decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
Chris Sontag Admits to "Linux License", Also Calls it a "Covenant Not to Sue" - Updated
Saturday, May 26 2007 @ 02:24 PM EDT

One of the new exhibits Novell has just filed in SCO v. Novell is a portion of the March 14, 2007 deposition of Chris Sontag, Exhibit 335-14 [PDF]. It's attached as an exhibit to the Second Supplemental Declaration of Kenneth W. Brakebill in Reply to Novell's Motions for Summary Judgment [PDF].

We learn some mighty fascinating things about the SCOsource endeavor we could only guess about before:

  1. The lawyers who worked on it (the list includes Boies, Schiller, Ryan Tibbitts, and Kevin McBride).
  2. The two guys most responsible for negotiating with potential victims (Sontag and Larry Gasparro).
  3. SCO's projected dreams of massive revenues from it (they seem to have figured it at 100% of the market of installed commercial Linux servers, some 10 to 20 million servers by their estimate at the time, or so he claims. It is in SCO's interest at the moment in this litigation with Novell, though, to make it appear to be a huge amount of lost business, obviously, so it can claim Novell ruined their business and get Novell, hardy har, to pay them should SCO win, so keep that in mind when reading about their financial expectations.)
  4. Questar Gas took a license. EV1 did too, but we knew that, but what we weren't sure about was what the license they took was precisely for. Now we know it was a "Linux license".
  5. They did offer a "Linux license". Sontag also uses the phrase a "covenant not to sue." And he calls it a Linux license, not an IP license or a Unix license. This isn't what SCO told the IBM court, as I'll show you.

So it looks like SCOsource was the first draft or dress rehearsal for what Microsoft is now trying with patents, all right, trying to find a way to neuter the GPL so it can tax Linux. That was SCO's dream too. As you'll see, Sontag speaks about a "right to use" license for Linux. That's what SCOsource was, or what it included. Linux users were supposed to pay SCO for a right to use Linux. Speaking of rights, what right does SCO have to decide who has a right to use Linux? Now Microsoft wants us to pay them too for a "right to use" Linux. It's like a hustle which requires vagueness about their claims -- they don't want any "infringement" fixed. They want to charge for it perpetually. Two dying companies trying to ride the Linux wave to survive a little longer by hook or by crook.

I wonder if Microsoft crafted the Novell deal from what they learned about the GPL from the SCOsource experience? Or did Microsoft provide SCO with the legal strategy in the first place? We don't know yet, but I'll bet we'll find out someday.

Don't you just love these folks? Here we are, Linux users, developers, and vendors, minding our own business, just traveling down life's highway when suddenly out of nowhere comes a gang of highway robbers who stop our coach, tell us to get out and hand over our gold, or we won't be allowed to continue on our way in peace. They don't own the highway or the coach or our gold, but they just grab what belongs to us because they feel like it. Do they care if it's fair?

Actually, it's worse than bandits. At least highway robbers don't pretend we stole *their* gold in some way they won't tell us about precisely, but that now we have to pay them for the rest of our lives every time we want to take a couch onto any highway.

Now, if I go to Burger King, do I have to pay a McDonald's tax? Will McDonald's threaten to sue me if I eat Burger King's hamburgers instead of theirs? No, they recognize that customers get to choose what they like, so they try to provide something that people will prefer. Why is Microsoft so concerned about people using Linux that it is trying to control it through doomed IP infringement claims to make it seem less appealing? Why not just make products people prefer? They can make money too, if they'd redirect some of that energy and money more productively. Hey, just calling off the message board astroturfers would be a nice start, and they'd save money too. The world would thank them for it. I know I would.

They'd probably need to grasp the design of the Internet first, though, so they'd understand how to make use of it to make money. No, not by turning it into controlled pipes into a walled garden, where paying customers sit on their hands and watch what they are allowed to watch, like some kind of Internet version of those old-fashioned drive-in movies. That's the way it was *before* the Internet.

That really is, I think, Microsoft's fundamental problem. They don't like the Internet or get what it's good for. They see the Internet as a worldwide drive-in movie, one that they wish to own. Linux is developed using the Internet, and that makes it fast and makes it possible for some of the greatest developers in the world to work together, no matter where they live.

The Internet is Microsoft's real problem, all right. It's Hollywood's problem too, and Viacom's, and the RIAA's. They are pining for the goode olde dayes and can't get with the new, even though, as Google and Red Hat have demonstrated, there is real money to be made the new way. Instead they are trying to shut down the openness of the Internet and sue into the ground those who discerned the Internet's possibilities before they did.

