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Darl McBride: On trees, branches and leaves
Sunday, August 16 2009 @ 12:57 PM EDT

I've been going through the testimony at the July 27th hearing in SCO's bankruptcy, the one that resulted in the court ordering the management out of control and a Chapter 11 trustee appointed. It's fascinating to compare what was testified to under oath at that hearing with what was testified to under oath at the SCO v. Novell trial last May.

I'd like to show you one such comparison from the testimony of Darl McBride at both events.

Remember how Darl used a tree metaphor, the graphic of which you can see here, along with his trial testimony, and in describing what it was SCOsource was covering, he told a convoluted tale about UnixWare being both the trunk of the tree and the branches? And he even mentioned there were some leaves in SCOsource too, and that the only way to license UNIX was to license UnixWare:

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.

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 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.

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. 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?

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; 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 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?

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.

Of course, that was all about the money, because if SVRX code was what SCOsource was mainly about, SCO owed Novell some money, and not just for the Sun license. That story was partially successful at trial, and SCOsource for end users like EV1 and you and me was deemed not about licensing code, just immunity from being sued. I think that was an erroneous ruling, but that is what happened.

So I viewed Darl's meandering answers to mean that there was a follow the pea story -- because SCO used the UNIX code in developing UnixWare, whatever they licensed from that kernel wasn't UNIX anymore, in other words not stuff they had to pay Novell for, but now it was UnixWare, magically transformed, so they didn't have to pay. SCO logic. Under SCO logic, SCO never has to pay Novell. Haven't you noticed that pattern?

Oh, and about that story he told about IBM coming to them in 1998 for the core UNIX and having to get it via UnixWare, that is poppycock. IBM already had a license to the core UNIX source code. They got that beginning in the mid80s, and they used it to develop their own branch, AIX. What they wanted in 1998, for Project Monterey, wasn't that. They had AIX built by then. They wanted something from SCO other than that source code, because they already had it. Project Monterey was about developing "a commercial 64 bit UNIX operating system for Intel(r) Itanium(tm) processors" in a joint development project, next generation UNIX, if you will. Here's the agreement to do Project Monterey. As you can see, it was a cross license of two branches from the UNIX System V trunk, IBM's AIX and SCO's UnixWare. Both parties had access to the trunk, SVRX, already. That's why IBM didn't ask for the older source code, and why Darl's story was so offensive to me. Just saying. For historians.

Here's what Darl told Robert McMillan about his licensing purposes at SCOforum in 2004, not describing the past but looking at SCO in the present and in the future:

McBride: There are a couple of reasons around going back to the USL part of the business. It's really a situation of going back to the future, if you will. We look into the future and fully expect that we're going to have some sort of a win against IBM in the courtroom. We know we've got another year and a quarter before we end up in front of a jury trial here in Utah, but we are preparing ourselves right now that as we move forward and as we do get justice in the courtrooms, what is our business going to look like?

Part of what we're modeling right now is a return to our licensing business. Last year, we had a couple of good licensing deals in the form of Sun (Microsystems Inc.) and Microsoft (Corp.) You're now hearing those guys talking about incorporating the Unix technology into Longhorn. Sun's been able to do things with it. We have other licensees that are off doing things with the core Unix System V technology.

We think that there's a very bright future in the company to return to the model that we had in the past with Unix Systems Laboratories.

IDGNS: Would that be a division within your company, or a separate company that did this licensing?

McBride: Both are possibilities. We're still doing what USL was doing. We have the same offices back in Murray Hill, New Jersey, right across the street from AT&T Bell Labs; we have the same great kernel-level programmers that are on our team that came out of AT&T; we have the core licensing business intact. Really the only thing that's not there is the brand, which was associated with USL.

IDGNS: But don't you already have licenses with all the Unix vendors today?

McBride: Around technologies that we've had up to this point, but we have new things we're working on, and are seeing an opportunity to continue to advance it in the form of upgrades.

IDGNS: In what areas?

McBride: Unix kernel development. Let's go back to the 64-bit side of things: 64-bit on Intel (Corp.) was why IBM had come in and partnered up with us on Project Monterey (IBM and SCO's aborted effort to jointly develop Unix for Intel's IA-64 processors). We have a lot of development know-how around that.

See what I mean? I was surprised to see him mumbling about leaves and branches and how UnixWare was both. No doubt Novell was too. And IBM's ears were probably turning red. They know the true story, obviously.

Darl told a more straightforward tale at the July 27th bankruptcy hearing, under direct examination by his lawyer, Arthur Spector:

SPECTOR: Mr. McBride, describe the original business of SCO Unix and UnixWare.

McBRIDE: The original business really had two parts to it; one was a source licensing business and the other one was a products business. So Unix is one of the major operating system platforms around the world, arguably the most powerful platform from a business standpoint. And large companies like IBM, Sun Micro Systems, a number of companies from Japan, Hewlett Packard, Dell, Oracle, and the like took down licensees to that Unix operating system --

SPECTOR: Can you stop for a second? You're using lingo. Took down, what does that mean?

McBRIDE: They licensed our operating system through --

SPECTOR: Okay.

McBRIDE: -- a contract. That basically is one part of the business which is here's this tree if you will that has this rich intellectual property running through it and the companies become various branches off from that. So each large company goes off and does what they're going to do to tailor that Unix operating system to their particular clientele or customer base. That's the core foundation if you will of the company.

The second part of the Unix business that SCO owns is one of these branches. So think of the branches being a product business. SCO actually owns two of those branches and one is called UnixWare and one is called Open Server. SCO's particular twist or customer base if you will that they focused on over the years is to supply highly reliable Unix operating systems on really cheap hardware like Intel chip sets. And so basically when you have large companies like McDonald's, seven of the top ten retailers in the U.S. are customers of ours, large customers that have many, many branches. In the case of McDonald's they have 14,000 branches where you will find our software. So it's the source licensing business and then it's the Unix products business.

Ah! The sweet smell of unvarnished truth. Of course, now it's too late as far as the SCO v. Novell money decisions. SCO is not under any threat now if it describes its business accurately. But note, for the record, that his new description matches what I wrote over and over and over, when I did the series of articles on SCOsource.

I swear, sometimes I hope that SCO does get the case remanded back to Utah for trial. I'd love to hear him explain the two accounts. At the hearing on July 27th, SCO wanted to incorporate some prior testimony at an earlier hearing, and that resulted in the court asking if anyone had any objections. Note this hilarious exchange:

MR. MARRIOTT: Your Honor, we don't have objection to any incorporation of that testimony to this hearing.

MR. SPECTOR: Thank you.

THE COURT: Mr. Lewis is that acceptable?

MR. LEWIS: That's all right, Your Honor.

THE COURT: All right, then we will do that.

Marriott, for IBM, and Lewis, for Novell, are practically drooling. Noooooo!! No objection at all. By all means, your honor. Do it, do it , do it!

But that isn't my reason for pointing all of this out. My reason is this: at the July 27th hearing, when describing SCO's prospects for rehabilitation, SCO's lawyer clearly indicated that SCO wishes to resume suing new people over SCOsource, should it prevail in its appeal, followed by prevailing in a jury trial, over who owns the UNIX copyrights.

By the way, did you notice something? Without those core UNIX copyrights, SCO can't sue anybody currently, as it indicates it is relying on the appeal for its hopes. So what was SCOsource really all about? If you answer UnixWare, apply for a job at SCO right away. The rest of us know better.

Oh, wait. I hear SCO's not currently hiring.


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