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February 25, 2010 Hearing on Novell's Daubert Motions and Pre-trial Conference in SCO v. Novell - Transcript
Wednesday, June 09 2010 @ 03:25 AM EDT

We now have the transcript [PDF] of the February 25, 2010 combined hearing on Novell's Daubert motions and final pre-trial conference between the parties in SCO v. Novell before Judge Stewart.

I think you may be surprised at how cordial and pleasant it was. Nobody choked anybody in the hallway. And Judge Ted Stewart, it turns out, has a sense of humor. In the end, however, he ruled against Novell on all its Daubert motions.

You could see that the judge was going to let SCO's experts testify by his questions during the hearing, and indeed he ruled the three SCO experts could testify, leaving it up to the jury to measure their credibility, although he did rule he'd tell the jury how to do so, and he limited what one expert, G. Gervaise Davis, could testify to. In the end, Davis didn't testify at all, so it was a loss for Novell only in the technical sense. In answering Novell's Daubert motion to disqualify Mr. Davis, SCO promised it wouldn't ask Mr. Davis any of the following:

Plaintiff has clearly stated that Mr. Davis will not opine on the ultimate issue of fact: who is the owner of the UNIX and UnixWare copyrights. Plaintiff also states that Mr. Davis will not tell the jury what the parties intended when they used the word “required” and will not tell the jury the law they must apply in considering whether the copyrights are “required.” Further, Mr. Davis will not opine on the law the jury must apply in deciding whether the parties to the APA intended to acquire the copyrights. Nor would he opine on the governing principles of contract interpretation, the relevance of extrinsic evidence, the relevance of course of performance, or anything of that nature. Rather, Mr. Davis will testify as to whether, in his experience, ownership of the copyrights was necessary for SCO to operate its business.
And what good would that testimony be, after former CEO Darl McBride testified that SCO didn't need those copyrights to run its software business? I suppose, although I'm just guessing, that is why Mr. Davis never did testify. What would he testify to? That Darl was mistaken? That he filed that with the SEC in error? SCO was painted into a corner. That Mr. Davis made the mistake? They couldn't both be right, and all that Mr. Davis could achieve would have been to emphasize Darl's statement, which was likely the last thing SCO's lawyers wanted the jury to remember. The best laid plans of mice and men often go awry. And in the end, the jury found on behalf of Novell, not SCO, which tells you that SCO's experts' testimony was not overwhelmingly convincing.

Here's Dr. Christine Botosan's expert report, Dr. Gary Pisano's, also here as text, and G. Gervaise Davis's report all as PDFs, if you have forgotten what the hearing was all about and want to review.

When it was time for Dr. Pisano to testify, on day 8 of the trial, the judge, according to our reporter's notes, said that if Dr. Pisano did not establish on cross-examination that he had the requisite knowledge of the underlying reports used, the judge would order that his testimony be struck, and then Dr. Botosan would not be permitted to use Dr. Pisano's report in her testimony. So, although he had ruled the way he had on the Daubert motions, clearly he was aware of Novell's concerns and gave them weight.

You can read our reporters' notes from the trial if you'd like to know what Dr. Botosan testified to here and here. Dr. Pisano's testimony is here.

Here's a brief snip, from page 40, which will give you a feel for the day. The judge had been thinking out loud right after SCO's attorney Ted Normand had argued fervently for Mr. Davis being allowed to testify, but after the judge's remark, apparently Normand looked like he wanted to continue to argue a point, and the judge says to him the following:

THE COURT: You didn't understand my point, and I apologize. When you think about it, you'll see that I'm supporting your position.

MR. NORMAND: Then I will sit down.

THE COURT: Mr. Brennan.

MR. BRENNAN: I was hoping that he would snatch defeat from the jaws of victory, Your Honor.

See what I mean about pleasant? Sterling Brennan was Novell's attorney, of course. And with that preparation, here's the transcript:

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

Jump to: Daubert hearing, Final Pretrial conference.

1


IN THE UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware )
corporation, )
Plaintiff, )
vs. )Case No. 2:04-CV-139TS
NOVELL, INC., a Delaware )
corporation, )
Defendant. )
_________________________________)
AND RELATED COUNTERCLAIMS. )
_________________________________)

BEFORE THE HONORABLE TED STEWART

---------------------------------

February 25, 2010

Motion Hearing

REPORTED BY: Patti Walker, CSR, RPR, CP

[address] Salt Lake City, Utah [zip]


2



A P P E A R A N C E S

For Plaintiff:




Brent Hatch
HATCH JAMES & DODGE
[address]
Salt Lake City, Utah [zip]

Stuart Singer
BOIES SCHILLER & FLEXNER
[address]
Fort Lauderdale, Florida [zip]

Edward Normand
Jason Cyrulnik
BOIES SCHILLER & FLEXNER
[address]
Armonk, New York [zip]

For Defendant:




Sterling Brennan
WORKMAN NYDEGGER
[address]
Salt Lake City, Utah [zip]

Eric Acker
Michael Jacobs
MORRISON & FOERSTER
[address]
San Francisco, California [zip]



3

SALT LAKE CITY, UTAH; THURSDAY, FEBRUARY 25, 2010; 9:00 A.M.

PROCEEDINGS

THE COURT: Good morning. We are here in the case of SCO Group vs. Novell, Inc., case 04-CR-139. Representing the plaintiffs we have Mr. Brent Hatch, Stuart Singer, Ed Normand, Jason Cyrulnik, and Mr. Ryan Tibbitts. On behalf of defendants Mr. Michael Jacobs, Eric Acker and Sterling Brennan.

Counsel, I hope this is not going to be a problem. My intention is to go ahead and hear argument on the three Daubert motions and then take a break and come back and do the final pretrial conference. Is that agreeable with all of you?

Mr. BRENNAN: It is for Novell, Your Honor.

MR. HATCH: For the two o'clock as originally scheduled or just a break?

THE COURT: A break, 15 minutes.

MR. HATCH: We can handle that.

THE COURT: We do have three motions, Daubert motions that have been filed by defendants.

Mr. Brennan, may I assume you will be making the argument?

MR. BRENNAN: Your Honor, I was intending, if it's agreeable to the Court, to argue one of them regarding Christine Botosan. Mr. Acker was going to present argument

4

on the other two involving Pisano and Davis, if that's agreeable.

THE COURT: That will be fine. I prefer we go ahead and hear your side on all three of them and then give plaintiffs the opportunity to respond. So if you'd like to go ahead, please.

MR. BRENNAN: It is it agreeable if I start with Botosan?

THE COURT: Absolutely.

MR. BRENNAN: May it please the Court, I wish to present brief argument, Your Honor. I know the Court has had the benefit of the papers. And absent suggestion I do otherwise, I'll try not to repeat everything that was already set forth in the brief.

THE COURT: Thank you.

MR. BRENNAN: Your Honor, I think really, cutting through the arguments, there are probably two to three critical issues that we believe would suggest that the Court ought to grant the motion. And the first that I wish to focus on is the so-called event study that is really the linchpin of Dr. Botosan's analysis. We believe, as we have described, there are at least two fundamental problems with the event study.

The first is the lack of relevance to the event study to the lost profits claim. This Court has already

5

ruled that a drop in stock price is not going to be a subject of the claims in this case. It's already ruled on that. The event study and the analysis that goes with it is really intended to focus on a track or an attempted correlation between NASDAQ and SCO's stock performance. That's not at issue here. That's not a relevant inquiry for purposes of lost profits.

