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Darl's 2003 Letter to Questar: Proof SCOsource was about AT&T's System V, not UnixWare
Monday, May 12 2008 @ 03:35 AM EDT

On April 29, day one of the SCO/Novell trial in Utah, one of the main issues addressed was whether SCOsource was about Unix System V or, as SCO has recently started claiming, about UnixWare. SCO's position is that they are one and the same. There were questions posed to Chris Sontag about the SCOsource license that Questar bought back in 2003.

But earlier, there was an exhibit attached to Novell's Motion for Partial Summary Judgment on its 4th Claim for Relief, namely Exhibit 7 [PDF], a May 12, 2003 letter from CEO Darl McBride to Questar CEO Keith Rattie. We never had time to do it as text back in December when it was filed, but I have time now, especially now that we see it matters, and it so, so clearly shows that back in 2003, SCOsource absolutely was about Unix System V, the original AT&T code "licensed by AT&T to approximately 6,000 companies and institutions worldwide", as SCO describes it in the letter, and not UnixWare, which isn't mentioned at all and couldn't be described that way. So here is the letter as text, for the record, and happily the judge has this exhibit in hand.

It's so funny, after the August 10th Utah decision that informed SCO it doesn't own the copyrights to Unix it claimed, to read McBride's description of proprietary software as carefully built in a process "designed to monitor the security and ownership of intellectual property rights associated with the code." He contrasts Linux as being a kind of anonymous free for all, with no one caring about who owns what. How hilarious that in fact the court ruled that is was proprietary SCO who didn't know who owned the UNIX code. So much for carefully monitoring IP ownership rights. As for security, I give you Microsoft's record in that department. Exhibit A.

It isn't true what Darl wrote about the Linux development being done by unknown coders, by the way. He might not know them, but the kernel maintainers do. And as for there being no process to police code, that's not true either. Even if there were no processes in place, which there are, the very nature of Open Source makes stealing code outright, as McBride alleges in the letter, unlikely to happen and impossible to conceal. It's all done in public, you know. You can't hide stolen code behind smoke and mirrors or under the bed or behind closed doors, the way proprietary companies often do. If there is any stolen code, it is *certain* to be found out, so no one would do that. It also goes against the whole point of FOSS, which is to provide something better than proprietary code.

You likely know this by now, but I wouldn't want to publish McBride's defamation without providing the truth right there on the same page. As for the "evidence" McBride claimed he had of copying, as you know no such evidence has ever shown up that we've seen yet, five years to the day from this letter's date. It's amazing that the letter worked, given it was so wrong on its facts, as it turned out, but it did. I had no idea it was so easy to hustle CEOs.

Questar said at the time, as reported by CNET's Stephen Shankland, that it was just easier to pay than to fight about it, since they used very little Linux:

Questar spokesman Chad Jones was one such person. "The rationale was that Linux is such a minor part of our operations and that our usage is so small and isolated, it made business sense to pay the license fee they were asking rather than risk potential litigation," Jones said. "This was purely a business decision to stay out of court."

But Jones said his company, in the oil and gas industry, didn't sign the agreement because it supported the legitimacy of SCO's claims. And it didn't pay much: Seven of the company's 100 servers run Linux, and Questar paid about $5,000, he said.

Actually, it turns out it was nearly $20,000. First, before I show you the letter, here's the exchange from the trial transcript about Questar's SCOsource license, Novell's attorney Eric Acker asking questions of Chris Sontag, who headed up SCOsource:

Q. Take a look at the Exhibit 286. This is another SCO group intellectual property license, correct?

A. Yes.

Q. And this time it's entered into with Questar, correct?

A. Yes.

Q. And why don't we take a look at the definition section of this agreement. Here the definition was a little different as to what SCO IP rights were, correct?

A. Yes.

Q. And what was licensed to Questar was SCO IP rights, which shall mean SCO's intellectual property rights in any and all past, current or future versions of -- or portions of SCO's software products commonly known as UNIX System V and/or UnixWare correct?

