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SCO's Declaration of Steven Sabbath - as text
Wednesday, June 22 2005 @ 03:52 AM EDT

Here's SCO's Declaration of Steven Sabbath, one of the documents we scanned from the pile of exhibits SCO attached to the Declaration of Jeremy Evans, which in turn was in support of SCO's sealed Memorandum in Opposition to IBM's Motion for Partial Summary Judgment on Breach of Contract Claims, Docket Number 348.

Dr Stupid and I were talking about this declaration, because he noticed some interesting things about it. First, Sabbath says he is offering the declaration in connection with both SCO v. IBM and SCO v. Novell. But we couldn't find it as ever being filed in the latter case.

You can see why SCO might have decided not to use it in the Novell case, if you look closely at what Mr. Sabbath writes.

For example, he testifies thusly:

Amendment No. 2, however, was intended to confirm, among other things, the parties' intent that SCO would obtain ownership of the UNIX copyrights under the APA and that Novell had received no rights with respect to UNIX source code under the APA.

At first glance, it might seem that he means that the Asset Purchase Agreement was intended to be a copyright conveyance, which was confirmed in the Amendment 2. Aside from the question of why it would need to be confirmed, if there had been a copyright conveyance, that wording -- "this is a copyright conveyance" -- or some such language would surely have been used, if the intent was really to confirm it, since that is what the APA is lacking and what the law requires. Yet Amendment No. 2 says no such thing.

Note the first clause: "SCO would obtain ownership..." Now, stop and think. He doesn't say that SCO *had obtained* ownership, but rather that it would, even though he uses the expression "had received no rights" with respects to Novell. If the parties were confirming in 1996 that SCO "would obtain" ownership (someday?) of the copyrights, then it follows, might it not, that SCO did not *have* ownership in 1996? You can find the October 1996 Amendment 2 in our Contracts page.

Might Sabbath thus be carefully expressing, and lawyers know how to express themselves carefully, that neither party saw the 1995 Asset Purchase Agreement as a conveyance of a copyright, and -- crucially -- that Novell was still the owner on paper? Or, perhaps that the APA was insufficient as a copyright conveyance, even if that was the intent? Note that there is no time frame given for the "would obtain." Of course, this isn't an attempt to put words in his mouth. But if the case goes to trial, no doubt he would be asked to clarify this point. It is one thing to put something opaque in a written declaration. It is quite another to say it as a witness at trial, subject to questioning by the other side's attorneys.

As to the second clause, "Novell had received no rights with respects to UNIX source code under the APA," this is classic weasel wording. Of course Novell received no rights to UNIX source code under that document, because they had them already and were transferring to oldSCO some of their rights. How could oldSCO give Novell any UNIX rights? Significantly Sabbath does not say that Novell *retained* no rights, so really this clause is just smoke and mirrors. It doesn't mean anything, if you logically parse it out.

As usual with SCO, what they *don't* say can be just as important as what they do. Here's what Mr. Sabbath does not say:

1. He does not explicitly say that the UNIX copyrights were transferred from Novell to oldSCO. Surely if they had been, he would have said so. And in his position, surely he would have known.

2. He doesn't say that oldSCO transferred the UNIX copyrights to Caldera, despite being around at the time.

3. He doesn't explain why neither the APA nor Amendment No. 2 declares itself to be a copyright conveyance.

This might explain why SCO hasn't filed this declaration in the Novell case.

A year ago, Dr Stupid wrote an article for Groklaw in which he presented contemporaneous evidence that Novell continued to make improvements to UnixWare after Amendment No. 2, and that oldSCO acknowledged them as holding the copyrights. In fact, he found SCO leaving copyright notices for Novell dated as late as 1998 untouched in its updates to the UnixWare system, including updates to the manuals of which newSCO claimed copyright ownership in its complaint against AutoZone. You might want to reread that article in connection with the Sabbath Declaration.


Brent O. Hatch (5715)
Mark F. James (5295)
[address, phone, fax]

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

Stephen N. Zack (admitted pro hac vice)
[address, phone, fax]

Attorneys for Plaintiff







Case No. 2:03CV0294DAK

Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells



I, STEVEN SABBATH, declare as follows:

1. I submit this Declaration in connection with the lawsuits entitled The SCO Group v. IBM and The SCO Group v. Novell, Inc..

2. From in or about January 1991 until in or about November 2003, I was employed by The Santa Cruz Operation, Inc. ("Santa Cruz"), which was subsequently renamed Tarantella, Inc. In 1995 and 1996, my position at Santa Cruz was Vice President of Law and Corporate Affairs.

3. In that capacity, I participated with others in numerous meetings and discussions leading up to the 1995 Asset Purchase Agreement (the "APA") whereby Novell sold its UNIX business to Santa Cruz. Those individuals included Jim Wilt, Geoff Seabrook, and Doug Michaels, who represented Santa Cruz in the negotiations; Ed Chatlos, the principal negotiator for Novell; and in-house and outside counsel for Novell.

4. Based on my involvement with the APA, I understand that the parties' intent and purpose in executing the APA was to transfer to Santa Cruz Novell's entire UNIX-related business, including all rights to UNIX and UnixWare and the UNIX copyrights; that the parties agreed to permit Novell to retain an interest in future System V binary royalties to enable SCO to afford the asset purchase; and that the parties never intended to give Novell any right with respect to any of Santa Cruz's future source code interests in UNIX and UnixWare, including under the SVRX licenses.

5. I understand that IBM has argued that Section 4.16(b) of the APA gave Novell the right to require Santa Cruz to waive any breach of the intellectual property protections provided in the SVRX licenses. That argument is contrary to the intent of Paragraph 4.16(b) as I understood it. Indeed, Santa Cruz would never have agreed to


give Novell the right under the APA to waive such protections under the SVRX licenses because such a right could have eviscerated the entire purpose of the APA and the value of the assets transferred to Santa Cruz under the APA.

6. In October 1996, Novell and Santa Cruz executed Amendment No. 2 to the APA. I was involved the discussions leading up to Amendment No. 2, and I signed Amendment No. 2 on behalf of Santa Cruz. Amendment No. 2 arose as a result of a dispute between Novell and SCO concerning Novell's attempt to execute, on Santa Cruz's behalf, a royalty buy-out with IBM. That dispute was ultimately resolved through an amendment to IBM's SVRX license that was jointly executed by Santa Cruz, Novell, and IBM. Amendment No. 2, however, was intended to confirm, among other things, the parties' intent that SCO would obtain ownership of the UNIX copyrights under the APA and that Novell had received no rights with respect to UNIX source code under the APA. Paragraph B.5 of Amendment No. 2 was specifically intended to make clear that Novell had no right to increase any SVRX licensee's rights to SVRX source code, no right to grant any new SVRX source code licenses, and no right to prevent Santa Cruz from exercising the rights it obtained under the APA with respect to SVRX source code.

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

Executed: 19 Nov 2004
Santa Cruz County, California

Steven Sabbath


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

Edward Normand


Plaintiff, The SCO Group, Inc. hereby certifies that a true and correct copy of
DECLARATION OF EDWARD NORMAND was served on Defendant International Business
Machines Corporation on this 30th day of November, by depositing it in U.S. Mail, first class,
postage prepaid, to their counsel of record as indicated below:

Evan R. Chesler, Esq.
Cravath, Swaine & Moore LLP

Donald J. Rosenberg, Esq.

Alan L. Sullivan, Esq.
Todd M. Shaughnessy, Esq.
Snell & Wilmer L.L.P.

Attorneys for Defendant/Counterclaim Plaintiff IBM Corp.


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