Microsoft seems not to realize that trying to kill off its competition in the glare of the Internet's spotlight is not going to work out well for Microsoft the way it used to in the dark. It is damaging its own reputation, and badly, on a worldwide scale, thanks to millions of uncontrollable bloggers. Communications have changed. Mainstream journalists are valuable, some of them are indispensable, but, with some notable exceptions, for the most part, they don't control opinions any more. People go more to independent blogs to get the truth, because they've lost trust in the mainstream. Read the comments under Ephraim Schwartz's factually-challenged piece on ODF and OpenXML. You will get more accurate information in the comments than in the article, I think, and the consistency of the comments correcting the article is my proof that no one took that article seriously *because they knew better* -- because everyone can now know whatever they want to know. You can't control knowledge now. Only actually playing fair and telling the truth works for companies now. And I'd suggest that means a change for Microsoft.

Maybe Microsoft should hire some PR people who are younger and/or more with it, so they wouldn't keep falling over their own feet. Maybe after first renovating the executive suite.

Yes, Microsoft has sullied its reputation with this patent saber rattling. That is true even if it were to turn out that it has a valid patent somewhere hidden away, because they are threatening end users and individual developers. That was a fatal mistake. It makes people furious. End users are your customers, and companies don't do well when they start threatening to sue their own customers. As for threatening individual developers, it's contemptible for any company the size of Microsoft to do such a thing. People naturally find it reprehensible. This is, at best, a vendor to vendor matter. And even that is a problem. The idea behind patent licenses is that someone *wants* to use your patents. We don't. The second Microsoft tells what its patents actually are, any actual infringement would be instantly removed and everyone would reroute. Maybe that is why they won't tell. Just like SCO.

The patent landscape has changed, too, thanks to KSR, so the value of the "let's sue for patent infringement" business model has been impaired. It might even need to be written off, when it comes to software. No one is afraid of Microsoft the way they used to be anyhow. The jeers and laughter at OSBC ought to tell it so. We expected Microsoft to pull something like this, so everyone prepared. The money is there. The talent is there. The community is there. And people know better, thanks in part to the ridiculous SCO dress rehearsal.

FOSS is unstoppable anyway, no matter what Microsoft does, because it isn't a traditional business that can be stopped in any traditional way. It's just talented people who figured out what the Internet could do for software development and did it. Even if it were possible to destroy all FOSS vendors in the universe, FOSS would continue, thanks in large part to the GPL.

Microsoft can make money from openness too. But they'd need to listen to Irving Wladawsky-Berger's advice, "If you want to know how to be successful, follow the smart people. Figure out what's on their minds, talk to them, figure it out, then you can say "Oh My God" -- then you can be part of it."

Here's the kicker, though. If your company has a bad reputation, the best people won't want to work for you. Yes. Think about it.

Speaking of destroying your own reputation, here's the interchange from the Sontag deposition, and I've marked some places because I want to show you where Sontag contradicts what SCO claimed in the IBM case:

14

1 the SCOsource umbrella.
2 Q. Okay. I think we were talking about who
3 else over time has devoted a substantial portion of
4 their time to SCOsource and you mentioned Bill
5 Broderick, and you mentioned Larry Gasparro I think
6 headed a sales team?
7 A. Uh-huh (affirmative).
8 Q. Any other individuals?
9 A. Jay Peterson, who was kind of my technical
10 lead for gathering source code on repositories or
11 answering technical questions for various cusomers
12 and so on.
13 Q. Did he have anyone working with him?
14 A. No, he did not.
15 Q. Okay. And what about Larry Gasparro: who
16 was on his team?
17 A. I can't remember. He had two or three
18 people working for him. Greg Pettit was one that I
19 can remember. And then I can't remember the name.
20 At least one other person that was working for Larry.
21 Q. And what were Bill Broderick's main areas
22 of responsibility for SCOsource?
23 A. Contracts administration.
24 Q. And what does that mean?
25 A. He was responsible for kind of doing the


15

1 day-to-day negotiations on contracts or drafting of
2 contracts that in many cases were ultimately reviewed
3 by the legal team. But he would be the day-to-day
4 contracts administrator.
5 Q. Did he have anyone working under him on
6 SCOsource tasks?
7 A. No, he did not.
8 Q. And when you say "the legal team" is that
9 in-house or outside counsel?
10 A. Both.
11 Q. Who would that encompass?
12 A. It would involve Ryan Tibbitts, a number
13 of attorneys from the Boies, Schiller & Flexner law
14 firm, as well as Kevin McBride.
15 Q. And who was most involved in talking
16 directly with potential licensees under the SCOsource
17 initiatives?
18 MS. BORUCHOW: Object to form.
19 A. Can you be more specific?
20 Q. Well, who at SCO -- you've mentioned a
21 number of people who had areas of responsibility in
22 SCOsource. Whose job would it be to be talking
23 actually with potential licensees?
24 A. That would have been myself, along with
25 Larry Gasparro and his team.


