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More Novell Exhibits: We Find Out What MS & Sun Paid SCO For
Sunday, June 03 2007 @ 11:35 AM EDT

Here are more of the new exhibits in SCO v. Novell that Chris Brown picked up at the courthouse on the 31st. These are the paper exhibits attached to the Declaration of Kenneth Brakebill, filed in support of Novell's four summary judgment motions. And it was worth the trip, because among other things, we finally find out what Sun and Microsoft got from SCO when they paid them all those millions in 2003. And we find confirmation that SCO's SCOsource Linux license was "a right to use license (RTU License) for commercial end-users of Linux." Hmm. That's what the Novell-Microsoft deal called it too. A right to use Linux.

Brace yourself, Sun fans. In Exhibit 60, SCO's Response to Novell's Inc.'s Interrogatory 15, dated April 6, 2007, paragraph 4, we learn that Microsoft and Sun paid for licenses that included a covenant not to sue, UnixWare rights, and incidental rights to the older UNIX System V source code. Sun paid ultimately $10 million and Microsoft paid $16.75 million. It turns out, then -- according to SCO, I hasten to add -- that both the Linux "right to use" license and the Unix license that SCOsource offered included a covenant not to sue.

I know. It raises questions about the details. A covenant not to sue over *what*? If they were buying UnixWare rights and incidental rights to older Unix code, what is the threat? I'm thinking it might be sort of like the DaimlerChrysler litigation, where SCO claimed the license covered Linux and not just Unix code. In any case, SCO reveals that both licenses' covenant not to sue "provided that the licensee would not be exposed to liability for the use of SCO's intellectual property in Linux." Um. In UnixWare?

So, it wasn't just about Xenix with Sun, I'm sad to report, although it also was. But I have to correct what I repeatedly told you I had heard, that it was about Xenix, getting rights to open source Solaris. And my original response to Sun's announcement that it might put out its own indemnified Linux was pretty much spot on, as they say, after all. Back then, Sun *was* Linux's toxic boyfriend, the first to buy a covenant not to sue from SCO.

It illuminates Sun's announcements to the press in 2003 that Linux customers could go to Sun, because they were clean. Remember this? McNealy: Sun safe from SCO damage? Scott McNealy forgot to tell us why. Well, corporations are made up of people, and there are some new people there at Sun, but it's still stomach churning. A little more openness might have been nice, for one thing, about just what folks going to Sun were actually supporting.

Here are the details: In Exhibit 60, SCO's Response to Novell's Inc.'s Interrogatory 15, dated April 6, 2007, the first paragraph after the objections section, paragraph 1, confirms that the Linux license was "a right to use license (RTU License) for commercial end-users of Linux." It explains that SCO's business strategy involved that license and also "a UnixWare source code license to developers" and both licenses "contained a covenant not to sue, which provided that the licensee would not be exposed to liability for the use of SCO's intellectual property in Linux."

So whatever the threat, it was about Linux. Why would Microsoft need that by the way? What's up, Doc? Anyway, SCO also claims Santa Cruz had an 80% market share of the Unix-on-Intel market. "With the rise of Linux, that dominance precipitously eroded, and SCO's market share and revenues suffered. The SCOsource program positioned SCO to revive its business by capitalizing on its deep intellectual property rights and historically strong position in this market, by selling licenses to companies who were now running Linux."

I guess that explains why they wouldn't tell any seekers of specificity precisely what IP of theirs was being infringed, since if they did, it would have been the end of the business. You can't capitalize on your deep intellectual property rights being infringed if they aren't, now can you? How brilliant these guys are.

Paragraph 4 tells us about the two licenses to Microsoft and Sun including a covenant not to sue, for which, along with the rest of the package, Sun paid ultimately $10 million and Microsoft paid $16.75 million as of the date of this SCO Response.

Paragraph 5 claims that the letters to Linux users, the Fortune 1000, "were the precursor to SCO's expansion of its SCOsource licensing program. SCO had been contacted by potential customers around the world inquiring as to how they could get in compliance with SCO's claims and avoid any potential problems. The expanded SCOsource program was created in part in response to these requests and questions." They keep saying that, but not many signed up, not even at first, so I'm not so sure.

After SCO registered the copyrights, on July 21, 2003 "SCO announced the registrations and that it would offer licenses to support run-time, binary use of Linux for all commercial users of Linux based on kernel version 2.4x and later." That's in paragraph 13.

In mid-August, "a Fortune 100 company requested from SCO and purchased a SCOsource right to use license." I'll bet they feel silly now.

December 19, 2003, we learn in paragraph 18, saw SCO sending out a second mass mailing, telling Linux users that "use of the Linux operating system in a commercial setting violates our rights under the United States Copyright Act." I wonder if that might come back to haunt them, now that no one seems able to find any copyright violations so far? Maybe that is why it seems so urgent to fight like the dickens to get methods and concepts into the IBM litigation? Anyway, end users of a book don't have to pay for copyright infringement in the book. There's no law against use. Copyright law is about copying. Hence the name. It's like, to me, SCO keeps mixing up patents and copyrights.

Some of what is in here, and there's lots more, mainly things that we've heard before, like the alleged Chicago 7 meeting, has been rebutted/denied by all the parties named, so it's hard for me to be sure what is true and what is mere allegation. It's a world view that is impossible for my brain to accept as seriously meant. For example, SCO alleges that Novell and IBM conferred on the telephone during the early period of SCO's allegations. That, to me, seems perfectly normal. So reading the way SCO makes it sounds, like some kind of conspiracy against SCO when it was obviously the other way around, is as bizarre to me as SCO claiming money from Novell because Novell responded in public to SCO's public threats.

They accuse people of things that seem like responsive actions and words to defend themselves against someone trying to bully the marketplace. I know to SCO it's publicly about trying to protect their precious IP, but why not tell folks what it is, then, instead of trying to build a business on perpetual infringement? That's not the way copyright law normally works. You are supposed to end the infringement going forward, not license the infringement and build your business on people infringing your code. That's the patent troll hustle, but SCO doesn't have any patents in this litigation.

Chris has now scanned all of the exhibits for us, all the exhibits attached to Brakebill's Declaration. Thank you so much. And so, here they are, the ones we were missing, in all their glory. You will get to watch a fascinating discovery battle that has been going on since March, but which we are just learning about now, as you will see in my brief notes:

  • Exhibit 16 - Darl McBride (Marriott, Singer) deposition Dec. 2, 2005 in IBM (asked whether the value of the Unix assets went down, judging by price of the 3 deals)

  • Exhibit 21 - Deposition of Robert J. Frankenberg Feb. 10, 2007

  • Ex 25 - Deposition of Burt Levine March 23, 2007 - license inherent

  • Ex 33 - Deposition of Alok Mohan Feb 23 2007 - sold Unix which was 95% of their business

  • Ex 36 - Deposition of Chris Sontag March 14, 2007 - re Novell interfering allegedly with SCOsource

  • Exhibit 38 - George Weiss, "What to Do During SCO's Protracted Lawsuit Against Linux"

  • Exhibit 40 - TechnewsWorld article by Jay Lyman, "Split Decision on SCO Impact, Response" - Laura DiDio advising clients (Yankee Group as a firm) to take SCO seriously, that she knew of at least one customer that chose Windows over Linux because of the SCO claims. Remember back then how it was?

  • Exhibit 45 - Deposition of Michael Paul Olson, March 3, 2006 (in IBM case) - Can't remember anything. Question involves a "OPS" (operations) Council Strategy Meeting

  • Exhibit 46 - appears to be a list of companies SCO sent Unix Licensee and or Linux right to use license letters to and the response (one funny one, I think GE, in any case #9: "operator will have someone call me back regarding legal matter - Unix license letter.... Call back on 4-28 at 11:45 and no one picked up the phone"

  • Exhibit 57 - Novell's Inc.'s Third Set of Interrogatories to the SCO Group, Inc., September 29, 2006 - Novell asked for all facts, bases and evidence in support of SCO's claims for damages, and how Novell caused it. It's Interrogatory 15.

  • Exhibit 58 - SCO's Response and Objections to Novell's Second and Third Sets of Interrogatories, December 28, 2006 - With regard to questions Novell asked in Exhibit 57, Interrogatory 15, SCO's response: "SCO specifically objects to this request on the grounds that the information it seeks is properly the subject of expert discovery."

  • Exhibit 59 - email correspondence between Ken Brakebill and Ted Normand, March 10-12, 2007 regarding SCO's response in Exhibit 58 to Interrogatory 15. Novell pressing for factual predicates of SCO's damages claims, and how it calculated it, and SCO claiming it didn't have to present an exact figure, that it is a matter for expert reports; however it agreed to present a witness to testify generally about harm, "the nature of the impact on SCO's of Novell's acts and omissions, but will not testify regarding the specific amount of damages suffered by SCO." Also some lawyering about another Novell request for documents which SCO says belong to third parties like Steve Sabbath, Jim Wilt, Ed Chatlos and William Broderick.

