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More Filings in SCO v. Novell - Declaration by G. Gervaise Davis as text
Tuesday, May 22 2007 @ 11:22 AM EDT

Lots of entries on the docket in SCO v. Novell, but SCO has filed them in as sealed documents. The one that is readable that will interest you is this one, Declaration of G. Gervaise Davis III, in which he opines as an expert on whether the Unix copyrights did or didn't transfer and tells the court how it should understand the APA and Amendments, based on logic and industry custom, which I doubt the court will care tremendously about, since Davis had nothing whatsoever to do with its preparation, negotiation, execution, or implementation and all the people who did are all available, if the court feels it even needs parol evidence, and they have already told the court that the copyrights didn't transfer.

Here's what he was hired for:
6. In connection with the lawsuit between SCO and Novell, I have been retained by counsel for SCO to offer expert testimony in the areas of industry customs and practices relating to copyrights and the use and manner of negotiating and drafting software acquisitions and the licensing agreements typically used in the industry. Specifically, I was asked whether it would be necessary, and expected, for the copyrights relating to the UNIX operating system to be transferred to SCO, as part of the sale of the UNIX business assets, in order for SCO to obtain the legal rights needed to use, create derivatives of, distribute and license the technology and the actual source and object code and other materials being used in the active software business purchased from Novell by SCO. My full analysis will be set forth in my expert report due on May 29, 2007.

Since SCO hired him, of course he says that normally you'd expect the copyrights to transfer. This case is so strange. I've never seen a contract case decided on the basis of what normally happens in an industry or on what would be logical. Maybe if the contract was so old everyone involved had died, and you couldn't figure out the wording at all. Of course, there's always a first time for everything, and one thing you have to give Boies Schiller: they'll try everything. And if you notice the date, this was signed yesterday, so that tells me the SCO side is worried they didn't have enough.

And there may be cases I just don't know about, but it seems a bit of a stretch, since parties entering a contract aren't bound by custom, and the two people who did write this contract for Novell and the lawyer executive in charge of the deal who attended the Novell board meeting the night before the signing of the APA where it was decided to retain the copyrights told us that there were particular reasons specific to *this* deal for doing things in such a way that copyrights would not transfer.

Some of you may remember that name. Here you go, Davis is the man who first helped Linus get his trademark back. He also said in a discussion about SCO in 2003 that litigating over intellectual property was insane: "The most rational companies recognize that litigation of intellectual property is just insane from a cost-benefit standpoint." Here's more of what he had to say back in 2003:

Q: In the SCO case, does that mean we should look for the public relations ramifications as much as the legal ones?

Davis: Absolutely, because once the dispute becomes public knowledge, it becomes a public relations war-not just for the opinions of you, me and other interested parties, but for the board of directors of IBM. They will keep reading about the case and wondering-do we have a problem here or not? Many of these cases effectively become like blackmail in the sense that somebody decides that it is worth paying the money just to stop all the questions and fuss....

Q: There's been a lot of confusion on the letter sent by SCO to the companies using Linux. The letter never told the recipient what actions to take.

Davis: There are two reasons for that letter. One is to get publicity over their claim. The other is that, under the intellectual property laws, if you claim copyright infringement, you must pursue the claim-or you may very well lose your rights. Numerous companies, when they think something has been infringed, will be very careful not to send a cease and desist letter. They will just notify people in a general way that they have these rights, and that companies may be infringing on them. In this way, they are not forced to bring a suit right away, but the implication is there.

Q: Does that mean one could look at the letter and say this has more to do with the IBM lawsuit than it does to the recipient?

Davis: Yes. Exactly. Because if they really thought that the other people were infringing, they probably would send them a cease and desist letter. But once you send that letter, you have to file suit within a reasonable time, or you'll lose your rights

Ah. Like blackmail. Don't look at me. That's what the man said.

Here are the docket entries:

05/18/2007 - 306 - **SEALED DOCUMENT** SEALED MEMORANDUM IN OPPOSITION re: 275 MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance, filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 307 - **SEALED DOCUMENT** SEALED RESPONSE IN OPPOSITION re: 277 MOTION for Summary Judgment on SCO's First Claim for Slander of Title Based on Failure to Establish Special Damages, filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 308 - **SEALED DOCUMENT** SEALED DECLARATION OF MARK F. JAMES filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 309 - **SEALED DOCUMENT** SEALED EXHIBITS 9-14 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 310 - **SEALED DOCUMENT** SEALED EXHIBITS 15-20 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 311 - **SEALED DOCUMENT** SEALED EXHIBITS 21-34 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 312 - **SEALED DOCUMENT** SEALED EXHIBITS 35-40 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 313 - **SEALED DOCUMENT** SEALED EXHIBITS 41-50 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 314 - **SEALED DOCUMENT** SEALED EXHIBITS 51-59 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 315 - **SEALED DOCUMENT** SEALED EXHIBITS 60-63 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 316 - **SEALED DOCUMENT** SEALED EXHIBITS 64-70 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 317 - **SEALED DOCUMENT** SEALED EXHIBITS 71-75 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 318 - **SEALED DOCUMENT** SEALED EXHIBITS 76-86 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 319 - **SEALED DOCUMENT** SEALED EXHIBITS 87-104 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/18/2007 - 320 - **SEALED DOCUMENT** SEALED EXHIBITS 105-120 re: [308] Sealed Document filed by Plaintiff SCO Group (oversized document is not scanned - will be kept in permanent storage) (alt) (Entered: 05/21/2007)