What Dr. Botosan does attempt to do is to draw some correlation between SCO's stock price and NASDAQ and then adhere to that some sort of event study to suggest that individuals who otherwise might have taken licenses under the SCOsource programs chose not to do so because of statements or events involving Novell's claim of ownership in the UNIX copyrights.

So the event study analysis is fatally flawed, not merely irrelevant but fatally flawed because it doesn't focus on the real issue in a lost profits analysis, and that is the question of whether or not SCO lost revenues and thus profits from the sale of SCOsource licenses because of any conduct by Novell. Instead, it's all attempted to track or correlate to NASDAQ and the performance. And the problem there, Your Honor, is there simply is not a correlation, as we demonstrated in the papers.

The regression analysis shows that there simply is not a predictability factor that would allow this Court to

6

allow this analysis to get past the gatekeeper function that this Court performs.

Now we did not and our expert for Novell did not have a chance, until very recently, to see really what the output was by Dr. Botosan. Our expert did attempt to do some sort of reverse engineering, as it were, to find out really even what the so-called R2 measurement was, which is the predictor of a correlation. And that reverse analysis suggested that the correlation was so low as to have absolutely no meaning.

In the declaration that was just submitted to this Court, I believe this past Monday, it was suggested that the predictability factor was a mere 14 percent. And so that demonstrates by the authorities that we've cited that there really is not a sustainable, reliable predictability factor that's even built into the progression analysis that Dr. Botosan did.

We've also referenced to the Court case law that suggests that even a correlation factor as high as .45, or 45 percent, is not sustainable and should not be accepted for purposes of statistical analysis to demonstrate a purported correlation between the events at issue and the claim.

So here we face a situation where not only is the event study irrelevant to the issue of lost profits, but

7

even the regression analysis that was performed itself demonstrates that there is no correlation between the events that are being presented to the Court. And in Dr. Botosan's late filed submission, she suggests that the correlation factor, as I said, is a mere 14 percent, which is well below the threshold that's been accepted by courts.

THE COURT: Mr. Brennan, isn't that simply your expert's view of Dr. Botosan's conclusions? I mean isn't that best dealt with by those two experts going toe to toe and you, on your best behavior, cross-examining the expert of plaintiff and so on? I just don't know whether or not -- I mean I'm not disputing your expert's calculation, but it is something that the jury ultimately gets to decide, doesn't it?

MR. BRENNAN: Well, I certainly do agree that would and could be a battle between experts and we would be able to, through cross-examination, demonstrate the failure of Dr. Botosan to make any correlation that has any meaning. No question about that. The issue here I believe, however, is whether or not we should even get to that point because the presentation and the analysis that's done is not limited merely because of a weight issue but because it doesn't even meet an acceptable standard. We were, in fact, dealing with so-called junk science here.

As we demonstrated, the authorities show that in a

8

correlation factor as low as Dr. Botosan states, and I'm going to rely upon her number in her declaration rather than our expert's calculation of a much lower coefficient, with an R2 as low as .14, it doesn't even get close to the threshold that courts already have rejected as being too low to allow the issue to even get to the jury for purposes of weight analysis.

So I certainly do agree with the Court that the experts could, in essence, battle it out and we could diminish the weight of the argument by cross-examination, but I'm suggesting to the Court that we need not and should not get there because of the gatekeeper function. This jury should not be required to, in essence, endure what I call is junk science.

Your Honor, the other points that we raised I do believe also could suggest to the Court that Dr. Botosan's testimony ought not be allowed and we have the problem where she is relying upon not mere inadmissible hearsay on its own, but is being used as a conduit to pass through information that is inappropriate. We've cited some of the examples to the Court. For example, some of the projection analysis, we've had no ability to analyze whether it's reliable, nor does Dr. Botosan in her report suggest that there has been any independent analysis by her on the projections that she's relying upon.

9

Instead, her testimony is being offered, again, as a mere conduit to pass through information where she's not independently analyzed it. She has not independently verified that it's reliable. Nor does she know or does she purport to know whether or not those projects meet any sort of rigor of reliability. That's another problem, Your Honor. And I believe under the gatekeeper function, that would be a basis for you to reject Dr. Botosan and her analysis and it ought not to go to the jury.

Now, Your Honor, with those arguments, I think at least those three points we suggest would be sufficient. There other points we've raised that are in the papers. Unless the Court has questions, I would not press them further at this juncture.

THE COURT: Thank you, Mr. Brennan.

MR. BRENNAN: If I might turn it to Mr. Acker to present argument on the other two motions.

THE COURT: All right.

MR. ACKER: Good morning, Your Honor.

THE COURT: Good morning.

MR. ACKER: I will start with Dr. Pisano. Much like the argument with Dr. Botosan, I think the Court has hit the nail on the head. The issue here is whether this is something that simply goes to the weight or is something that the methodology used by Dr. Pisano is so flawed that

10

the jury should not even get a chance to hear that evidence.

What we think is the critical point in our papers obviously is this Yankee Group survey that Dr. Pisano relies on. He relies on it and underlies all his analysis on what the market penetration will be. That is of the entire Linux world, what percentage may have taken a SCOsource license.

THE COURT: Mr. Acker, if I may, I realize the disadvantage you all have of filing a response with no reply. In their response, the plaintiffs argue that he did not rely on just one Yankee Group study but rather on two other studies, including another by Yankee Group. You did not address that in your initial papers, so I would ask you to, please, somewhere in the course of your presentation, to get to that point.

MR. ACKER: I will do it right now, Your Honor.

The percentages that underlie his damages analysis of 19-percent and 45-percent market penetration come from the Yankee Group study that he says in his deposition he knows virtually nothing about. He doesn't know how many companies were surveyed. He doesn't know what companies were surveyed. He doesn't know what questions were asked of those companies. He doesn't know what responses were given. He doesn't know what parameters or conditions were placed on that survey to give it any indicia of reliability.

Attached as Exhibit B to our moving papers, Your

11

Honor, is a copy of the Yankee study. But really all he's relying one is the one chart, the graph chart we put forward in our papers. That's where he's coming up with this 19, 45 percent. The other two studies are what he uses as, quote, checks. But the numbers in those studies, the alleged market penetration numbers in those studies aren't the same. They are within the range, but they are not the same as the study he's relying on to come to his conclusion, to come to his conclusion that there can be as high as a 45-percent market penetration.

In addition, there is actually no evidence from Dr. Pisano that he knows anything about those studies either, that he knows what companies were surveyed, how those studies were conducted.

So I think we have really crossed the line, Your Honor, from simply attacking or cross-examining Dr. Pisano for the jury with the failings in his analysis where we have an expert who is relying on methodology that simply can't be sustained.

THE COURT: Mr. Acker, to that point, let me ask you this. If he knew everything about these studies -- you know, it's not uncommon for experts to rely on studies conducted by others, as you well know. But if he knew everything about it, if he knew who had been interviewed and the nature of the questions, et cetera, et cetera, would you

12

not agree that in that case he should be able to rely upon that?

MR. ACKER: Yes.

THE COURT: So this, then, is not really a matter of reliability going to the method. It is the weakness in that method; is that not correct? Let me be more precise. You don't disagree with his methodology, you disagree with the extent to which he undertook an analysis of his underlying study? Isn't that really what we're talking about? It's not the methodology, it's just you don't think he did his own homework before he reached his conclusions?

MR. ACKER: I don't disagree with experts relying on these sorts of market surveys when they have done their homework to determine the reliability of those surveys. I do believe and our position is that his methodology is flawed because he's relying on a survey -- in fact, relying to a certain extent on three surveys, which he knows virtually nothing about other than what he reads on a piece of paper. So I believe it does go to the methodology.

