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Day 2, April 30, Novell v. SCO Trial Transcript - as text, no line #s
Friday, May 02 2008 @ 10:16 AM EDT

Here is day two of the trial of Novell v. SCO, the daily transcript as text. Our thanks go to Steve Martin. Here's Day 1.

This is the day that saw CEO Darl McBride take the stand and tell the court he always certified truthful SEC filings, even when they seem to contradict what he is now testifying to. He says that the Sun and Microsoft licenses were *not* SCOsource licenses, just UnixWare licenses "embodied in the SCOsource division." Oddly, that is the same language that he uses to describe SVRX, as being "embodied" in UnixWare.

I wonder what he means by that word 'embodied'? One clue is his statement that "we use UnixWare as the wrapper to sell a System V license." Well, there you have it. They used a wrapper to sell *System V * licenses. Oops. I think he probably woke up at 2 AM thinking about that answer. A casual onlooker might think he was agreeing with the court, which has already ruled that the Sun and Microsoft licenses are SVRX licenses, to an unknown degree, which is what the trial is to establish, not that Darl acknowledges the court or its decisions as being binding. He stays on message. But might that casual observer get the idea that SCO deliberately wrapped System V licenses in UnixWare to avoid having to pay Novell its System V royalties?

Also Chris Sontag finished his testimony, and Greg Jones and John Maciaszek also took the stand.

By the way, he mentions that if you go into a bookstore you will find how to program in Unix and Linux books in the same section. That is because Linux is not a programming language. Neither is UNIX. They are both written in C, C++, Java, Perl, Python, and Ada95. Etc. You know. In programming languages. And both are POSIX-compliant, POSIX being a standard. Duh. What he says is like saying that if you go into a US bookstore and head for the cookbooks section, you'll find a lot of books written in English. That is true. You will. Not only that, but they all use cups as a measurement and Tablespoons and such. That doesn't mean they copied from one another, or that all the recipes will produce the identical result, just that they were written in the same language and use standard measurements for US cooks. He is such a riot. And I have only scratched the surface.

Day 2, April 30, the PDFs:

Part 1
Part 2
Part3

Again, use the PDF as being definitive. We strive for accuracy in our text versions, but we are human. So are court transcribers, by the way, and it's Groklaw's policy not to correct any errors they make.

Also, this is the version with no line numbers. We like to do that type first, so those who rely on screen readers don't have to listen to numbers read off at the beginning of every line, often in the middle of a sentence.

Aside from the August 10 ruling that said the Sun and Microsoft licenses were SCOsource licenses for SVRX, Groklaw member gdeinsta reminds us that there was also a Novell Motion In Limine granted last September, which forbids SCO from arguing at this trial that they are not:

Novell's Motion in Limine No. 2 to Preclude SCO from Contesting Licenses Conveying SVRX Rights are "SVRX Licenses" - Granted. "Therefore, SCO cannot be and is not precluded from arguing that the SVRX component is de minimis. SCO's attempt, however, at making a distinction between the license as a whole being an SVRX License and only the SVRX component of the license being an SVRX License is contrary to the court's finding that even an incidental license of SVRX is considered an SVRX License under the APA's broad definition of SVRX License. The court rejected SCO's arguments that the Sun and Microsoft Agreements were not SVRX Licenses because they licensed SVRX only incidentally. ... There is no relevance to evidence relating to legal determinations already made by the court. Disputes as to the court's interpretation of the contract should be left for appeal."

That means any testimony, such as Darl's, that the Sun and Microsoft licenses are not what the court already ruled they are has no relevance. So that part is just for the peanut gallery, and for the appeal later. Appeals courts know what court orders are and how they are to be obeyed, of course.

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

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

___________________________________

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff and
Counterclaim-defendant.

vs.

NOVELL, INC., a Delaware
corporation,

Defendant and
ounterclaim-plaintiff.

____________________________________

Case 2:04-cv-139dak

BEFORE THE HONORABLE DALE A. KIMBALL
APRIL 30, 2008

REPORTER'S TRANSCRIPT OF PROCEEDINGS

TRIAL TRANSCRIPT
VOLUME II
(Daily copy)

Reported by: KELLY BROWN, HICKEN CSR, RPR, RMR

207

A P P E A R A N C E S

FOR NOVELL: MORRISON & FOERSTER LLP
BY: MICHAEL A. JACOBS
ERIC M. ACKER
DAVID E. MELAUGH
Attorneys at Law
[address]
FOR SCO: BOIES, SCHILLER & FLEXNER LLP
BY: STUART H. SINGER
EDWARD J. NORMAND
JASON CYRULNIK
Attorneys at Law
[address]

HATCH, JAMES & DODGE, P.C.
BY: BRENT O. HATCH
Attorney at Law
[address]

208

I N D E X

WITNESS EXAMINATION BY PAGE
CHRISTOPHER S. SONTAG REDIRECT BY ACKER 210
RECROSS BY NORMAND 222
REDIRECT BY ACKER 228
RECROSS BY NORMAND 228
DARL CHARLES McBRIDE DIRECT BY ACKER 230
CROSS BY SINGER 281
REDIRECT BY ACKER 296
RECROSS BY SINGER 302
GREG JONES DIRECT BY MELAUGH 304
CROSS BY NORMAND 332
JOHN MACIASZEK DIRECT BY SINGER 391
CROSS BY JACOBS 408

EXHIBITS

NOVELL RECEIVED
151 308
439 315
440 316
441 316
430 389
468, 469 389
SCO RECEIVED
442, 43, 46, 47, 317
48, 49, 50, 51, 42 317
53, 55, 56, 58, 59 317

209

Salt Lake City, Utah, Wednesday, April 30, 2008

* * * * *

THE COURT: You may resume the stand, Mr. Sontag.

You may proceed, Mr. Acker.

Good morning, everyone.

MR. ACKER: Good morning, Your Honor. Thank you.

CHRISTOPHER S. SONTAG,

called as a witness at the request of Novell,

having been previously duly sworn, was examined

and testified further as follows:

REDIRECT EXAMINATION BY MR. ACKER:

Q. Good morning, Mr. Sontag.

A. Good morning.

Q. You testified yesterday in response to questions of counsel that the price for the SCO intellectual property licenses, that series of licenses we looked at yesterday afternoon, those prices were set as the price equal to the most current version of UnixWare; is that right?

A. The most current and applicable version of UnixWare. So single CPU or multi CPU version of UnixWare.

Q. So if a potential licensee was using an older version of SVRX, say an older version of 1992 or 1994, and wanted to take one of these licenses, under the SCOsource program, SCO would still charge that licensee the same price

210

they would pay for the most current version of UnixWare; correct?

A. That is correct.

Q. And that was true for all of the SCOsource IP licenses; correct?

A. Yes.

Q. Counsel asked you a very direct question yesterday regarding whether or not there is any UnixWare code in Linux. And I wrote down your answer, and you said that there very well could be; correct?

A. Yes.

Q. But the bottom line is that you simply do not know if there was any unique UnixWare code in Linux; right?

A. I believe your question was about uniquely UnixWare code. Given that UnixWare has developed out of, you know, many versions of the UNIX, you know, development tree, much of that code is uncommon. And to uniquely parse out something that's different with UnixWare versus previous releases, I've never done that analysis, never seen this analysis.

Q. Do you know if that analysis has ever been done, that is, someone has sat down and parsed out what is unique to the most recent version of UnixWare as opposed to what exists in pre APA SVRX?

A. I don't know if that has been done.

Q. But the bottom line is that given that testimony,

211

you simply don't know if there's any code that is unique to UnixWare that is in Linux; correct?

A. I do not.

Q. Counsel also asked you a series of questions about the first phase of the SCOsource program that was referred to initially in late 2002 and early 2003 as the SCO Tech program; correct?

A. Yes.

Q. And you answered his questions regarding the licensing of libraries of UNIX code; correct? Do you recall that testimony?

A. Yes.

Q. Now, no licenses were ever issued under that program, that is, the first phase of the program in which it was contemplated that the libraries would be licensed; isn't that right?

A. I do not believe there was any specific licenses under that first release of the SCO Tech or early SCOsource license.

Q. So the SCO Tech or the SCOsource licenses that actually were issued were the Sun and the Microsoft license as well as the series of additional licenses that we looked at yesterday; correct?

A. Yeah. And I would separate out the Sun and the Microsoft licenses from the series that you speak of. They're

212

separate types of licenses.

Q. But they were all SCOsource licenses; right?

A. They were all under the SCOsource division.

Q. Now, regarding the Sun agreement, if we could put up Exhibit 187, Attachment 1, please.

Mr. Sontag, we put up on the screen Attachment 1 to the 2003 Sun agreement. The first page of Attachment 1. And you've testified that all of this software license, the 2003 license, was included in this attachment and licensed Sun simply as legacy software or older versions of SVRX software that was licensed along with the most recent version of UnixWare.

A. Correct. And they already had a license to most of this, anyways.

Q. And that was my next question. It's true, isn't it, that Sun already had a license to all of this software on the first page of Attachment 1 of 2002 license; right?

A. Yes. And that is -- again, that license for the previous versions was just a standard practice. So, again, licensing the latest version of UnixWare and incidentally licensing all the previous versions.

Q. But because -- and that previous license, the 1994 Sun license to this exact same 30 versions of software was fully paid up; correct?

A. Yes.

213

Q. And so Sun didn't need -- there was no need for Sun to obtain a license. They didn't need a license, a re-license to this additional 30 pieces of legacy software in 2004 except that they wanted to expand their rights to distribute the software; correct?

A. Again, this was all included just because it was a standard practice of licensing the UnixWare source code.

Q. But Sun already had a license for this software; right?

A. Yes.

Q. And what they wanted in the 2003 agreement was to expand or, in your words, to soften the confidentiality provisions relating to this software; correct?

A. Primarily, they wanted a license to the latest version of UnixWare for their Intel work that they were doing.

Q. And with respect to this 30 versions of legacy SVRX, they wanted to soften the confidentiality provisions relating to the software; correct?

A. It was a minor part of the agreement.

Q. That's what Sun wanted; right?

A. Yes.

Q. And that's what SCO gave to them; correct?

A. Yes. It's all part of the agreement.

Q. Now, it's true, isn't it, that not all of this pre-APA SVRX software is in the current version of UnixWare?

214

Correct?

A. Probably not. But I would suspect, you know, anything that is valuable and important would still be in the current version of UnixWare.

Q. But you've never done a line-by-line comparison to determine what portions of this software, the legacy SVRX software, is actually in the current version of UnixWare; correct?

A. I have not.

Q. And you're not aware of anyone else having done that analysis; correct?

A. I'm not aware of that analysis.

Q. And Sun didn't do that analysis, as far as you know; correct?

A. Not that I know.

Q. And you're not aware of any expert for SCO doing that analysis?

A. I'm not aware.

Q. And you're not aware of any technician or technical person or engineer of SCO doing this analysis; correct?

A. No, I'm not.

Q. Now, you testified yesterday and you've already testified today that SCO has a history of including older versions of software when it licenses the most recent versions of software; correct?

215

A. Yes. And SCO's predecessors in the UNIX business did the same thing.

Q. But you also testified in answer to your questions to counsel that you'd seen older licenses in which the legacy software was routinely licensed, but recently there had been contracts in which that hadn't been done; correct?

A. My understanding was in the most recent release, most versions of the UnixWare source license, they removed the long listings and prior products solely for the purpose of reducing the size of the contract, though the older versions were still implicitly included in those contracts.

Q. Well, when you say most recent, what time frame are we talking about?

A. I think the chain was made with 7.1.3 versions of the UnixWare source agreements.

Q. And what time frame was that?

A. That would be within the last, you know, five to seven years. Prior versions 7.1.2, 7.1.1, my understanding is that they did include the listings of all of the prior releases.

Q. When you say listings, they would have that long laundry list of the prior SVRX software?

A. That's correct.

Q. If I could show what we've marked and been admitted as Exhibit 69.

216

(Time lapse.)

THE WITNESS: Okay.

Q. BY MR. ACKER: Exhibit 69 is a SCO license with a company called CyberGuard; correct?

A. Yes.

Q. And what is being licensed with CyberGuard is UnixWare 7.0; correct?

A. Yes.

Q. And this agreement was entered into 10 years ago; right? 1998? Look at the bottom of the first page. See on the signature page?

A. Yes.

Q. Mr. Broderick signed the license March of '98?

A. Yes.

Q. And if we take a look at -- we go back to SCO, SCO 0978321. It's Paragraph 4.7 in the attachment.

A. 4.7?

Q. Yes.

A. Okay.

Q. See there's a heading there, Prior Products; correct?

A. Yes.

Q. And the only prior products listed there are UnixWare; correct?

A. Yes.

217

Q. And so there is no -- in this contract 10 years old, there is no list of all the prior legacy software; correct?

A. It appears to not be the case.

Q. So your testimony or your understanding about SCO's practices isn't that always all the legacy software is licensed is not accurate; right?

A. It appears in this case for this one particular license. However, my understanding on this practice comes from Bill Broderick who is the one who signed this contract.

Q. Kind of curious, isn't it?

A. And what he had told me was even if they did not include it, if somebody asked for it, they would provide them with a supplement that did include it.

Q. Let me show you what we've marked and admitted as Exhibit 70. Will you take a look at that?

A. Okay.

Q. Exhibit 70 is another license. And this time it's on behalf of Santa Cruz' predecessor to SCO, an entity called DASCOM, Inc.; correct?

A. Yes.

Q. And again, this license was entered into 10 years ago; correct?

A. Yes.

Q. And what was licensed was UnixWare operating

218

system; correct?

A. 7 operating system.

Q. And then if you go to the attachment, paragraph 4.7, which is on SCO 1043328 --

A. Yes.

Q. -- do you have that? We have it on the screen. Again, the only prior products listed are SCO UnixWare Release 2.1 and 2.0; correct?

A. Those are the only ones listed.

Q. And again, we don't have a laundry list of all the prior SVRX product; correct?

A. Not in this case.

Q. So this is another example that is inconsistent with your understanding of what you've been told about SCO's historical licensing practices; corrects?

A. Again, I was told that it was removed at some point to simplify the contract. However, it was provided to any customer that requested those prior releases.

Q. Let me show you what we've marked and has been -- of what SCO has marked and been admitted as SCO Exhibit 369.

A. Okay.

Q. SCO Exhibit 369 is a license between a Japanese subsidiary of SCO and an entity called Alps Electric Company; correct?

A. Yes.

219

Q. It's dated March 29th, 1996; right?

A. Yes.

Q. And if you take a look at SCO 1042588, you see -- we have it on the screen. This is a license for UNIX Release 2.0. Do you see that?

A. Yes.

Q. And then if you go back to SCO 1042612, and the attachment here is actually a listing of these prior products, and this exhibit was intentionally left blank. So there was no legacy software included in this license in 1996; correct?

A. In this particular license, no.

Q. Is it fair to say what we have here in Exhibits 69, 70 and 369 are examples that are inconsistent with your understanding of SCO's historical licensing practices? Correct?

A. Yes.

Q. And you weren't at SCO until 1992; correct?

A. At SCO?

Q. I mean you weren't at SCO until 2002; correct?

A. That is correct.

Q. So anything that you've learned about historical licensing practices of the company were simply as a result of something that's been told to you; correct?

A. That is correct.

Q. In questioning by counsel yesterday, you were asked

220

about -- I want to turn your attention to Section 2.2 of the Microsoft agreement. In response to questions from counsel you testified yesterday that the release and license in Section 2 pertained to UnixWare. Do you recall that testimony?

A. Yes.

Q. But it's true, isn't it, that Microsoft -- that release and license didn't pertain just to UnixWare, it also pertained to prior SR VX products because Microsoft's concerns about those products being in their products would not have assuaged unless they got released from the earlier products?

A. Actually I think the release was for all of SCO's intellectual property rights.

Q. And when it includes all of SCO's intellectual property rights that means both UnixWare and prior SVRX products; correct?

A. And OpenServer and all of SCO's units and intellectual property rights.

Q. And you also testified yesterday that Section 4 of the Microsoft agreement, in that section Microsoft wanted to use UnixWare and other System 4 products in their products; right? Excuse me. They wanted to use UnixWare and other System V products in their products, which is why they took out the license in Section 4 in the Microsoft agreement?

A. They took out the license in Section 4 to expand

221

their rights for UNIX to a broader set of products.

Q. But your testimony yesterday was Microsoft was considering including in their products both UnixWare and other System V products; right?

A. No. The only thing that I would expect that they were intending to include in their products was the latest version of UnixWare. They also might possibly have included some of the OpenServer source code software that we licensed to them. The prior versions would not make sense to include in new products.

Q. But it's true you're not aware of Microsoft ever including any of either OpenServer, UnixWare or prior SVRX products in their products; correct?

A. I do not know what they have done.

MR. ACKER: That's all I have, Your Honor.

THE COURT: Thank you, Mr. Acker.

Mr. Normand?

RECROSS-EXAMINATION BY MR. NORMAND:

Q. Good morning, Mr. Sontag.

A. Good morning.

Q. Could you pull up Novell 187? Attachment 1.

Mr. Sontag, do you recall being asked about this attachment this morning?

A. Yes.

222

Q. This is a list of System V prior products you said earlier?

A. Yes.

Q. Do you know whether under the 1994 agreement with Sun, Sun had already obtained copies to these System V releases?

A. Source tapes or just rights to them?

Q. Either.

A. My understanding was that they had rights to all these previous releases. I do not know if they had source tapes for any of these previous versions.

Q. They had rights to use these -- do you have a view as to whether or not they had rights to use these releases on their CPUs?

A. Yes.

Q. You were asked about what was described as softened confidentiality restrictions in the 2003 Sun agreement. Do you recall that?

A. Yes.

Q. Were the confidentiality restrictions that pertained to the older System V technology the same as the confidentiality restrictions that pertained to UnixWare in the 2003 agreement?

A. I don't necessarily know. My understanding is applied to all the new confidentiality provision in the 2003

223

agreement. My understanding is it applied to all the versions.

Q. In your view, was there any difference in the way that Sun could deal with the UnixWare source code as opposed to the older System V releases?

A. No.

MR. NORMAND: Would you pull up Novell 369.

MR. ERIC WHEELER: 369?

MR. NORMAND: Yes.

THE COURT: SCO 369?

MR. NORMAND: Yes, Your Honor.

Q. BY MR. NORMAND: Do you recall being shown this document by counsel?

A. Yes.

Q. This is the Alps agreement, the Nihon Alps agreement?

A. Yes.

Q. Do you know whether Alps ever told Santa Cruz in the negotiations of this agreement that they had no interest in listing the prior products?

A. I do not know.

Q. That's not something that you ever discussed with Mr. Broderick?

A. No.

Q. Pull up the bottom half.

224

What is the date of this agreement, Mr. Sontag?

A. March 29th, 1996.

MR. NORMAND: Could you pull up SCO 141. Go to the next page. Blow up the bottom half.

Q. BY MR. NORMAND: What is the date of this document, Mr. Sontag?

A. March 31st, 1997.

MR. NORMAND: And could you blow up the top half.

Q. BY MR. NORMAND: What do you understand this document to be?

A. This is a supplement.

Q. Which company is it with?

A. With NCR. And I'm not sure what specifically it would be related to.

Q. BY MR. NORMAND: Are you able to recognize now what this document pertains to?

A. This looks like a UnixWare Release 2.1 International Edition right to use sublicensing-type fees and agreement.

MR. NORMAND: Would you go to Page 24. Can you blow up the top two thirds.

Q. BY MR. NORMAND: And do you recognize what this represents on this page, Mr. Sontag?

A. A list of prior products.

Q. Now, this document is dated after the Alps license;

225

correct?

A. That is correct.

Q. And is this document dated after the APA?

A. No, it is not.

Q. Is it dated after the asset purchase agreement?

A. I'm sorry. Yes, it is. Yes, it is.

Q. Do you have any idea as to of all the UnixWare licenses that were executed how many of them list the earlier releases of System V?

A. I don't specifically, no. But my impression was it was the majority.

Q. Who would be the person at SCO who would know that?

A. Bill Broderick is the person who would know.

Q. Mr. Sontag, who was the principal negotiator for SCO in the 2003 Sun and Microsoft agreements?

A. I was.

Q. Did either Microsoft or Sun have any UnixWare license prior to entering into those 2003 agreements?

A. No, they did not.

Q. How much did Microsoft pay for its limited UnixWare license in Section 3?

A. In Section 3?

Q. Including the option to exercise section.

A. About $8 million, I believe.

Q. If I told you 7 million, would that --

226

A. That's, yeah.

Q. Now, as between Microsoft's limited license to UnixWare in Section 3 and Sun UnixWare license, who had the broader license?

A. Can you repeat the question?

Q. As between Microsoft's Section 3 UnixWare license and the UnixWare license that Sun obtained under its 2003 agreement, who had the broader license?

A. Sun did.

Q. In your view, did Microsoft obtain any additional UnixWare rights under Section 4 of its agreement?

A. Yes.

Q. In your view, did Microsoft pay additional money for its additional UnixWare rights under Section 4 on top of the 7 million in Section 3?

A. Yes, it did. I mean, it was significantly broadened, as I testified before.

Q. As between Microsoft's full UnixWare license under Sections 3 and 4 and Sun's license, who had the broader license?

A. I would view them as being equal.

Q. And how much did Sun pay under its 2003 agreement?

A. About $10 million.

MR. NORMAND: No further questions, Your Honor.

THE COURT: Thank you, Mr. Normand.

227

Anything else of this witness?

MR. ACKER: Just a second, Your Honor.

(Time lapse.)

MR. ACKER: One question.

REDIRECT EXAMINATION BY MR. ACKER:

Q. You just testified in response to counsel that you viewed the rights that Microsoft obtained under Section 4 of its license as being equal to what Sun obtained; is that right?

A. Effectively, yes.

Q. Do you believe that Microsoft had open source UnixWare under Section 4?

A. No, I don't.

MR. ACKER: Nothing else, Your Honor.

THE COURT: Thank you. I guess you meant two questions.

MR. ACKER: I did. I apologize.

THE COURT: Mr. Normand?

That's all right.

RECROSS-EXAMINATION BY MR. NORMAND:

Q. Mr. Sontag, having considered the question that was just asked of you, in your view as between the full UnixWare license that Microsoft had under Sections 3 and 4 and Sun's

228

UnixWare license, who had the broader UnixWare license?

A. Specifically to UnixWare, I view that they were about equal. I mean, you also have to take into account, which I don't think I fully explained with the previous question, that Sun had significantly more rights in terms of sublicensing and software distribution rights for their UNIX technologies. So they're way further ahead in many ways. But in terms of just distribution of UnixWare, they were effectively comparable.

Q. All right. Would it be accurate to say that Sun had broader rights with respect to UnixWare as to what counsel described as open sourcing?

A. Modestly. I think I'm not an attorney, so it would be difficult for me to be able to determine the differences in terms of those agreements.

Q. Thank you.

THE COURT: Thank you.

Anything else?

MR. ACKER: No, Your Honor.

THE COURT: Thank you.

You may step down, Mr. Sontag.

I assume this witness may be excused?

MR. ACKER: Yes, Your Honor.

THE COURT: You can stay or go as you choose, Mr. Sontag.

229

You may call your next witness.

MR. ACKER: We would call Mr. Darl McBride, Your Honor.

THE COURT: Come forward and be sworn, please, right here in front of the clerk of court.

THE CLERK: Come stand up here. Please raise your right hand.

DARL CHARLES McBRIDE,

called as a witness at the request of Novell

having been first duly sworn, was examined

and testified as follows:

THE WITNESS: Yes, I do.

THE CLERK: Thank you. Please take the witness stand right there.

Please state your name and spell it for the record.

THE WITNESS: Darl Charles McBride. D-A-R-L, C-H-A-R-L-E-S, M-C-B-R-I-D-E.

THE CLERK: Thank you.

DIRECT EXAMINATION BY MR. ACKER:

Q. Good morning, Mr. McBride.

A. Good morning.

Q. You're currently the CEO of SCO; is that right?

A. That's correct.

Q. And you came to the company then called Caldera in

230

that same position in June of 2002; right?