A. Yes.

Q. That's what the license grant was, correct?

A. Yes.

Q. And if you take a look at paragraph 114 -- I'm sorry, 2.1 -- well, let's go back to -- if we could highlight 114. And, again, the definition of UNIX-based code there includes both UNIX System V or UnixWare, right?

A. Yes.

Q. And Questar paid SCO $19,125 for this license, correct?

A. Yes.

Q. And none of that money was remitted to Novell, correct?

A. No.

Q. And you didn't seek Novell's permission before entering into that license, right?

A. No.

So, at a minimum, we see that at least part of the license was for Unix System V. However, as you know, I've reached the hypothesis that there was basically one template for SCOsource for the little guys -- you see how little Questar paid -- and that UnixWare was thrown in more as an alibi than anything actually being licensed. And my hypothesis takes legs when you read the letter that was sent to Questar's CEO, which resulted in a SCOsource license. As you will see, nothing is said about UnixWare, and what is specifically mentioned is the Unix from AT&T, because at the time, SCO was telling the world that it owned all of that. Now, after learning from the court in Utah that it doesn't own System V from AT&T, now it talks about UnixWare. But read the letter, and you will see that is all just so much pudding.

Note that there is some handwritten notes on the exhibit, but I can't read them well enough to do reliable text, and so rather than guess, I'll direct you to the PDF. After the letter, I provide you with a 1991 press release announcing the formation of Univel, "a networking company", which was set up by USL and Novell to create and develop UnixWare, as you can see by this 1993 press release, which describes UnixWare and System V and announces Novell acquiring Univel. UnixWare can't be described as what AT&T originally licensed to 6,000 companies and universities, because, as you'll see, those licenses were in place long before UnixWare was born. UnixWare was a product developed by Univel, beginning in 1991. IBM's license agreement for UNIX from AT&T was in 1985. Obviously, it wasn't licensing UnixWare.

We had a link to the press release about Univel's beginning on Grokline, but I notice today the press release has disappeared, so I'll put it here for convenience, and you can still find it on the Internet Archive. It will be obvious to you that UnixWare and Unix System V are not the same thing, despite SCO's attempts to conflate them, and they did not even originate from the same entity or at the same time or for the same purpose.

Here is the McBride to Questar letter, then, followed by the two press releases after the double and then triple rows of stars. I've marked the most pertinent parts of in red text:

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

May 12, 2003

Mr. Keith O. Rattie
President & CEO
Questar Corporation
[address]

Dear Keith:

SCO holds the rights to the UNIX operating system software originally licensed by AT&T to approximately 6,000 companies and institutions worldwide (the "UNIX Licenses"). The vast majority of UNIX software used in enterprise applications today is a derivative work of the software originally distributed under our UNIX License. Like you, we have an obligation to our shareholders to protect our intellectual property and other valuable rights.

In recent years, a UNIX-like operating system has emerged and has been distributed in the enterprise by various software vendors. This system is called Linux. We believe that Linux is, in material part, an unauthorized derivative of UNIX.

As you may know, the development process for Linux has differed substantially from the development process for other enterprise operating systems. Commercial software is built by carefully selected and screened teams of programmers working to build proprietary, secure software. This process is designed to monitor the security and ownership of intellectual property rights associated with the code.

By contrast, much of Linux has been built from contributions by numerous unrelated and unknown software developers, each contributing a small section of code. There is no mechanism inherent in the Linux development process to assure that intellectual property rights, confidentiality or security are protected. The Linux process does not prevent inclusion of code that has been stolen outright, or developed by improper use of proprietary methods and concepts.

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. We have evidence that portions of UNIX System V software code have been copied into Linux and that additional other portions of UNIX System V software code have been modified and copied into Linux, seemingly for the purposes of obfuscating their original source.


2

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

We believe that Linux infringes on our UNIX intellectual property and other rights. We intend to aggressively protect and enforce these rights. Consistent with this effort, on March 7, we initiated legal action against IBM for alleged unfair competition and breach of contract with respect to our UNIX rights. This case is pending in Utah Federal District Court. As you are aware, this case has been widely reported and commented upon in the press. If you would like additional information, a copy of the complaint and response may be viewed at our web site at www.sco.com/scosource.