I understand the Court's point, but our point is a diligent expert in this field conducting this sort of damage analysis would undertake to determine what sort of rigor was used in the market analysis upon which he's relying.

Unless the Court has other questions about Dr. Pisano, I will turn now to Mr. Davis. And I think

13

Mr. Davis, unlike the two damages expert, is in a bit of a different field, a different manner or different topic obviously. But the issue there is whether or not this Court will allow a paid lawyer to come into this courtroom to rely on his own knowledge of copyright law and essentially to tell the jury that he believes, based on his 30 or 40 years of experience as a licensing lawyer and his knowledge of copyright law, to say that the Amendment No. 2 transfers the UNIX copyrights, because that is what his testimony purports to be.

He will testify that SCO either needed a license or they needed ownership of the UNIX copyrights in order to exercise their rights with respect to the acquisition of the UNIX and UnixWare technologies, which is the exact language of Amendment No. 2. That's his first position.

He then says I look at this deal, I look at the APA, and I don't see a license here. I don't see a direct license and I don't see an exclusive license. Therefore, it is my legal opinion that SCO must have had ownership of the UnixWare and UNIX copyrights. That is his opinion.

His opinion is not based on any legal instructions from this Court, any jury instructions from this Court, any decisions by this Court. It is his understanding of the legal standards based on his own legal practice. That comes directly from page 9 of SCO's opposition, that he is going

14

to come into this court and give that opinion based on his understanding of the relevant legal standards based on his own legal practice.

And I think what is instructive to this Court is the Tenth Circuit's opinion in Specht v. Jensen, which was a Section 1983 case in which the underlying conduct was an illegal search of a home. There the trial court allowed a criminal defense lawyer to come into court and, based on his knowledge of Fourth Amendment jurisprudence, to tell the jury I believe this was an improper search and seizure. And the Tenth Circuit reversed saying that was an improper use of an expert opinion, that allowed a lawyer to give his own opinion about the relevant law underlying a claim that basically told the jury that the claim was valid.

The Tenth Circuit also instructed in no uncertain terms that we need to be very careful when we have expert testimony from lawyers. They are different than damages experts, and they are different because jurors will tend to give additional weight and stock to that testimony and essentially usurp this Court's role to instruct the jury as to what the relevant legal standards are.

So we submit that Specht is controlling, that Mr. Davis should not be allowed to opine on his legal understanding of the copyright law to support SCO's argument that Amendment No. 2 transferred the UNIX copyrights. They

15

haven't cited a single case, Your Honor, which a lawyer has been allowed to give such testimony. The cases that they rely on, both Tenth Circuit and elsewhere, are totally different factual situations.

In Phillips, Your Honor, it was a summary judgment setting in which a court allowed testimony by not a lawyer but by personnel, HR people about common uses of terms in a contract. In Oakland Oil it was an expert in oil production and in pipelines testifying about his opinion regarding why certain fraud occurred in the case, but not the meaning of contract by a lawyer. Finally, in U.S. v. Bedford, it was an IRS agent testifying whether or not federal tax laws had been violated. Not a single case, Your Honor, in which a lawyer has been allowed to come in and opine to the legal standards and essentially the jury that one side should win. We think Specht controls and he should not be allowed.

THE COURT: Mr. Acker, let me ask you this. Let's say Mr. Davis was not an attorney but rather was some person who had developed an expertise in negotiating these contracts and had for many years participated in the same type of negotiations, and so on, that Mr. Davis asserts that he has. Would that expert be permitted to testify? In other words, is it really the fact that Mr. Davis is an attorney that would disqualify him in your mind?

MR. ACKER: That's a big part of it, Your Honor.

16

But also I don't know what the relevance would be if he was just someone who had been a businessman involved in licensing that was not involved in any way with this deal, and there's no dispute that he knows nothing about the APA Amendment No. 2 other than what he's read. But I also think we need to look at exactly what testimony is being proffered and what testimony is being proffered is that that I laid out, and that his underlying basis for that testimony is his understanding of the relevant legal standards. I don't think he can get to his opinion unless he does offer some sort of legal opinion regarding what would be required in his view for SCO to gain the benefit of the deal. I don't know how he could give that testimony without treading into this Court's province of being the determiner of what are the legal standards of this court.

THE COURT: Mr. Acker, let me ask you this. My understanding of his testimony would be that he had participated in a large number of negotiations and ultimately writing contracts dealing with the transfer of copyrights. And his argument would be, first of all, there either had to be a copyright or a license. And in this case it's his conclusion that it was the transfer of a copyright. Isn't that the essence of his testimony?

MR. ACKER: That is the essence of his testimony. It goes beyond that, Your Honor. There had to be a license

17

or there had to be ownership. I don't see a license, therefore there has to be ownership.

THE COURT: All right. Then you stated it much better than I did.

The dilemma is that I don't see him speaking as an attorney, I reached this conclusion. My understanding of his testimony is he's speaking as someone who's participated in similar transfers, that it had to be one or the other, and based upon this language it's my opinion as an expert, not as an attorney, but as someone with experience that it was a transfer of the ownership.

MR. ACKER: It's pretty clear from the opposition, Mr. Davis would testify that he reaches his conclusions about what copyrights are required based on his understanding of the relevant law. I mean he is going to say based upon my 40 years of experience in the law regarding copyright law.

THE COURT: If I were to rule that he could not make reference -- or could not draw a conclusion, his testimony could not make reference to legal conclusions but rather his conclusions based upon his experience, would that solve your concern?

MR. ACKER: The problem is he can't give that opinion then, Your Honor, because his opinion is based on his understanding of copyright law and what is required for

18

SCO to take certain actions, what rights they need to do that. That by definition is giving a legal opinion.

THE COURT: All right. Anything else, Mr. Acker?

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

THE COURT: Thank you.

Mr. Hatch.

Mr. Brennan, Mr. Acker, I do intend to give you a chance to reply.

MR. HATCH: Your Honor, like Novell, we took the opportunity to split this up amongst the lawyers, so I will handle the Botosan Daubert, Mr. Singer will handle the Pisano, and Mr. Normand the Davis, if that's okay.

Novell didn't spend a lot of time on Dr. Botosan's testimony regarding the damages analysis. And it's understandable. I think if you look at the introduction in their brief, it kind of gives us the whole flavor right there and I don't think we really have to go a whole lot further. They state in their introduction, to arrive at lost profits, Dr. Botosan first calculates lost revenues by subtracting SCO's actual licensing revenues from what they were projected to be. She then deducts what she estimates SCO's costs would have been to generate those revenues in order to arrive at lost profits.

That's a true statement of the process that's in the methodology that someone of the expertise of Dr. Botosan

19

would go through to reach that analysis. They acknowledge that because they say the two basic flaws that infect this part of her analysis both go to her starting point. They say she cherry-picked the highest projections she could find. And, second, instead of performing any meaningful analysis of those cherry-picked projections, such as applying discounts based on the recognized risk factors, she just parrots them.

So what they are essentially saying here, Your Honor, in going through the brief, we're not challenging her expertise, we're not challenging her credentials, we're not challenging her methodology, we're not even claiming she used some novel methodology that couldn't be tested.

THE COURT: To be accurate, they are not challenging her overall methodology. I think to be accurate, they do challenge the application of some of her methods.

MR. HATCH: But the application being what data she's inputting. But nowhere did they say with this kind of a calculation --

THE COURT: I agree. I didn't hear either from Mr. Brennan nor in his written materials anything -- I agree with you. All right.

MR. HATCH: They didn't say she was unqualified to perform the analysis, and didn't challenge any of those

20

things. They basically came to the point that they said, you know, we don't like the data she put in.