A. That's correct.

Q. And at that time, when you joined Caldera, it was not in great financial shape; correct?

A. That is correct.

Q. In fact, the company was in somewhat of a turn-around situation. Would that be accurate?

A. Yes.

Q. The company had not been profitable for the fiscal year ending October 31st; 2002; right?

A. Yes.

Q. And, in fact, the company had suffered a net loss of more than $24 million for that year; right?

A. I don't remember exactly, but it wasn't in good shape. I know that.

Q. And when you first came to Caldera, you met with the top dozen or so managers of the company and asked them what they would do if they were running the company.

A. Yes.

Q. And during those conversations, one of the managers, John, I believe his name is Terpstra?

A. Terpstra.

Q. Terpstra, told you that he believed that the UNIX intellectual property exists inside of Linux; right?

A. Yes, that's correct.

231

Q. And one of your takeaways or your findings from your meetings with managers was although that the prior management or regime had been focusing on marketing Linux, most of the company's revenue was coming from UNIX; correct?

A. Yes, that's correct.

Q. And you believed that the course of action had to change in the company in order to become profitable had to turn its attention in protecting its UNIX assets; right?

A. That was clearly one of the key strategies that we identified, yes.

Q. Let me show you what we have marked and has been admitted as Exhibit 139. Mr. McBride, if you would take a look at that, please, sir.

(Time lapse.)

THE WITNESS: Okay.

Q. BY MR. ACKER: Exhibit 139 is a letter that you wrote to Caldera shareholders on August 12th, 2002; correct?

A. Yes, that's correct.

Q. And in the first paragraph of the letter or the first numbered paragraph, you wrote:

Caldera owns the technology and other key intellectual property rights to UNIX, one of the world's largest, most popular computing platforms.

Correct?

A. Yes, that's correct.

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Q. And in the last sentence of that first numbered paragraph, you wrote:

We can and will be much more aggressive in

marketing and protecting those valuable assets.

Right?

A. That's correct.

Q. And you delineated what those assets were in the prior paragraphs; right?

A. Yes.

Q. And you delineated them in three groups, UNIX SVRX; right?

A. Yes. I wouldn't articulate it exactly the way you are.

Q. Well, my question was you separated it out in three separate buckets, didn't you?

A. Well, the precursor of those three buckets is the statement right before it, which is the umbrella to those three buckets or really the foundation of those three buckets, which is our UNIX intellectual property. And then we talk about three brands that they may have heard, which are UNIX, SVRX or System V. We use that interchangeably, UnixWare and SCOsource. I call these brands that are on top of the UNIX intellectual property.

Q. So the core assets of the company on the bottom is the UNIX intellectual property; is that fair?

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A. Yes, fair enough.

Q. And then built on top of that was UNIX SVRX; correct?

A. Well, this is a brand. Again, if you go back to the first thing here, we're talking -- I think it's important that we don't -- we get the right distinction between a brand and, you know, the core assets that we're talking about here.

Q. But the core assets, the UNIX core intellectual property underlies all three of these brands; correct?

A. The core intellectual property is what is tied into each of these brands, that's correct.

Q. And it was the core intellectual property tied into each of these brands that you told shareholders in August of 2002 that you sought to protect.

A. Yes.

Q. And the brands that you delineated were three separate brands, UNIX SVRX; right?

A. Yes.

Q. UnixWare; correct?

A. Yes.

Q. And SCO OpenServer; right?

A. Yes.

Q. And it's true, isn't it, that on several prior occasions, you have described SCO's UNIX assets using a tree analogy?

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A. Yes.

Q. Why don't we bring up Exhibit 421, if we could. Let me give you a copy.

And if you take a look at the third page of Exhibit 421, Mr. McBride, or fourth page, that's the tree; right?

A. Yes.

Q. And in the diagram, the trunk labeled as SCO IP UNIX, that's the core UNIX System V software code; correct? That's what that represents?

A. Yes.

Q. And the branches on this diagram are derivative works that are based on the core UNIX software code; correct?

A. Yes.

Q. And those branches include both SCO UnixWare; correct?

A. SCO -- that is correct. SCO UnixWare is a little bit unique in this diagram in that it serves both as the trunk of the tree and also as a branch.

And so if somebody came to the company and said, we want to get the core intellectual property to UNIX, and we want to take a license for that, for example, IBM did that with us in 1998, we said, okay, if you want to get core access to the UNIX intellectual property or the trunk code, the way you do that is through a UnixWare license.

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So UnixWare is unique compared to any of these other branches in that the core trunk is where the UNIX intellectual property was held was inside of UnixWare.

Q. Well, isn't it true that when you arrived in Caldera in late 2002, you realized that the revenues from the branches UnixWare and OpenServer were, in your words, marching south and dying off; correct?

A. They were under severe competition from primarily Linux but also from others. But, yes, they had been going south for a number of years.

Q. And because the revenues from the branches UnixWare and OpenServer were marching south and dying off, your strategy was to focus on maximizing the value of the trunk; correct?

A. In part, that's correct.

Q. And the trunk of the tree is the core SVRX code; correct?

A. We call it different things along the way. Sometimes we call it SCO UNIX; sometimes we call it System V; and sometimes we call it SVRX; sometimes we call it UnixWare. But it's all basically the core IP UNIX.

Q. And that's the core IP that dates back at AT&T?

A. It started at AT&T, but it had evolved dramatically over the years.

Q. And it was the core UNIX IP that you and Mr. Sontag

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and others sought to mine with the SCO source program at SCO in 2002 through 2004; correct?

A. We sought to take the core UNIX ownership rights that we had that were primarily embodied in UnixWare and be able to get more value in the marketplace out of that core intellectual property.

Q. But you don't know, do you, whether all of the code from the core UNIX IP exists in UnixWare; correct?

A. The core -- no, that's not correct. The core code of UnixWare is where the older versions of UNIX have been embodied. It's been that way for years. I worked at Novell, and it was the case then and it's the case now 15 years later.

Q. But my question is, do you know if every line of code of the trunk here, do you know if every line of code in this trunk exists in UnixWare?

A. I know that if you want to license the trunk code, you'd have to do it through UnixWare.

Q. That wasn't my question. My question was, do you know if every line of code in the UnixWare, this core trunk exists in UnixWare?

A. That's my understanding.

Q. Have you ever done any study to determine that?

A. I'm not an engineer. We have some engineers that will be here in the next couple days. I suppose you could ask them that.

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Q. Do you know if anyone's ever done that?

A. Again, that's something you'd have to ask the engineers. What I do know is that the way the core UNIX property was licensed -- I worked for Novell for eight years. I was there when we bought it from AT&T. I was at Novell as an executive when we sold the UNIX property to SCO. And I know that when we were at Novell we made a conscious decision to take the core UNIX code that we bought from AT&T and have it embodied in UnixWare. It was part of the strategy. And that strategy has continued on over the years.

Q. And that was UnixWare that existed prior to the APA; correct?

A. It started prior to the APA in UnixWare. It has continued on that way.

Q. Let me show you what we've marked as Exhibit 173.

(Time lapse.)

Q. BY MR. ACKER: Exhibit 173 is a press release announcing the SCOsource licensing program dated January 22nd of 2003; correct?

A. Yes.

Q. Would you take a look at the paragraph under SCOsource. This is was a description that the company gave of what SCOsource was; correct?

A. Yes.

Q. And how you described it in January of 2003 was

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that:

SCO patents, copyrights and core technology date back to 1969 when Bell Laboratories created the original UNIX source code.

Correct?

A. Yes.

Q. And it was that software, that is the core technology dating back to 1969 that would be licensed in the SCOsource program; correct?

A. Part of it was that. There was other things in there.

Q. Let me show you what we've marked Exhibit 194.

(Time lapse.)

Q. BY MR. ACKER: This is a letter that you wrote to over 1,000 companies in May of 2003; correct?

A. Yes.

Q. And this is a letter written in conjunction with the SCOsource licensing program; correct?

A. In part.

Q. And in the first sentence you wrote:

SCO holds the rights to the UNIX operating system originally licensed by AT&T to approximately 6,000 companies and institutions worldwide, the UNIX licenses.

Correct?

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A. Yes.

Q. And if we could go down to the last two paragraphs, in the fifth paragraph, you write:

Many Linux contributors were originally UNIX

developers who had access to UNIX source code

distributed by AT&T and were subject to

confidentiality agreements including

confidentiality of the methods and concepts

involved in software design.

And then you continue:

We have evidence that portions of the UNIX

System V software code have been copied into

Linux.

That's what you told these 1,000

companies; correct?

A. That's correct.

Q. And in the last paragraph, you wrote:

As a consequence of UNIX' unrestricted authoring process, it is not surprising that the Linux distributors do not warrant the legal integrity of the Linux code provided to the customers. Therefore, legal liability that may arise from the Linux development process may also rest with the end user.

That's what you sold these companies;

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correct?

A. That's what the general license says.

Q. And the companies were the end users; right?

A. Yes.

Q. So what you're telling these companies in May of 2003, is, look, our core intellectual property dating back to AT&T is in Linux; right?

A. Yes.

Q. And you're using Linux; correct?

A. That's correct.

Q. Therefore, you're going to have to take a license from us.

A. I don't see anything in here that says you have to take a license from us.

Q. You're telling them you should consider whether or not you should take a license from us; right?

A. You have to show me where that is. I don't see it.

Q. What was the intent for writing the letter other than to put these companies on notice that you believe that your core intellectual property was in Linux and they were using Linux and may be, in your words, legal liability for the end user?

A. I think "notice" is the right word you used there. That's what we were trying to do is put them on notice. I had met with IBM several months prior to this. And IBM said to me

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directly that you cannot come after us because we do not do Linux distributions. That's between you and an end user. And because we don't do distributions, you can't sue IBM. That's one of the things they told us. And, you know, if you read the general public license, it does say that. It says, a caveat emptor phrase in the general public phrase that says you are getting this license for Linux for free, and be aware if somebody comes after you for intellectual property problems we're absolved from that. I'm paraphrasing now, but that's essentially what it says.

Q. But you not only told these 1,000 companies that our, SCO's, technology is in Linux, and you're using Linux and you may have liability, you also gave them a specific example where you initiated legal action in this letter; didn't you?

A. Yes, we did.

Q. Why don't we turn to the second page.

In the first sentence of this paragraph, you wrote:

We believe that Linux infringes our UNIX intellectual property and other rights.

Correct?

A. Yes, that's correct.

Q. And there you're talking about the trunk of the tree, the core UNIX intellectual property; right?

A. I don't believe it says that in there.

Q. But that's what you're referring to; correct?

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A. I'm referring to a number of things.

Q. Isn't it true --

A. I'm referring to things that are in the trunk and I'm referring to things in the branches and things that may have been in the leaves.

Q. You're referring to all three, the whole tree?

A. There were a lot of things going on. And when you go into a bookstore and you go to the section in the bookstore that says, how to program in UNIX. And then you go to the section that says, how to program in Linux, there's not one. It's the same thing. It's the same book. It's the same thing. Linux is a replica of our UNIX, period.

Q. But let me just make this clear. When you wrote:

We believe that Linux infringes our intellectual property rights.

You were referring in part to the core intellectual property that existed in the trunk of your tree diagram; correct?

A. As I said earlier, I was referring to all parts of the tree.

Q. Including the core in the trunk?

A. Including System V that was embodied in UnixWare that was in the trunk, that's correct.

Q. And then you told them you not only put them on notice, you flat-out told them:

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We intend to aggressively protect and enforce these rights.

A. That's absolutely correct.

Q. You're basically telling them, take a license or we're going to sue you.

A. You're going to have to show me where it says that.

Q. Well, you then told them:

We intend to aggressively protect and enforce our rights.

And then you told them:

We already sued IBM.

Correct?

A. Yes. So where does that say we're going to go out and sue everybody else? I don't see that in there.

Q. Well, when you wrote the letter, the user did not take a license, was it your intent to bring legal action?

A. Our intent when we started the SCOsource licensing program was very simple. We wanted very much to protect the property. In fact, I had a meeting with IBM weeks after I joined the company with Mr. Steve Solazzo, who was a senior executive over there. And I talked to him about the idea of going out and protecting our intellectual property, UNIX and asked his advice on it.

And he said he thought that was a great idea. He said IBM does that, and we collect over a billion dollars a

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year from our licensing efforts. Now occasionally, you have to file a lawsuit, yes. It's not the preferred path. It can be very expensive, as we found out in the cases we're dealing with here. But you also find that if you don't stand up and protect yourself and you don't protect your rights, then you are going to have a property that is going to get run over, and you're not going to have any value left in it.

So the core idea here was to protect these rights through a licensing program as the IBM executive had given me the idea.

Q. And that licensing program was SCOsource; correct?

A. That's correct.

Q. And although it was not the preferred route to go, you understood that there may be the need to bring action if these companies who you believe were infringing SCO's intellectual property refused to take a license under SCOsource; correct?

A. That's how IBM played the game, and that's how we were trying to play the game.

Q. And in June of 2003 -- excuse me -- in 2003, after SCO announced the SCOsource licensing deals with Sun and Microsoft and public filings, SEC filings, and press releases, Novell through its general counsel asked you for copies of those agreements; correct?

A. Which agreements are you talking about?

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Q. Sun and Microsoft.

A. Yes.

Q. And Sun and Microsoft are SCOsource licenses; right?

A. They were UnixWare licenses.

Q. Well, isn't it true that the Sun and Microsoft licenses are SCO's -- are licenses under the SCOsource licensing program?

A. They were UnixWare licenses that were embodied in the SCOsource division.

Q. Well, I guess I'm going to have to ask the question again.

Were the Sun and Microsoft licenses SCOsource licenses or not?

A. No. They were UnixWare licenses.

Q. Let me show you what we marked as Exhibit 215.

THE COURT: 215?

MR. ACKER: Yes, sir. It's been admitted.

(Time lapse.)

Q. BY MR. ACKER: Have you had a chance to look at 215, sir?

A. Yes.

Q. It's a letter to you from Mr. LaSala, the general counsel of Novell, dated June 24, 2003; correct?

A. Correct.

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Q. And in the first sentence in the first section of the letter, Mr. LaSala references Section 416(B) of the asset purchase agreement; correct?

A. Yes.

Q. And then look at the next slide, please. Next one.

And in the second page of the letter at the bottom, Mr. LaSala demands to see copies of the Sun and Microsoft agreements; correct?

A. Yes.

Q. And you refused to provide those; correct?

A. Yes.

Q. And at the time that you refused to provide those, you were -- SCO was the fiduciary of Novell; correct? Fiduciary relationship between with two entities; is that right?

MR. SINGER: Objection. It calls for a legal conclusion which the Court has already determined.

THE COURT: It does call for a legal conclusion. I'll let you ask him about his understanding about that if he has one.

Q. BY MR. ACKER: Well, you understood that under the APA you were the agent for Novell to collect licenses or collect royalties for SVRX licenses; correct?

A. Correct.

Q. And you understand now, don't you, that this Court

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has determined that you were actually -- there was a fiduciary relationship between the two companies; correct?

A. For those licenses.

Q. But you refused to provide the Sun and Microsoft licenses to Novell; correct?

A. Correct.

Q. Now --

A. And can I explain?

THE COURT: Yes.

Because he understands my order doesn't mean he agrees with it, though.

MR. ACKER: I'm fully aware of that, Your Honor.

THE WITNESS: Can I explain?

THE COURT: Yes. You weren't done with your answer, so go ahead and answer.

THE WITNESS: Yes.

So my view of those two licenses was that Novell had no more standing to ask us to produce those licenses to them than the court reporter here has standing to ask for those. So it didn't make any sense that we would send it to them.

Q. BY MR. ACKER: So it was your position that the court reporter here in this courtroom today has the same standing to ask for those licenses as Novell did in 2003?

A. For the UnixWare licenses with Sun and Microsoft,

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absolutely correct.

Q. Okay. Why didn't you provide those copies of those licenses to Novell and explain your position?

A. Same reason I wouldn't provide them to her if she asked for them. She didn't have any standing, and Novell didn't have any standing with respect to those licenses. Why would we send them to her? Why would we send them to you? Why would we send them to Novell? We had all the standing in the world to do those UnixWare licenses.

And what -- the other thing, the context I would like to bring this out in is this letter comes in a series of about two dozen letters over a couple months. And it comes on the heels of Novell sending out a letter to the world telling them that they, in fact, are the copyright owner of UNIX and that they're going to use that copyright ownership to come after SCO and attack us for the good of the Linux community. They were currying favor with the Linux community.

Five days after that, my secretary found Amendment 2 that amends the asset purchase agreement that says in part SCO has the copyrights necessary to exercise its rights under the asset purchase agreement for UNIX and UnixWare.

Upon finding that agreement, that amended agreement to the asset purchase agreement, I called the CEO of Novell, Jack Messman and asked him if he had read Amendment 2. And he

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said, no, I have not seen Amendment 2. What is that? And I said essentially what I just said to you, that it talks about us having the rights to the copyrights.

He said, I've never seen that. Is this a trick? And I said, no, it has Novell's signature on it. Tim Tolman had signed it. Will you fax it to me? This is 7 o'clock at night his time.

I faxed it to him. Jack Messman, CEO of Novell, called me back within five minutes after reading Amendment 2, and he said to me, okay, Darl, SCO has the copyrights, what do you want? That's what he said. And I -- I don't need to go into detail about everything that we talked about. But I basically said, we need a retraction. We need you to come back and tell the world that you, in fact, don't own the copyrights, that we do. And then we need to talk about damages. And when I said damages, he got upset and hung up.

But within 12 hours of that phone call, Novell issued a press release to the world that said, SCO has produced to us an amendment to the copyrights -- or to the asset purchase agreement. It wasn't in our files, but it appears that it is correct that SCO owns some copyrights. And so we're backing down off from this.

Within days after that -- so that was the immediate reaction from Novell. That's why I it was always interesting to me the immediate reaction from not an attorney that is paid

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to litigate, but from the guy on top said, okay, you've got the copyrights. What do you want me to do about it?

They immediately send out -- he gets with his general counsel. They immediately send out a press release to the world that says, SCO owns the copyrights. And then a few days later, realizing that they're in litigation, I presume, with their outside attorneys, we get a series of letters that come at us one after another after another. It's like, it's like carpet bombing. Carpet bombing of legal letters of one thing after another after another including a reversal of their position that they say on the copyrights which they say, well, I know we said that you're right. We know we sent the letter out. But the more we think about it, the more we think we still own the copyrights.

Then they sent out a letter like this that says, oh, and we want to see the Sun and Microsoft things. And, oh, by the way and by the way and by the way. There were dozens of those letters that came at us.

So how serious did I take this? Well, I took it about as serious as I took the other two dozen, which is they're in litigation. They're attacking. They're in full attack mode. Did we read every letter? Did we respond to every letter as necessary? Yeah. There were some in there that had some legitimacy to them. I didn't view this as one of them.

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Q. BY MR. ACKER: In response to this letter, you never responded back to Mr. LaSala and said, you're not entitled to see those, did you?

A. Every one of these letters that came in I took over and handed to Mr. Tibbits over here, the general counsel, and I don't know what happened to them after that. So you have to ask him.

Q. And you never wrote a letter back and said, you're not entitled to those Sun and Microsoft agreements because they're UnixWare agreements. You never said that; correct?

A. I personally don't know what happened. Again, this is a legal letter that's coming at me. I gave it to my general counsel. You'd have to query him on what he did with them because I really don't know.

Q. So if we wanted to understand what it was with SCO's response to Novell's request to see the Sun and Microsoft agreements, we have to look at what Mr. Tibbits said in his letters back to Novell; correct?

A. Again, that would be the place I would go.

Q. Okay. We'll take a look at that.

If we could bring up Exhibit 294, please.

(Time lapse.)

THE WITNESS: Okay.

Q. BY MR. ACKER: Exhibit 294 is a letter from Mr. Tibbits written to Mr. LaSala on February 5th, 2004;

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correct?

A. Yes.

Q. And if we could go to the last paragraph from the bottom of the first page carrying over to the second page. And in that letter, Mr. Tibbits writes:

In your letter you assert that SCO has unilaterally amended and modified SVRX licenses with Sun, Microsystems and Microsoft. You claim this characterization is based on public statements by SCO, but you do not identify where SCO made these alleged statements. By your citation of Paragraph 4.16(B) of the APA and Section B of the Amendment 2, it appears you are concerned about the proper flow of royalty revenues to Novell under the APA.

And you understand that at the time that when Mr. LaSala and others at Novell were repeatedly writing letter to you and others at SCO, they were concerned about the flow of the SVRX royalties; correct?

A. I didn't know that at the time. You'd have to ask Mr. Tibbits about that.

Q. That's what Mr. LaSala said in his letters to you; correct?

A. That wasn't my view.

Q. And in response to that concern from Novell that

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these were SVRX licenses and that Novell was entitled to SVRX royalties, Mr. Tibbits wrote:

To the limited extent that Novell may have rights under Paragraph 4.16 of the APA to protect its revenue stream from SVRX licenses that were in existence at the time of the APA, those rights do not extend to the new contract with Sun and the new contract with Microsoft.

Correct?

A. Correct.

Q. So it was SCO's position back in 2003 that the reason that Novell was not entitled to these licenses is because these were licenses that were entered into after the date of the APA; correct?

A. Yes.

Q. And there was no mention in this letter from Mr. Tibbits to Novell in 2003 that Novell was not entitled to that revenue because they were UnixWare licenses; correct?

A. Well, it says the Microsoft agreement is the new agreement not covered by the APA.

All the licensing going forward was done for UNIX to a UnixWare license. Novell had no rights to do that. So --

Q. But SCO's position back in 2003 is that Novell was not entitled to these monies because they were licenses that

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were entered into after the date of the APA; correct?

A. The new license would be a UnixWare license. And so if it was done after the APA, it would be a UnixWare license and it wouldn't be covered. The only thing that Novell had rights to was the preexisting royalties that SCO didn't buy out as part of the '95 transaction.

Q. But what Mr. Tibbits told to Mr. LaSala was not that. What Mr. Tibbits told to Mr. LaSala is, these were new agreements after the APA; therefore, you're not entitled to royalties; right?

A. That's what it says there.

Q. And what Mr. Tibbits said to Mr. LaSala was not that we licensed some SVRX, but it was incidental to UnixWare, but rather these are new agreements after the date of the APA; therefore, you don't get money; right?

A. Well, I think you can take bits and pieces of words and say, here's what it was then. But if you take the approach that the company has done over the years, it is to license UnixWare. And if incidentally along the way, there is SVRX that ties to those things incidentally, then, yes, we have a right to license them.

Q. But that's not what Mr. Tibbits told Mr. LaSala.

A. I don't see that in there, no.

Q. And that was the position of SCO in 2003; correct?

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A. That's what Mr. Tibbits' letter says.

Q. So it's true, isn't it, that six times between 2003 and November of 2004 Novell asked SCO to provide it with a copy of the Sun and Microsoft agreements; true?

A. I'm not sure. I wasn't involved in the discussions.

Q. But the existence of those agreements had been disclosed in press releases, articles and SEC filings; correct?

A. Yes.

Q. Yet, SCO refused to provide copies of those agreements to Novell, an entity it owed fiduciary duty to; correct?

A. We didn't have a fiduciary duty to Novell for these contracts and licenses, so why would we?

Q. And it's true, isn't it, that never before had SCO refused to provide a contract or to provide information regarding a contract to Novell when asked by Novell; correct?

A. I don't know the history of that.

Q. Let me show you Exhibit 326.

(Time lapse.)

Q. BY MR. ACKER: It's an article that you're quoted in from eWEEK, dated April 13th, 2005; correct?

A. Correct.

Q. And in the article there's a discussion about Sun's

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plans to open source its OpenSolaris products; correct?

A. Yes.

Q. And there's a quote attributed to you where you say:

We have seen what Sun plans to do with open

Solaris, and we have no problem with it.

Do you see that?

A. Yes, I do.

Q. Is that quote accurate?

A. Yes.

Q. And is it true -- it's true, isn't it, that the bottom line is you don't believe there's anything improper about Sun's open sourcing of its Solaris product; correct?

A. No.

Q. And SCO does not have a problem with what Sun did in open sourcing Solaris after the execution of 2003 Sun licensing deal; right?

A. Correct.

Q. And you would agree, wouldn't you, that what Sun has done with its OpenSolaris products it has the right to package that Sun obtained from SCO in its 2003 license?

A. That's what I said.

Q. And it's true, isn't it, that Sun's OpenSolaris is a derivative of UNIX System V?

A. Yes, it is.

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Q. As --

A. I'd like to -- are you off that thread, or can I explain why I made those statements?

Q. Well, counsel is going to have an opportunity to ask all the questions you want. I'm sure you can make all the statements you want.