Similar to analogous efforts underway in the music industry, we are prepared to take all actions necessary to stop the ongoing violation of our intellectual property or other rights.

SCO's actions may prove unpopular with those who wish to advance or otherwise benefit from Linux as a free software system for use in enterprise applications. However, our property and contract rights are important and valuable; not only to us, but to every individual and every company whose livelihood depends on the continued viability of intellectual and intangible property rights in a digital age.

THE SCO GROUP

By: __[signature]___
Darl McBride
President and CEO

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


Editor's note: UNIX System Labs was sold in 1993 and is not part of AT&T.

FOR RELEASE THURSDAY, DECEMBER 12, 1991

Novell and Unix System Labs create Univel, a networking company

NEW YORK, N.Y. Novell, Inc., developer of NetWare* systems software, and UNIX System Laboratories (USL), Inc., developer of the UNIX* System V operating system, today announced creation of Univel, a joint venture company formed to accelerate the expanded use of easy-to-use UNIX systems in the network computing marketplace.

"There are clear customer needs for a mature, stable, well developed, general purpose applications platform like UNIX System V that encompasses the desktop, applications servers on computer networks, and host computer systems," said Raymond J. Noorda, chairman, president and chief executive officer of Novell.

"Novell is committed to meeting this need. Through Univel, Novell and USL will bring an end user customer focus to the UNIX system, making it easier to use while significantly expanding its availability throughout worldwide distribution channels."

Roel Pieper, president and chief executive officer of USL, said, "Univel opens a new era in the growth of the UNIX system by making its power and security accesssible and available on market-leading microprocessor platforms.

Univel products will set the standard for the UNIX System at the desktop and will help attract thousands of additional applications to 32-bit operating system environments, including those built around the Intel ix86 chip architecture."

Novell and USL are contributing cash and technology rights to Univel. Novell holds a 55 percent share in the new company. Although specific financial terms of the joint venture were not disclosed, the companies acknowledged that Univel has been underwritten with $30 million cash and other assets.

In addition, the joint venture will have access to technical resources and the education, training, sales, marketing and distribution capabilities of the parent companies.

Novell and USL expect Univel to respond to customer needs with streamlined UNIX System V Release 4.1 operating system products. The companies anticipate that Univel's products will enable computer users to run UNIX applications on standard hardware and utilize the UNIX system as a scalable applications environment across computer networks.

Product development is intended to tightly integrate NetWare network services from Novell with the UNIX SVR4 applications platform.

Novell's NetWare provides network services that integrate DOS, OS/2, Macintosh and UNIX desktop computers with each other and with host computer systems from leading UNIX system vendors, and from other companies including Digital Equipment Corp., Hewlett-Packard and IBM.

UNIX SVR4 unites all major UNIX system derivatives into a single, standard product that supports all major system integration standards, including POSIX, IEEE, X/Open's Portability Guide Issue 3, the System V Interface Definition, the Intel SVR4 Application Binary Interface and the Intel Binary Compatibility Specification, Edition 2.

Univel's initial products will be announced and begin shipping to computer users in 1992. They will be available through computer product distributors, systems integrators and resellers worldwide.

They will also be made available from computer manufacturers under OEM agreements. The new company will be headquartered in San Jose, Calif.

The appointment of three key Univel executives was announced. Joel A. Appelbaum has been named president and chief executive officer of Univel. Grover P. Righter has been named vice president product group. Gregory R. Fallon has been named vice president sales and channel management.

Appelbaum previously had been executive vice president, Open Solution Software, at USL. Before joining USL in 1990, he was vice president for AT&T's network computing product line and director, Venture Technologies at AT&T Corporate. He served at Bell Laboratories for more than 16 years in both research and management positions, including director, Strategic Planning.