And ultimately that is the analysis, under Daubert, the Liquid Dynamics we cited, the Loudermill case we cited, the Subaru case we cited, that courts have consistently said goes to the weight of the testimony, not its admissibility.

In fact --

THE COURT: Mr. Brennan's argument is when the methodology, the specifics of the methodology, not the overall but some of the specifics of the methodology are so out of line that this Court has an obligation to preclude the reliance or testimony regarding that out of line method.

MR. HATCH: Well, let's talk about that for just a second because one of the things they say, and we only have a few minutes today and we filed, you know, the supplemental declarations of Dr. Botosan that go point by point. It's very interesting here because like in the Loudermill case, they filed as an exhibit to their brief the report of Dr. Musika -- excuse me, Mr. Musika, not doctor, Mr. Musika, who has attacked Dr. Botosan in a classic battle of the experts. As the court said in Loudermill, again, while Dr. Lowry's opinions may have been subject to attack, as indeed they were -- in other words, exactly what's going on here -- such issues go to credibility, not admissibility.

21

Now this cherry-picking I think in and of itself says that, it says we're attacking the credibility, we're attacking, you know, her numbers.

Just to kind of give you a little bit of a flavor, if you don't mind, I would like to give you two things that I've derived from Dr. Botosan's report, if I may?

THE COURT: Yes.

MR. HATCH: Several of the things that they say about this cherry-picking just aren't true. Again, I believe this goes to weight. I don't think it goes to admissibility. For instance, on the first bar graph that I provided to Your Honor, Dr. Botosan looked at the Deutsche Bank report. That's an independent report. It wasn't something that SCO hired. And we can debate back and forth, but they said we picked the highest numbers. Well, Dr. Botosan's report in paragraphs 43 and 44, you see that she actually chose scenario number two, which wasn't the lowest and wasn't anywhere near the highest. And throughout her report, she explains the basis for why she picked the numbers she did and indicated that in virtually every instance, she tried to pick very conservative numbers. As a matter of fact, her report said that the damages that she eventually came to could have been significantly higher, you know, double what she ultimately opined on, which is evidence she didn't pick the highest numbers.

22

The second is, again, you know, the methodology they are not challenging that you have to take, you know, these factors, and one of the factors is how much are you going to -- the lost sales as a number, you have to multiply that by the licensing price, at least in the case of the RTUs, which were essentially the covenant not to sue. The initial list price that SCO used was almost $1400. And the Deutsche Bank, when they were doing an analysis for their own people for independent means, they used a conservative analysis, as you would if you were going to put money into something. They said, we're going to attribute 100 to $300. Even with those numbers, she picked the lowest. She picked the hundred.

So if we go through -- when they are saying she's cherry-picking, she's always using the largest numbers, they are not really being fair about the way that she did her studies.

And, again, weight, not admissibility. All these things, if they want to attack her on it and cross-examine at trial, we welcome that. I think Dr. Botosan is going to handle that very well. She's extremely well qualified. She's got a Ph.D in accounting. She's more qualified, at least on that basis, than Novell's expert, the person who's attacking her at this point. If you read the briefs, there are many errors in his calculations as well, which we intend

23

to cross-examine him on.

Now the second point and one of the things they are most concerned about here, and Mr. Brennan spent the bulk of his time on, is what he calls the event study. Novell really makes a classic error here because what they are trying to do, and I will read again from their introduction, and it's very similar to what Mr. Brennan argued here today, he said in the introduction, Dr. Botosan's causation analysis is even more deeply flawed. First, she bases her opinion on an event study purporting to show that Novell stock caused SCO's stock price to drop, but the Court has already ruled that decline in stock price is not an appropriate claim for special damages.

Now he said again today that it wasn't relevant, he said the event study was to damages -- that's what he said today, not relevant to lost profits. So it's fatally flawed because of that reason.

Well, what that misses is that the event study was only to causation. It has nothing to do with damages in that it's not -- and I challenge on rebuttal, if they would like to, is get up and show a single number -- damage number, monetary number that was taken from the event study that made it into Dr. Botosan's damages numbers. It's not there. Because this is to show causation, which is an independent element that we have to show a trial. It does

24

not figure into the damages number.

So they're attacking -- and they are setting up the classic straw man, something they say, well, you're not allowed to use this for damages based on the Court's ruling. Therefore, you must be using it for damages, so guess what, it should be out. We didn't do that. I would challenge them to do that.

Now if Your Honor will allow me, I have one more slide I would like to show. This particular slide comes from Dr. Botosan's report. And what it shows is this is just a snapshot from the data that she was able to provide. This is the date of the -- the stock price of SCO on the day of the May 28th slander statement. And the reason this goes to show -- and they don't like it and they want this out, is because, as you can see, the stock price is fairly flat during the morning. Then at roughly one o'clock, when Novell made its slander statement, it took a dramatic and precipitous drop.

Now if we had just come to court and put this piece of evidence in, and we didn't have Dr. Botosan's study, they would have argued to keep this out because we had not ruled out other potential causes for the precipitous price drop. Well, that's the purpose for Dr. Botosan's event study is to essentially rule out other causes for this. And her studies do that on a very complex and

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statistical analysis that shows that based on, you know, standard accounting and statistical analysis, the reason for that drop was Novell's slanderous statement. That goes really to the heart of the case. But nowhere here does she then extrapolate the drop from -- I'm looking here, and I'll say from 8.50 down to $6, and nowhere does she take that $2.50 drop and plug it into some formula, because this merely shows causation, what's happening when they slander the title of SCO.

The one thing they don't mention is that one of the tests for reliability on this is the P-value. And as Dr. Botosan's declaration -- I think it's Exhibit C in paragraph 12 -- indicated, the P-value indicates there is only a .21 of one percent chance that SCO suffered this 24.6 negative abnormal return on May 28th, 2003 by chance. Thus, the event study provides exceedingly compelling evidence that SCO's market value suffered an economically statistically significant decline on the day it made its slanderous statement. That's a causation analysis. So it's not -- it's understandable that the attack is that we're using this to show lost profits because, you know, that is something they can argue, but they haven't argued this on that basis.

The event studies -- even Dr. Musika admits that event studies are generally used in the business.

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The only other attack really that they make to this event study is that somehow the R2 value -- and they cite the Griffin case, they say the R2 value isn't a .45. The problem is when you are looking at the Griffin case, Griffin is not an event study case. There is no corroborating evidence like Dr. Botosan provided throughout her report. And Griffin did not hold and no cases ever cited that .45 is a required threshold. There are no other cases cited.

And, here, we're not trying to -- we're not trying to look and explain all events over the two-year period of Dr. Botosan's study. We're only looking at dates with significant abnormal negative returns. And the only one that was there and the most significant one is this May 28th, 2003 point, which I just spoke about.

And if we talk about how the professional deals with it, if we go to the Litigation Services Handbook, it says, one should not accept or reject in law based solely on R-Squared. I understand that. If we look at the P-value, this is a cinch.

Now there are challenges to each of these things and all the other things in there go to the weight. They can cross-examine and they can go after it that way, but it isn't going to admissibility and they haven't cited a single case that really says that.

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The last thing is they talked about Dr. Botosan being what they call a conduit for opinion hearsay. They talk -- they use the pejorative saying she's just parroting what other people say. That's not a fair reading of her expert opinion.

If you look at her expert opinion, she, like most experts, relied on a number of things. She relied on studies. She relied on -- in every case I've been involved in, I know Your Honor has, she looked at depositions. She looked at testimony. She interviewed witnesses. Then they believe she just repeated those things, what was good and what was bad. That's not reality.