05/21/2007 - 321 - ORDER granting 304 Motion for Leave to File Excess Pages. Signed by Judge Dale A. Kimball on 5/21/07 (alt) (Entered: 05/21/2007)

05/21/2007 - 322 - ORDER granting 305 Motion for Leave to File Excess Pages. Signed by Judge Dale A. Kimball on 5/21/07 (alt) (Entered: 05/21/2007)

05/21/2007 - 323 - ORDER granting 300 Motion for Leave to File Excess Pages. Signed by Judge Dale A. Kimball on 5/21/07 (alt) (Entered: 05/21/2007)

05/21/2007 - 324 - DECLARATION of G. Gervaise Davis III re [306] Sealed Document, SCO'S MEMORANDUM IN OPPOSITION re: 275 MOTION for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance, filed by SCO Group. (Attachments: # 1 Exhibit A - Exibit B)(Normand, Edward) (Entered: 05/21/2007)

[ Update: I forgot to tell you that this is accompanying SCO's sealed Memorandum in Opposition to Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title and Third Claim for Specific Performance [PDF], one of the four summary judgment motions Novell has filed, and that means that Novell can attach an expert's opinion saying the opposite, or two of them, I suppose, if they think they need it, when they reply.]

Here is the declaration by Davis as text, thanks to Steve Martin.

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

Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, PC
[address]
[phone]
[fax]

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

Devan V. Padmanabhan (admitted pro hac vice)
DORSEY & WHITNEY LLP
[address]
[phone]
[fax]

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

Stuart Singer (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address]
[phone]
[fax]

Attorneys for Plaintiff, The SCO Group, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC.,
a Delaware corporation,

Plaintiff/Counterclaim-Defendant,

vs.

NOVELL, INC.,
a Delaware corporation,

Defendant/Counterclaim-Plaintiff.
DECLARATION OF G. GERVAISE
DAVIS III


Civil No.: 2:04CV00139


Judge Dale A. Kimball
Magistrate Brooke C. Wells

(1)

I, G. GERVAISE DAVIS III, declare as follows:

1. I was admitted to the District of Columbia Bar in 1958 and the California Bar in 1959 (CA Bar #29501). Since then I have been admitted in nearly all the federal courts in the State of California, as well as before the U.S. Supreme Court, the U.S. Tax Court, and numerous Federal Circuit and District Court in states other than California. I am no longer an active member of the D.C. Bar. I have been practicing law for nearly fifty years, except for two recent years when I was inactive due to medical issues. (My Curriculum Vitae is attached hereto as Exhibit A to this Report.)

2. During the time I practiced law as a technology and intellectual property lawyer (over forty years), I devoted approximately 90% of my time to the representation of computer software and hardware companies, as well as hundreds of corporate and business users of software. The subject matter of this practice covered (among other topics) the creation and development, authorship, sale, licensing, distribution and use of computer software. The practice involved the core issues arising under the federal and state laws relating to copyright, patent, and trade secret protection of computer software. During that time, I participated in the negotiation of software licenses acquiring, transferring, licensing, or otherwise permitting end-user companies and individuals to use highly valuable and expensive software and other assets in these businesses. My representation of clients also often included situations where the software package was being acquired and/or licensed for further development and the future marketing of it by a second party to third party end users.

3. In that work, my involvement included helping clients by developing business strategies for protecting, acquiring, selling and licensing software. Such work required that I gain a detailed understanding of the economics of software licensing and ownership, including

1 (2)

how to control and help clients derive maximum economic benefits from the high cost of developing, selling and acquiring such software, or conversely, how to keep the transaction costs associated with acquiring or licensing software to a minimum. Those goals were often in opposition, depending upon the client I was representing. Based on such experience (among other factors), I believe I have a detailed, accurate and useful understanding of the complex customs and practices of software licensing and how those practices bear on the instant dispute between The SCO Group, Inc. ("SCO") and Novell, Inc. ("Novell").