A. Okay. That's fine.

Q. As the CEO of either Caldera or SCO, have you ever certified an SEC filing, either a Form 10K or 10Q with the knowledge that it contained a false statement?

A. Not that I'm aware of.

Q. If we could take a look at Exhibit 190.

Mr. McBride, feel free to look at any portion of that, but I'm going to ask you about specific sections of it.

A. Do I have to read this again? These are brutal enough to go through the first time.

Q. Why don't you take a look at the second-to-the-last page of the document. You see there's a certification by you of Caldera's Q for the period ending April 30th, 2003. Do you see that?

A. Yes.

Q. And before signing -- or having the electronic signature affixed to the certification, did you read the Q?

A. Yes, I did.

Q. And when you read it I assume sometime in May or

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June of 2003, did you think everything in it was accurate?

A. I hope so or I wouldn't have signed it.

Q. Okay. Why don't you take a look at Page -- the paragraph beginning on Page 20 and running over to Page 21 of Exhibit 190.

A. Okay.

Q. This is a description of the SCOsource program; correct?

A. Yes.

Q. And in 2003 when describing that program, you included in it the Sun and Microsoft agreements; correct?

A. Yes.

Q. And how you describe the SCOsource program was, the Q was written:

One of the assets that we acquired from

Tarantella --

And that happened in 2001; correct?

A. Yes.

Q. -- was the intellectual property rights to UNIX.

Correct?

A. Yes.

Q. And those rights that you're referring to that SCO acquired in 2001 were rights that initially had been developed according to the Q by AT&T Bell Labs, and over 30,000 licensing and sublicensing had been entered into with

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approximately 6,000 entities.

Do you see that?

A. Yes.

Q. So the rights that you're talking about protecting in the SCOsource program are the rights acquired in 2001 from Tarantella; correct?

A. Yes.

Q. And those rights date back to code that had been developed in AT&T labs; right?

A. It started in AT&T Labs. But at the point in time that we were talking about in 2001, if you were going to try to run the software in the 1968 AT&T Labs code, you would have to have a punch card to make it work.

Q. Okay.

A. The point is this was a continuous effort. It didn't stop in 1969. And that's all of the things we were licensing. It started at AT&T, and clearly there were a number of contracts that were tied to that period of time. But the technology clearly evolved.

Q. But the rights that you are referring to here are rights that you obtained in 2001 from Tarantella.

A. Yes. But what I'm saying is the Tarantella property itself had evolved in time, as well. So, yes. Some of those were done in AT&T days; some were done in Novell days; some were done in SCO, Tarantella and ultimately

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Caldera.

Q. And then the last sentence of this paragraph you wrote or was written:

We believe these operating systems are all derivatives of the original UNIX source code owned by us.

Do you see that?

A. Yes.

Q. And the UNIX source code that you're referring to there, again, were the rights that were obtained in 2001 from Tarantella?

A. Yes.

Q. And then you write:

We initiated the SCO source efforts to review the status of these licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses.

Do you see that?

A. Yes.

Q. And again, that intellectual property that you're referring to again is that UNIX source code; correct?

A. Yes.

Q. And this effort resulted in the execution of two licenses during the April 30th, 2003, quarter; right?

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A. Yes.

Q. And those two licenses were the Microsoft license and the Sun license; right?

A. Correct.

Q. And the way that you described -- or the Microsoft license was described in 2003 or the Sun license was described, even though its's not identified as such here is:

The first of these licenses was with a long time licensee of the UNIX source code which is a major participant in the UNIX industry and was a cleanup license to cover items that were outside of the scope of the initial license.

That's the way it was described in 2003; correct?

A. Uh-huh (affirmative).

Q. That's the Sun license. In 2003 SCO described it as a cleanup license; is that right?

A. That's what it says.

Q. A cleanup license referring back to its original license from 1994; correct?

A. It says:

A cleanup license to cover items that are outside of the scope of the initial license.

Well, if you want to put a magnifying glass and say, what are the things that were outside of the scope of the initial license? It would have been the work that was done

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from the time of the '94 agreement up to 2003. And primarily the value of the technology in those Jonathan Schwartz, the president and CEO of Sun, has said multiple times, was relating to the software drivers that attached to UnixWare. Those were the things that were outside of the scope of that initial license.

Q. But it also provided Sun with the ability to open source Solaris, which it hadn't been able to do under the 1994 license; correct?

A. Sun had more broad rights than anybody in the industry with respect to how widely they could distribute their product. They paid nearly $100 million for these rights. And what Sun had that was unique that when they did the original deal for $83 million was they got the right to redistribute source. That was very unique.

And so although it was not exactly open sourcing, it was so broadly spreading the source out there that it was going to be very hard for the company to protect that. That's why they paid so much for it at the time they did it.

So there was a very broad opening in the technology with Sun that was finished off at the point in time that we did the agreement in 2003.

Q. Why don't we take a look at Page -- if we go to Page 22. If we could highlight the bottom two paragraphs.

Here later in the Q in this paragraph above, you

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describe what the revenue is for UnixWare products for the Court; right?

A. Yes.

Q. That does not include the Sun or Microsoft agreements; correct?

A. Let me look at it here for a second.

Right.

Q. So in the Q in 2003, we're describing what the revenue was for UnixWare licensing. Did you not include either the Sun or Microsoft revenues? Correct?

A. Correct. Can you bring up the tree picture again?

Q. And then when you do talk --

THE COURT: Your counsel can do it if he wants to when he asks you questions.

THE WITNESS: Can I describe it then?

Q. BY MR. ACKER: When we talk about licensing, which is the SCOsource program --

A. Right.

Q. -- that's where the Sun and Microsoft revenues were; correct?

A. These were tied into the trunk, if you will, of the tree licensing, which is UnixWare. There was also the branch UnixWare. So if you were going to put this back on the tree picture, you would take the first two versions up there and say, OpenServer was a branch, UnixWare was a branch. Those

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were kept out in the marketplace. Those were sold through our channels. When you're talking about licensing programs, those were different channels, it was the trunk code. But those were always 100 percent. Those contracts were driven off of a UnixWare license.

Q. Let me understand your testimony. So when you're talking about the UnixWare and OpenServer licensing revenue in the Q, you're talking about the branches of the tree; correct?

A. Yes.

Q. But when you're talking about the Sun and Microsoft and SCOsource licensing, you're talking about the trunk, the core UNIX IP; correct?

A. That's the way I would depict it, yes.

Q. And the core trunk or UNIX IP dates back to AT&T; correct?

A. It started at AT&T and evolved over time.

Q. Let me show you what we've marked as Exhibit 304. It's also been admitted.

A. So I'm a little bit troubled that you were trying to imply that I was not telling the truth in my 10Q here. I don't understand what --

Q. I'm not implying anything, Mr. McBride. I'm asking questions --

A. You said that.

Q. I asked you if you have ever not told the truth in

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your Q.

A. Right.

Q. And what you're telling me is that you have told the truth in your Q.

A. Okay. I just wanted to make sure it was clear.

Q. Let me ask you that. You always have told the truth; correct?

A. Yes.

Q. And so what we read to you is accurate; is that right?

A. Yes.

Q. And the Sun and Microsoft licenses, those were not included as UnixWare licensing revenue; correct?

A. They were included as part of the licensing revenue that went to the trunk code of UnixWare.

Q. They were not included in the Q as UnixWare or OpenServer licensing revenue; correct?

A. Not as part of the branch revenue, no.

Q. And that was accurate; right?

A. Pardon?

Q. That was accurate?

A. Yes.

Q. When you said that in 2003, it was accurate; right?

A. Yes.

Q. And it's still accurate as you sit here today?

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A. Yes. I wanted to make sure we were clear on that.

Q. Why don't we take a look at Exhibit 304. This is another Q for the quarterly period ending April 30th, 2004. And again, you would have read this before it went out; correct?

A. Yes.

Q. Why don't we go to Page 40. Do you see on Page 40, Mr. McBride, there is -- at the top of the chart, there is a depiction of what revenue was generated for UnixWare revenue for the quarter ending April 30th, 2004; correct?

A. Yes.

Q. And you had it both for the three months ending April 30th, 2003, and for the three months ending April 30th, 2004, as well as for the six months ending April 30th, 2003, and for the six months ending April 30th, 2004; correct?

A. Yes.

Q. And this UnixWare revenue in the Q for April 30th, 2004, none of that involves the Sun or Microsoft licenses; right?

A. Those would have been done through our licensing program, not through the products program.

Q. Okay.

A. This is more of a branch revenue out here.

Q. The branch of the tree; correct?

A. Yes.

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Q. Why don't we take a look at the bottom of the page. And when you talk about SCOsource licensing revenue, as distinct from UnixWare revenue, you describe it as:

SCOsource licensing revenue consists of revenue generated from vendor licenses to use our proprietary UNIX System V code as well as IP licenses.

Correct?

A. Yes.

Q. Accurate statement; right?

A. Yes.

Q. You're licensing the trunk of the tree; correct?

A. Correct.

Q. And this revenue does include the Sun and Microsoft licenses; right?

A. Yes. Yes. Along the way we created a division, and we put as many licensing revenue pieces that we could in the SCOsource division.

Q. Let me show you what we've marked and been admitted as Exhibit 313.

Mr. McBride, there is your Form 10Q for the period ending July 31st, 2004; correct?

A. Yes.

Q. And if we go to -- we'll go to your certification on Page 61.

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Again, on September 14th, 2004, you read the document; correct?

A. Yes.

Q. And you wouldn't allow someone to place your electronic signature on it unless you read it and believed it to be accurate; correct?

A. Correct.

Q. Why don't we go to Page 32 -- I'm sorry. We'll start on Page 31.

On Page 31 of the Q, it was written:

Our product revenue consists of software licenses of our UNIX products primarily OpenServer and UnixWare as well as sales of UNIX related products.

Correct?

A. Correct.

Q. So when you're talking in the financials about what products revenue is, it's software license of OpenServer and UnixWare.

A. Everything in software turns on a license. So, yes, it was UNIX products and OpenServer UnixWare.

Q. But when the term products revenue is used, it's specific to OpenServer and UnixWare licensing; right?

A. That's typically how we do did it, yes.

Q. Why don't we turn to the next page, Exhibit 32 --

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Page 32.

So you see on the next page, Mr. McBride, there's a listing there of the UnixWare revenue and OpenServer revenue for the nine months ending July 31st, 2003, and 2004. And neither of those numbers or those line items include the Sun and Microsoft agreements; correct?

A. What period of time is this talking about?

Q. Well, at the top it's the nine months ending July 31st, 2003, and 2004. So nine months prior to July 31st, 2003, and 2004. And there is a line item for UNIX revenue, UnixWare revenue and OpenServer revenue; correct?

A. This thing is so dark on the screen I can't even read it. Let me go to the page. Which page are we on here?

Q. 32.

(Time lapse.)

THE WITNESS: Okay. So what's the question then?

Q. BY MR. ACKER: When you're talking about these line items up here, UnixWare revenue and UNIX licensing --

A. Right.

Q. -- that does not include the Sun and Microsoft agreement?

A. That is the UnixWare branch revenue up there. Again, the only way you can get System V code license company is through UnixWare.

Q. Let's go back to Page 31. Go back one page.

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In the Q how you describe products revenue is:

Our products revenue consists of software licenses of our UNIX products primarily OpenServer and UnixWare.

Correct?

A. Okay.

Q. We go to the next page, Paragraph 32, this UnixWare revenue line does not include the Sun or Microsoft licenses, the revenue from those licenses; right?

A. No; because it was trunk revenue, not branch revenue. This is referring to branch revenue.

Q. And again, branch revenue is the derivative works including OpenServer and UnixWare; correct?

A. Yes.

Q. And the trunk is the core UNIX IP; correct?

A. I believe you keep trying to shift my words on this. If we go back to the very beginning, I believe what I said very clearly and I said a number of times here is that UnixWare runs throughout the entire tree, okay. It runs throughout the entire tree. So I know you're trying to catch me saying things the wrong way here, but let me come back to the same statement, that UnixWare runs through the entire tree. UnixWare is also a branch. Any time we're talking about the core licensing of the code that's running through the branch, the trunk, it's always going to be through

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UnixWare licensing.

Q. But when you told the SEC in 2003 and 2004 that you had a body of UnixWare licensing, you did not include the Sun and Microsoft agreements in that licensing; correct?

A. No. And we didn't put a picture of the tree in there, either. This is not inconsistent with the statement that I'm making.

Q. Let me just get it clear. It's true, isn't it, that when you told the SEC and investing public in 2003 and 2004 that the Sun and Microsoft licenses were not UnixWare licensing revenue, that was an accurate statement?

THE COURT REPORTER: An or inaccurate?

MR. ACKER: Inaccurate statement, that it was true.

THE WITNESS: Say that again.

Q. BY MR. ACKER: Was it true when you told the SEC and the investing public in 2003 and 2004 that the revenue from the Sun and Microsoft agreements was not UnixWare licensing revenue?

A. No. It was -- System V was always licensed through UnixWare. UnixWare here is described -- if you want to go back --

Q. Well, let me ask you. So the statement was inaccurate?

A. I was saying something. Can I finish?

Q. Was the statement accurate? I'm asking a simple

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question. Was it true or false?

A. Can I finish my statement?

Q. Was it true or false when you told the federal government and the investing public that the Sun and Microsoft licensing revenue was not UnixWare licensing revenue?

THE COURT: You can finish your statement. You need to answer his question, but go ahead and finish your statement.

THE WITNESS: Okay.

If you go back and -- have you listened to the conference call --

Q. BY MR. ACKER: The way this works is I ask questions and you answer them. It's unfortunate that way.

A. If you listen to the conference call from the time we were doing this licensing, you go back and listen to them. And we were always very clear that the licensing -- a lot of the SEC thing evolves around disclosure, and we've done nothing to not disclose where these are coming from. The code from the licenses, the only which -- you couldn't walk into the company and buy a System V license by itself. There wasn't such a thing on the price list. It would be like walking into Chevrolet and saying, I'd like to buy a Duramax engine. It's not there. You buy a Duramax engine by buying Chevy Silverado, and that's how you get your Duramax.

And that's the same way it happens here. We were

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always very clear on that. This is not deceiving the investing public. I know where you're trying to go with it. But the statements that I'm making are not inconsistent with our licensing practices.

Q. And I'd just like an answer to the question.

A. What's the question?

Q. Is it true when you told the investing public in 2003 and 2004 that the Sun and Microsoft revenue was not UnixWare licensing revenue?

A. We didn't say it was not UnixWare revenue.

Q. Well, you have a list of what UnixWare revenue is in the Q; correct?

A. These were UnixWare branch products.

Q. Let me finish.

You have a list of what UnixWare is in the Q; correct? There's a line in there that includes UnixWare revenue; right?

A. The UnixWare branch revenue is what we're talking about.

Q. And it doesn't include the Sun and Microsoft licenses; right?

A. They were down in the licensing part of SCOsource, and the way you got that was through UnixWare.

Q. But if you go back to the prior page, go back. When you describe what is included in UnixWare licensing and

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your products revenue, that product line that does not include Sun and Microsoft, it's the software license of our UNIX products including OpenServer and UNIX and UnixWare; correct?

A. And this is referring to the branch revenue. We had the System V revenue that was manifested in a UnixWare license that was part of that, as well. The investing public looked at UnixWare, when you say UnixWare to our investors, what they think is what's coming out of the UnixWare product line, okay. We were trying to -- we were not trying to play trick plays with legalisms here with where you're trying to go with. We're trying to inform the investing public they know what our UnixWare product is. And the fact that we use UnixWare as the wrapper to sell a System V license is not confusing to our investors. It might be confusing to you, but it's not to our investors.

Q. Simple question. In your Q, you said that the products revenue included UnixWare licensing revenue; correct?

A. Say that again.

Q. The products revenue in your Q includes UnixWare licensing revenue; correct?

A. Which means it was a product. It was a branch.

Q. And that did not include, that line item from products revenue did not include the Sun and Microsoft revenue; correct?

A. No, it did not.

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Q. Mr. McBride, with your approval SCO filed this lawsuit against Novell alleging slander of title; correct?

A. Correct.

Q. And the basis for that claim was that Novell allegedly slandered SCO's claim to ownership of the copyrights for the UNIX System V software; correct?

A. Yes.

Q. And SCO claimed that Novell's actions in challenging SCO's ownership of the UNIX System V software cost SCO hundreds of millions of dollars in damages; correct?

A. Correct.

Q. And the basis for that hundreds of millions of dollars of damages claimed that Novell's actions harmed or destroyed SCO's SCOsource licensing program; right?

A. Yes. That was a major, major factor.

Q. But it's true, isn't it, that the only copyrights that Novell have claimed ownership of are the copyrights of the software that were in existence before the 1995 APA; correct?

A. They have filed copyrights that step all over the top of our UNIX copyrights, the foundation of our SCOsource program.

Q. But the copyrights that Novell has claimed ownership to existed prior to the 1995 APA?

A. They have claimed copyright ownership to the

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copyrights that in the asset purchase agreement, if you go to the included assets, says, SCO is hereby transferred all rights and ownership to all copies of UNIX and UnixWare. It doesn't say Novell gets all the previous versions and SCO gets the latter versions. It says in the first part of the included assets of the asset purchase agreement, included in the asset list is all copies of UNIX and UnixWare and all rights and ownership of UNIX and UnixWare. There is nowhere in there --

Q. I wasn't asking about that. All I was asking you, isn't it true that the basis for your slander of title claim is that Novell claimed ownership to software, but it only claimed ownership to software that existed prior to the APA; correct?

A. That's not -- they have claimed -- well, the way you're dicing it, I would say that's correct. But it steps on a number of copyrights we believe we have ownership rights to.

Q. And Novell has never claimed copyrights to SCO produced UnixWare created after the APA; correct?

A. They have claimed ownership to copyrights that are a major part of UnixWare. They sold us -- they said to us in 1995, you go to UnixWare. At that point in time, System V has gone through a number of iterations. The version of System V in 1995 was a thing called System V Release 5. System V Release 5 is also known as UnixWare.

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So there's an evolution, System V Release 1, 2, 3, 4, 5. Each time this code base gets broader and deeper. What Novell did is they told us in 1995, they didn't just tell us, they told all of their customers that they had sold UNIX and their interest in UNIX to SCO. They sent out letters to Prentice Hall, they sent a letter to Prentice Hall and dozens of other companies that said in part, we have sold our interest and our ownership in UNIX and UnixWare to the Santa Cruz Operation. It makes immeasurably more sense for you to be dealing with the owners of UNIX and UnixWare than us. And so here's their numbers. And Novell signed this. SCO signed it; Novell signed it.

Then it lists, in this Prentice Hall letter that goes out in 1996, it lists numerous versions of what Novell said to the customers, to Prentice Hall in this case, was transferred. It was sold. And it lists all of the things that your client went out and filed copyrights on, not in '95. Why didn't they do it in '95? Why didn't they do it in '96? '97? Why didn't they do it in '98 when we had a licensing deal going on with Monterey or IBM. Maybe in 2001 when SCO transferred the company to a new company called Caldera. They could have said something then.

They only did it after we filed suit against IBM in 2003 and IBM paid Novell $50 million to come and work with them. And that copyright ownership letter that Novell sent

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out to Prentice Hall could not be more clear that SCO is the owner of those products. And ownership in my mind and in the APA says that it includes all rights and ownership.

Q. And the products we're talking about are products that were in existence before 1995; correct?

A. Part of them, yes. Part of them are subsequent versions.

Q. So because of this claim that SCO was damaged for hundreds of millions of dollars by Novell's actions, there must be significant value to that software that existed before 1995; correct?

A. Again, what you're doing is taking pre 1995 technology called System V, and up to that point we've had System V Release 1, 2, 3, 4. And in '95, Novell sells to SCO System V Release 5 and calls it UnixWare. Now they're trying to recreate the playing field. The business people at Novell are not doing this. The business people 100 percent line up with our story. There's a couple of attorneys coming in and trying to recreate the story that they own the previous copyrights. But yet, that contradicts the proposition that our company acquired UnixWare and UNIX and all the rights that go with that in 1995.

And so what Novell would have you believe is that all of the money, the 100-plus million dollars that we spent and paid to get rights to all of the versions of UNIX are now

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stripped away. And all we have is what we created after that.

Q. And because --

A. It's incredible that they even made that argument, let alone that it's standing up.

Q. And because of those actions, Novell's actions in claiming ownership to these products that existed before 1995, you believe SCO has been damaged in hundreds of millions of dollars?

A. Absolutely.

MR. ACKER: Nothing else, Your Honor.

THE COURT: Thank you.

Let's take our first break. We'll be in recess for 15 minutes.

(Recess.)

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THE COURT: You may proceed, Mr. Singer.

MR. SINGER: Thank you, Your Honor.

CROSS EXAMINATION BY MR. SINGER:

Q. Good morning, Mr. McBride.

A. Good morning.

Q. You were asked some questions about the public filings of SCO in which there's references to license agreements with two licensees, Sun and Microsoft, to clean up IP issues. Do you remember that line of examination?

A. Yes, I do.

Q. Was the manner in which those IP issues cleared up with Sun and Microsoft through a license to UnixWare technology?

A. Yes.

Q. And, with respect to Microsoft, was there also a license to OpenServer technology?

A. Yes.

Q. And, with respect to Sun, was there also a provision of drivers for UnixWare technology?

A. Yes.

Q. Now, anywhere in the SEC filings you are aware of, has SCO sought any amount of money from those licenses as actually being SVRX license money in the

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meaning of the APA?

A. No.

Q. I'd like to direct your attention back to the eWEEK article, which is Novell's Exhibit 326. Do you remember being asked a few questions about your comments in that article about what Sun obtained from SCO?

A.Yes.

Q.And you remember, at one point you wanted to explain what those rights were, and it was suggested would better be done during my examination rather than Novell's counsel?

A.Yes.

Q.Well, that time has now come, and I would like you to provide that explanation.

A.I remember the advice well.

Q.Can you explain what you understood Sun was getting from the 2003 rights, as you were expressing them with reregard to the E-Week article?

A.Yes. The key thing that they were looking for was how to take their Solaris operating system and make it more compliant with the Intel chip set, which is what SCO has a deep history of doing. And the way you do that, the way it's substantiated, is by taking the drivers that attach to SCO's operating systems and allow Sun to move that over to Solaris.

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Q.With respect to open sourcing rights and the ability to distribute source code, did Sun have substantial rights from the 1994 agreement in that regard?

A.Yes, they did.

Q.And you mentioned $82.5 million being paid in the 1994 agreement; is that right?

A.Yes.

Q.Was all of that paid to Novell?

A.Yes.

Q.At the very beginning of the direct examination, you were asked about the tree analogy and UnixWare technology in there. When SCO licenses UnixWare, is it your understanding that it licenses all the core intellectual property in the trunk of that tree?

A.Yes.

Q.Has anyone come in to you and said: We want to simply go back and license that technology in the form of the old SVRX licenses from the 1980's and early 1990's, as opposed licensing UnixWare.

A.No.

Q.Have you ever told shareholders that the way in which you're going to commercially exploit that intellectual property is from selling those old SVRX licenses, as opposed to through UnixWare technology?

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A.No.

Q.You were asked some questions about UnixWare having started before the Asset Purchase Agreement was executed in 2005. Do you remember those questions?

A.Yes.

Q.Is it your understanding that Santa Cruz, and now SCO, bought the rights to UnixWare in the APA?

A.Yes.

Q.And that included the business as it was before the APA was executed?

A.That's what they told us.

Q. And was a fair amount of consideration paid for that business?

A. Yes. It was well over a hundred million dollars.

Q.In addition, were there royalty rights in the APA for the sale of UnixWare products that Novell would get under certain conditions?

A.Yes.

Q. And were those conditions, first of all, a floor that had to be exceeded in UnixWare sales?

A.Yes.

MR. ACKER: I'm just going to object to leading. The last five questions have been leading.

THE COURT: Try not to lead.

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Q.Was there a floor in the agreement?

A.Yes.

Q.And can you explain how the floor operated?

A.Yes. There had to be a certain threshold hit before Novell would receive any of those royalties.

Q.Was there also a -- was there any time limit on the time during which those royalties would accrue to Novell?

A.Yes.

Q.And do you remember how many years that time limit existed for?