If you look at her report, she was very clear that not only did she assess the projections, but she also adjusted revenues for incremental costs in calculating lost profits. Her calculations, methodologies are undisputed. She used a regression analysis to estimate incremental costs to SCO, including the cost of revenue, administrative cost, marketing cost. It's undisputed that any of these calculations are not contained in any of the so-called parroted projections. In other words, they said she wasn't doing an expert analysis.

The reality is none of these are in the so-called parroted statements. She had to take those statements and then do an expert analysis, which she did. Just the

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citations in their brief to some of the math, I don't pretend to understand, shows that she actually was doing something that experts do.

Then she corroborated her opinion from multiple sources. The damages calculations were corroborated by lost profits determinations by Dr. Pisano. In other words, she came to the damages from two different directions -- excuse me, she used Dr. Pisano's and she also used the other projections and, interestingly enough, they corroborated each other. That's other evidence that her expert analysis was not only an analysis but also was accurate. Her causation study analysis is corroborated through interviews, depositions and all the other things that I have talked about.

So, Your Honor, they have not made -- they have made a basis for the trial. Undoubtedly, we're going to have a hotly disputed trial. We're going to have experts that are going to be cross-examined. It's going to be real exciting. But they certainly haven't created a basis for saying we don't go to court here.

We'll turn the time over to Mr. Singer.

THE COURT: Thank you.

MR. SINGER: Good morning, Your Honor.

I would like to note at the outset that the motion, while being styled one as to disqualify Dr. Pisano,

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actually was more targeted at two of his specific opinions. There is no challenge to Dr. Pisano's qualifications. There is no challenge to a great deal of his report where he discusses issues such as causation, the importance of this issue to entities buying and operating a system, that demand for indemnification would logically be high, his examination of alternatives to SCO for that indemnification, and his opinion regarding inability of SCO in the future to pick up after all the dust settles along with this program.

I would like to turn to the two opinions they specifically target. One of them was not addressed in the oral argument. It's simply an argument of relevancy, not an argument about his methodology and the size of the relevant market. And it clearly is relevant for a jury to know this is a large market this slander affected and that that factors into their consideration of all the other evidence they will hear in the case.

The balance of the attack by Novell is focused, as I think the Court has apprehended, on his reliance on this 2004 Yankee study for the purpose of saying that in his opinion the range of likely purchasers of SCO's product but for the slander was between 19 and 45 percent.

Now they attack that on the basis that Dr. Pisano didn't understand enough about the study. I would suggest that, first of all, as I think the Court indicated in a

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question to counsel, that doesn't go to the methodology. That goes, we would submit, to weight.

But, second, what it really does is it goes to a question of the memory test at the deposition. Dr. Pisano recalled this was a Yankee study. He testified, as he stated in his report, that Yankee studies are relied upon in the industry, and that they had about a thousand people.

Now in his rebuttal report he references a further document -- this is at footnote 34 of his rebuttal report, which is the full study, not just the report of the graph which is appended to the motion that Novell filed, but the full study, which provides a section on methodology. This is at page -- this is the Bates stamp SCO1668632, which Novell has had and their experts have had, that says you had a thousand plus respondents, that is conducted in March and April 2004, that was an independent, non-sponsored, Web-based survey of IT administrators and executives worldwide, and it lists the specific questions and gives the results.

Now match that up, if we could, with the only source, the Federal Judicial Center, notes in the excerpt that Novell quotes as to what an expert should know about a study which he relies upon that was conducted by someone else. They say that that individual should know the purpose of the survey. That's known, the interest in buying

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indemnification among Linux users. The survey methodology, including the target population. We have that here, companies with over 5,000 employees. The sampling design, that it was an Internet response survey with a thousand responses. The survey instrument, you have that. We have exactly the questions asked, so that can be evaluated, along with the four different potential responses. The results, we have each of the breakdowns. Then the statistical analysis. There is no statistical analysis here. We're not trying to extrapolate these results statistically into some other form. They are being used directly.

So all of the issues with respect to the 2004 study are matters for fair critique. Mr. Musika, their expert, has certainly critiqued it and can play itself out in front of the jury. And Dr. Pisano has answered those critiques in his rebuttal report and would do so in front of the jury. For example, one of the critiques is it doesn't consider price. He says, number one, we're looking at this for damages purposes at the lowest possible price of $100. And, secondly, he says, one of the two other studies, because he didn't rely just on this, he looked at two other studies, the 2005 Yankee study actually asked people about the price they would be willing to pay. And of the 20 percent that said they would be interested in buying indemnification, you had a very sizeable percent, 40,000,

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who would spend an incremental 25,000 to 100,000 annually, and another 20 percent would spend 100,000 to 250,000. So you do have information in the data he relied on that goes to price as a factor and demand.

Now you have, as I note, three studies. Only one of them has really been critiqued. The 2005 study is consistent. As counsel indicated, it was within the range of 19 to 24 percent. They are certainly able to argue it's 24 percent. Their expert, Mr. Musika, quotes a study saying it's eight percent. This is what is appropriately relied upon by experts in a field in addressing the issue of how much demand would there have been for a product that SCO was trying to sell when the slander occurred.

Now I would note that the case law here, Your Honor, supports the view that this goes directly to weight and not to admissibility. I would like to point to the Tenth Circuit's opinion in Compton v. Subaru, which we've cited in our papers, which says, as long as a logical basis exists for an expert's opinion, the weaknesses in the underpinnings of the opinion go to the weight and not the admissibility of the testimony.

Novell's cases are quite distinguishable. The Massey case was a criminal case where you had an overenthusiastic prosecutor drawing some statistical comparisons about the likelihood of misidentification, and

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the court said that went too far for closing argument.

The Bogacki case, the expert didn't know the nature and extent of the source at all from which his statistics were gathered. Here there's quite a bit of information in the record.

In the Sheats case, the testimony was actually admitted.

I think the most relevant case is actually the decision of the Eleventh Circuit, which we quoted -- cited to in our brief, that's the Jellibeans v. Skating Clubs case, where the Eleventh Circuit talked about a situation where you had a survey, where there were technical deficiencies that were alleged by the other side regarding sampling and the interviewers, and the Court said, quote, these alleged technical deficiencies affect the survey's weight and not its admissibility, citing a considerable amount of other authority.

So we think this is fair ground for cross-examination. It's similar to the information that Mr. Musika relies on when he talks about surveys, and the motion should be denied.

THE COURT: Mr. Singer, before you go to Mr. Davis, I want to ask Mr. Acker a question. I had meant to ask you this, so I can get this on the record so Mr. Singer doesn't have to get back up.

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In your written memorandum you challenged Mr. Davis's qualifications asserting as a software attorney he has a very limited expertise and he has no expertise in the running of a company. Are you still asserting that as a -- are you still challenging his qualifications?

MR. ACKER: We're certainly challenging his qualifications if he is going to opine as to what is required in order to run a software company, yes, Your Honor.

THE COURT: Thank you.

MR. SINGER: Your Honor, with the Court's permission, I would like to turn it over to my colleague, Mr. Normand, who will address Mr. Davis's motion.

THE COURT: All right.

MR. NORMAND: Good morning, Your Honor.

May it please the Court, Mr. Davis is well qualified and he would offer relevant admissible testimony that would be helpful to the jury here. I don't think Novell's arguments, either in their brief or today, do justice to the nature and scope of his testimony or to the controlling law. Let me start with the controlling law.

As Your Honor's own opinions are reflected, as Novell's papers and argument frankly fail to reflect, a qualified expert who has specialized knowledge and whose testimony would be helpful to the jury is permitted to speak

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to the ultimate issues in the case and, in doing so, is permitted to speak to his understanding of the law.