90

1 under oath?
2 A. Yes.
3 Q. Anything you need to correct or clarify
4 from this morning?
5 A. No. I don't believe so.
6 Q. Okay. So can you tell me again when was
7 the first time you think anyone came up with numbers
8 in terms of projections for the revenue that
9 SCOsource would generate?
10 A. I think by April or May of 2003, we
11 started developing some kind of high level
12 projections of what we expected to be able to be
13 accomplished with the SCOsource right-to-use
14 licensing program. And it was based on the
15 projections of commercial use of Linux and servers
16 that was somewhere on the order of, by that time,
17 about 2 million commercial servers. But we believed
18 that number could be substantially higher because
19 there wasn't really effective reporting mechanisms,
20 and that it was having a fairly high growth rate. So
21 by this time now, it's on the order of 10 to 20
22 million installed servers as of 2007.
23 But based on our pricing that we had, we
24 viewed that ultimately we should be able to get a
25 hundred percent adoption of our UNIX or our


91

1 right-to-use license with the commercial use of
2 Linux. So whatever the current installed base is, we
3 thought we should be able to get the entire
4 commercial use licensed appropriately. It's just how
5 quickly that could occur.
6 Q. Which is the right-to-use license, again?
7 A. The license -- the right-to-use license
8 for Linux.
9 Q. The IP license?
10 A. Well, no. The right-to-use license for
11 Linux that provided the covenant not to sue.
12 Q. Is that the Microsoft Sun type
13 arrangement?
14 A. No. That was the license for Linux users.
15 Q. And that was entities such as ... who took
16 those licenses?
17 A. Any commercial user who ...
18 Q. No. Who actually took them?
19 A. EV1 was a licensee. Questar Gas
20 ultimately was a licensee. A number of retailers and
21 a few others, many of whom I no longer remember the
22 names of.
23 Q. You were saying before that the IP was
24 such a valuable asset, and protecting that was the
25 primary goal of SCOsource. I mean, if that's true

Soooo, the Microsoft and Sun licenses were NOT Linux licenses, meaning they must be Unix licenses, no? Which makes the money Microsoft and Sun gave to SCO Novell's money. Right?

And I'd surely like to hear SCO's explanation for why it told the court in SCO v. IBM that what it offered wasn't a Linux license but a Unix license that had nothing at all to do with Linux:

B. SCO Did Not Breach the GPL

24. IBM alleges that SCO has breached the GPL by imposing "further restrictions" on Linux users.

25. Section 4 of the GPL states that a licensee's use of licensed material beyond the scope of the GPL will "automatically terminate" the licensee's rights under the GPL (but the GPL does not say when such a termination becomes effective, and it provides no mechanism by which the licensee is put on notice of an alleged unauthorized use of the licensed material). (IBM Ex. 128 4.)

26. Section 6 of the GPL states: "Each time you redistribute the Program (or any work based on the Program), the recipient automatically receives a license from the original licensor to copy, distribute or modify the Program subject to these terms and conditions. You may not impose any further restrictions on the recipients' exercise of the rights granted herein." (Id 6.)

27. IBM argues (at 19) that SCO's right to use and distribute Linux under the GPL "automatically terminated" when SCO began offering its Intellectual Property License for UNIX (the "UNIX License") beginning on August 5, 2003. Specifically, IBM contends that the UNIX License imposed "further restrictions" (and thereby breached Section 6 of the GPL) by allegedly licensing Linux only in object code format, prohibiting end-users from further sublicensing or distributing Linux, and by charging fees for Linux.

28. However, the UNIX Licenses on their face license and charge for the use of UNIX software, not Linux or any IBM-copyrighted work. (See, e.g., IBM Ex. 401; IBM Ex. 403.) The UNIX Licenses contain a release of claims, covenant not to sue, and waiver of any infringement claims SCO may have against the licensee, all based on the licensee's use of UNIX. (Ex. 49 30.)