A.I know that it expired December 31, 2002.

Q.Did Novell ever qualify for any royalties on UnixWare sales, as provided in that provision of the APA?

A.No.

Q.Has, to your knowledge, Novell, at any time, ever suggested to you that you owed Novell any royalties under that provision?

A.No.

Q.Outside of that provision, has Novell ever suggested to you, in any way, that you owed UnixWare licensing money to Novell on sales of UnixWare products?

A.No.

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Q.Even if some of those products were UnixWare products that started at Novell prior to the sale?

A.No.

Q.There was a line of questioning about the request for the Sun and Microsoft agreements. And I want to ask you a couple of questions about that. Mr. Acker asked that -- if SCO had ever refused before to provide a contract when provided by Novell. I'd like to ask you, had Novell ever requested any UnixWare licenses prior to the Sun and Microsoft agreement?

A.Not that I'm aware of. We did a deal with IBM in '98 over Project Monterey, and I never saw anything where they came in and requested to see what was going on with that.

Q.Now, in connection with the Sun and Microsoft agreements, you were asked some questions about, first of all, the June 24, 2003 letter to you from Mr. LaSal A.And that is Novell's Exhibit 215. That was in June of 2003?

A.Yes.

Q.Prior to that time, had there been conversations that you had with Novell regarding the SCOsource program?

A.Yes.

Q.Who did you have those conversations with at

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Novell?

A.Greg Jones.

Q.Can you tell me when the first conversations occurred?

A.Yes. It would have been in the fall of 2002, probably early November.

Q.Who initiated the conversation?

A.I first called in to Greg Jones, who was an attorney at Novell.

Q.Okay. And what did you tell him or ask him?

A.Well, I told him that I was the CEO of SCO, SCO had acquired the UNIX properties, as we remembered from the '95 time frame, and we were preparing to enforce our intellectual property rights and, in the process of going through the related agreements, I had come across a head-scratcher, if you will, something in the agreements that did not make sense to me.

There was competing language, where the majority of the Asset Purchase Agreement seemed to appear that all of the property went to the Santa Cruz operation, and there was really just one word in one small section that was conflicting that, and that was relating to the copyrights in the excluded asset list.

And I explained that to Mr. Jones and, at the same time, explained to him what we were trying to do

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with our SCOsource program.

Q.Now, at the time you had this conversation, were you aware of amendment number 2?

A.No, I was not.

Q.What did you ask Mr. Jones for Novell to do?

A.I asked him if he would help us find all of the documents that related to the Asset Purchase Agreement in 1995, so we could try and get some clarity to what was clearly an erroneous problem. Something was in error because there was conflicting statements.

Q.What did Mr. Jones say to you?

A.He agreed with me and said he would do his best to see how he could help.

Q.Okay. Was there a follow-up conversation with Mr. Jones or anyone else from Novell?

A.Yes. Over the period of the next, I would say, two to three months, there were a number of discussions I had with Greg. And then, eventually, there was someone else from Novell, a Dave Wright came in, and I had some discussions with him, but primarily it was with Mr. Jones.

Q.Can you relate the substance of that conversation -- conversations?

A.The substance, if you put a thread through it, was basically us asking them to clarify this language

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that we felt was conflicting and that we had bought the technology, SCO had bought it, Novell had sold it. I went through that with Greg. Greg agreed with me and said: Yeah. That doesn't make sense. Let's try and figure out if there's a document out there somewhere.

So, the first part was going out to try and find some documents that would help that. So if there was a thread through it, it was Greg was very helpful every step along the way to try and help us resolve the issues.

Q.Well, did they express a willingness to go back and search for documents?

A.Yes, they did. The first part of of it was Mr. Jones telling me: Let me go see what I can find out.

I worked with Greg at Novell, and I knew him well. A lot of people had left over the ten years since I had worked there, so -- eight years, whatever it was. So -- but I did know Greg, and Greg was very helpful to, first of all, go try and find any documentation that would explain what was going on at the time of the deal.

Q.Did there come a time when Novell said they were not willing to provide any assistance in doing that?

A.Yes.

Q.When did that occur?

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A.The first come back from Greg was that they had gone -- he had gone down the path of trying to find the documents, and he came back and said to me that all the documentation around the UNIX stuff was old and in archives and wasn't even on property anymore and so it was going to be extremely difficult for them to go out and even find the documentation around the UNIX technologies.

Q.At that time, did you ask them if they would take any further steps to clarify the ownership of the copyrights?

A.Yes. Well, we talked about it, and so the first step that I took was to try and explain to them why there would be an incentive for them to do it, and that was that Novell's royalties from the preexisting royalties from '95, they obviously had been coming down over the years. And the way I described it to Greg was that if we're able to support, in the industry, the defense of the intellectual property for UNIX, vis-a-vis Linux, then anybody who has anything to do with UNIX will benefit from that, so their declining revenue stream might slow down.

So I was trying to explain to them that it wasn't just in our interest, but it was in fact in Novell's interest to get involved with us to support us

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in what we were doing with SCOsource.

Q. Did you explain the SCOsource program to Mr. Jones?

A.Yes, I did.

Q. That it would involve licensing individuals who are using Linux to make use of whatever UNIX intellectual property existed in Linux?

MR. ACKER: Same objection. Leading, Your Honor. He can ask, simply: What did you say?

Q. Did you describe the SCOsource program?

A. Yes, I did. I explained to Greg what we were doing. I believe he understood it. At the point in time we were talking, the tight focus that we had on the intellectual property problems in Linux related to our UNIX was around our library licensing, and I went through and described generally what we were doing with SCOsource and then also specifically what the first program would be around.

Q.Did Novell, through Mr. Jones or anyone else, respond to you with respect to their interest in helping on the SCOsource program?

A.Well, again, Greg was extremely helpful along the way to try and help us clarify what the problems were in the Asset Purchase Agreement. And with respect to the SCOsource program -- well, in order -- what came back was

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Mr. Jones said that SCO -- Novell was not interested in participating in anything to do with UNIX. That was yesterday's story, that they had taken it all the way up to the top of the company. And I can't remember if he said executive committee or the CEO.

Somebody at a very high level had reviewed the request for both things; to get involved in what we were doing with our licensing program, but also to help us try and get some clarity around what was clearly some incorrect documents.

Q.Did Novell agree or refuse to provide any clarification, through any subsequent documentation, on the ownership of the copyrights?

A.Greg agreed, but higher-ups disagreed. So, Greg, after basically saying that it's in the archives, we can't find them, and after we kept pressing and saying that we really want to get this cleared up, Greg had an idea which I thought it was a good one, which was: Why don't you guys just draft a statement -- maybe we can include it as a side letter -- and clarify what is clearly a problem in the documents, and I'll get somebody to sign it, and we'll be done with it.

We went through that step per Mr. Jones' request. We actually created a one-page, I believe. It was a document that was a little side letter to attach

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that said: Both parties agree that, at the time of the transaction, it was the intent of the parties to -- that the copyrights were part of this transaction.

Over the course of the last several years, it's been proposed --

Q.I'm not asking about the last several years, Mr. McBride, just those questions.

A.Okay.

Q.With respect, though, to that request for clarification, did Novell ultimately agree or refuse to provide it?

A.They ultimately refused.

Q.Did -- at any time in these conversations that occurred in late 2002 and early 2003, did Novell ever say that you, SCO, are not able to engage in a SCOsource licensing program because we, Novell, own that intellectual property?

A.No, they did not.

Q.Did Novell, at any time during those discussions, ever say: You, SCO, if you go forward with that program, have to give us, Novell, the revenue that comes out of it?

A.Not at all. In fact, what they did say was: UNIX is yesterday's story. We're going forward. We're interested in Linux. We don't want to get involved in

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UNIX.

Q.Now, moving forward to June 24, 2003 and Novell Exhibit 215, Mr. McBride, you were asked about this letter, which talked about receiving copies of the agreements, the two license agreements.

A.Correct.

Q.At that time, did Novell ever say to you: We think the SCOsource licenses that are publicly being made available are licenses which violate our SVRX rights.

A.Say that again.

Q.Did Novell ever say to you, either in the June 24, 2003 letter, or at that time, that the SCOsource licenses, which are publicly available, that you're selling to the public, violate our SVRX rights in the APA?

A.No.

Q.In fact, if you turn to Exhibit 272, which is Mr. Tibbitts' letter that you were asked about, Mr. Tibbitts' letter of February 5, 2004, to Mr. LaSala --

A.I think it's 272. It appears -- oh, here it is.

Q.It's Deposition Exhibit 272. It's Trial Exhibit 294. It should be.

If you turn to the second page, you see even in

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February, 2004, Mr. Tibbitts is saying to Mr. LaSala:

You also question SCO's introduction of intellectual property license for Linux and whether that was a USVRX license.

Do you see that?

A. Yes.

Q. Had Novell, even as late as February, 2004, ever told you that the publicly available SCOsource licenses, that SCO was marketing at that time, were things that you were not authorized to offer to the public because of their SVRX rights?

A. No.

Q. Did they ever tell you, at that time, that if you marketed those, they would get the revenue?

A. No.

Q. Or they believed they were entitled to the revenue?

A. No.

MR. SINGER: Thank you very much.

THE COURT: Thank you.

Anything else, Mr. Acker?

MR. ACKER: Just a few questions, Your Honor.

THE COURT: Is it Acker or Acker?

MR. ACKER: Spelled Acker, pronounced Acker.

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REDIRECT EXAMINATION BY MR. ACKER:

Q. Mr. McBride, if you still have Exhibit --

Could you bring up Exhibit 215, please.

And Exhibit 215 is the letter to you from Mr. LaSala, dated June 24, 2003, that counsel just asked you about. If we could take a look at the second page under the "therefore" clause, it's true, isn't it, that what Mr. LaSala wrote in June of 2003:

Immediately provide to Novell copies of the two agreements in question -- the Sun and Microsoft agreements -- and any other agreements in which SCO purports to amend, modify or waive rights under any SVRX license or to enter into any new SVRX license.

Do you see that?

A. Yes.

Q. So, it was the case in June of 2003 that Novell asked you not only for the Sun and Microsoft license, but for any other licenses, correct?

A. You're looking under A?

Q. Yes, sir.

A. Yes, uh-huh.

Q. And Counsel asked you about conversations that you had with folks at Novell in late 2002, going into 2003. At that point, the SCOsource program was still in

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its infancy, correct?

A.Yes.

Q.And, in fact, you were still playing with this idea of licensing UNIX libraries, correct?

A. Right.

Q. And that plan, that licensing of UNIX libraries, that never went forward, right?

A. That's not correct.

Q. Well, there was never any license issued under that program, correct?

A. That's not correct.

Q. The licensing of the UNIX libraries in the SCOtech program, it's your testimony there were licenses entered into?

A. No. There were licenses made available. There was no one that licensed it.

Q. So this early first version of SCOtech, there were never any licenses actually executed, correct?

A. The licensees that were interested in it were ultimately interested in getting more than just the libraries. They wanted the license to all of the UNIX intellectual property that was related to all of the Linux.

Q. And so, when you had this conversation -- conversations with folks from Novell in late 2002 and

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early 2003, the SCOsource program wasn't even really formally in existence yet, correct?

A. No. That's not correct. It was in existence. Before we went out with it, we went and visited with various people, industry partners, and explained to them what we were doing, but we eventually launched it in January of 2003.

Q. And what was launched in January of 2003 changed in the summer of 2003?

A. It got bigger as we went along.

Q. And the -- when you had the conversations with folks from Novell in late 2002, you didn't disclose to them what ultimately became the SCOsource program in the summer of 2003, right?

A. When I talked to Greg, on the very first call we talked about how we were going to protect our intellectual property rights. I explained the SCOsource program. At that point in time, I think it was actually called SCOtech, but I explained very clearly what the program was. And it was clear what we were doing. And what I explained to him in the fall and winter of 2002 is eventually what SCOsource became.

Q. Well, did you disclose, in those conversations with Mr. Jones, that you intended to enter into a license agreement with Sun that would modify and restate Novell's

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license agreement with Sun from 1994?

A. We didn't talk about Sun when I talked to Greg.

Q. When you talked to Mr. Jones, did you disclose to Mr. Jones that you had plans to enter into a licensing agreement with Microsoft?

A. I didn't talk about specific companies. I didn't talk about Sun. I didn't talk about Microsoft. I did talk, in general terms, about being able to protect our rights, whether it was vis-a-vis users or large companies.

Q. And, after you were asked, when Novell became aware of the Sun and Microsoft agreements, as you testified earlier this morning, you got letter after letter of them demanding to see copies of those agreements, right?

A. I got letter after letter as a result of Novell doing a flip flop on the copyright language. That's exactly when the letters started. And that's when they got very intense in litigating.

Q. And they also sent you letters that we looked at this morning, Mr. LaSala's letter, where he asked for copies of the Sun and Microsoft and any other agreements, correct?

A. The question was?

Q. You also got a letter from Mr. LaSala --

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A. Yes.

Q. -- asking for those agreements?

A.Yes.

Q. And you refused to provide those agreements, correct?

A. We refused to provide those and a number of other things.

Q. Let me show you, if I could, Exhibit 267. Mr. McBride, Exhibit 267 is a letter from Mike -- it's Bready, I believe -- to Robert Bench, the Chief Financial Officer of SCO, dated November 21, 2003. Do you see that?

A. Yes.

Q. And if you take a look at the first paragraph, Mr. Bench wrote to SCO's CFO, in November of 2003:

We have completed significant portions of the audit, but we are still lacking critical information and documentation necessary to finish the audit.

Do you see that?

A.Yes.

Q.And if we take a look at the second page, paragraph 1.4, there's a specific reference to the Sun and Microsoft agreements, correct?

A.Yes.

Q.And then, in paragraph 1.5, just below it,

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again Novell renews its request for the Sun and Microsoft agreements. Do you see that?

A. Yes.

Q. And then, if we could take a look at Section 2.1, there's a specific reference in this letter from Mr. Bready to Mr. Bench regarding the incidental clause in the APA.

Do you see that?

A. Yes.

Q. And it's true, isn't it, that despite these letters and requests for agreements and references to the incidental clause in the APA; at no point, in either 2003 or 2004, did SCO respond to Novell and say: You're not entitled to any of these revenues because this was a UnixWare license, the Sun and Microsoft license were, and any other software we licensed was simply incidental.

That never happened, right?

A. I don't know how we responded to all these. Again, I wasn't involved in the response.

Q. Are you aware of that response ever being made?

A. Yes. I talked to Mr. Tibbitts.

Q. I asked you: Are you aware of that response ever being made?

A.I don't know what they -- how they responded to it.

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MR. ACKER: I don't have anything else, Your Honor.

THE COURT: Thank you.

Anything else, Mr. Singer?

RECROSS EXAMINATION BY MR. SINGER:

Q. Based on your conversations with Novell in early 2003 and late 2002, do you believe that Novell clearly understood that you were intending to license UNIX intellectual property for use in Linux?

A. Absolutely.

Q. And it was in the context of that discussion that Novell refused to provide clarification that the copyrights were in SCO's possession; is that correct?

A. That's correct.

Q. And did you, at any time, ask Novell to transfer to SCO copyrights?

A. No. I have to tell you, it makes me very upset every time I read that in some kind of paper or anywhere that is stated. Novell's papers -- you have Mr. Jones' own testimony that contradicts that. So, the answer is: No. I never asked them to transfer it. I always took the approach that the property had been sold and all we were seeking was a clarification. That was it.

MR. SINGER: Thank you very much. Nothing

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further.

THE COURT: Anything else -- thank you, Mr. Singer.

Anything else, Mr. Acker?

MR. ACKER: No, Your Honor. Thank you.

THE COURT: Thank you. You may step down, Mr. McBride. I assume this witness may be excused.

MR. ACKER: Yes, on behalf of Novell, Your Honor.

MR. SINGER: Yes, Your Honor.

THE COURT: You may call your next witness.

MR. MELAUGH: Your Honor, we call Greg Jones

GREG JONES,

the witness hereinbefore named, being first duly cautioned and sworn or affirmed to tell the truth, the whole truth, and nothing but the truth, was examined and testified as follows:

THE COURT: Let's see, now. You're Mr. Melaugh, right?

MR. MELAUGH: Yes, I am. Good morning, Your Honor.

THE COURT: Good morning.

THE CLERK: Please state your name and spell it for the record.

THE WITNESS: Greg Jones. G-r-e-g.

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J-o-n-e-s.

THE CLERK: Thank you.

DIRECT EXAMINATION BY MR. MELAUGH:

Q. Good good morning, Mr. Jones.

A. Good morning.

Q. Mr. Jones, could you please introduce yourself to the Court?

A. Yes. I am Greg Jones. I am Vice President of Technology Law at Novell.

Q. Mr. Jones, could you please describe your educational background.

A. Yes. I have a Computer Science Degree from Brigham Young University and also a Juris Doctorate Degree from BYU.

Q. Could you please describe briefly your work history following graduation from law school.

A. Following law school, I had a law clerk/baliff position in Utah County, which included being law clerk to a State District Judge. In March of '92, I joined Novell. I have been at Novell since then, always in a position of advising on intellectual property and licensing matters, and I currently lead a team of attorneys that supports Novell's R&D efforts.

Q. Mr. Jones, could I ask you to expand a bit on

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your responsibilities during the timeframe at issue in this case; say, from 2002 to the present?

A. Again, leading this team of attorneys and paralegals in supporting the R&D efforts. So, that includes inbound licensing of technology and other intellectual property licensing. Also, if there are disputes that arise or things of that nature that affect the R&D organization, then we offer counsel and advice.

Q. Mr. Jones, you have been present in the courtroom since we began; isn't that right?

A. Yes.

Q. And so you've heard the testimony of Mr. Sontag yesterday, and Mr. McBride today?

A. Yes.

Q. I'd like to ask you about a segment of that testimony. I believe the substance of it is that, both from Mr. Sontag and from Mr. McBride, that SCO explained the details of the SCOsource program to you; that you or anyone else from Novell didn't say no to SCOsource; and that, therefore, SCO felt it could proceed with the SCOsource program.

How does that testimony comport with your memory of these communications that are being talked about?

A. Well, they both did speak of their belief that

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UNIX intellectual property or code may be found in Linux. I recall Mr. McBride talking about the libraries that he alluded to. And I recall their desire to enforce their rights. And, at one point, I do recall them saying that the enforcement may be by means of a licensing program. But I didn't have a full understanding exactly what SCOsource would be or what it would entail. I had never seen anything that explained the exact terms of what that program might be or anything of that nature.

Q. Did they ever suggest to you, during these communications, that SCO might sue Linux users for infringement of SVRX copyrights?

A. They were not that specific.

Q. As part of these communications, did they ever suggest to you that SCO was going to go out and license SVRX?

A. Again, they were never that specific. In those 2002 conversations, where are they were introducing themselves and what was happening, they never got that specific with me.

Q. As well as the early 2003 communications; is that right?

A. The only thing in 2003 was: There was this -- Mr. McBride aluded to a document they prepared and they sent to Novell and, in looking at that document, which --

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there is a reference to SVRX, but, again, it's not really an explanation of what the SCOsource program is. It was, instead, something they were proposing to do to define the rights in a way that they wanted to see them defined.

Q. And, and as a matter of fact, no one from Novell signed that letter, no one from Novell agreed to the letter that you're referencing?

A. That's correct.

Q. As part of these communications, did anyone from SCO ever suggest to you or anyone else at Novell that SCO was going to purport to authorize the open sourcing of SVRX?

A. No.

Q. Did they ever suggest to you that they were going to amend or -- and restate Sun's 1994 buyout agreement?

A. No.

Q. Did they ever suggest to you, or anyone else at Novell that you're aware of, that they were going to enter into a license with Microsoft?

A. No.

Q. Mr. Jones, I'm going to show you an exhibit that's not in the binder that you have. This has been premarked as Exhibit 151 from Novell. I want to draw

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your attention to the paragraph at the bottom of the e-mail. This is from -- the paragraph right above that that's from you.

THE COURT: This has not been admitted, correct?

MR. MELAUGH: That's correct, Your Honor.

Q. Does this comport with your memory of the communications that you have just described?

A. Yes.

Q. And I want to draw your attention to the top of the e-mail. And this is a response from Chris Stone. Does this comport with your memory of Novell's reaction to SCO's proposal?

A. Yes.

MR. MELAUGH: Your Honor, I'd like to move Exhibit 151 into evidence.

MR. NORMAND: No objection, Your Honor.

THE COURT: 151 is received.

(Novell's Exhibit 151 received in evidence.)

Q. Mr. Jones, if you could turn in your binder to Exhibit 187. This is Novell Exhibit 187. It's been pre-admitted. Mr. Jones, what is this?

A. This is a 2003 software license agreement between Sun and SCO.

Q. Where did Novell obtain this document?

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A. We obtained this document from SCO in discovery in litigation.

Q. Did Novell have a copy of this document prior to obtaining it in discovery in this litigation?

A. No.

Q. After receiving this agreement in discovery in this litigation, what did you do?

A. Well, this agreement, you know, it relates back to this 1994 agreement -- excuse me -- it relates back to a 1994 agreement between Novell and Sun, and it says that it meant to restate that agreement. So I went back and looked at the 1994 agreement. Both of them identified versions of SVRX as technologies that are being licensed, so I also took a look at the Asset Purchase Agreement between Novell and Santa Cruz, SCO.

Q. If you could turn for a moment to the next tab in this Novell Exhibit 5, which has been pre-admitted, what is this document, Mr. Jones?

A. This is a 1994 software license and distribution agreement between Sun Microsystems and Novell.

Q. Was this the 1994 agreement you were referring to just a moment ago?

A. Yes.

Q. As a general matter, what is this agreement?

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A. Well, this is an agreement under which Sun bought out its royalty obligations for licenses to UNIX technologies.

Q.After reviewing the Asset Purchase Agreement and the 1994 agreement and the 2003 agreement, what was your understanding of the relationship between these three agreements?

A. Well, I guess, first of all, that indeed the 2003 agreement carries over many of the terms from the 1994 agreement, but it does, for all practical purposes, remove the confidentiality obligations for the source code that were part of the 1994 agreement.

I also note that the 2003 agreement, basically, is a restatement of a buyout that was done. So this is an agreement relating to a buyout of royalties that comes under provisions of amendment number 2 to the Asset Purchase Agreement, which requires that such agreements not be entered without both parties' consent.

Also, the 2003 agreement relates to SVRX technologies and substantial new rights being granted with respect to them, independent of the UnixWare technologies identified in the agreement. So, it is an SVRX agreement.

The licensing of SVRXs is not merely incidental to UnixWare. It's not minor. Expansive rights were

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granted with respect to SVRX, that it could even be released as open source. So, this is also an agreement that, under the Asset Purchase Agreement, should not have been entered without Novell's approval.

Q. So, let's walk through that again. You -- I think, the first part of your answer referred to confidentiality obligations that were in the 1994 agreement and in the 2003 agreement. Are you referring to the -- at least, in part, to the sections that are on the screen now?

A. Yes. This is from the 2003 agreement, right?

Q. Can you walk us through your understanding of these sections?

A. Well, so -- well, so, first have all, 10.1 is just a general -- I'm sorry 10.1 is --

Q. 10.1 is from 1994, to be clear, and the bottom one is from 2003.

A. So 10.1 is from the 1994 agreement and imposes confidentiality restrictions, of course. I'd add that there are other provisions in the 1994 agreement that also provide that any source code sublicensing has to be done pursuant to terms at least as restrictive as those that Sun uses for its most valuable proprietary source code.

So, while there were significant sublicensing

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rights in the 1994 agreement, they were very tightly controlled. And, furthermore, Sun had an obligation to police those licenses and to act on any violations of the confidentiality.

And, by contrast, I look at Section 8, Roman 1, towards the bottom, which basically says that if Sun distributes these UNIX technologies under a license model of Sun's choosing, then, at that point, those technologies are no longer confidential, and there are no longer any confidentiality requirements that apply to that technology.

Q. I believe you said it was also your understanding that SVRX plays a significant role in the 2003 SCOsource license. What led you to that conclusion?

A. Well, simply that the SVRX products are identified on the schedules and that this dramatic expansion of rights received by virtue of removing the confidentiality applies across the board to all of the technologies that are identified, whether it's UnixWare or earlier versions of SVRX that predated the APA.

