erik W. Hughes' Dec. '04 Declaration - "SCO Never Repudiated the GPL"
Wednesday, March 02 2005 @ 04:38 AM EST

Here is the Declaration of Erik W. Hughes , the SCO employee who has the unhappy task of having to rebut IBM's GPL allegations in its Redacted Memorandum in Support of IBM's Motion for Partial Summary Judgment on Breach of Contract Claims, among other things, and to persuade the court that SCO's didn't violate the GPL by its Intellectual Property License for Linux. He fervently states, in a moment of supreme irony, and for me great satisfaction, "SCO never repudiated the GPL."

Well, we probably need to talk about that.

He also tells us this whopper: "Prior to suspending its sale of Linux-related products in May 2003, SCO had a promising Linux business . . ." A *promising* Linux business? Unfortunately, our credulity is strained by the fact that we well remember his CEO telling us that he devised the litigation path precisely because the company was about to go out of business. And Business Week told us SCO was losing $5 million per quarter "and its stock had slid below the $1 NASDAQ delisting price".

Ah, irony.

Here's a story about a judge who ordered an entire law firm, all 80 lawyers, to take an ethics class, as a sanction "for repeated misrepresentation of facts and the law". That's a fine idea. Perhaps they could have a class for witnesses too. Lesson 1: Judges expect you to tell the truth. Fibbing is considered out-of-place in legal proceedings, even -- quaintly to some -- morally wrong. Crossing your fingers behind your back doesn't make it OK. Kindly remember we are expecting the truth, the whole truth, and nothing but the truth. Lesson 2: Lying to a court can have consequences that you may not enjoy very much.

He also says IBM never notified SCO its rights under the GPL had terminated or that SCO was infringing IBM's copyrights. Under the terms of the GPL, no notice is required. The notice is built in to the GPL. Your right to distribute under the GPL is only provided to you if you accept the terms of the GPL and abide by them. If you violate the terms, your rights automatically terminate:

"4. You may not copy, modify, sublicense, or distribute the Program except as expressly provided under this License. Any attempt otherwise to copy, modify, sublicense or distribute the Program is void, and will automatically terminate your rights under this License. However, parties who have received copies, or rights, from you under this License will not have their licenses terminated so long as such parties remain in full compliance.

"5. You are not required to accept this License, since you have not signed it. However, nothing else grants you permission to modify or distribute the Program or its derivative works. These actions are prohibited by law if you do not accept this License. Therefore, by modifying or distributing the Program (or any work based on the Program), you indicate your acceptance of this License to do so, and all its terms and conditions for copying, distributing or modifying the Program or works based on it."

By far the most intriguing aspect to this declaration is the sales figures. Look at paragraph 4, for example. They sold, from August 5, 2003 to May 31, 2004 45 units of SCO Linux Server 4.0. But 70 units were returned, for a net loss of over a thousand dollars. I gather a lot of folks sent their software back. These figures don't seem normal, so I am guessing a lot of folks got mad at SCO for their Linux litigation strategy and decided to show it that way. Get a load of this paragraph:

"7. In accordance with its obligations to current customers, from May 14, 2003, until May 31, 2004, SCO sold 83 units of SCO Linux Server 4.0, for gross revenue of $9,209. During this same period, 79 units were returned, which resulted in a loss of $7,360, so net sales for this period were 4 units and net revenue was $1,849."

79 out of 83 units returned. No wonder SCO filed this as a paper document. It's embarrassing. What might the moral of this business story be? Don't sue your customers, maybe? Litigation doesn't always pay? I'll let you draw your own conclusions.

SCO references an Erik Hughes declaration in its Memorandum in Opposition to IBM's Motion for Partial Summary Judgment on its Counterclaim for Copyright Infringement (Eighth Counterclaim), but it dates it November of 2004, not December. I don't know if that means there have been two declarations or if one or the other is a typo. However, Mr. Hughes has apparently also been deposed, because he says this is to further his deposition. That sometimes means that something was said or not said during a deposition that the witness, or his lawyers, would like to fix. The whole point of this declaration is to try to say that SCO immediately stopped selling Linux, its entire product line, promptly after "discovering" that IBM had put "hundreds of thousands of lines" of SCO's code into Linux.

Now, if they could just find them, so Judge Kimball would stop saying they haven't produced enough evidence to shake a stick at, we'd maybe start to believe them. Where, oh where can those missing lines of infringing code be hiding?