Even the Specht case that Novell cites and relies upon makes that clear. And the cases cited therein that we pointed to in our brief underscore that point, that an expert is permitted to speak to his understanding or her understanding of the law.

Probably the closest analogy, the line of cases that we also cite in our brief, that Novell did not address, come from the expert testimony that is permitted on discrete and technical issues in the area of intellectual property, particularly patent law. In the patent law context, an expert is permitted to speak not only to the question of obviousness, which is a question that by definition involves some consideration of the law of obviousness, but experts in that context are also permitted to testify to the issue of whether one patent infringes another patent, which, again, by definition has to involve some consideration by the expert of the law, his or her understanding of the law.

In this case the Tenth Circuit, as Your Honor knows, has remanded on the issue of what copyrights were required for SCO to exercise its rights with respect to the technology it had required under the amended APA. And in this respect, I think Novell fails to do justice to Mr. Davis's opinions in the following ways. He can offer

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two kinds of testimony with respect to that issue. One, based on his extensive experience, he can speak to custom and practice in the industry and, two, he can speak to his understanding of why that custom and practice exists.

Let's start with the first one, custom and practice. He's been doing this for over 40 years. He's negotiated thousands of licenses. He's advised hundreds of executives on how to do this. He's never seen an implied license that would allow a software company to operate a sophisticated software business. He's never seen one. In his view, there's a custom and practice whereby you, as the title of the APA suggests, transfer assets. Now that's factual testimony. That's testimony that has nothing to do with his view of the law. It's testimony on which, consistent with Your Honor's opinion in Slicex, they can try to cross-examine. They can try to tear away at the foundation of that factual testimony. Maybe there is no such custom and practice. He's convinced there is and he has the experience to testify to.

Now he can also testify to his explanation for why that custom and practice exists. Why would it have been that in 40 years of doing this he's never seen an implied license of this sort. Why would that be. First, he has a practical explanation, which he offers in his opinion. There is a complete lack of transparency for the licensee if

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all he has is an implied license. He can't be sure what the scope of his rights are.

Second, there is lack of transparency for third parties. They don't know what the scope of the licensee's rights are either. They can't have confidence that that licensee is purporting to grant them certain rights, the licensee actually has those rights. Again, that's factual testimony. That has nothing to do with his understanding of the law. That is simply his practical explanation for why he thinks the custom and practice exists and why it is that in 40 years of doing this, he's never recommended to anyone that they do an implied license and he's never seen one.

THE COURT: Mr. Normand, would you slow down a bit, please.

MR. NORMAND: The third point would be, and this is where the rubber meets the road on Novell's motion, to some extent his testimony would involve his understanding of the law consistent with what the Tenth Circuit has said is appropriate. He would offer the explanation for the custom and practice based on his understanding of the law. The reason it has always worked this way is because you either have to own the copyrights or you have to have a clear license to them in order to operate a sophisticated software company, such as SCO has.

He would explain in that context, I'll tell you

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why I think you have to have one of those rights, it's my understanding of the law that if you don't own and if you don't have a license, you can't -- literally can't make copies of the software from day to day, which is how a operating software company works, and you can't bring claims in court to enforce your rights. So he says I've never seen an implied license like this. And if it's not an implied license, then SCO has to have the copyrights. The copyrights are required.

He would not tell the jury I have concluded that under the APA it must be that the parties intended for SCO to acquire the copyrights. He would say, I think the copyrights are required. I'm not commenting on what the parties meant by using the word required, but as I interpret it, I think they are required. He wouldn't instruct the jury on the law they have to apply in making that decision. He wouldn't tell them what kind of extrinsic evidence is relevant. He wouldn't tell them how to interpret a contract. He would explain this is my understanding of 40 years of doing this.

Now Novell argues about his lack of experience and Your Honor asked the question about experience. I think the fact that he's an attorney is irrelevant. They cite to a case suggesting that as a threshold matter, an attorney can't be an expert in this kind of context. I think without

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fixating on the point, the argument that his testimony is not merely less relevant or less probative, their argument that his testimony is altogether inadmissible because he hasn't owned or operated a software company runs sharply up against one of the themes of the trial, which will be that attorneys played significant roles with respect to the amended APA in deciding what rights were and were not necessary.

So I think, for all those reasons, Mr. Davis offers admissible, relevant helpful testimony to the jury that has nothing to do with his understanding of the law. And even with respect to that testimony that involves his understanding of the law, none of the concerns in the Tenth Circuit cases are implicated. He will not be instructing the jury on what law they will apply.

Thank you, Your Honor.

THE COURT: I will say, Mr. Normand -- thank you -- it strikes the Court as you are arguing that had you tried to use an expert to proffer the same type of testimony, that probably he or she would have been -- proffered a witness to offer the same type of testimony covering the same areas and he or she was not an attorney, there probably would have been a challenge to them testifying in the absence of them being an attorney. So it's kind of a -- there's a catch-22 here.

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You didn't understand my point, and I apologize. When you think about it, you'll see that I'm supporting your position.

MR. NORMAND: Then I will sit down.

THE COURT: Mr. Brennan.

MR. BRENNAN: I was hoping that he would snatch defeat from the jaws of victory, Your Honor.

Just a few points back to Dr. Botosan. Yes, there are two opinions that Dr. Botosan offers. One is the amount of alleged damages and the other is causation. But here's the fundamental problem again, that, first, with causation, the basis for the analysis is on an entirely irrelevant measure of yardstick. I think that point can be illustrated by what Mr. Hatch provided to the Court. If I can make brief reference to the diagram that shows SCO entered a crisis of May 28th, 2003, I think this will illustrate the fundamental problem in the methodology offered by Dr. Botosan.

First of all, according to the diagram that's been offered, at the start of the day on May 28th, 2003, SCO's stock price was between ten and I think 10.50 per share. If that's rounded, say about ten and a quarter. And even before the alleged slanderous statement had even been uttered or made or released, SCO's stock prices already dropped below $8.50.

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Then after the alleged statement is made, it dropped less than the amount that it had already dropped that day, and the suggestion is made, well, that must somehow be evidence of what? Not just of a stock price drop, but that somehow potential licensees out in the market made a conscious decision premised on any statement by Novell not to enter into a license agreement with SCO. That's the fundamental problem.

First of all, there is not a correlation that's been demonstrated between the stock price and the market. And, secondly, there's been absolutely no demonstration that whatever correlation might exist between the stock price and the market price or performance has anything to do with respect to predicting whether or not a potential licensee would have acquired the SCOsource license. There is this huge gap between the two.

Somehow what Dr. Botosan is seeking to present or argue is that if I can somehow demonstrate through an event study some relationship between stock performance and the market, that I thereby can read on to whether or not a licensee in the market would decide to buy a license. And it's already been demonstrated that there is not a reliable correlation between SCO's stock performance and the market.

That's why, again, we turn to the correlation coefficient that's even identified in Dr. Botosan's report

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as being .14, or 14 percent. In other words, there is only a potential of a 14-percent chance in looking for a correlation in these events to get it right. The obvious converse is there's an 86-percent chance you would get it wrong.

And so in the Griffin case that we cited to the Court in our papers, the court undertook an analysis of whether or not the statistical evidence that was being presented to create a correlation met a sufficient threshold to allow that testimony to be presented to the jury. In that case, the relationship had a .45, or 45-percent chance under statistical analysis of predicting a relationship, and the court rejected that as not sufficient to meet the gatekeeper function to allow it to go to the jury.