Q. Stepping back to this change in the confidentiality obligations, what significance do you attribute to this change?

A. What significance in terms of how it's important?

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Q. In the context of what you know about Sun's business, the actions Sun took after entering into this license?

A. So, Sun has an operating system known as Solaris. It's a UNIX variant. It's competitive with Linux. This 2003 agreement allows Sun, then, to release Solaris as open source under an open source licensing model, which they have done in a project called OpenSolaris. So it poses a direct competitive challenge to Linux and, certainly, to Novell, given that Linux is an important part of Novell's business. We are a Linux distributor.

Q. Do you know whether there is any SVRX code in Sun's OpenSolaris product?

A. Yes.

Q. How do you know that?

A. Well, Novell has SVRX code in its possession, and so I obtained source code files from Novell's personnel, and then I downloaded source code from OpenSolaris. I found those same files, and sometimes with some degree of difference or change but, in the majority's of instances, identical in the OpenSolaris project. So I took those files, compared them side-by-side, so I was able to find SVRX files in the OpenSolaris project.

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Q. You said you downloaded the OpenSolaris code. Is that something anyone can do?

A. Yes. Anyone can do that.

Q. And do you have to pay any money to download the OpenSolaris code?

A. No.

Q. Do you have to sign an agreement to download the OpenSolaris code?

A. No. You don't have to do that.

Q. If you could turn to Exhibit 439 in your binder. This is Novell Exhibit 439. It has not yet been admitted. Mr. Jones, could you describe what 439 is.

A. Well, the right-hand side of this document contains the -- just the contents of one of the SVRX files that I looked at, this one called Auto Push.C, and the left side of the document, the left column, is a corresponding file that comes out of the OpenSolaris project.

Q. And what's significant to you in the text of the chart that we're looking at right now?

A. Well, one thing just of note is, of course, Sun has included its open source license notice at the top of the file, but then below that, on the left-hand side, we see an AT&T copyright notice, with the latest year of creation of code being 1989. And then we just jump

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across the page to the SVRX side and see basically the identical copyright notice.

And from there on, you can see what's striking is that while there are places where there are some additional text or a minor difference, there are just extensive portions of the file where what you find is that they are identical.

Q. And, moving to the second page of this chart, is that what we're seeing here?

A. Yes.

MR. MELAUGH: Your Honor, I'd like to move Exhibit 439 into evidence.

MR. NORMAND: No objection.

THE COURT: 439 is received.

(Novell's Exhibit 439 received in evidence.)

Q. Mr. Jones, if you could turn to Exhibit 440. Could you tell us what this exhibit is?

A. Yes. Again, this is a document in which the right column includes the contents of a source code file from SVRX, Disk USG.C, and the left column is a -- the corresponding file that I downloaded from the OpenSolaris project. And, as with the previous exhibit, you look at the copyright notices. You see the commonalities.

On this particular one, you see that Sun notes that it made some modifications in 1999, so they are not

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going to be identical in every respect, but you walk down through the file and they are identical in many respects. And it's evident that the OpenSolaris file is based on the SVRX file.

Q. Mr. Jones -- I move Exhibit 440 into evidence, Your Honor.

MR. NORMAND: No objection.

THE COURT: 440 is received.

(Novell's Exhibit 440 received in evidence.)

Q. Mr. Jones, if you could turn -- and we will just address this briefly, to Exhibit 441. Is this similar to what we've seen with the past two exhibits?

A. Yes. It's the same. Again, on the right-hand side, the contents of a source code file from SVRX; on the left-hand side, the contents of a source code file from the OpenSolaris project. The file names are the same, and it's quite clear, as you walk through, the similarities show that the OpenSolaris file was based on the SVRX file.

MR. MELAUGH: Your Honor, I move Novell Exhibit 441 into evidence.

MR. NORMAND: No objection.

THE COURT: 441 is received.

(Plaintiff's 441 Exhibit received in evidence.)

Q. Greg, if you could just page through the

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exhibits that follow in this book. I'm going to list them off for the record. They are Novell Exhibits 442, 443, 446, 447, 448, 449, 450, 451, 452, 453, 455, 456, 458 and 459.

Mr. Jones, are these exhibits similar to the three that we have just taken a look at?

A. Yes.

MR. NORMAND: No, objection.

MR. MELAUGH: Your Honor, I move these exhibits into evidence.

THE COURT: Same nature. Any objection?

MR. NOLRMAND: Your Honor, I said no objection.

THE COURT: I didn't hear you.

MR. NORMAND: I'm sorry.

THE COURT: 442, 443, 446, 447, 448, 449, 450, 451, 452, 453, 455, 456, 458 and 459 are received.

(Novel Exhibits 442, 443, 446, 447, 448,

449, 450, 451, 452, 453, 455, 456, 458

and 459 received in evidence.)

MR. MELAUGH: Thank you, Your Honor.

Q. Mr. Jones, do you know whether there is any SCO UnixWare code in OpenSolaris?

A. I have not done a comprehensive search. I did search on the OpenSolaris site for any reference to Santa Cruze or SCO that would appear on a copyright notice. I

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didn't find anything, but I didn't make a comprehensive effort to identify UnixWare code in OpenSolaris.

Q. When you say "search on the OpenSolaris web site," what do you mean?

A. There is a -- if you go to the OpenSolaris site on the internet, there is a user interface there, and there is a utility that allows you to do text searches that searches through the text of the source code files that are there on the OpenSolaris site.

Q.I 'm sorry. What were the terms that you searched for in that code?

A.Two of them, Santa Cruz and SCO. Yeah. I also -- I also did Caldera. There was one Caldera file.

Q.And by "file," are you referring to copyright notices? What are you referring to when you say that?

A. Again, all I looked for is whether those terms appeared in any copyright notices, and I could not see them appearing in a copyright notice.

Q. Did SCO obtain Novell's permission to enter into the 2003 Sun SCOsource license?

A. No.

Q. Would Novell have consented to the 2003 Sun SCOsource license if SCO had asked?

A. No.

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Q. Why not?

A. Well, it simply would not have been in Novell's commercial interests. In the fall of 2002, Novell had acquired Simeon a Linux desk top company. We were exploring ways to get into the Linux market so enabling a competitor to Linux simply would not have been in Novell's interests. In the manner in which they entered this agreement, when they did it, they kept all the money. I assume that would have been their proposal but, fundamentally, it simply would have been contrary to Novell's business interests to enable something like this.

Q. What amount does Novell seek from the Sun SCOsource licensse?

A. Everything that was paid.

Q. Why does Novell believe it is entitled to that amount?

A. Well, there were expansive rights granted with respect to the versions of SVRX that pre-date -- post-date -- pre-date the Asset Purchase Agreement. These were dramatically greater rights than were enjoyed under the 1994 agreement, and there is nothing in the agreement that assigns any value to anything other than the SVRX technologies for which Novell is entitled to receive royalties.

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The customary 5 percent administrative fee that SCO normally receives for collecting SVRX royalties just doesn't seem to be germane in this particular instance.

Q. Based on your experience with software licensing, would you describe the 2003 Sun SCOsource license as a typical software license?

A. No. I mean, it's an extraordinary agreement. When you enter an agreement where you take the step of going from proprietary to open source, that is quite a dramatic change. And so it's not something you would custom -- certainly it would not be what you would customarily see in an agreement. It's an extraordinary agreement.

Q. 267, Novell's 267.

Did Novell ever ask SCO whether SCO considered the Sun license an incidental license of SVRX?

A. Yes.

Q. Are you familiar with the letter -- we have had testimony about this so far. Are you familiar with this letter that's Exhibit 267?

A.Yes.

Q.This is a letter to Mr. Bench, dated November 21, 2003, correct?

A.Correct.

Q.If I could draw your attention to the second

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page of the letter, paragraph 1.2. So, what's going on in this paragraph, Mr. Jones? A.Well, this simply -- it's an audit letter, of course, so this is describing to SCO this particular aspect of amendment 1 to the Asset Purchase Agreement that does allow SCO to engage in certain SVRX licensing activities if they are incidental -- well, just as it says right there: As may be incidentally involved through SCO's right to sell and license UnixWare software.

So, this paragraph kind of says: Okay. Let's talk about this topic here. Q.Let's take a look at paragraph 1.6.

A.Okay.

Q.And so what's going on in Exhibit 1.6?

A.That is an invitation to SCO to say, you know, if the activities -- any activities that you're participating in that qualify for these exceptions, then, you know, please make those known to us.

Q.And if we could take a look at paragraph 2.1. And the same question here, Mr. Jones: What's going on in this paragraph?

A.So, again, we're introducing the topic of: We're aware that there is this exception in the context of incidental licensing and so I think it's, again, going

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to be an invitation for them to let us know if they believe any of their activities would qualify for this exception.

Q. So, after asking three times in this letter, Mr. Jones, up and until this litigation, did SCO ever say to Novell that the reason it was entitled to the Sun SCOsource revenue was because that license was an incidental SVRX license?

A. No.

Q. Mr. Jones, if you could turn to Exhibit 189 in your binder. What is this exhibit, Mr. Jones?

A. This is a release, license and option agreement between Microsoft and Caldera International d/b/a the SCO group, now known as SCO.

Q. Where did Novell obtain this document?

A.We obtained this in discovery in this litigation.

Q.Before obtaining this document in discovery in this litigation, did Novell have a copy of this document?

A. No.

Q. After receiving the 2003 Microsoft SCOsource license, what did you do?

A. Well, this agreement -- again, you know, you go through a license agreement to see what technology is

being licensed. And I observed there numerous versions of SVRX identified as licensed technologies. So I then took out the Asset Purchase Agreement between Novell and SCO and looked at this agreement in light of the terms of the Asset Purchase Agreement.

Q. After conducting that review, what was your understanding of the 2003 Microsoft SCOsource license as it concerns the Asset Purchase Agreement?

A. Well, it's certainly an SVRX agreement. I think it's been found that an SVRX agreement is one that relates to SVRX code. And this one certainly does. I also look at it from the perspective of whether this exception for licensing of SVRX incidental to UnixWare might be germane.

In this instance, I look at the identification of all of these SVRX technologies, and I look at the broad intellectual property licenses that are granted under the agreement. And I see that there is -- this is not an amendment to an existing agreement. This is not adding rights to rights already acquired. So, basically, all of the rights to the SVRX technologies are new, and, again, they are quite expansive as you march through the options.

So I look at this as an SVRX agreement that should not have been entered without Novell's approval.

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There is a Section 3 that relates solely to UnixWare, but the overall agreement is an SVRX agreement, and those other parts are so substantial that I can't view them as being really incidental to the UnixWare component of the agreement.

Q. Did SCO obtain Novell's permission to enter into the 2003 Microsoft SCOsource agreement?

A. No.

Q. Would Novell have consented to the 2003 Microsoft SCOsource agreement if SCO had asked?

A. No. I just can't see, again, any commercial benefit to Novell from this particular agreement, and so, no.

Q. What amount does Novell seek from the 2003 Microsoft agreement?

A. Well, I actually don't know the specific figure myself. It's whatever amounts were paid under Section 2 and under Section 4 of the agreement, but not whatever was paid under Section 3.

Q. So let's walk through those.

A. Okay.

Q. If we could put up Section 2, please. Why is Novell entitled to the revenue from Section 2?

A. Well, here, you know, we have these licenses that broadly relate to SCO's, you know, intellectual

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property rights. And I think, at that point in time, I simply -- I can't avoid looking at this in the context of what was going on in the marketplace in terms of the dramatic representation being made about SCO ownership of UNIX technologies, historic UNIX and so forth.

And so, looking at that context, in combination with Section 2, I say, basically, this is an invitation for someone to use intellectual property when in the end it has been found to be Novell's. There is no apportionment, value-wise, in this agreement as to, you know, how many dollars correspond to this or that. And I think Novell is entitled to conclude that all of it should come to Novell.

Q.What do you -- what conclusions have you come to about the Section 3 revenue, Mr. Jones?

A.Well, as previously mentioned, you know, this is something that Novell is not pursuing. It is -- it is the case that the Section 4 rights that, again, relate to SVRX, can't be obtained without these Section 3 UnixWare optional rights being exercised or being purchased, but we're not pursuing it.

Q.Are you at Section 4 now?

A.Yes.

Q.Mr. Jones, why is Novell entitled to the revenue from Section 4?

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A.Well, again, Section 4, the license grant relates to all the technologies identified in the agreement, including those in Exhibit C, which is a list of SVRX, pre-APA SVRX technologies. And, again, these are new rights. I don't see any evidence of -- that these are merely restating rights previously obtained under some separate agreement, that these are new rights that are being received to SVRX technologies. I simply cannot conclude that this is incidental to UnixWare. They are substantial rights.

There is no -- there is nothing on the face of the agreement, or otherwise, by which SCO has attempted to assign value to the UnixWare-unique portion of this section. So I think Novell is entitled to conclude that Novell should receive all of this money.

Q.Mr. Jones, if you could turn to what's been marked as Novell Exhibit 237, which has been pre-admitted.

A.I think I -- I think I should add that, in these instances, one thing that factors into my conclusion in terms of Novell's being entitled to draw these conclusions is that Novell was counting on SCO to be our fiduciary, to look at these SVRX agreements, to bring them to our attention if our rights were implicated.

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And, as demonstrated by our repeated requests for these agreements, and those requests being rejected, we had absolutely no visibility as to what was going on with these transactions. And so, there was -- to me, there is a heightened responsibility here, and it lends -- and that lends to Novell's being entitled to conclude that we should receive all these monies.

Q.And I asked you earlier -- we saw that letter from Mr. Bready, and I asked you earlier whether SCO had ever said that the Sun license was incidental up until this litigation. Did SCO ever say that the Microsoft license -- that it was entitled to the Microsoft money because it was an incidental license of SVRX, up until this litigation?

A.No.

Q.So now we're on Exhibit 237, Mr. Jones. What is this document?

A.This is a SCO Group intellectual property compliance license for SCO UNIX rights. The agreement is between SCO, obviously, and Computer Associates.

Q.Where did Novell obtain this document?

A.In discovery in this litigation from SCO.

Q.And, prior to obtaining this document in discovery in this litigation, did Novell have a copy of this document?

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A.No.

Q.After receiving this intellectual property compliance license, what did you do?

A.Well, again, this is -- it's a license, so I look for what technology is being licensed or what intellectual property rights, and, you know, so I go to -- and you'll see that, you know, a key term here is that this is UNIX-based code.

Q.You're looking on the second page now?

A.Yeah, on the second page.

Q.And at 1.14, is that what you're looking at?

A.Right. And here, you know, there's a reference to -- that the UNIX-based code is UNIX System V or UnixWare. And so, these are, again, implicating versions of pre-APA SVRX in a context in which there are no -- this is not enhancing a previous agreement. This is not adding UnixWare rights on top of UNIX System V rights that were previously obtained. It's just a brand new grant. So I view this as an SVRX agreement.

Q.What's your understanding of the larger context in which this SCOsource license and the SCOsource licensing campaign is taking place?

A.Well, this was obviously a very public campaign that SCO was undertaking, and in a very -- a public campaign carried out in a very public way; a lot of

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publicity and a lot of assertions of rights and a lot of assertions that Linux included UNIX code. And so, it was in that context that these types of agreements were being offered to people.

Q. And do you have an understanding of what code SCO claims is at issue in SCOsource, is at issue in Linux?

A. Well, you know, clearly, Novell's assertion of ownership to the SVRX -- the pre-APA SVRX copyrights basically precipitated this litigation, and there were claims that this was causing great damage to SCO as a result of damaging the SCOsource program itself.

And so -- so, basically, it's quite evident that the SVRX code was just critical to the SCOsource project.

Q. Has Novell ever claimed to own copyrights to SCO UnixWare?

A. No. If by "SCO UnixWare," you mean any UnixWare code produced after the date of the Asset Purchase Agreement, no.

Q. Did SCO obtain Novell's permission to enter into the license that we're looking at right now? A. No. Q. Would Novell have consented if SCO had asked?

A. No.

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Q. Why not?

A. Well, again, this is entered into in August of 2003, and, again, in the fall of 2002, Novell's going in the direction of Linux, and this would simply be completely contrary to Novell's business interests, among other things. There's just no -- no benefit to Novell to enter such an agreement, and a down side.

Q. What revenue from this agreement does Novell seek?

A. All of it.

Q. Why is that?

A. Again, this is one where there are substantial SVRX rights granted. There is no allocation or identification of value uniquely associated with UnixWare, and, again, all this is in the context of SCO being Novell's fiduciary and entering SVRX-related agreements and not disclosing them to us, and we are not in a position to protect our rights.

Q. If you could look briefly at the exhibits that follow, Mr. Jones. For the record those are Novell Exhibit 286, Novell Exhibit 300, Novell Exhibit 309, Novell Exhibit 322, Novell Exhibit 349, Novell Exhibit 422 and Novell Exhibit 426, all of which have been pre-admitted in this litigation.

As a general matter, what are these exhibits,

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Mr. Jones?

A. These are all agreements of a like nature. Their terms may vary in some, I think, immaterial respects, for our purposes, but they are all -- well, they are all agreements that purport to license the licensee to use any UNIX code that is found in copies of Linux that the licensee is using; and, again, whether it's UNIX System V code or UnixWare code.

Q.Did SCO obtain Novell's permission to enter into any of these licenses?

A. No.

Q. And would Novell have consented to these licenses, if asked?

A. No.

Q. What revenue does Novell seek from these licenses?

A. All of the revenue. There is no specification in the agreements as to any specific amount that's associated with UnixWare, and there are substantial SVRX rights granted, and there's a fiduciary relationship here. So I think we are entitled to all of them. Again, the 5 percent administrative fee that Novell normally allows SCO for collecting royalties doesn't seem germane here.

MR. MELAUGH: Thank you, Mr. Jones.

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THE COURT: Thank you, Mr. Melaugh.

Mr. Normand, you may cross examine.

MR. NORMAND: Thank you, Your Honor.

CROSS EXAMINATION BY MR. NORMAND:

Q. Still good morning, Mr. Jones.

A. Good morning.

Q. You're a lawyer, right?

A. Yes.

Q. How long have you been a lawyer?

A. Since 1990.

Q. Did you ever work in selling any software products since you have been at Novell?

A. No. I have been involved in the outbound licensing of technologies for revenue. I've assisted -- I have assisted in a legal role in supporting sales efforts, but it's not been, by any means, my primary responsibility or my focus.

Q. Hve you been involved in pricing any software products, while at Novell?

A. Very tangentially.

Q. Did you ever work in marketing any software products at Novell?

A. Probably not even tangentially.

Q. Did you ever have occasion to negotiate the

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terms of any software agreement regarding UNIX at your time at Novell?

A. Yes.

Q. Can you please explain that?

A. It was -- there was a -- it was after the Asset Purchase Agreement, there was a source code licensee that had -- was involved in a buyout situation, and so I participated to some extent in that. I was not the primary person responsible for doing that.

Q. Do you remember the name of the licensee?

A. I think it was Silicone Graphics, Silicone Graphics and Cray.

Q. And do you recall dealing with Santa Cruz on that issue at all?

A. I believe Santa Cruz was involved, but I can't recall whether I'm one of the people who spoke to them.

Q. How much familiarity with how computer operating systems are developed do you have?

A. I have a general familiarity. I have been -- you know, I have a computer science degree. I have been working in the industry. I have been legal counsel to a company that develops and markets operating systems and legal issues associated with the development process and so forth. So, I don't know how to quantify my knowledge, but I come from that background.

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Q. Have you ever worked as a programmer, professionally?

A. Yes.

Q. And when?

A. This was prior to law school, just working for a small software company.

Q. What operating systems did you deal with?

A. There? Well, one was Solaris. And I can't recall the other operating systems that we were using.

Q. Did you have an understanding, at that time, as to the origins of Solaris?

A. At that point in time? No.

Q. Do you now?

A. To some extent, yes.

Q. What is that understanding?

A. Well, that Solaris is an SVRX-based operating system.

Q. Which release?

A. Well, I generally understand SVRX 4. My knowledge is no more specific than that, and that -- and that, basically, Solaris is one of the many source code licensees that takes a source code license and then will create their own variant, and so Solaris is the Sun variant of SVRX 4.

Q. Do you know how Solaris was developed?

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A. I'm not sure what you mean.

Q. AT&T developed Solaris with Sun, correct?

A. You're saying -- if AT&T and Solaris worked together, side-by-side, to develop Sun? I'm not aware of that one way or another, so I don't know what you're asking about.

Q. Let me ask it again because I think you flipped Solaris and Sun in your answer. Do you know how the SVR 4 operating system was developed?

A. Well, I have a general understanding that AT&T developed the base UNIX technologies and that, at a certain point in time, there was a subsidiary, UNIX System Laboratories, that was created. They would advance the core UNIX technologies and then they would license out that source code to the various UNIX OEMs.

Q. Now, when it came time for AT&T and USL to move from Release 3 to Release 4, in developing Release 4, they actually worked with Sun, didn't they?

A. I have no knowledge one way or another on that.

Q. And when Sun developed Solaris, it did so simultaneously with the development of Release 4, correct?

A. I'm not sure exactly what you mean.

Q. Do you have a view as to whether Solaris

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contains any significant amount of SVR 4 technology?

A. My understanding has been that it does.

Q. Do you know whether previous versions of UNIX contained source code included in UnixWare?

A. Previous to what?

Q. Previous to the latest release of System V that UnixWare represents?

A.My general understanding is that you would find, in the latest release of UnixWare, code that had been in earlier versions of UnixWare SVRX.

Q. And code that had been in earlier versions of System V might not have made its way into UnixWare, correct?

A. Yeah. I'd -- yeah. I don't know that for a fact, but you say "might," and that sounds very possible to me.

Q. Do you have a view as to whether, if code from older versions of System V has not made its way into UnixWare, do you have a view as to whether that older code has any commercial value?

A. Well, yes.

Q. What's your view?

A. Well, in terms of -- to me, there are at least two types of commercial value. One commercial value is that there is actual technical merit that is still placed

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on the marketplace, and I can't opine one way or the other. The other is that there are intellectual property rights associated with the technology but that, independent of that current technical merit of that code base, could have some relevance in the marketplace.

Q. Do you have a view as to whether UNIX System V, Release 2, for example, has any commercial value?

A. I just -- well, in that respect that I just set out, I would say, with respect to whether it has technical merit, I'm not in a position to say. As to whether the intellectual property rights associated with it potentially have value, potentially.

Q. But you don't have a view one way or the other?

A. I think I would have a bias towards -- well, which release is it?

Q. Release 2.

A. UNIX System V? So it's SVR 2?

Q. Two.

A. Let me see. Well, you know, copyright lasts for a long time, and so if that code is still available, potentially it could have commercial value in the sense that I stated, for the intellectual property.

Q. As someone with programming experience, do you have any view as to whether there is any existing hardware that you could run SVR 2 on?

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A.I don't know. I don't know.

Q.Now, in Novell's view, if there are trade secrets in UNIX System V, SCO owns them, correct?

A.I believe that's been Novell's position.

Q.And was that your position at deposition?

A.I think so.

Q.And, in Novell's view, SCO owns the software know-how and methods and concepts in UNIX System V and UnixWare, correct?

A.You're talking post-APA UnixWare, these rights -- independent of copyright?

Q.I'm asking you whether, in your view --

A.And I'll answer it this way. Post-APA versions of UnixWare, to the extent not implicating Novell's pre-APA copyrights in SVRX, and to the extent they are developed by SCO, as opposed to some partner of SCO or something, Novell would not be asserting rights to those, certainly.

MR. NORMAND: Your Honor, could I publish a portion of Mr. Jones' deposition in this case?

THE COURT: Sure.

(A portion of the deposition was played.)

MR. NORMAND: That's from Mr. Jones' May 10, 2007 deposition, Rule 30(b)(6); at page 36, line 24, to page 38, line 1.

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Q.Mr. Jones, in Novell's view, it would not be accurate to say that Novell had transferred its existing ownership interest in the UNIX System V products to Santa Cruz in 1995, correct?

A.Could you say that again?

Q.In Novell's view, it would not be accurate to say that Novell had transferred its existing ownership interests in UNIX System V to Santa Cruz in 1995, correct?

A.Right.

THE COURT: SCO 411?

MR. NORMAND: Yes, Your Honor.

Q.Mr. Jones, this is a document dated May 23, 1996. Do you recognize the document?

A.Yes. I've seen it before.