4. Some of the major companies I represented with respect to the foregoing issues were Sun Microsystems, Silicon Graphics, Hewlett Packard, Atari and Fujitsu, as well as my one of my primary clients, Digital Research, Inc., the developer of the first recognized, standardized microcomputer operating system called "CP/M" and later called "DR-DOS." On behalf of my clients I have written and negotiated software licenses with Apple, DEC, IBM, Intel, Control Data, NCR, Burroughs, Ashton Tate, Word Perfect, Novell, and at least a hundred or more smaller software and hardware companies, as well as for or with many other businesses using, acquiring, licensing or selling the copyrights and other rights in the software at issue.

5. In the course of such representation, I was often asked to advise these clients on software copyright issues and questions copyright ownership and the various rights such ownership creates, as well as the obligations it imposes upon the owners and licensors of the copyrights. In such capacities, I had to understand the relative industry customs and practices relating to ownership warranties and other necessary provisions in licenses. This also involved working on many acquisition and purchase agreements relating to software businesses and software copyrights, trade secrets, and patents. I consider myself an expert in copyright, trade secrets and trademarks as these subjects relate to software and software licensing. I do not

2 (3)

consider myself an expert on software patents as such, but I am quite familiar with the impact of the more recent growing influence of patent law on the foregoing subjects.

6. In connection with the lawsuit between SCO and Novell, I have been retained by counsel for SCO to offer expert testimony in the areas of industry customs and practices relating to copyrights and the use and manner of negotiating and drafting software acquisitions and the licensing agreements typically used in the industry. Specifically, I was asked whether it would be necessary, and expected, for the copyrights relating to the UNIX operating system to be transferred to SCO, as part of the sale of the UNIX business assets, in order for SCO to obtain the legal rights needed to use, create derivatives of, distribute and license the technology and the actual source and object code and other materials being used in the active software business purchased from Novell by SCO. My full analysis will be set forth in my expert report due on May 29, 2007. Based on the work I have completed, however, I have concluded the following.

a. The parties intended to transfer, and did transfer, the same UNIX and UnixWare copyrights that Novell owned and used to run those businesses, as well as those inchoate and not yet completed or registered copyrights for projects underway.

b. Novell obtained by a "grant back" license certain non-exclusive rights in those copyrights that continued to allow Novell to market its Netware product line of software.

c. Novell's argument that SCO obtained an "implied license" to use the copyrights is contrary to the relevant customs and practices regarding the sale and licensing of software and source code when sold as a business (as opposed to merely the sale of a specific program), because (among other relevant considerations) SCO could not effectively continue to run, and further develop, the UnixWare business based solely on

3 (4)

the unspecified implied licenses and the unidentified scope thereof that Novell claims to have created or intended to have granted SCO.

d. There is no evidence I have seen substantiating Novell's argument that SCO received or relied upon any implied copyright licenses to run the businesses it purchased from Novell. In my experience, Amendment No. 2 to the APA does not use any language suggesting either that the APA had conferred an implied license on SCO or that the Amendment itself constituted such a license. Instead, the language of the Amendment merely confirms the intended transfer of all of the copyrights necessary for SCO to exercise its rights in the UNIX and UnixWare technology it had acquired. Those are the same copyrights that Novell had itself acquired and then owned before it sold the assets of the business using those copyrights.

e. It would not have been logical or necessary for legal counsel to Novell to rely on some alleged unspecified concern about possible loss of its license rights under the bankruptcy laws in deciding not to transfer the actual copyrights, because Section 365(n) of the Bankruptcy Code protected licensees of intellectual property rights in such events after its addition to the laws in 1988, for that very reason.

f. In 1995, the year of this transaction, and for many years before and for some years thereafter, there were serious reservations in the software industry about whether software could be patented. Today, patents effecting software use are becoming more important than they were in 1995 when the APA was negotiated, even though patents are still not anywhere near as significant as copyright protection, without which the software industry could not function as an industry. For those reasons and others, the question of the scope of any patents on isolated technology in UNIX and UnixWare would not have

4 (5)

been a major concern to the parties or to lawyers familiar with the software industry in the early and mid-1990s.

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

EXECUTED AT MONTEREY, CALIFORNIA ON MAY 21, 2007:
(signature)
G. Gervaise Davis III

5 (6)

CERTIFICATE OF SERVICE

Plaintiff/Counterclaim-Defendant, The SCO Group, Inc., hereby certifies that a true and correct copy of the foregoing Declaration of G. Gervaise Davis III was served on this 21st day of May, 2007, via CM/ECF to the following:

Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon
ANDERSON & KARRENBERG
[address]

Michael A. Jacobs
Matthew I. Kreeger
Kenneth W. Brakebill
MORRISON & FOERSTER
[address]

/s/ Edward Normand

6 (7)


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