Here we're dealing with a predictability ratio of only .14, according to Dr. Botosan. And we still have to jump over that very broad chasm when we don't have a correlation between stock price and the market to reach the conclusion that a licensee made a decision as to whether or not to enter into a license agreement. That is the fundamental problem with the methodology. It isn't just weight. There is a fundamental flaw.

And the jury otherwise, without the Court performing this gatekeeper function, would be exposed to seeking to make some determination where we have not

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established fundamental correlations either between SCO's price, which is very volatile, unrelated to the market, and no connection that Dr. Botosan creates or provides in terms of a decision being made by a potential licensee. All she does in her report is says, well, whatever SCO's stock is doing must be somehow a function of what a licensee is doing. But her report provides no connection. There is no connective tissue between those two concepts. They are unrelated. They are not correlated. That's the problem.

In terms of --

THE COURT: Mr. Brennan, let me ask you this. Did the Griffin case have to do with testimony on causation or damages?

MR. BRENNAN: It had to do with causation. It was an issue of discrimination and whether or not looking at a broad scope of employees and hiring decisions, whether there was a discriminatory animus or decision making based on decisions.

THE COURT: All right. Thank you.

MR. BRENNAN: Now, Your Honor, if I might briefly turn to the other point of the analysis, and that has to do with the projections regarding damages. Now, again, Dr. Botosan's projections are a function of some sort of projection as to what number of potential licensees would have entered into a SCOsource license, which, again, as I've

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already gone through, somehow is supposed to be correlated to stock price. We've talked about that.

Here's the fundamental problem with the projections. First of all, if I might borrow Mr. Hatch's diagram, at least submission to the Court, the estimates being conservative and Dr. Botosan, not in every instance but in several instances, relies upon the Deutsche Bank analysis and projections. Here's the problem. The Deutsche Bank analysis, which is never analyzed by Dr. Botosan in her report or testimony, it's just naked numbers presented, what we can tell from the Deutsche Bank analysis is that it was looking at potential revenues to SCO from license agreements. And they had two license agreements to look to. One was Sun Microsystems and one was Microsoft.

But there's a problem with that and, as we submitted, even the testimony of SCO's chief executive officer, the license agreements that SCO did enter into with Sun Microsystems and did enter into with Microsoft were not SCOsource license agreements. We've attached his testimony for the Court. They were not even the sort of license agreements that are at issue here. They were fundamentally different licenses than a SCOsource license.

So the Deutsche analysis is not some sort of measurement or projection as to how SCO would have performed with the SCOsource licensing program. It's only data points

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for license agreements that are not even at issue here. So the projections are themselves fundamentally flawed. Why is it more than a weight issue? Because Dr. Botosan engages in no analysis to determine even what the Deutsche Bank projections purport to measure.

Now one last point that ties these together. We did submit this in the papers, but it was not presented in opposition. One might ask if Novell made a so-called slanderous statement on May 28th, 2003, and the correlation that is attempted to be drawn here is that caused a drop in SCO's stock price and somehow we can bridge the chasm, which there is no evidence to suggest, or we can go from stock price to a decision by a potential licensee, one would expect that if, in fact, SCO had been harmed, that the stock price would continue to trail down. But exactly the opposite occurred. In fact, SCO's price rebounded significantly and remained volatile throughout the period. That simply demonstrates there is not a correlation.

So in taking just a one-day snippet and trying to bridge this huge gap and suggest this one day indicates intent on the part of licensees to resist SCOsource licenses because of a statement by Novell is belied by SCO's stock performance, which continued to go up and down and was extraordinarily dynamic and volatile, uncorrelated to the market throughout the period of the damage analysis.

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So we have these fundamental flaws that, again, yes, Novell could demonstrate the inadequacy and incompleteness on cross-examination, but we ought not get to that point. It's junk science.

Thank you, Your Honor.

Do you have any questions?

THE COURT: I don't, Mr. Brennan. Thank you very much.

MR. ACKER: Your Honor, let me start with Dr. Pisano. Mr. Singer's point, I think, the nub here is really this Yankee study and whether or not Dr. Pisano had any knowledge about that before he came to his opinion. And Mr. Singer now is pointing to a fuller explanation of that study in trying to rehabilitate Dr. Pisano. The fact is Dr. Pisano came to his opinion with no knowledge of that study, and he testified to that under oath.

At his deposition he was asked, do you know who responded, how many, who at the various companies, anything like that. I don't have details on who responded. He was asked, do you know anything about what procedures, though, were employed here. I don't know the specific procedures, no. Do you know what checks were employed to make sure that this survey was done on a sound basis, what kind of procedural mechanisms. I don't have details on that, no.

So the sworn testimony of the expert is I didn't

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know anything about this study, but that's what I based my opinion on. We submit to you that goes beyond simply fodder for cross-examination and that is an improper method this Court should not allow to go to the jury.

With respect to Mr. Davis, I want to make a couple of points. First of all, I didn't hear Mr. Normand point to a single case from this circuit or any circuit in which a lawyer was allowed to testify as an expert on a law that would control the outcome of a case. I would urge the Court to go back and look at the Specht case because the Tenth Circuit was extremely clear, and they said, however, when the purpose of testimony is to direct the jury's understanding of the legal standards upon which their verdict must be based, the testimony cannot be allowed. In no instance can a witness be permitted to define the law of the case.

Mr. Normand in a slight of hand tried to divide up Mr. Davis's testimony and say one was going to be this custom and practice testimony. Well, we submit to you what Mr. Davis has done in his legal career and whether he's ever seen a contract like this, whether he's ever done a contract like this is irrelevant. I mean the Court should not permit him to come in here and say I've been a licensing lawyer for 40 years and I've never seen a contract like this. That's irrelevant to the fact that there is a contract like this

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and this jury is going to have to wrestle with what that contract means. So I would submit that part of his testimony is wholly irrelevant.

The second part of his testimony, and I think it's pretty clear from Mr. Normand's argument that he's saying he's going to use his knowledge of copyright law and he's going to tell this jury, based on his knowledge of copyright law, looking at the exact language of Amendment No. 2, the UNIX copyrights must have transferred. At base level, that is what his testimony will be. That's why they want his testimony, but that is usurping the function of this Court and we think it's wholly in violation of Specht and Tenth Circuit law. And they haven't cited a single case to give this Court comfort that that sort of testimony should be allowed.

The cases that they rely on, other than the cases I distinguished earlier, the patent law cases on invalidity and noninfringement, that's a wholly different method. That was where a technical expert is informed by the court as to what the laws are in infringement, what the laws are on invalidity, and that expert -- that technical expert takes that knowledge from the court, that law, and then applies it to the technical expertise that he or she brings to the courtroom.

That's not what is going to happen here.

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Mr. Davis is going to come in here and look at the jurors and tell them all about copyright law and tell them why his understanding of copyright law means that SCO must win. At base, that is wholly improper testimony. We think it violates clear Tenth Circuit law and simply should not be allowed.

So unless the Court has questions, I will submit it on that.

THE COURT: I don't, Mr. Acker. Thank you.

Mr. Hatch, Mr. Singer, Mr. Normand, I'll give you each 30 seconds if you want to stand right there and say something.

MR. HATCH: Your Honor, real quickly, you know, Mr. Brennan put up our snapshot, and one of the things he didn't do, you'll notice that he never gave any other explanation. He pointed to a couple outliers, beginning of the stock prices, pretty level, dropped, gave no other explanation. He then goes into R-Squared, which even the Griffin case, and I can quote from that, says, we agree that R-Squared alone cannot determine the validity of the model. He mixes up concepts with the P-value that's important, and Dr. Botosan said the P-value shows .21 of one percent chance that this drop could have been for anything other than this statement. She says it couldn't have been by chance.