Q.And the second full paragraph says:

As you may have heard, Novell has transferred to Santa Cruz, Santa Cruz Operation, Inc., Novell's existing ownership interest in the UNIX System-based offerings and related products, collectively transferred products.

Do you see that line?

A.Yes.

Q.And you think that that's an inaccurate statement, correct?

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A.Yes.

Q.Do you have any explanation for why Mr. DeFazio would sign a document containing such a statement?

A.No.

Q.Have you spoken with Mr. Defazio about that issue?

A.No.

Q.Mr. Jones, do you have a view as to whether a UnixWare license gives the licensee the right to use all prior releases of UNIX System V?

A.I take it a UnixWare license to be a license to a stand-alone version of UnixWare, and then I would say that that license includes rights to any code contained in it, and if it so happens that some of that code was in prior releases of UNIX, then the licensee is receiving licenses to that code.

Q.Do you have any view as to whether, when Novell owned the UNIX business, it granted rights to the previous releases of System V when it did a license of the most recent releases of System V?

A.I've had some exposure to that in this litigation and seeing what's come forward in discovery. It seems -- what I have seen is that that happens when consideration has been given for the prior products that are in the agreement.

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But, as I have told you before, and as you were inquiring today, you know, my career focus has not been doing sales agreements and things of that nature, so --

Q. Did you watch your counsel's opening argument?

A. Yes.

Q. Did you see reference made to the NCR supplements?

A. Yes.

Q. Do you recall what the number of that supplement was?

A. 112.

Q. And it's your position, as you understand it -- when I say "you," I mean Novell. It's Novell's position that the only reason the System V prior products were listed for NCR was because it had previously obtained a stand-alone license to every previous release of System V?

A. Well, what I heard was that, in fact, the licenses had been obtained for previous releases. I don't necessarily recall having heard that's the only reason. I just can't recall.

Q. I may have misunderstood your answer. I thought you said that your understanding was that the only reason System V prior products would be listed would be if the licensee had already obtained a stand-alone

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license to all those releases.

A. Did I say "only?"

Q. That's what I understood you to say.

A. Okay. I -- and I thought I prefaced it with generally. But, I mean, what I have -- my impression that I have formed after seeing the documents that I have been able to see in this litigation is that consideration has been given for prior products. And I, again, tell you that I have not surveyed all these agreements. That has not been my purview. That's is not what I am about.

Q. Can you recall coming across any agreements where that could not have been true?

A. No.

Q. Are you familiar with the language in the APA providing that Novell would receive royalties from SCO's sales of UnixWare if certain conditions were met?

A. Yes.

Q. You were here for Mr. McBride's testimony, right?

A. Yes.

Q. So you heard questions and answers regarding floors and thresholds regarding UnixWare sales?

A. Actually I think my mind drifted off at that point, but I have seen those parts of the agreement.

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Q. Are you familiar with language in the APA providing that, after December 31, 2002, Novell would not receive any royalties from SCO's sales of UnixWare, even if the conditions were met?

A. Yeah, something to that effect. I know that there was a cut-off date and so forth.

Q. So, in Novell's view, after December 31, 2002, SCO had the right to retain all royalties it received for licensing UnixWare, correct?

A. Clearly, from the language, at least, stand-alone versions of UnixWare.

Q. And, in Novell's view, in fact, the entire intent of the APA was for the UnixWare business to be transitioned to Santa Cruz, correct?

A. Could you say that again?

Q. In your view and in Novell's view, the entire intent of the APA was for the UnixWare business to be transitioned to SCO, correct?

A. Well, I don't -- I guess the only thing I would say is: You know, in terms of entire intent, certainly it was a driving factor behind the agreement, was to transition that technology into another company and have it advanced. But there were a variety of other purposes to that agreement, including protecting Novell's interests in making sure that there were provisions that

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would enable Novell to receive a portion of an ongoing revenue stream to be compensated for the business.

And so I'm with you in terms of, you know, the business motive that triggered the transition was certainly to advance the UnixWare technology, but I can't go as far as saying that that was the entire purpose of that document, the agreement. The agreement also has a fundamental purpose to protect the interests and rights of Novell.

Q. Let me rephrase the question. With respect to UnixWare, Novell's entire intent was to transfer the UnixWare business to Santa Cruz, correct?

A. Yeah, to the extent consistent with Novell's other interests that would be implicated by the agreement, which I think is -- you know, manifests itself in various places in the document.

MR. NORMAND: Your Honor, I would like to play a brief excerpt from Mr. Jones' deposition.

THE COURT: Go ahead.

(A portion of the deposition was played.)

MR. MELAUGH: If I could ask Mr. Normand to state the part in the deposition before your start the clip.

MR. NORMAND: All right. Sorry

MR. MELAUGH: I don't think you have indicated

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it yet, the date and the page number you're referencing.

THE COURT: The page number and the line.

MR. NORMAND: Yes, Your Honor. I'm sorry. That's Mr. Jones' May 10, 2007, 30(b)(6) deposition, and at page 60 lines 14 to 23.

Q. SCO 61 is a two e-mail chain dated December 4, 1995, the top e-mail is from David Johnson to, among others, Larry Bouffard. Do you recognize any of those names, Mr. Jones?

A. Yes.

Q. And do you see the name of Skip Jonas about a third of the way down?

A.Yes.

Q. Who is Skip Jonas?

A. He had a position relating to -- he had a sales position, and I know that at least at one time his responsibilities related to our UNIX business. That's about the extent of my knowledge of Skip Jonas.

Q. Do you see this language, Mr. Jones, where Mr. Jonas says, quote:

Novell is out of the UNIX/UnixWare business after the closing and does not have the right to sell UnixWare, so if Novell has any inventory of UnixWare after the closing, I believe that Novell has only two choices. Sell it to SCO or destroy it.

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Do you see that language?

A. Yes.

Q. Is that language consistent with your understanding of what happened with the sale of UnixWare under the APA?

A.I'm not familiar with this particular issue of the preexisting UnixWare inventory and what was done with it and so forth. At this moment in time, I can't recall that issue.

Q. But it is your understanding that Novell was out of the UnixWare business after the APA, correct?

A. Yeah. I think, generally-speaking, I would have to say yes. I would like to ask a clarifying question on your earlier question.

Q. Of course.

A. What do you mean by "UnixWare business?"

Q. What's the ambiguity as to what UnixWare business is?

A. Well, for example, there were pre-APA versions of SVRX that were UnixWare, and so Novell continued to have a revenue stream associated with those. So, that's why I asked the question, in terms of just: What do you mean by "in the business," because there's still interests there. And so, hence, my question.

Q.Is that your only caveat to your view that the

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entire UnixWare business had been transferred, as you sit here today?

A.Now, that's a different question, the entire UnixWare business having been transferred. Generally, of course, Novell's focus was not going to be UnixWare, and Novell was counting on SCO on moving forward with that. And Novell had some -- it retained rights in terms of copyrights, in terms of royalties that corresponded to UnixWare, you know, and I haven't thought through to delineate every little interest, ongoing interest Novell may have, but I'm with you in terms of: No doubt, the general direction was that UnixWare was moving forward with SCO, and Novell has some ongoing interest in that area, but it's certainly not Novell's focus.

Q. You're not suggesting, then, that Santa Cruz was Novell's agent for purposes of UnixWare licenses, are you?

A. Well, what do you mean by "UnixWare?" And, again, I just mean, there are -- there were some pre-APA releases of SVRX that were UnixWare, so, with respect to those releases -- and those are identified on the schedule of SVRX licenses. So, only with respect to those versions of UnixWare, I would say that that fiduciary relationship, that collection role applies to those.

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Q. But the right that Novell retained was to continue to receive royalties for certain UnixWare licenses that were in existence?

A. Anything that would be an SVRX license that would pertain to the pre-APA release of UnixWare.

Q. Your position is that the APA identifies, as a basis for SVRX licenses, certain UnixWare licenses?

A. I believe, if we were to take out the Asset Purchase Agreement and look at the schedule that we would see that the last one or two SVRX releases were, in fact, UnixWare. And that's all I'm talking about.

Q. And, apart from that retained royalty interest, do you have a view as to whether Novell retained any interest in the UnixWare business after the APA?

A. Again, I think I've mentioned that, you know, we would have copyrights associated with anything that was pre-APA. And you said "apart from the royalties," and so we're not talking about that, you know, and I -- so, in my mind, those are the primary things. But as I've told you, this is the last place in the world I would want to sit and attempt to delineate every single aspect of the APA and every possible ongoing interest.

And I'm with you in terms of the UnixWare business, in general, is going to SCO, and that's SCO's focus, and it's not Novell's from that point going

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forward.

Q. It's not Novell's view that, when SCO was licensing UnixWare with SVRX copyrights therein, it's not Novell's view that SCO had to try to value those copyrights and remit money to Novell, is it?

A. So, if you're talking about versions of UnixWare created post-APA and what's being licensed is that version of UnixWare, yes, that is not Novell's position that SCO would have to attempt to, you know, value all the SVRX component parts that make up a part of that UnixWare release.

Q. Even though that UnixWare release, in your view, does contain all manner of SVRX code, correct?

A. That's right.

Q. Now, you're familiar with this language in amendment number 1 to the APA?

THE COURT: What is the exhibit?

MR. NORMAND: This is SCO 71, Your Honor. I'm sorry.

Q.You have seen this language before?

A.Yes.

Q.Now, I may have misunderstood your testimony, but SCO had the right to enter into new SVRX licenses if it was doing so incidentally through its rights to sell and license UnixWare software, correct?

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A.Right.

Q.Now, when you were testifying earlier, I thought you were saying that, in your review of the Microsoft and Sun agreements, that an important fact to you was that it was a new license. Did I mishear you?

A.Well, that was an important fact, but it was taken in combination with my belief that the UnixWare activity in the agreement was not -- excuse me -- that the SVRX rights being granted were not merely incidental to the UnixWare portion.

So I wasn't -- that was not the only factor. I did highlight that.

Q.It doesn't really matter whether the SVRX component of the Sun and Microsoft agreements is a new component for purposes of determining this incidental exception, does it?

A.I think it does.

Q.How so?

A.Well, so, for example, if you go to that licensee and they already have a fully paid-up license for a certain release of SVRX, and then that licensee approaches SCO and licenses UnixWare, and from the license -- that wouldn't be surprising -- licenses UnixWare from SCO and enters an agreement in which UnixWare is identified and then that version of SVRX, for

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which the licensee had fully paid up its license, in that scenario, the fact that -- and, to me, in that scenario, the licensing of UnixWare very likely is incidental to the -- excuse me -- the licensing of the SVRX showing up on the schedule of the new UnixWare agreement, it's, for all purposes, incidental because no new rights are being granted. It's significance there is it's almost meaningless.

However, if I took that same version of SVRX and SCO approaches a customer, and SCO enters an agreement with the customer and identifies that same version of UnixWare on the product schedule and then separately that version of SVRX, and that customer has never paid for SVRX before and charges that customer the very same amount for UnixWare, you know, then, to me, I say: Well, now this customer has received substantial additional rights that it did not previously have.

Q.It sounds like you've thought about the issue of incidental licensing a bit?

A.I've thought about it.

Q.But you don't have any view as to whether this language, this incidental language, encompasses a prior practice of licensing older versions of System V with the most recent release, do you?

A.Well, my view is, to the extent I have been

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exposed to prior practices, that the theme that I see in them is consistent with the rationale that I just set out.

Q. You don't have a view as to whether, in amendment number 1, the parties intended, through the use of that language, to encompass the practice of licensing the prior releases of System V with the most recent release, do you?

A. I don't have any knowledge of the people who drafted that language, having -- having spoken and saying that this is why we are putting that language in the agreement. I do not have that type of knowledge.

Q. Well, if you have no view on that issue, you can't make a fully-informed assessment of whether incidental licensing has occurred, can you?

A. To the contrary. This is an agreement. I think there is an integration clause that says this merges prior discussions and understandings. This agreement, you know, I look at it, and I think that that language has meaning independent of whatever prior discussions took place.

Q. Would you acknowledge that it could also be meant to encompass this prior practice, correct? A. What prior practice?

Q. The prior practice of licensing older versions

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of System V with the most recent release?

A. Well, the prior practice that I described is one in which, for each of those prior releases, consideration had been given. So I don't know if you're talking about the same prior practice, but if that's the prior practice you're alluding to, I could easily see that this would support that type of practice.

Q. You don't have a view as to whether it encompasses a practice of licensing releases even to those people who had not previously acquired a stand-alone license to the earlier releases?

A. I don't have any knowledge of it being applied to such people.

Q. And if this provision was intended to encompass this practice, it would change your analysis, wouldn't it?

A. I don't know that it would.

Q. So you think the intent of the parties is irrelevant?

A. No. But, again, there is -- this is an agreement. I think there is an integration clause. "Incidentally" is a word that appears in the dictionary. It has a meaning.

Q. It's ambiguous, isn't it?

A. I don't know. I think it calls for application

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to circumstances, but I have been asked about this before, I know, and I said, you know, I'd look at the dictionary, so --

THE COURT: Pick a good stopping point.

MR. NORMAND: This is fine, Your Honor.

THE COURT: Are you sure?

MR. NORMAND: Yes.

THE COURT: All right. We'll take our second break and be in recess for 15 minutes.

(Short recess.)

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REPORTER'S CERTIFICATE STATE OF UTAH )

) ss. COUNTY OF SALT LAKE )

I, REBECCA JANKE, do hereby certify that I am a Certified Court Reporter for the State of Utah;

That as such Reporter I attended the hearing of the foregoing matter on April 30, 2008, and thereat reported in Stenotype all of the testimony and proceedings had, and caused said notes to be transcribed into typewriting, and the foregoing pages numbered 281 through 354 constitute a full, true and correct record of the proceedings transcribed.

That I am not of kin to any of the parties and have no interets in the outcome of the matter;

And hereby set my hand and seal this 30th day of April, 2008.

_______________________________

REBECCA JANKE, CSR, RPR, RMR

THE COURT: You may proceed, Mr. Normand.

MR. NORMAND: Thank you, Your Honor.

May I approach, Your Honor?

THE COURT: You may.

MR. NORMAND: This is a copy of the bulk of the exhibits that we'll be using.

THE COURT: Are these all in? Have they all been admitted?

MR. NORMAND: With one exception, Your Honor. And when we get to that, I'll offer it.

Q. BY MR. NORMAND: Mr. Jones, do you recognize Schedule 1.1(A) to the APA?

A. I'm familiar with it. It's not up there right now. I don't have the exhibit to myself.

Q. And you referenced the schedule of assets that is in 1.1(A) earlier; correct?

A. Correct.

Q. And that's in Item 6 of the APA; right?

A. Right.

Q. And there's no UnixWare release identified in Item 6; correct?

A. I'm not certain in that -- my only uncertainty is that I knew the early release of UnixWare was based on Release 4.2. And so I just -- I'm not certain whether that version of 4.2 corresponds to what was in UnixWare release or

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not. That's my only uncertainty.

Q. Your view is UNIX System 5 Release 4.2 MP is the same or virtually the same as the first release of UnixWare; correct?

A. That's a lot more than I said. I just -- I think that the early version of UnixWare corresponds to 4.2. But sitting here today, I'm just not certain. So if it is the case, then there's UnixWare in the schedule. If it's not the case, then UnixWare is not there.

Q. So looking at Item 6 now, you don't think Novell retained any interest in any UnixWare royalties after the APA; correct?

A. If none of those identified as SVRX releases are UnixWare, then the SVRX licenses and the corresponding royalties would relate to UnixWare. So it's just a factual question that I have. And that was -- when I was -- earlier when you were asking me about UNIX everything I said was based on whether or not any of these releases are, in fact, a version of UnixWare.

Q. But in your view, the place to look to determine what royalties arose is Item 6; correct?

A. Yeah, that's right. Item 6 is where there's a reference to that in Section 4.16.

Q. You said earlier in your understanding that System V prior products are only licensed when consideration

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was given for the prior products; right?

A. I think I said generally. To the extent that I had an opportunity to see examples that that's what I've seen. So that's what I said.

Q. You're aware of examples of UNIX licensees who were not charged any price for getting prior products; correct?

A. I don't believe I am. I'm not saying that that has never happened. But I don't think I'm aware of any examples.

MR. NORMAND: This is SCO Exhibit 369. It may not be in the book, Your Honor, as it turns out.

Blow up the top half.

Q. BY MR. NORMAND: Do you recognize this document, Mr. Jones? Software agreement for Nihon SCO, Limited; correct?

A. I just need to actually read the document here.

Yes.

Q. Page 10?

MR. MELAUGH: Can I ask Mr. Normand to give a copy to the witness? Do you have a copy?

THE COURT: Do you have a copy that you can give to him?

MR. NORMAND: Somewhere, Your Honor.

THE WITNESS: Thank you.

MR. NORMAND: Blow up the top half.

MR. ERIC WHEELER: Yes, sir.

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Q. BY MR. NORMAND: Mr. Jones, Exhibit A to this document at Page 10 reflects an initial designated CPU price of $375,000; correct?

A. Just a second. I'm trying to find it here.

Q. It's at Page 10. Do you see Item A, 1A?

A. I want to make sure it's the same page. It's kind of clipped at the top.

Okay. Right.

Q. And if you turn to Page 32, Mr. Jones. There are no prior products listed; correct?

A. Page 32?

Q. Correct.

A. I'm really thrown by the numbering.

Q. Do you not see this on the screen? Do you want me to blow it up?

A. Well, I'd like to be able to see it in context. And you're referring to page 32. I'm simply not tracking on the pages.

Q. Bates number is 1042612.

A. Okay.

Q. So for this supplement, the initial CPU price is $375,000, and there are no prior products listed; correct?

A. There are no prior products in this exhibit. I've never seen this agreement before. I'm not familiar with the way it's organized. So all I can really say is I know this

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exhibit says that, but I'm not familiar with the agreement.

Q. Okay.

May I approach, Your Honor?

THE COURT: You may. What exhibit are you talking about?

MR. NORMAND: SCO 370.

Q. BY MR. NORMAND: SCO 370 is a UNIX agreement concerning UNISYS; correct?

A. Yes.

Q. Do you see at Page 4 which is --

A. I think the Bate stamp number would help.

Q. It's easier?

A. Yeah.

Q. Bates 1039897.

A. Okay.

Q. In Section 1A, the initial designated CPU price is $375,000; correct?

A. Correct.

Q. If you turn to Bates 1039921. A lengthy list of prior products; correct?

A. Right. There is a list, right.

Q. So these two documents reflect the same initial per CPU price for UnixWare licenses whether or not the prior products are listed; correct?

A. Again, I'm not familiar with the documents. I can

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simply say that that information appears on the two pages that we saw in each agreement. I have never studied this document. I'm not familiar with the way it's organized and how it works.

Q. Well, having seen what I've shown you, it's clear that --

MR. MALAUGH: Mr. Normand, is this a demonstrative that you intend to use?

We have a stipulation such that demonstratives that are going to be used with witnesses must be disclosed 24 hours in advance.

MR. NORMAND: This is from the opening.

THE COURT: It's from what?

MR. NORMAND: The opening argument that Mr. Singer did, Your Honor.

MR. SINGER: I used those two in my opening.

THE COURT: I thought he did.

MR. MALAUGH: I think our understanding of the agreement was that if someone was going to use something with the witness, we would be told it was going to be used with the witness.

MR. NORMAND: I don't need to use it, Your Honor. But I do have a different understanding of the meaning of the stipulation.

THE COURT: Well, I don't have any understanding of the meaning of that yet. So apparently you two have a

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different ones. But now it's not relevant; right.

MR. NORMAND: I'll ask Mr. Jones a question without using the exhibits.

THE COURT: All right.

Q. BY MR. NORMAND: Based on what I've shown you on these two licenses, the same per CPU price per unit where a license was charged whether or not the system prior products was listed; correct?

A. The same price was listed on the page whether or not the exhibit identified a product or not. And that's all I can say, is those words appear. And I haven't studied the agreements, so I don't know how they work.

Q. You are a lawyer; right?

A. I think lawyers actually need to read documents to understand them, nonetheless.

Q. I understand.

Now, in your view, one needs the details in the transaction at issue to determine whether there is an incidental licensing that's SVRX with UnixWare; correct?

A. I'm sorry. Could you say that again?

Q. In your view, one needs to understand the details of the transaction at issue to determine whether there has been incidental licensing of any SVRX with UnixWare; correct?

A. Once you understand the circumstances of the transaction.

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Q. Now, on the issue of whether any SVRX source code was licensed incidentally to UnixWare in Microsoft agreement, you think Microsoft views are irrelevant?

A. As to SVRX agreement, yes.

Q. And as to whether there's been any incidental licensing; correct?

A. Yes.

Q. And the same is true as to Sun's view in its agreement as to whether there's been incidental licensing; correct?

A. Yes.

Q. But you do think the overall facts and circumstances surrounding the transaction are relevant; correct?

A. Well, the circumstances of the transaction -- yeah, to some extent that needs to be understood.

Q. To a significant extent; correct?

A. Yes.

Q. And primarily, you think the actual terms of the agreements are the most important to determining whether there has been incidental licensing; correct?

A. Not necessarily. I mean, the terms -- the terms of an agreement might not fully reflect the circumstances behind the transaction.

MR. NORMAND: Your Honor, may I play a clip from

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Mr. Jones' deposition?

THE COURT: Yes. Tell us.

MR. NORMAND: May 10, 2007; Page 246 Line 16 to Page 247 Line 1.

THE COURT: Thank you.

MR. MALAUGH: It was May 10th? Thanks.

MR. NORMAND: If that's not going to work, I can read it, Your Honor.

THE COURT: Is it not going to work? All we're getting so far is it a sounds like someone backing up.

MR. ERIC WHEELER: That is the audio, Your Honor.

THE COURT: If you can read it if you can't get it to work.

Q. BY MR. NORMAND: Mr. Jones, I asked the following question, and you gave the following answer:

Question. So in Novell's view --

MR. MELAUGH: Can I ask -- I'm sorry I'm having difficulties, but could you give him a copy of the transcript to Mr. Jones so he can follow along with you?

MR. NORMAND: May I approach, Your Honor?

THE COURT: Oh, yes. Yes.

Q. BY MR. NORMAND: This is at Page 246 Line 16:

Question. So in Novell's view whether the

UnixWare had been licensed or whether the SVRX had

been licensed incidentally with UnixWare is

something to be determined from the terms of the

agreements; is that right?

Answer. Well, as I said, I think terms of

the agreement would be the most important

consideration. And my response is I think I

suggested the overall facts and circumstances, and

those facts and circumstances I think are probably

the most important thing in the terms.

Do you recall being asked that question and giving that answer?

A. Vaguely. But here it is, so....

Q. Now, beginning in October of 2002, you had several communications with SCO; right?

A. Yes.

Q. And there were in your best estimate four to six conversations between Novell and SCO during that time?

A. Something like that. I don't know.

Q. And to your recollection, in October of 2002, Mr. McBride told that you SCO was starting to look into the possibility of Linux end users using UNIX code; correct?

A. Yes.

MR. NORMAND: Will you pull up SCO 398?

MR. ERIC WHEELER: Yes, sir.

Q. BY MR. NORMAND: And in this e-mail, in the fall of 2002, you refer to that earlier conversation with Mr. McBride;

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correct?

THE COURT: This is SCO 390?

MR. NORMAND: Yes, Your Honor -- 398.

THE COURT: Pardon me?

MR. NORMAND: 398.

MR. MELAUGH: And again, Your Honor, if I could ask counsel to follow the general practice and give the witness a copy of the exhibit that he's referring to so that the witness can see the context of what you're blowing up.

Q. BY MR. NORMAND: Mr. Jones, do you need a copy of this exhibit to understand this question?

A. Not this one. But in general I really appreciate having the exhibits.

Q. Of course.

And you recall in this document that a few weeks earlier on November 15th --

A. I actually didn't answer your question. But you had asked me the question about --

Q. Do you think this e-mail reflects your discussions with Mr. McBride?

A. Yes.

Q. This is an e-mail from November 15th, 2002; correct?

A. Right.

Q. And you recall that a few weeks earlier on that

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date, Mr. McBride, quote:

Expressed interest in pursuing Linux users

who may be using misappropriated UNIX code. End quote.

Right?

A. Right.

Q. This is SCO 397, e-mail dated November 20th, 2002, from yourself. And in this e-mail you described a conversation with Mr. McBride that you and Dave Wright had that same day; correct?