29. For example, IBM labels the UNIX License that SCO sold to Questar as a Linux license.

REDACTED

30. The licensing clauses of all the UNIX Licenses are worded similarly. (Ex. 49 30.) The UNIX Licenses thus are agreements pertaining to UNIX and not to Linux. (Id.; IBM Ex. 324 at 181-82.)

31. SCO has not sought to collect royalties or licensing fees for, or to impose any restrictions on, the use of Linux or any of IBM's allegedly copyrighted works. (IBM Ex. 284 9; Ex.49 30.) SCO has never attempted to license or sublicense Linux or any IBM copyrighted work, or any other GPL-licensed source code. (Ex. 49 30.)

Getting the picture? In one case, it's all about Unix, not Linux. In the other it's all about Linux, not Unix. Notice Questar mentioned as getting a "Unix license"? But Sontag says it was a "Linux license". Well, which is it? SCO keeps digging the hole its reputation is falling in deeper and deeper. For sure, if what Sontag said at his Novell deposition is true, then SCO's memo in IBM is not, or vice versa. Well. I guess they could both be not true. At least I see no way to make them match up.

It's SCO's misfortune to have both cases, Novell and IBM assigned to the same judge, who presumably can count how many stories he is being told.

You will have noticed that these are snips. For example, the exhibit jumps from a snip on page 15 of the deposition transcript to page 90, so don't let it confuse you.

So, thanks to this deposition, at least we know now who was involved, who was most in charge of running it, and where the buck stops at SCO. If those parts are true. But can't you imagine another trial someday, maybe an antitrust case, where some poor guy will be deposed and asked who was most responsible for the Novell-Microsoft "covenant not to sue"? And who was silly enough to sign up for something like that?

The Brakebill declaration is in support of four Novell reply memoranda:

Reply in Support of Novell's Motion for Partial Summary Judgment on SCO's Non-Compete Claim in Its Second Claim for Breach of Contract and Fifth Claim for Unfair Competition

Reply in Support of Novell's Motion for Partial Summary Judgment on the Copyright Ownership Portions of SCO's First Claim for Slander of Title and Third Claim for Specific Performance

Reply in Support of Novell's Motion for Partial Summary Judgment on the Copyright Ownership Portions of SCO's Second Claim for Breach of Contract and Fifth Claim for Unfair Competition

Reply in Support of Novell's Motion for Summary Judgment on SCO's First Claim for Slander of Title Based on Failure to Establish Special Damages

The Brakebill supplemental declaration is the document you need to figure out what all the exhibits are, because he numbers and names them, including mentioning some sealed exhibits, like a letter from a guy at Raytheon to Greg Pettit at SCO and internal HP email. You will also note with pleasure that in Exhibit 7, Mr. Brakebill teaches the court how to use Internet Archive to find pages that have been removed from websites. The exhibit is a Novell web page on a certain date in 2004. Little by little, we'll get the judiciary up to speed! Here's a tip: try to find any SCO pages on Internet Archive. You can find old Novell pages, but where, oh where, has our little SCO gone? Might it be they'd rather we can't find where they say one thing one year and something else another?

The thought comes to mind because Exhibit 15 to the Brakebill supplemental declaration is Chris Sontag's deposition in the IBM case taken in 2006. In that deposition, Sontag claimed that while there were negotiations over HP taking a license, it didn't happen because they couldn't come to terms. Asked to explain, he claims it was SCO that turned HP down (and by the way, Sontag says the approach was to then-CEO Carly Fiorina), not the other way around. But isn't SCO now claiming that it was Novell's statement about owning the copyrights that interfered? It's so hard to keep up. So, um, which is it? That is, of course, Novell's message to the judge.

Sontag additionally claims HP offered to pay SCO 30 to 50 million for a SCOsource license, but SCO thought that was insufficient remuneration for such a fabulous license as it was offering and turned the offer down. Sontag claims SCO also had "legal concerns" which made SCO walk away from the HP offer, concerns he wouldn't elaborate on. I'd say they were getting warm there, if that were true, which I doubt. I'd have legal concerns about offering such a license to anyone with in-house counsel, frankly. But that's just me.

Sealed Exhibit 17 is an internal HP email dated September 1, 2003 and Exhibit 18 is another dated September 3, 2003, both emails produced "by a third party in the SCO v. IBM litigation". Ah. Foiled again, if there was any attempt to avoid disclosing these emails. But you do have to wonder why SCO didn't turn them over itself. Since it is Novell doing the filing of the HP emails, I must assume that the emails tell a different story than Sontag's.


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )