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Deposition of Darl McBride in Novell: Dreaming of Billions From Linux
Saturday, June 02 2007 @ 09:03 PM EDT

We have some new exhibits in SCO v. Novell that Chris Brown picked up at the courthouse on the 31st. They were filed in paper form. It's a lot of work, so thank you, Chris. I'll be posting the rest tomorrow. Today, we'll start with the deposition of Darl McBride, because I know it's the one you'd read first. It was taken on March 27, 2007 in the Novell litigation. It's Exhibit 63, attached to the Declaration of Kenneth Brakebill, offered in support of Novell's four summary judgment motions heard on May 31 and to be completed on Monday.

In this deposition, we learn quite a bit about SCOsource and how it all played out, according to Darl. What reverberates the most, more than the scuttlebut about negotiating with HP and Google, are the dreams of great wealth the SCOfolk fantasized about, with white boards and modeling.

First, he talks about the negotiations with HP, that he says fell apart. The theme is how Novell allegedly ruined SCO's chances to get licensees to sign up. He says, "We were in the hundred million, $200, $250 million range was basically what we were targeting. In the end, they were down at $30. We eventually got our arms around the idea that there was a way of doing a deal with them that was in closer to the range where they were $30, $40 million, but it would not be as wide a scope as what all of us had talked about initially. And that's when we started to make some progress with that, and then eventually that one fell apart." A later question to him reveals he had earlier in the deposition told them that the HP deal fell apart because of Novell saying it held the copyrights, which made the deal less "valuable" in HP's eyes.

$250 million dollars. Imagine how HP would feel today had it paid it, now that we are scouring the horizon diligently to try to find any copyright infringement. This all happened, McBride says, in the summer of 2003, August through September. Probably you, like me, remember the rumors. McBride says the the lead negotiator at HP was Joe Beyers, who told SCO he was in direct communication "with Carly". Others were peripherally involved, and he names a Rick Becker.

Why am I mentioning it when I find it hard to trust what SCO says? Because it's part of the history. So, Misters Beyers and Becker, forgive me for putting your names here. It wasn't me. Talk to Mr. McBride. According to McB, it was Beyers who told him that Novell skunked the deal. But here's something: according to the deposition, this was by phone. McB took no notes. There is no email. No letter confirming. Just Darl's word. That and a pony will take you around the track. Darl says maybe Sontag has something in writing, but we already heard his version, which was SCO walked away from the deal because there wasn't enough money offered.

Anyway, McBride says the license "had to do with HP customers being able to run Linux under our SCOsource program." No wonder HP came up with its indemnity program. No doubt it expected worse from SCO than actually happened, and in fact Darl tells the story that they told SCO that rather than take a license, they were going to indemnify. Then Darl also says that HP said that it would be hard to pay "more than that" since the Novell claim wasn't resolved. So it may in fact be true, or almost, what Sontag said, only Darl gives a more complete version. I say almost because the next question to Darl is, "Did he explain any other reasons why HP was not interested in proceeding further with negotiations?" And I note Darl doesn't say, "Oh they were interested but at a lower level," so I piece it together in my mind more like this; they were negotiating down from $250 million to $30 or $40, and then HP backed out altogether. Remember Sontag saying there were "legal reasons" too why the deal broke down. The haze is somewhat clearer.

Except next Darl says they didn't exactly tell them about the indemnification. "It came out shortly thereafter, and we became aware of it," he testifies. If I'm not getting the story exactly right, it isn't for a lack of trying. You can read the deposition yourselves and see if I'm at true north now or not.

Next he tells us about Google. Ultimately, Darl says, "what it came down to was, 'Until you get some court rulings on the ownership side, and on the infringement side, we can't move forward with you.'" He claims Google offered "some money but it was a big spread away from what we were asking for." They were asking hundreds of millions. Google offered tens. "There was a decimal problem," Darl says, in his inimitable way.

Novell's lawyer delicately asks, "So aside from these annotated reports, is there any other source that you can think of that would corroborate your recollections of particular licensees raising copyright ownership as an issue in the SCOsource negotiations?"