Righter formerly headed UNIX system efforts within Novell's Interoperability Systems Group. He joined Novell in 1988 and has held software engineering and product development management positions at the company, including director of NetWare development and director UNIX system products.

Fallon was formerly channel marketing director for International Operations at Novell. He joined Novell in 1989 through the Novell/Excelan merger. He had been business development group manager at Kinetics, a wholly owned subsidiary of Excelan. Prior to joining Kinetics, Fallon had fifteen years of sales experience in the computer industry.

Univel will be overseen by a five person board that includes Appelbaum, two additional nominees from Novell and two nominees from USL.

UNIX System Laboratories, Inc., headquartered in Summit, N.J., develops and markets the UNIX System V operating system and other Open Systems software, including the TUXEDO* Enterprise Transaction Processing System, Open Networking Platform* OSI technology, and the C++ Programming Language System, to the worldwide computer industry.

Novell, Inc., (NASDAQ: NOVL) is an operating system software company, the developer of network-services and specialized and general purpose operating system software products including NetWare, DR DOS, DR Multiuser DOS, and Flex OS. Novell's NetWare network computing products manage and control the sharing of services, data and applications among computer workgroups, departmental networks and business-wide information systems.


* UNIX is a registered trademark in the United States and elsewhere, licensed exclusively through X/Open Company Ltd. NetWare is a registered trademark of Novell, Inc. TUXEDO and Open Networking Platform are registered trademarks of Novell, Inc.


Note: In June 1993, Novell Inc. acquired UNIX System Laboratories, Inc. For more details, see our news release. For information about UNIX system, visit Novell's website http://www.novell.com/.

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


Peter Troop - Novell Inc.
[phone] (office)

Larry Lytle - UNIX System Laboratories, Inc.
[phone] (office)

FOR RELEASE MONDAY, JUNE 14, 1993

Novell completes acquisition of UNIX System Laboratories

PROVO, Utah -- Novell Inc. the computer networking company announced the completion of its acquisition of UNIX System Laboratories following a vote of approval Monday by the shareholders of USL.

Novell will exchange 11.1 million shares of its common stock for the outstanding shares of USL stock it does not already own. The tax-free exchange of shares is being accounted for as a purchase. As indicated in December 1992 when the transaction was first announced, Novell expects to incur a one-time write-off of purchased research and development of approximately $270 million, based on the valuation of the transaction.

This write-off will be reflected in Novell's financial results for its third fiscal quarter ending July 31, 1993. On a per share basis, this purchased R&D will represent a charge against Novell earnings of up to 85 cents in its third fiscal quarter.

USL has become a wholly owned subsidiary of Novell. Roel Pieper continues as president and chief executive officer of the USL subsidiary, reporting to Raymond J. Noorda chairman of Novell. Pieper also becomes an executive vice president at Novell. The Univel company, formed as a partnership between Novell and USL in December 1991, continues to operate from its headquarters in San Jose, California.

Completion of the acquisition follows the signing of a letter of intent between Novell and AT&T on Dec. 20, 1992. The companies reached a definitive agreement for the transaction on Feb. 16, 1993.

AT&T now holds approximately 9 million shares of Novell common stock, or three percent of the outstanding shares, after exchanging their 77 percent interest in USL for Novell stock. AT&T has indicated its intention to hold its shares of Novell as an investment.

USL, based in Summit, N.J., develops and markets the UNIX System V operating system, the TUXEDO Enterprise Transaction Processing System, the C++ Programming Language System and other standards-based system software products to the worldwide com- puter industry. USL also provides education and management con- sulting for UNIX systems and related technologies.

Univel develops and markets UnixWare, an easy-to-use UNIX system that is tightly linked to network services provided by Novell's NetWare system software. UnixWare is an advanced 32-bit operating system for computers using industry standard Intel microprocessors.

Novell Inc. is the computer networking company, developer of network services and specialized and general purpose operating system products, including NetWare, UnixWare and Novell DOS. Novell's NetWare network computing products manage and control the sharing of services, data and applications among computer workgroups, departmental networks and across enterprise-wide in- formation systems.


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