A. Just a second.

(Time lapse.)

THE WITNESS: Yes.

Q. BY MR. NORMAND: You recount the possible efforts by SCO to assert claims relating to infringing uses of SCO's UNIX libraries by end users of Linux; correct?

A. Right.

MR. NORMAND: 399.

Q. BY MR. NORMAND: To some extent you may be able to find it. It's tabbed.

A. Okay. Thanks.

Q. We're on 399 now.

I'm told we may need some time technically to be able to use the documents this way, which I think is faster. But I defer to how Your Honor wants to proceed. It may take us three to four minutes.

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THE COURT: To get this up and running?

MR. NORMAND: Yes, sir.

THE COURT: Well, we better wait. I think it ultimately would be quicker.

MR. NORMAND: I agree, Your Honor.

(Time lapse).

THE COURT: There are no -- there are no interlude non-exhibit questions you could ask? If there aren't, there aren't.

MR. NORMAND: I'm sort of in the middle of this topic.

(Time lapse.)

Q. BY MR. NORMAND: There is a discrete area that we can turn to, Mr. Jones, if you're comfortable with that. We can go back to this.

A. Yes.

Q. You spoke about the Solaris files with counsel in your direct examination. Do you remember that?

A. Yes.

Q. Exhibits 439 to 59?

A. It sounds right.

Q. Do you know what functions these files perform in Solaris?

A. I didn't. No. I didn't attempt to understand what their functionality was.

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Q. Do you know what function these files performed, SVR4-389?

A. No. In neither case did I look at them to what their functionality was.

Q. Do you know if the files originated in SVR4-386?

A. Meaning that the first version in which they appeared?

Q. Yes.

A. I don't know.

Q. You said that Novell had a hard copy of SVR4-386; correct?

A. A hard copy?

Q. A hard copy of the source code?

A. If I said that I'm mistaken. We have SVRX source code. But if you understood me to say that we have hard copies of it, I didn't intend to say that. That would be a huge printout.

Q. I didn't mean to say you printed it out. I mean you have access to the actual source code?

A. Okay. I understood you to mean by hard copy we had a printout of the system.

Q. No. Why did Novell have the source code of the SVR4-386?

A. I don't know why we wouldn't.

Q. Novell transferred all copies of its source code

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for UNIX and UnixWare to Santa Cruz in 1995; correct?

A. There is a license of technology back to Novell. The technology license agreement. It was contemporaneous with the asset purchase agreement. So -- there are certain bounds on the license, but we're perfectly entitled to have copies of the pre APA SVRX according to the terms of that license agreement.

Q. Now you identified 21 OpenSolaris filings that you found; correct?

A. Yeah. There were 21 that we talked about today.

Q. And all of those files are in UnixWare 1; correct?

A. I don't know whether they're in UnixWare 1.

Q. You did not look at that, did you?

A. I did not look at that.

Q. Now, you testified, Mr. Jones, your views as to what money Novell is entitled to under the Sun agreement in 2003. Do you recall that?

A. Yes.

Q. And you said you didn't think that the 2003 Sun agreement was a customarily license agreement. Do you recall that?

A. I think I said -- I can't recall -- that may have been the question. I think what I said it was extraordinary. I can't recall if I said, used the words, it's not customary. But I do recall using the word extraordinary.

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Q. The 1994 Sun agreement was extraordinary, as well, wasn't it?

A. Yeah. I'd say it's not a typical agreement. It's a buyout of source code rights. Buyout, excuse me, of source code royalty obligations.

Q. Now, Novell seeks all 10 million that was paid for the 2003 Sun agreement?

A. Yes.

Q. The 2003 Sun agreement does provide some broad rights with respect to UnixWare; correct?

A. Yes.

Q. And you asses no value to that UnixWare license; correct?

A. No. As I stated, there has been no value specific to the UnixWare portion suggested by SCO. And given the relationship between Novell and SCO in this regard and SCO being the fiduciary and no value being, having been assigned by SCO, I conclude that we're entitled to all of it.

Q. So your view is the only reason that Novell is entitled to all of it is because SCO hasn't suggested an apportionment?

A. Well, I don't think that -- you know, there would have to be some legitimate apportionment established, and one has not even been suggested.

Q. But your view is the most important thing to look

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at to determine whether there's been incidental licensing is in terms of the agreement; correct?

A. Well, let me see here. I mean, obviously what we've talked about is the facts and circumstances and the terms and conditions both mattering, having to look at all of it. And so in my deposition you asked me the question, I said one was more important than the other, and today I said the other is more important. They're both important. They're all important in understanding the agreement. I don't truly know that gets us anywhere by trying to say one is more important than the other. But the circumstances, the facts and circumstances, the terms, all of those need to be considered.

Q. One can't reasonably review the 2003 Sun agreement and conclude that no money was paid for the broad UnixWare license; correct?

A. I don't think one can conclude that the monies paid were not to some extent in consideration with the UnixWare related rights. But I have no way of knowing how much of it was for that.

Q. Your view is SCO should forfeit whatever money it might be entitled to because it hasn't suggested a specific apportionment; right?

A. In light of the fiduciary relationship that exists between the parties and the fact that SCO executed this without Novell's approval and involvement and SCO has not been

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forthcoming with some suggestion as to what the value should be for the UnixWare portion, yes.

Q. You think SCO should forfeit the money?

A. Well --

Q. You just said yes.

A. Well, then --

Q. So that's your answer.

A. Well, I guess forfeit the money is a characterization.

Q. You're an attorney. I've asked you a question. What's your view? Is it forfeiture?

A. What my view is is that there's no reason Novell should forfeit any of the monies itself given the position that Novell is in, given that Novell was excluded.

Q. That begs the question, doesn't it? We were here to determine who gets what, what the relative value is of this license.

A. Absolutely. And, of course, as I've expressed and you certainly are going to disagree with me, that from my perspective, given the fiduciary relationship and all the factors that I've described, that if there's a party that's at risk of forfeiting or foregoing some consideration as between Novell and SCO, it should be SCO.

Q. Section 3 of the Microsoft agreement is the UnixWare license; correct?

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A. Yes.

Q. It was $7 million worth of the UnixWare license; correct?

A. You know, I just know there's money there. I have not memorized the payment amounts for each section of that agreement.

Q. The Sun UnixWare license is broader than the Microsoft UnixWare license, isn't it?

A. I haven't looked at the two in those terms.

Q. Well, you testified at some length in your direct examination about how much thought you've put into this. The Section 3 Microsoft license is narrower than -- Section 3 license of Microsoft UnixWare is narrower than Sun's UnixWare license; correct?

A. Is the question whether I said that before or whether that's a fact?

Q. No. I'm asking you a yes or no question right now.

A. Right now. Well, the elements of a license in its breath I think are the technology that are licensed and the rights that are conferred. And the rights that are conferred in the Sun agreement I can't imagine more expansive rights than those. I haven't looked at the Sun agreement and the Microsoft agreement side by side to see if there's any meaningful distinction in the technologies that are identified. So I simply haven't looked at the agreement from

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that perspective. I haven't thought of it that way.

Q. You're not able as you sit here to compare the scopes of the UnixWare license of Microsoft 2003 to the scope of the UnixWare of Sun in 2003; that's your testimony?

A. Are you asking me to do that now?

Q. I'm asking you --

A. I have not done it before.

Q. How could you not have done that and apportion any value to the Sun license?

A. For the reasons that I've stated before.

Q. The UnixWare license in the Sun agreement is worth at least $7 million, isn't it? Wouldn't it follow from the act of the Section 3 UnixWare license in Microsoft was for $7 million?

A. I have not, you know, come here today having attempted to made any specific valuations, just as SCO has not offered any specific valuations. And my position as between Novell and SCO is it's incumbent on SCO to do that. And if they haven't done it, then they're the ones that should bear the risk of foregoing consideration.

Q. But you concede that if you're wrong about that point, if you're wrong about that burden that you think applies to SCO, then there is value to the UnixWare components in the Sun agreement. That is your view, isn't it?

A. Can you say that again?

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Q. If you're wrong about your argument that SCO should forfeit the value of any UnixWare license in the Sun agreement, if you're wrong about that, there is value to the UnixWare Sun agreement, isn't there?

A. I don't understand what you're saying. There's value to the UnixWare --

Q. Are you suggesting that Sun take no money, no consideration for the broad UnixWare license it received in 2003?

A. I'm just confused because the whole agreement characterizes the UnixWare agreement. And you're specifying the UnixWare portions?

Q. I understand Novell's position to be that there's at least a broad UnixWare license in the Sun agreement. I understand that Novell takes the position, that there's more than that as well. And SVRX components. Are we on the same page?

A. No. Where I got disconnected from you is that you said that the Sun UnixWare license. And what I've heard SCO do is it characterize the entire agreement as a UnixWare license. And you just asked me if there's value associated with it. And I think, well, yeah, Sun paid for it. So I wasn't sure if you were asking about the entire agreement.

Q. I'm asking just about what you regard as the UnixWare portion.

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A. The UnixWare portion? Yeah. I've never said -- I'm drawing some conclusion that there's no value in the UnixWare related rights that are conferred. But the question is, how do you establish some valuation for apportionment purposes? And SCO has not provided anything on that. And again, under those circumstances, I feel Novell's entitled to conclude that that money should be Novell's, and Novell should not be required to forfeit something here.

Q. Your view that Novell gets all the money, the 10 million, is based on a legal argument; correct?

A. Well, it's based on -- legal arguments don't exist in a vacuum. It's based on the factual circumstances and the legal arguments arising out of the fiduciary relationship that exists between the two parties.

Q. Your view that Novell gets everything is not based on an objective assessment of what was paid for the rights in the 2003 Sun agreement, is it?

A. It's not -- it does not reflect any type of economic valuation or analysis or anything of that nature.

Q. I want to turn back to your discussions with SCO in the fall of 2002.

A. Okay.

Q. I won't be much longer.

Exhibit 400, Mr. Jones. It should be in that book.

THE COURT: This is SCO 400?

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MR. NORMAND: Yes, Your Honor.

THE WITNESS: Yes. I've got it.

Q. BY MR. NORMAND: Now, at the time of these discussions with Mr. McBride, Novell had no interest whatsoever in supporting any UNIX infringement claims against end users of Linux; correct?

A. Yes. I think that's correct. And that's what our executives advised me.

Q. Novell's efforts were prioritized in other places; correct?

A. Well -- I guess I just say yes, just by virtue of the fact that this didn't have priority. So....

Q. Now, at the time of these discussions Novell was fully moving in the direction of being involved in Linux; correct?

A. That's correct.

Q. And you didn't say that to SCO in these discussions; correct?

A. No. I mean, to me I think we had acquired Zimeon at that point, which is the Linux desktop company. So that was public knowledge. And any other information that I had about Novell's investigations would have been confidential, so no.

Q. You didn't raise any objections with respect to the perspective licenses that Darl had mentioned; correct?

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A. I did not understand the licenses that would be granted.

Q. You understood --

A. Darl, he came to me requesting help with due diligence and assessing what SCO's rights would be. I confided that once they understood what their rights would be, they would act accordingly. So not having known the terms that would have been offered to people in any such program or any agreement and also just understanding that SCO seemed to be investigating intellectual property rights to understand the bounds what they might properly do, I don't think there was any need for me -- I don't know what I would have objected to.

Q. He specifically told you that they were concerned about the use of UNIX code and use of UNIX code by Linux end users; correct?

A. That's right.

Q. What did you understand UNIX code to be?

A. At that point I wouldn't know.

Q. Didn't think about it?

A. There wouldn't be -- as has been discussed, there is a wide variety of UNIX code that's been developed over the years. So how would I know what specific code he would be discussing? He did mention -- the one specific thing that Darl mentioned was the library. But I couldn't understand,

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you know, in the vast scheme of things, you know, where that would factor in or under what terms it would be offered or -- you know, my information was very scant.

Q. But you knew it concerned Linux and UNIX; correct?

A. That I knew.

Q. And Novell's position is that it retained substantial rights in the UNIX business; correct?

A. We have substantial rights in pre-APA SVRX. UNIX would be a pre-APA SVRX as a subset of UNIX. So when someone says they're going to do something with UNIX, I cannot know if they're taking about something that would implicate Novell's interest or not.

Q. And you understood SCO to be contemplating a program on its own; correct?

A. Yes. On its own -- well, what do you mean by, on its own?

Q. You understood that SCO was interested in pursuing its own efforts against Linux end users; correct?

A. Yeah. I guess I just need not to jump to a conclusion here. They were asking for Novell's cooperation and assistance to the extent of helping them identify documents or due diligence purpose and things of that nature. And, of course, they had questions about the terms of the earlier agreements. And whether or not they had any involvement with third parties was something I had no

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knowledge of. So I was hasty to say they were going alone. That was what I just described was the extent of the knowledge that I had.

Q. You're not suggesting that Mr. McBride had asked you to be a business partner in pursuing these Linux end users, are you?

A. What do you mean by business partner?

Q. It was SCO's effort and they were asking for due diligence support from Novell; right?

A. Yeah. The nature of the cooperation, and, you know, partnering covers a wide variety of activities. So Mr. McBride suggested, as he explained earlier here today, you know, hey, Novell, if you help support us in some way, what we intend to do that could have some business benefit to you. And so, Novell, what we want of you is to help us do due diligence. We think that will help support our efforts.

So is that partnering? I think that's some form of partnering. But that's the extent of what Mr. McBride explained to me. He didn't explain something beyond that to me or suggest something beyond that.

Q. This is Exhibit SCO 87, Your Honor.

THE COURT: Okay.

Q. BY MR. NORMAND: Mr. Jones, I want to go back to a couple of letters that we discussed. In 1996, you were employed by Novell; correct?

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A. Yes.

Q. Now, in 1996, Novell informed its customers and business partners that Novell had transferred its existing ownership interest in all releases of UNIX and UnixWare to Santa Cruz; correct?

A. Could you say that again? I was looking at the document, and you were speaking.

Q. I said in 1996 Novell represented to its customers and business partners that it had transferred its existing ownership interest in all releases of UNIX and UnixWare to Santa Cruz; correct?

This paragraph that is Attachment A.You can go to Attachment A.

A. I guess the only liberty -- I mean, this letter was sent. I simply don't have the personal knowledge of how extensively it was sent, but I think you said its customers. So I don't know how many -- I just don't know how many customers received it. But this letter does reference in this exhibit all releases of UNIX System V and prior releases of the UNIX system. And the letter would be inconsistent, of course, with the asset purchase agreement.

Q. But Novell did make these representations to Prentice-Hall; correct?

A. It's sent -- well, you know, again, I assume Prentice-Hall received it, Novell wrote this in a letter to

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Prentice-Hall by an Novell employee.

Q. Novell said that it was assigning its right under its agreements that concerned those releases; correct?

A. If this letter says that, it's inconsistent with the asset purchase agreement.

Q. Let's go to Exhibit 411.

THE COURT: SCO 411?

MR. NORMAND: Yes, Your Honor.

Q. BY MR. NORMAND: This is a letter from Mike DeFazio to SunSoft. Do you know what SunSoft is?

A. I thought it was a software division of Sun.

Q. You're correct.

A. Okay.

Q. And Novell specifically told Sun that Novell had transferred its existing ownership interest and all releases of UNIX and UnixWare; correct?

A. This letter says that, and it's inconsistent with the APA.

Q. Who signed this letter?

A. Michael J. DeFazio.

Q. What was his position?

A. I don't know his precise title, but he was -- I know he had significant responsibilities for Novell's UNIX business. You know, I regard him as having headed it up, really, at certain points in time.

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Q. Was he head of the organization within AT&T and USL and later Novell responsible for product management, marketing and licensing terms and conditions for UNIX from 1984 to 1995?

A. I don't know what you're reading. It sounds plausible. It's obvious I don't come in here with that specific knowledge in my mind. But that sounds plausible.

Q. But you think he was wrong about what he said?

A. Yes.

MR. NORMAND: SCO 136.

Q. BY MR. NORMAND: There is a SCO -- what number is this?

MR. ERIC WHEELER: 136.

MR. NORMAND: 136, Your Honor.

Q. BY MR. NORMAND: This is a similar letter to Microsoft; correct?

A. Just a second.

MR. NORMAND:

Your Honor, I don't think there's a stipulation as to this document, so I move for its admission.

THE COURT: 136.

MR. MELAUGH: No objection.

THE COURT: Well, it's on the list, isn't it?

THE CLERK: It is not on the list.

THE COURT: 136. It's on my list. SCO Exhibit 136.

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THE CLERK: I don't have a 136 on mine, on my list.

THE COURT: Well, I'll admit it. It's on my list.

(Whereupon, SCO 136 was received.)

MR. NORMAND: Thank you, Your Honor. We'll cure the confusion.

Q. BY MR. NORMAND: Now, in these letters, Mr. Jones, Novell was telling people to deal directly with Santa Cruz; correct?

A. I've been reading the other part of the letter. So just a second.

(Time lapse.)

Q. BY MR. NORMAND: Have you had a chance to review the document?

A. Yes. Yes. It's consistent with what you said. These are -- it's informing the parties that the contracts have been assigned to SCO. So in effect that they should, you know, they should be dealing with SCO then.

Q. And Novell told Sun and Microsoft that; is that correct?

A. SunSoft and Microsoft.

Q. My colleagues remind me that when we went down with the system, I was on one of your e-mails.

A. Okay.

Q. Your infamous e-mails.

A. Infamous.

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MR. NORMAND: This is still 399, Your Honor.

Q. BY MR. NORMAND: Do you have that e-mail in front of you, Mr. Jones?

A. Hang on just a second. Tab -- this is Exhibit -- yeah, I've got this.

THE COURT: SCO 399.

THE WITNESS: Right. Thanks.

Q. BY MR. NORMAND: Let me know when you've had a chance to review it.

A. Okay.

(Time lapse.)

THE WITNESS: Okay.

Q. BY MR. NORMAND: Thank you, Mr. Jones.

You said on December 4th, 2002, that you and Mr. Wright had returned a phone call from Mr. McBride; correct?

A. Yes.

Q. And you said that Darl reiterated his request from Novell's assistance, and then he informed us that next week SCO will announce a Linux licensing program; correct?

A. Correct.

Q. That's an accurate statement; correct?

A. I believe so.

Q. In your review of this document, have you had seen any statements that you made that you think are inaccurate?

A. That I made that are inaccurate?

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Q. Correct.

A. I think the only thing I might take issue with is my poor writing in the second sentence of the fourth paragraph where I talk about potential increase of the declining $8 million revenue stream.

Q. But the rest of your statements in the e-mail you believe are accurate?

A. Yeah. And I think, as Mr. McBride was saying, I think he was just suggesting that the decline would slow, not that there would be some substantial increase or something of that nature.

MR. NORMAND: May I approach, Your Honor?

THE COURT: Yes.

Q. BY MR. NORMAND: I hand you two last documents, Mr. Jones.

A. Okay.

Q. These are Novell 468 and 469. This is a Novell letter to Microsoft from September of 2007; correct?

A. Well, there are two letters. I'm sorry. We were on --

Q. I'm sorry. I'm on 468.

A. Okay.

Q. And 469 is a letter to Sun.

A. Yeah.

Q. And the content of the letter is the same; correct?

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A. I don't know.

Q. Let's do 468.

A. Okay.

Q. Have you seen this letter before?

A. I think I have. I've seen so many documents. But I believe I've seen it.

Q. In this letter, Mr. LaSala, who was general counsel at the time; correct?

A. Yes.

Q. Tells Microsoft, quote:

We believe that the 2003 agreement is

unenforceable, void or invalid, and hence that

there may be copyright issues arising out of

Microsoft's use of UNIX or UnixWare code in which

Novell retains copyright ownership.

Do you see that line?

A. Yes.

Q. Does that statement reflect Novell's position today, as well?

A. Yes.

Q. Exhibit 469 is a letter to Sun. And it contains in bottom third of the letter the same statement; correct?

A. I think they're not quite identical. But you're asking if that still reflects Novell's position? That's the question?

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Q. Right.

A. I believe so.

MR. NORMAND: Nothing further, Your Honor.

THE COURT: Pardon me?

MR. NORMAND: Nothing further.

THE COURT: Thank you, Mr. Normand.

Anything else, Mr. Melaugh?

MR. MELAUGH: Your Honor, we have no further questions of this witness.

THE COURT: Thank you, Mr. Jones. You may call your next witness.

MR. JACOBS: Your Honor, we have no further witnesses. We have a couple of exhibits to move into evidence. And we would request the opportunity to just check this evening against the exhibits that we looked at to make sure that they were either part of the stipulation or we moved them into evidence.

THE COURT: What exhibits are you talking about?

MR. JACOBS: So 430, Novell Exhibit 430 is the letter to the Arbitral Tribunal in which SCO stated that it had no further claims after this Court's copyright decision.

THE COURT: This is Novell 430.

MR. JACOBS: Correct.

THE COURT: Any objection?

MR. SINGER: No objection.

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THE COURT: 430 is received.

(Whereupon, Novell Exhibit 430 was received.)

MR. JACOBS: And Novell Exhibits 468 and 469 are the two exhibits that you just saw in the examination of Mr. Jones. The letters from last September to Microsoft and Sun.

THE COURT: You want them in twice?

MR. JACOBS: No. He did not move them into evidence.

THE COURT: Didn't he? I thought he did.

MR. NORMAND: I missed the reference to the exhibits number. I'm sorry.

THE COURT: It's SCO.

MR. JACOBS: No. I believe it's Novell.

THE COURT: Novell 468 and 469.

MR. NORMAND: I would like to move them into evidence. Thank you.

THE COURT: I thought you would. 468 and 469 are received. (Whereupon, Novell Exhibits 468 and 469 were received.)

MR. JACOBS: And then if we may, Your Honor, just check, we don't know of anything we left out. But we would like to check this evening on whether there were any further exhibits.

THE COURT: We'll check at the end of the trial, as

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well, for both of you. All right.

MR. JACOBS: Otherwise we rest, Your Honor.

THE COURT: Thank you.

MR. SINGER: Your Honor, we would like to move at this time for an involuntary dismissal of these claims. I'm not going to ask to argue at this time, but argument on a certain basis later today. But we simply would like to do so on the basis of all the papers that have been submitted including arguments in our trial brief and proposed findings.

THE COURT: All right. And I'll take those motions under advisement.

And you may call your first witness.

MR. SINGER: That is John Maciaszek.

THE COURT: You want this on the record? Because we can't hear you if you do.

MR. SINGER: We would like to put on the record reserving the right to using these blowups used in the openings with any witnesses that will be called tomorrow. We won't use them with Mr. Maciaszek today.

THE COURT: You will not today?

MR. SINGER: I don't think we'll need them with Mr. Maciaszek.

THE COURT: All right. Well, that almost gives you your 24-hour notice.

Come forward and be sworn, please. Right here in

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front of the clerk of court. Right there. That will be good. Thanks.

THE CLERK: Please raise your right hand.

JOHN MACIASZEK,

called as a witness at the request of SCO Group,

having been first duly sworn, was examined

and testified as follows:

THE WITNESS: I do.

THE CLERK: Thank you. Please take the witness stand right there.

Please state your name and spell it for the record.

THE WITNESS: John Maciaszek, M-A-C-I-A-S-Z-E-K.

THE CLERK: Thank you.

DIRECT EXAMINATION BY MR. SINGER:

Q. Good afternoon, Mr. Maciaszek.

A. Good afternoon.

Q. When were you first employed by AT&T or any company involved in the UNIX business?

A. Well, I started in AT&T back in 1966. The UNIX business portion was when I moved into USL in December of 1991.

Q. So that's when you would date back your beginning of involvement with UNIX?

A. Centrally, yes. Before that I had peripheral

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interactions relative to it on other product lines.

Q. When you started with USL, UNIX System Labs, in 1991, what were your responsibilities?

A. I had product management responsibility for some components of the operating system business, as well as ultimately responsibility for the interaction between USL, Novell and the joint venture Univell.

Q. Did there come a time when your employment changed either to a new company or your responsibilities changed?

A. Fundamentally I've been a product manager ever since joining USL, all the way through the changes through Novell and through Caldera and back to SCO again.