This is obviously an important issue. If the judge accepts SCO's story, then every deal sunk by doubts raised by Novell might come into play, if the judge also finds that it was improper for Novell to speak about its ownership. Both are relatively unlikely, but lawyers always plan for the very worst, so Novell here is trying to elicit information that can support Darl's recollection. Because if it is only his memory, a jury might not find that altogether enough. Darl can only think of one source, Larry Gasparro, then under Sontag in that division, and he's left SCO by now. No other writings? Just Gasparro's testimony and some reports from him? That seems a little thin. What about Sontag, at least?

CA paid $500 per seat, we find out next. I gather that was the same offer made to Google, which with all their servers would be a nice sum in the hundreds of millions, Darl computes.

SCO had sit down discussions with the Pentagon too, and they cited copyright issues with Novell, according to Darl. Ditto an investment house, maybe Morgan Stanley, he can't recall. Windham Hotels. Regal Entertainment, the movie theater chain. Just USA Sports. I didn't know those movies theaters ran on Linux, did you? Cool.

These are excerpts, which is why sometimes they end in the middle of a sentence, by the way. But on page 14 of the PDF, we learn that SCOsource is technically still available on SCO's web site. Not too late, if you want a license. But SCO isn't pushing it currently until the litigation clarifies. "But in terms of going out and spending energy or cycles behind it, it just got to the point where there were so many problems of trying to get people to come to an understanding of where we were on this, given where Novell was coming from, that we basically said we've got to table this until we get through with our litigation with them."

So, if Novell and IBM lose, look for a letter in the mail followed by a phone call, I guess. So does that mean that Linux end users get to pay both SCO and Microsoft if they want to use Linux? That ought to thoroughly rub the freedom right out of Linux.

Is that the goal? You think? You can just see the SCOfolk, around the whiteboard, dreaming of money from Linux end users, can't you, in this remark from Darl when asked if SCO ever did any modeling on what SCOsource would likely generate:

Oh, we had -- usually I would sit down and go through it on the white board with Chris or Bob Bench. You know, guys on the finance side. We would kind of lay out what the number of units of Linux were that were in the marketplace against what our list price was for the SCOsource license, reduced by any kind of discounts that we might give for volume or for being an early adopter. And it was usually a pretty big number that we were talking about....

I remember that the models were showing -- we would look at IDC numbers, and there were X millions of servers and growing at a certain rate. And I remember specifically 4 million servers going to 6 million servers over some time frame. I'd have to go back and refresh what the time frames were, but I remember bracketing if you've got 4 million servers against our list price of $700, you multipy that out, you get $2.8 billion. If you go up to the full list -- or the list price against the 6 million then you are talking about $4.2 billion. So it was always -- it's a ridiculously big number. So okay. I guess we could get finite on whether the number is $5 billion or $1 billion or $6 billion. The point is it was a lot of money for the company, and the size of company that we were.

Well, he said it. Ridiculous is the exact word I'd have chosen. Wait. Isn't $6 billion what SCO wants from IBM? Nah. Only 3.

That was the fun part for SCO, dreaming of big money from Linux.

Followed by the "now we have to prove it" part.

Followed by, "uh oh."

And don't you get the flavor that what they wanted, and still want, is billions from perpetually infringed IP? And do you see that the idea wasn't to clear up any infringement by removing whatever was allegedly infringing? The idea was to leave it in there, not that anyone can find it in the end, but the idea was to make Linux end users pay a tax instead of fixing the infringement, had it existed. And the letters were to persuade the pragmatic that it was cheaper to pay than be sued. And so, company by company, Linux's doom was to be sealed.

As SCO told us long ago, Linux will still exist. It just won't be free any more.

And judging by the date of this deposition and by recent threats from Microsoft that sound quite a lot like this to me, it still is the dream. Catch the part about servers running Linux going from 4 to 6 million? Some folks who are not in the Linux business appear to want some of that action. Others prefer that Linux lie down and die or at least dump the GPL and become de facto proprietary, hence more controllable. But the SCO dream as I see it is simply this: they'd like those volunteer Linux programmers, who didn't charge one thin dime for their wonderful code, to, in effect, support SCO for life, based on alleged, but not specified, "infringement" that no one is allowed to fix. Does it get lower than that?


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