  • Exhibit 61 - Letter to Edward Normand, SCO's lawyer, from Kenneth Brakebill, Novell's lawyer, March 5, 2007 (meaning it happened before the email exchange in Exhibit 59). In the letter Brakebill addresses SCO's refusal to provide any facts "concerning its allegations that Novell's actions caused SCO damage, including the factual justification' for SCO's claim, 'all documents that SCO contends support the bases for its damages claims' and 'all persons with knowledge of the related facts'." Brakebill informs SCO that while it can put forth an expert on its claim, that doesn't mean it needn't be bothered answering Novell's Interrogatory 15. And, of course, that is true, which is why SCO eventually did answer it, after reading, I suppose, the two cases that Brakebill cites to support his position, which also includes that SCO had to designate a Rule 30(b)(6) witness "on Topic 23 from Novell's Rule 30(b)(6) deposition notice. Topic 23, the letter explains, asked SCO to produce a witness on damages caused by Novell. And SCO eventually caved on this also, as we saw in the email exchange, possibly after reading the numerous cases Novell cites on this point.

    This is kind of basic, in my view, so I can only conclude that SCO is following the tooth extraction method of discovery. Namely, you must yank out at least one SCO tooth before you can get some. They probably didn't even read the cases. They did note the "Please let us know in three business days" whether it would comply, although it took two extra days, I think.

  • Exhibit 62 - is an email dated April 17, 2007 from Sashi Bach Boruchow to Ken Brakebill, including an earlier email from Brakebill to Normand, dated March 30, in which Brakebill wrote that he couldn't find some documents Chris Sontag mentioned in his deposition a day or so before, regarding communications with companies about SCOsource. She tells Brakebill, on Normand's behalf, that all the documents Brakebill wanted have been produced, I gather Exhibit 46 among other things. But she in no way tells him where to find it or how to identify it, despite Brakebill's letter to Normand asking for the Bates numbers if the materials had already been produced. Those are those numbers on each exhibit so you can put it all in a pile or a database and find it later. That struck me funny. It's starting to look like no love lost between the lawyers in SCO v. Novell, too.

    And this Boruchow email is dated April 17th. Novell was getting a little close to the wire, considering the summary judgment motion schedule. Novell is remarkably still asking for the factual basis for SCO's claim in mid-April. Does this not bring back memories of Wells' funny line about IBM being accused of shoplifting but not told what the stolen item was, and being handed a catalogue and told, "You know what you stole. It's in here somewhere." And then she refers him to SCO's answer to interrogatory 15's "non-exhaustive list of such correspondence." Well, I'm guessing he wanted the exhaustive list.

Now, I may be getting cynical, but when one lawyer answers correspondence directed to another without explaining why, my Spider sense starts itching. It occasionally can mean that the one addressed would rather not say anything, in case it turns out not to be true. Then he can say something like, "Oh say, did she say that? She's not the main attorney on this, and she got mixed up, I guess. Here's the stuff you wanted." Or some such. Sometimes, it's just about delay.

I'm not working on this case, but if I were and saw that email back in April, I'd run and look at all the dates. So I did anyway. And when we look at all that, here's the way it played out:

March 14, 2007 at Chris Sontag's deposition he mentions documents that Novell's Brakebill can't find, correspondence sent or received by SCO from potential SCOsource licensees, some of whom allegedly mentioned Novell as the reason they wouldn't buy a SCOsource license at that time.

March 29, 2007 is the date of Ken Brakebill's email to Ted Normand asking for the missing documents mentioned by Sontag in his deposition that Brakebill can't find.

April 6, 2007 is SCO's Response to Novell's Interrogatory 15, which means that on my calendar, when Brakebill wrote his email to SCO, in fact he didn't have the documents because SCO had not yet produced them.

April 17, 2007, more than two weeks after the request from Brakebill, Boruchow informs him -- not that he couldn't find them on March 29th because they hadn't been produced yet -- but just "such correspondence and potential SCOsource licensees has been produced." Meaning, to me, that just as soon as they got the email, they may have scrambled to produce those documents quickly, because they hadn't properly produced them heretofore.

This is why lawyers like depositions, of course. People tell them things the lawyers wouldn't. She ends, "Please let me know if you have questions." I will guess that his question was, why didn't you produce this without me having to catch you?

One exhibit isn't complete. The court has raised the price now on getting copies of paper documents. It used to be that you could Xerox them yourself. Now they do it for you for 50 cents a page. But thanks to your generosity, we got most of what we were missing. We will eventually get a transcript of the May 31st hearing as well.

Do you think, though, it's worth paying for the full list of the companies which were sent the Unix and/or Linux SCOsource letter? Take a look at Exhibit 46. If so, let me know, because that is the one item we didn't get in full, just a couple of representative pages, because it's a long exhibit, and it would cost $60 more to get that one completed. I'll do it if you like, but only if it really matters to you. Also weigh in all the types of information. Should we or not?

Once again, a big thank you to Chris, for doing this for us. It's priceless material. And now one of the biggest mysteries of all is solved. The only one I personally would like solved now is did Microsoft get ideas from SCO that we now see implemented in their patent covenant not to sue for "right to use" Linux? Or was it the other way around? Or independent invention? I surely hope somebody is asking that question, and that someday we get to know the answer.


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