Q. Has products for which you have managed include the UNIX System V products?

A. Yes.

Q. And do they include UnixWare?

A. Yes.

Q. What is your current employment?

A. I'm currently employed by SCO on a part-time basis. I'm sort of semiretired at the moment.

Q. Where do you live?

A. I live in Marlboro, New Jersey.

Q. And have you worked consistently in New Jersey on AT&T and UNIX System Labs and so forth?

A. Yes. Yes. I was born in New Jersey, and except

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for my time in the Army, I lived there all my life.

Q. Mr. Maciaszek, was there a time when you worked for Novell?

A. Yes.

Q. What was that time period?

A. It was a time period when Novell acquired USL from AT&T. And during -- I was there during that entire duration before the sale to Santa Cruz.

Q. Were your responsibilities the same?

A. Essentially the same, yes. I was product manager.

Q. And when the sale occurred to Santa Cruz, did you go over to Santa Cruz?

A. Yes, I did.

Q. And did you continue with those responsibilities?

A. Yes.

Q. And similarly forwarded to SCO?

A. Yes.

Q. Was there a licensing group that was at Novell at the time that the asset purchase agreement was entered into?

A. Yes, there was.

Q. And what happened to that licensing group or most of the members of the group after the agreement was executed?

A. They basically moved over to SCO. I believe everybody with possibly one or two exceptions moved to Novell -- I mean to SCO.

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Q. They moved from Novell to SCO?

A. That's right.

Q. Did they continue with the licensing of UNIX for Santa Cruz?

A. Yes, they did.

Q. And you remained part of that group?

A. Well, I was not in the licensing group. But in product management. And obviously I had responsibilities to interact with the licensing group to put together the schedules.

Q. Can you explain what the Santa Cruz UNIX licensing group did?

A. They were responsible for the legal aspects of new schedules that got put together for new product offerings. I'm talking in this case about source code products. Plus they were responsible for all the contracts that were negotiated with customers for both binary and source and interacted with all the sales organizations worldwide.

Q. What is UnixWare?

A. What is UNIX or UnixWare is the latest, depending on the number you want, it's -- what is UnixWare. The next release of UNIX System V that we offer in both binary package format today as well as potentially source licenses for it.

Q. Are you familiar with SVR4.2 MP?

A. Yes.

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Q. What does that stand for?

A. That's System V Release 4.2 multiprocessing version.

Q. How did that relate to UnixWare?

A. Well, that was the predecessor to UnixWare 2. UnixWare 2 essentially contains the bulk of SVR4.2 MP, plus some additional user interface code that was built on top of that.

Q. What does the MP mean?

A. Multiprocessor. That's today's technology. Typically all the computers you see today have more than a single processor in it.

Q. Is that important?

A. That contains the code that enables the operating system to support those multiprocessors.

Q. Is that an important development?

A. Absolutely. I mean, there were very few today even at the desktop level that you buy with -- having only a single processor.

Q. You mentioned after SVR4.2 MP you had UnixWare 2?

A. Yes.

Q. Was there a UnixWare 1?

A. Yes. UnixWare 1 was actually based on SVR4.2, no MP, which was a single processor version of the operating system. And UnixWare 1 was produced as part of the joint

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venture of Univell and USL. Univell did some work on the user interfaces. Novell added some code with respect to the NetWare, and then the product was sold, was initially sold as a packaged product. The initial units were packaged products by Univell.

Q. Was UnixWare 2.0 the first multiprocessing version of UnixWare?

A. That's correct.

Q. Now, did the versions of UnixWare build on the earlier System V UNIX code?

A. Yes, of course.

Q. And after -- at the time of the APA, did you have a transfer of the UnixWare business to Santa Cruz?

A. Yes.

Q. And did Santa Cruz continue in development and release of its own versions of UnixWare?

A. Yes, it did.

Q. Did it make any modifications to the UnixWare operating system?

A. Every new version contains modifications to support new hardware, support new features that were needed by the more modern applications that were coming to the market.

Q. And you also were employed at the time in 2001 when Santa Cruz sold its business to Caldera?

A. Yes, I was.

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Q. And what happened to the UNIX licensing group at that time?

A. That crew moved, as far as I can recall, lock, stock and barrel to Caldera.

Q. And your involvement continued throughout?

A. Yes, that's correct.

Q. Okay. Now, at Novell, with respect to UnixWare, did you have any involvement in the negotiation or oversight of UnixWare licenses?

A. Yes.

Q. Can you explain what your responsibility was?

A. As a product manager, my recollection is that I was involved in putting together the UnixWare 2 license, to model it so that it paralleled our package product introducing what the discount structure would be.

Q. Can you describe generally what a UnixWare license provided at that time?

A. The UnixWare license provided access to the source code of the corresponding package product and would enable an OEM or other licensee to construct an identical product to what we were shipping as packaged product or to use the source code to produce a version of UnixWare that would run under alternate architecture. The products that we were selling then and continue to sell now are targeted at the Intel market. But at that time, there clearly were other chipsets

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that were in the marketplace. And a licensee of that source code could produce a version that would run on those alternate architectures.

Q. Let me go over that a little bit and make sure I understand the set.

There were some SCO UnixWare products that were just sold out to the market; is that correct?

A. The packaged product, yeah.

Q. And that would be --

A. Excuse me. We're almost out of water here.

THE COURT: Just enough for you.

THE WITNESS: Right. It looks that way.

Q. BY MR. SINGER: Are you ready now?

A. Yes.

Q. The end user -- the packaged products go to end users; is that correct?

A. Ultimately to the end users, yes. We sold through a multi-tier distribution and still do.

Q. Now, you mentioned you also licensed source code to OEMs, original equipment manufacturers; is that right?

A. Right. Those are computer manufacturers.

Q. And your point was they could use that to develop their own type of operating system based on that source code and sell those products?

A. Right. They would either modify it because they

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had a different central processing architecture or they would need to make improvement so that it would perform best on their hardware over and above, you know, other hardware.

Q. When you gave one of those OEMs a license to do that with the UnixWare source code, could they use any part of the UnixWare source code for developing their own product?

A. Yes, of course.

Q. And that would include the System V source code that may have originated back in 1969 or later times?

A. Well, whatever was in UnixWare was UnixWare.

Q. There was no distinction in terms of what the customer could use?

A. No, absolutely not.

Q. Now, when you licensed UnixWare and at the time that you were Novell, did Novell grant the customer any license to any older versions of the System V products?

A. Well, the standard practice going back to AT&T days was to grant the right to use prior products as part of the new products.

Q. And you said that goes back to AT&T days?

A. Oh, yeah. Started well before I joined the organization. Go back and look at the SVR1.1 prior, and there were always prior products listed there.

Q. Did you obtain --

A. Is it okay if I have a cough drop?

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THE COURT: Sure.

THE WITNESS: Thank you.

Q. BY MR. SINGER: And if you need more water --

A. No. I still got the water. When I talk a lot I tend to cough.

Okay. Let's go.

Q. Okay. Did you have personal knowledge of that licensing of prior products at the time that you joined UNIX Systems Labs?

A. Oh, yes. I mean, I was involved in creating the 4.2 license, so I understand very well what the situation was.

Q. Were the customers who were given those prior products asked to pay anything extra for the prior products?

A. Absolutely not.

Q. And is that a consistent practice throughout the time that you have been at Novell and both its predecessor and successor companies?

A. Absolutely. I can't remember or recall any occasion where there would be any even thought given to charge them for that.

Q. Was there any requirement imposed that you would only give the prior -- the access or right to use prior products to those licensees who had bought for value that earlier version?

A. No.

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Q. That's not something you looked into?

A. No. Absolutely not. That was part of the standard license in general. We use the same license for all licensed users.

Q. Now, when the original equipment manufacturer entered into a license, what types of fees did they pay?

A. Well, there would be a fee for the software agreement, a fee for the sublicensing agreement and a fee for the individual schedules or the individual licensees with particular releases of the product.

Q. Was the fee for the actual source code, was that a one-time fee or something that would recur?

A. It was a one-time fee.

Q. And then you mentioned there would also be a fee for distribution?

A. That's right. The sublicensing fee.

Q. Was that also a one-time fee?

A. It in effect became a one-time fee. It was listed each time. But if somebody already had one, we typically didn't charge them again.

Q. Was there a third source of fees or royalties involved?

A. Well, the most obvious fee and the most generic was the one when you distributed the products there would be a royalty or per copy fee that was paid for each copy of the

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product, the derivative work that was distributed.

Q. Is that sometimes referred to as a binary fee?

A. Binary per copy fee, right.

Q. And what does the binary refer to?

A. Well, it is non-source. In essence, it's a running pro product that has been created when compiling, linking source code into a binary. In essence, think about the CD that you put in when you install Windows. That's a binary product. You don't get the source code to Windows.

Q. And that fee, of course, would vary depending on how many products were sold?

A. There was a discount schedule, and also it would depend on what release you were shipping. Over the historical time the fees tended to go up as time marched on.

Q. Now, I'd like to show you Exhibit 141. This is SCO 141.

May I approach the witness, Your Honor?

THE COURT: Yes.

Q. BY MR. SINGER: Mr. Maciaszek, do you recognize this exhibit?

A. Yeah. This looks to me like a 2.1 schedule for the UnixWare 2.1.

Q. You see a customer name on the second page?

A. Right. NCR.

Q. Okay. And was this a license for UnixWare 2.1

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source code?

A. That is correct.

Q. Now, if you turn to Exhibit I, prior products on Page 24 --

A. Okay. I'm there.

Q. Okay. Is this a list of prior products which NCR was given rights to use in connection with this license?

A. Yes, that is correct.

Q. Was any additional fee charged to NCR to make use of any of these products?

A. No.

Q. Was there anything special about this treatment of NCR from what you treated other customers at this time?

A. Absolutely not. This is a standard schedule, as best I can tell from looking at it.

Q. Did there come a later point in time after this when you stopped listing particular prior products on a schedule?

A. Yes. With UnixWare 7.

Q. Why was that done?

A. Well, the plain thrust there, if you go look at the history, at that time we were primarily in the packaged product business. The majority of OEMs had already downsized and eliminated their engineering organization. So our goal with UnixWare 7 was a standard binary product that would go

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into the marketplace. Consequently, we didn't add the additional prior products because we wanted to maximize the similarity of all releases of UnixWare.

Q. If a customer wanted to use, make some use of a prior product they had had, was that a problem?

A. No.

Q. Did you charge anything extra for that?

A. No. To my knowledge, I don't think anybody -- we actually did -- I don't think we actually modified anybody for that purpose. But had they asked, we would have added the additional prior products without any issue.

Q. Do you recall in the period of time that was the way you approached the license whether anyone even asked to use the prior products?

A. I don't believe anyone ever did. I'm not -- I certainly can't recall anyone who did.

Q. Can you turn to Page 6 of the license, which has Paragraph 10. Can you see the section, perhaps we can blow it up, called the Novell NetWare software?

A. Yes, I do.

Q. What does that paragraph mean to you?

A. Well, NetWare was a component of UnixWare 2. There was some components of NetWare. At that time, Novell had the strategy, not unlike the one I referred to earlier about UnixWare 7, of wanting to make NetWare ubiquitous across all

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operating systems. So UnixWare 2 contained NetWare components. And in essence, what this is saying is that you had to include -- wait a minute. Let me read this one -- oh, you could only use the source code for NetWare should you choose to license it; in essence, to fix bugs, but not to make derivative work. That was to keep NetWare standards.

Q. So this was a limitation on the use of NetWare, which was a Novell product, which was being sold along with the UnixWare?

A. Yes, that's correct. If you were a licensee of UnixWare 2.1, we would have delivered to you the complete source code to build that product coupled with some binary components that you couldn't change. NetWare was one of them. There were some other third-party components. NetWare source was licensable as an add-on to the 2.1. I believe if you look at the first page of the schedule there is a separate price for it. This paragraph is constraining what you could do with that source should you choose to optionally license it.

Q. Was there any restriction, Mr. Maciaszek, in the license agreement on earlier versions of UNIX software, not talking about NetWare now, but UNIX software that may have been developed by Novell or its predecessors?

A. No.

Q. So this was specific for NetWare?

A. That's correct. NetWare was considered to be the

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crown jewels of Novell at the time. And I would assume it still is today.

Q. Now, when -- you've discussed the fact there was no separate source code licensing fee for including prior products; is that correct?

A. That's correct.

Q. Now, let's say you have a binary product that one of these companies developed using that source code. Was there a method that was used to determine what royalty scale you would use; in other words, whether the royalty would be calculated by the most recent UnixWare version or an earlier version of the System V code?

A. The royalty was always based on the latest source code that was incorporated and used to build the derivative work. So if you were shipping 2.1, you would read this schedule, and it would tell you exactly what you would have to pay.

Q. What if you have a derivative work that has some old System V code in it and some more recent versions in UnixWare, how would you determine the royalty in that situation?

A. The royalty was the same.

Q. What would it be based on?

A. Pardon me? It would be based according to this schedule, what we said it was for UnixWare 2.1. That was the

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whole purpose of the prior products.

Q. How much code of UnixWare would there need be to trigger the UnixWare royalty as opposed to one of the older royalties?

A. Well, that's the concept. The one-line-of-code concept said if you licensed UnixWare 2.1 and it was the latest release, if you took a single line of code from UnixWare and included it in a derivative work, your derivative work as you distribute it would be subject to the terms, conditions and obviously royalties which were part thereof of the UnixWare 2.1 schedule. So you'd pay based on UnixWare if you took one line of code from UnixWare sources and put it in derivative work.

Q. That's why it's called one line of code?

A. That's correct.

Q. So even if 99 percent of the code in that derivative product was an older System V version, if it was one line of UnixWare, it would trigger UnixWare royalty?

A. That is correct.

Q. And under the APA, are you aware whether any UnixWare royalties had to be remitted to Novell?

A. No UnixWare royalties remitted to Novell. There would have been possibly royalties paid on UnixWare based upon the business model that was part of the AP A.But that was never achieved, so we never did pay.

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Q. You're referring now to the part of the APA which had a special UnixWare royalty?

A. That is correct.

Q. And that was never achieved, you said?

A. As far as I know it was never achieved. And as the product manager I would have been aware if we were paying those royalties.

Q. And by achieved, the sales never reached the level that that would be kicked in by?

A. That's correct. It was a business plan that was stipulated as part of the AP A. And if we achieved certain targets, then some royalties potentially would have gone back to Novell. But that was never achieved.

Q. Okay.

I have nothing further. Thank you.

THE COURT: Thank you.

You may cross-examine, Mr. Jacobs.

MR. JACOBS: Thank you, Your Honor.

CROSS-EXAMINATION BY MR. JACOBS:

Q. Mr. Maciaszek, good afternoon.

A. Good afternoon.

Q. Could you take a look again at SCO 141, please.

A. Is that what I'm looking at now?

Q. Yes. That's that NCR license.

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A. Okay.

Q. And if you look at the second line, you see it? It says, supplement Number 112?

A. Yes.

Q. Can you explain, please, what that means?

A. Well, that says to me that there would have been 111 prior agreements or supplements that NCR had executed prior to this one.

Q. And in each of those 111 prior agreements or supplements, NCR would have paid fees for that supplement?

A. I would have assumed -- I would assume so. I can't testify if that's correct since I'm not aware of them.

Q. That was -- based on the ordinary license practice, which you testified that you're familiar with, that would be your assumption?

A. Yes.

Q. So at least in this particular case, this was not a fresh out-of-the-box license of March 31, 1997, of UnixWare 2.1 to NCR with no history to it, was it?

A. It was a fresh 2.1. There was clearly interaction and history for NCR's relationship going back all the way to AT&T, obviously.

THE COURT: Excuse me. All the way back to what?

THE WITNESS: To AT&T when they first licensed their first substantiation of UNIX from AT&T. And I can't

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tell you what that was.

THE COURT: Okay.

THE WITNESS: It was before my time.

THE COURT: Excuse me, go ahead.

Q. BY MR. JACOBS: Take a look, please, sir, at the prior products section of this agreement. I believe you told us it was Exhibit I. This would be Page 77766 on this exhibit.

A. Okay.

Q. And I believe you testified -- I think you might have just been mistaken about the meaning of Mr. Singer's question. He asked you whether there were any restrictions on the use of the prior products, and you said no. That's not quite right; correct?

A. Well, in this particular case, there was a restriction with respect to the corporation of NetWare in the application server and personal edition, if that's what I'm reading.

Q. Well, there were restrictions on, for example, the use of SCO UnixWare 2.0 under this license agreement, are there not, sir?

A. I think I just said what it was. I said that if, in fact, you deleted NetWare from your derivative work, then you were only able to use 2.0 and 1.1.

Q. Let me ask you -- perhaps I could ask it this way,

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sir. Take a look at prior products, and you see that it says, SCO UnixWare Release 2.0. Do you see that?

A. Yes.

Q. Was it your understanding under this agreement that the customer was free to publish the source code of SCO UnixWare 2.0 on its website?

A. No, absolutely not.

Q. Why not? What restricted him?

A. I would assume it would have been -- the place that you would find that restriction would be in the software agreement.

Q. In the --

A. Software agreement.

Q. In the software agreement which governs all the software licenses --

A. Unless it's superceded, yes.

Q. You would be pretty shocked if a customer said, you got the rights to release 2.0. Under a 2.1 agreement, we can do whatever we want with it including publishing it on our website?

A. That was not -- that certainly would not be authorized under the software agreement.

Q. And publishing the software code on the website would be a big deal in your capacity as a product manager?

A. Yes.

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Q. Why?

A. Well, it depends on what you were publishing, what purpose you were publishing it for.

Q. You're publishing the entire source code for SCO UnixWare 2.0.

A. That would have been a violation of your contractual rights.

Q. And substantial injury to the owner of SCO Release -- UnixWare 2.0?

A. Yes.

Q. And the same with, say, let's pick one, UNIX System V Release 4.2 Intel386 Implementation. Everything you said about SCO UnixWare 2.0 applies to that release, as well; correct?

A. Well, it's a matter of greed. The bulk of that stuff was obsolete at the time.

Q. If a customer under your tenure as product manager, say when you were at Novell --

A. Yes.

Q. -- and let's go back a little bit, had published on its website, Internet is just coming into being, and they publish on their website UNIX System V Release 4.0 Intel386 the Version 3 implementation, that would have been a big surprise, wouldn't it?

A. Yes, it would have been.

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Q. And it would have been a substantial potential injury to the business you were responsible for?

A. Absolutely.

Q. Now, you talked about the development practices of the UNIX operating system. You testified that modifications were added over time with each successive release. Do you recall that testimony?

A. Yes.

Q. And isn't it a fact, sir, that modifications also include deletions of code over time?

A. That is correct. Substitutions, as well.

Q. And I think in answer to a question from Mr. Singer that was driving at a somewhat similar point, you said, whatever is in UnixWare is in UnixWare. Do you recall that answer?

A. Yes.

Q. And in order to know whether any particular code from a prior release has been carried forward all the way to the present day, you would actually have to look at the code and compare it, wouldn't you?

A. To be definitive, yes.

Q. And it's quite possible that code from, say, UNIX System 4.0, pick your release, has been deleted over time and is not in the current version of UnixWare?

A. That's correct. It could have been deleted or it

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could have been substituted or enhanced.

Q. And the same is true for, say, UNIX System IV, pick your release, and, say, SCO UnixWare 2.1?

A. That's correct.

Q. Under the OEM agreements, an OEM licensee could create its own version of UNIX and put its name on it, say, Sun Solaris; correct?

A. That's correct.

Q. And it is, indeed, your understanding that Sun Solaris is based upon a UNIX System V release; correct?

A. That is correct.

Q. Do you happen to know which release, sir?

A. To be perfectly frank, no, I don't. I have not looked at the Solaris code recently, so I do not know.

Q. It is true that Solaris was developed before the 1995 asset purchase agreement; correct?

A. Yes.

Q. And it would not surprise you if you found substantial code predating the asset purchase agreement in Sun Solaris?

A. No. It wouldn't surprise me if there were code from the prior release, no.

Q. And at any particular point in time, an OEM licensee could stop taking additional releases of UNIX or UnixWare and develop it on its own path; correct?

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A. That's correct.

Q. And, in fact, some OEMs did that; correct?

A. Yes.

Q. For example, Sun Solaris; correct?

A. Yes.

Q. They -- in so far as their code refresh, if you will, from any of the UNIX businesses was concerned, it was frozen in time as of the last schedule attached to their software agreement; correct?

A. I would have assumed, yes. I think it was 4.0, but I'm not positive.

Q. And that code as to Sun, that older code, that is the UNIX code on which then as of that date and going forward, unless they were to sign a new license, they were building their variance on; correct?

A. Yes.

Q. And --

A. I would assume there would be code from other sources, as well. But, yes.

Q. You're right. I didn't actually ask that quite precisely enough.

In so far as the UNIX code is concerned, once they're frozen in time as of their latest schedule, that is the UNIX code on which they were relying; correct?

A. Correct.

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Q. And as to Sun in that case, that UNIX code has substantial value, doesn't it?

A. Well, you'd have to ask Sun that. I mean, I can't answer that question.

Q. Well, if you went to them and say, after the asset purchase agreement went to them in 1996 and said, you know what, we want you to strip out all of that UNIX System V Release 4 code from Sun Solaris, what do you think their reaction would have been?

A. It wouldn't have been favorable.

Q. Because it would have been a substantial injury to their business, would it not, sir?

A. Yes.

Q. Have you in preparing for your testimony studied any other examples of UnixWare licensing other than the NCR Corporation?

A. Studied?

Q. Yes.

A. No, not to my knowledge. I don't recall studying anything.

Q. Have you surveyed the UNIX licenses that SCO and its predecessors have entered into to try and form an understanding whether your testimony today about the practices is, in fact, supported by the actual underlining documents?

A. I did not study all licenses, no.

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Q. Did you study any of the licenses?

A. I'm aware of a good number of them.

Q. But did you go back and check before you testified today to see whether the documents relating to UNIX licensing practices support your testimony today?

A. Probably casually, yes. I don't recall any detail going back over all of those licenses.

Q. Thank you.

Thank you, Your Honor. No further questions.

THE COURT: Thank you.

Mr. Singer?

MR. SINGER: Just a couple of questions.

REDIRECT EXAMINATION BY MR. SINGER:

Q. Mr. Maciaszek, if Sun, once they get a UnixWare source code license incorporates one line of that UnixWare program into their new Solaris products, do they have to pay royalties on the binary products based on the UnixWare schedule?

A. Yes.

Q. Is that an application to what you discussed as the one-line-code rule?

A. That is correct.

Q. Can you think of any reason why Sun would buy a license from UnixWare if they weren't interested in making use

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of new technology?

A. It doesn't make any sense to me.

Q. Now, with respect to the NCR agreement, Exhibit 141, you were asked about the fact that there were a lot of earlier supplements as being 112. Are prior supplements also done whenever there are additional CPUs which are being added to the license to make use of the software?

A. Yes, that is correct.

Q. Are they done for additional distributions of the software?

A. Yes, that is correct.

Q. So it doesn't necessarily mean a new release of the operating system?

A. Oh, absolutely not. There are all kinds of ancillary products that would end up being on one of these supplement licensing forms.

Q. So did NCR's rights to make use of prior software products as set forth in this UnixWare license depend in any way on the fact there were 112 prior supplements?

A. Absolutely not.

Q. Your answer?

A. Absolutely not.

MR. SINGER: Nothing further.

THE COURT: Thank you.

Anything else, Mr. Jacobs?

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MR. JACOBS: No, Your Honor.

THE COURT: I assume this witness may be excused?

MR. SINGER: He may.

THE COURT: You may be excused.

We'll be in recess now until 3 o'clock when you'll be back to argue the motions.

MR. JACOBS: Great.

MR. SINGER: Can we leave everything as it is, Your Honor?

THE COURT: Sure.

(Whereupon, the trial proceedings were concluded.)

* * * * *

419

STATE OF UTAH

ss.

COUNTY OF SALT LAKE

I, KELLY BROWN HICKEN, do hereby certify that I am a certified court reporter for the State of Utah;

That as such reporter, I attended the hearing of the foregoing matter on April 30, 2008, and thereat reported in Stenotype all of the testimony and proceedings had, and caused said notes to be transcribed into typewriting; and the foregoing pages number from 207 through 280 and 355 through constitute a full, true and correct report of the same.

That I am not of kin to any of the parties and have no interest in the outcome of the matter;

And hereby set my hand and seal, this ____ day of _________ 2008.

______________________________________
KELLY BROWN HICKEN, CSR, RPR, RMR

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