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

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

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

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

Attorneys for Plaintiff

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

THE SCO GROUP, Inc.

Plaintiff,

v.

INTERNATIONAL BUSINESS
MACHINES CORPORATION,

Defendant.

Case No. 2:03CV0294DAK

Hon. Dale A. Kimball

Magistrate Judge Brooke C. Wells

DECLARATION OF
ERIK W. HUGHES


1. My name is Erik W. Hughes. As Director of Product Management for The SCO Group, Inc. ("SCO"), I have personal knowledge of the following facts. I submit this declaration in support of SCO's Memorandum in Opposition to IBM's Motion for Partial Summary Judgment on SCO's Contract Claims, in support of SCO's Memorandum in Opposition to IBM's Motion for Partial Summary Judgment on IBM's Claim of Copyright Infringement (Eighth Counterclaim) and further to my deposition of May 11, 2004.

2. As reflected in the SCO press release attached as Exhibit A, SCO released the product called SCO Linux Server 4.0 on November 19, 2002. SCO marketed and sold this product for only a few months, from November 19, 2002, until May 14, 2003.

3. As I testified at my deposition, and as reflected in the SCO press release attached as Exhibit B, SCO suspended the sale and marketing of its Linux-related products, including SCO Linux Server 4.0, on May 14, 2003. This was shortly after SCO discovered that IBM had contributed SCO's copyrighted UNIX code to Linux without SCO's approval. After that date, SCO allowed only pre-existing customers to purchase such products in accordance with its obligations to those customers. Since May 14, 2003, SCO has not entered into any further obligations to sell Linux Server 4.0 or OpenLinux 3.1.1.

4. From August 5, 2003, until May 31, 2004 (the date of the last sale), SCO sold 45 units of SCO Linux Server 4.0, for gross revenue of $5,294. During this same period, 70 units were returned, which resulted in a loss of $6,473, so net sales for this period were -25 units and net revenue was -$1,179.

5. After August 5, 2003, there were 401 sales of SCO OpenLinux 3.1.1 for total gross revenue of $50,796. During the same period, 22 copies of this product were returned, so net revenue was $50,025.

6. As indicated in the SCO press release attached as Exhibit C, August 5, 2003, was the first date on which SCO offered its SCO Intellectual Property License for sale. SCO determined to offer this license only because IBM had misappropriated SCO's proprietary code and contributed hundreds of thousands of lines of that code to Linux.

7. In accordance with its obligations to current customers, from May 14, 2003, until May 31, 2004, SCO sold 83 units of SCO Linux Server 4.0, for gross revenue of $9,209. During this same period, 79 units were returned, which resulted in a loss of $7,360, so net sales for this period were 4 units and net revenue was $1,849.

8. As reflected in Exhibit B, and as reconfirmed in its letter of June 23, 2003, a copy of which is attached as Exhibit D, SCO has never sought to sell a SCO Intellectual Property License for Linux to anyone who received a Linux distribution from SCO. Rather, SCO has agreed to hold its Linux customers harmless from any SCO intellectual property issues regarding Linux.

9. SCO copied, advertised and distributed the Linux kernel and other related Linux software for years before 2003. At all times, SCO distributed the Linux kernel and other GPL licensed packages as expressly provided under the General Public License ("GPL"). SCO's Linux distribution complied with all of the conditions set forth in section 1 and section 3 of the GPL. No royalty or licensing fees of any nature were charged. SCO never repudiated the GPL.

10. Prior to suspending its sale of Linux-related products in May 2003, SCO had a promising Linux business with longstanding customers and pre-existing binding sales and service contracts. The Linux product line, including the operating system, services, support, professional services, education, and layered applications, had accounted for 5-10% of SCO's revenue.

11. Until December 31, 2004, SCO is required by contract to provide its Linux customers with password-protected internet access to certain Linux files. Promptly thereafter, SCO will delete all remaining Linux files from its internet servers. Thus, while SCO has not made any significant distribution of any Linux product since May 2003, SCO's Linux "distribution" will totally cease by the end of 2004.

12. Prior to the filing of its Counterclaim on August 6, 2003, IBM never provided SCO with any notice of its claim that SCO's rights under the GPL had terminated and that SCO was infringing IBM's copyrights.

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

December 7, 2004

___[signature]____
Erik W. Hughes


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