He talked about the stock coming back. What he

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doesn't bother to tell the Court is, yeah, it rebounded because they retracted -- for a period of time they retracted and said, yeah, it looks like SCO does own the copyright, and it immediately went up. So if we go -- and Dr. Botosan deals with each of those points in her report.

But as I listened to Mr. Brennan, all it again shows me is that there is going to be a strong debate. They are going to say she was out there on the ledges and being too aggressive. We're going to say she was way too conservative. That's a matter for the jury to decide and that's a factual issue.

Thank you, Your Honor.

THE COURT: Mr. Singer.

MR. SINGER: Your Honor, very briefly, the comments by Mr. Acker went to one of the three studies that Mr. Pisano relies upon and I think illustrate that this was questions -- snippets of testimony from a deposition where he says, no, I don't know the details of this, but not even confronting him at the deposition with the document that's attached to his rebuttal report before the deposition that lays out it's a thousand respondents, which he did know at the deposition. There is no question about Yankee being biased. There is no argument that the questions were unfair. These are things that mostly go to cross-examination.

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Thank you.

THE COURT: Thank you.

Mr. Normand, anything?

MR. NORMAND: Your Honor, two things.

One, although Novell and I continue to disagree whose burden it was to show an attorney by definition somehow could not testify as an expert, it's a simple matter of a jury instruction. Ladies and gentlemen, although this man is an attorney, he is not telling you the law. I will tell you the law in the case. That would resolve that concern. One.

Two, Mr. Acker acknowledges that part of the issue on remand has to be what copyrights are required. It cannot be that the only witnesses who are permitted to testify as to what is required are percipient witnesses who participated in the negotiations. We could put someone on who's an engineer at SCO who will say, here's why I think they are required. Mr. Acker's objection to such testimony would be, well, he can't tell the jury what the parties intended. That's not the issue. The issue is the flat actual question, independent of what the parties may have intended in using the word, taking the word required, what is required and what is not. He's not going to be telling the jurors what the parties intended or how they should decide what the parties intended.

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Thank you, Your Honor.

THE COURT: Counsel, thank you. Your arguments today have been very helpful to the Court. I appreciate your brevity and focusing in on those things of most importance. We'll take a ten-minute recess and then we'll come back and conduct final pretrial conference.

(Recess)

THE COURT: Counsel, let me deal with a couple of preliminary matters before we get to the typical final pretrial conference checklist.

First of all, as you well know, in the trial order that was submitted to the Court, there is a paragraph that points out the dispute between the parties over what the uncontroverted facts are. And today there was a filing from the defendants requesting this Court to take judicial notice of prior factual findings, findings of either Judge Kimball or the Tenth Circuit. I would request from the plaintiffs that they submit a response to that by Tuesday at five o'clock and I'll deal with it in an order.

Also, in your trial order you indicate that there is a dispute between the parties over those things that are to be decided by the Court and those by the jury. And, to my knowledge, neither of you have supplied anything to the Court by way of written memorandum addressing those issues. I would ask that be submitted to the Court by Tuesday as

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well. If either of you wishes to respond to the other side, I would ask that that be to the Court by Thursday at five o'clock.

I do want to say this. As a general matter, I want both of you to avoid reference to the prior decision by Judge Kimball or the Tenth Circuit. And if you have something that you think needs to be brought to the jury's attention that makes reference to either of those prior decisions, I want you to make it known to the Court in advance. And I want to give the other side an opportunity to respond to it. I do want you to know, as a general rule, I'm going to be very hesitant to allow reference to those things because I believe that it would be confusing to the jury and also very prejudicial. That is speaking just very generally, however.

Again, if either of you during the course of the trial see that you need to, in addressing a witness or cross-examination of a witness, anticipate making reference to Judge Kimball's decision or the Tenth Circuit decision, I want that brought to my attention. We can deal with it in a side-bar or before the trial begins or after the trial ends on any given day.

Do any of you have any questions about those items?

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

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THE COURT: Let's then go to the typical checklist that the Court has. First of all, this matter is scheduled to begin for trial on Monday, March 8th. The Court has scheduled three weeks, 15 trial days. Is there any reason why either side believes that three weeks is not going to be a sufficient amount of time?

MR. HATCH: No, Your Honor.

MR. ACKER: No, Your Honor.

In that regard, we have, between the parties, agreed to split the time evenly down the middle. I don't know how the Court would like to handle the keeping of the time. Would you like the parties to do that?

THE COURT: Yes.

MR. ACKER: So we'll keep each other abreast of where we think we are.

My understanding is the Court runs its trials from 8:30 to 1:30 with two 15-minute breaks; is that correct?

THE COURT: Roughly.

MR. ACKER: So about four and a half hours of trial a day. We'll calculate that and divide it amongst ourselves.

THE COURT: Mr. Acker, I need to ask you, have I been mispronouncing your name?

MR. ACKER: My German relatives pronounce it Acker and we in southern California pronounce it Acker, so Acker.

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THE COURT: So I have been doing it right?

MR. ACKER: You've been right. They've been wrong.

THE COURT: Thank you. I'll take judicial notice of that.

I would ask, counsel, that you be here at eight o'clock the first morning so we can deal with any last-minute matters that we need to before we begin jury selection.

I want to stress a couple of things. I do not like surprises, particularly surprises about major evidentiary rulings, and so I would ask you to anticipate those. Bring them to the Court's attention out of the hearing of the jury whenever possible.

I do like to minimize side-bars. I will indicate that we have -- just recently had a rather major investment made in this courtroom's facilities, and we have the ability to conduct a side-bar without it being overheard by the jury because we have a white noise system that apparently works very well. So my hesitance to have side-bars that I've had in the past is diminished somewhat because we can do it without the jury hearing everything we're saying. But, still, I think it's awkward, and I would ask you to try to anticipate those matters that can be dealt with at breaks, before and after trial, instead of having to have a side-bar

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whenever possible.

The Court received the proposed pretrial order yesterday and will plan to sign it today.

I believe we have now dealt with all the motions in limine. There are the three Daubert motions we've just heard argument on that remain. We'll try to get you an order on those as soon as we can. I'm not aware of any other motions -- I guess technically we do have the motion by the defendant that I referred to a moment ago asking the Court to take judicial notice of certain facts. Other than that, I'm not aware of anything else.

Is there something, Mr. Singer? Is that what you were going to address?

MR. SINGER: I think in addition to the judicial notice motion, there is one motion on the motions in limine which was taken under advisement?

THE COURT: Correct.

MR. SINGER: That was our motion regarding the commentary on the outside legal sources that are following the litigation.

THE COURT: That I think we'll just have to deal with during the course of trial. Is that the one?

MR. SINGER: That's the one which we reserved on. And I think our interest there is simply that unless perhaps it's cleared with the Court in advance, we don't see there

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to be a need to make known to the jury the name of one of these Web sites which are devoted to following the case, that probably everything can be said substantively without mentioning the name of the particular Web sites in question.

THE COURT: The Court will -- is your concern -- tell me your concern.

MR. SINGER: Our concern is that by mentioning, let's say, Groklaw, which is a site following and criticizing SCO's position in this case, it makes it that much easier -- despite the instructions that the jury will receive not to do any outside investigation, that it makes it more tempting and easier to go and put Groklaw into a Web browser and come upon that site. We don't think we need to mention the name of Groklaw or something like that to make any arguments that are relevant in this trial.

THE COURT: I would agree. I do want there to be no temptation for these jurors to be doing research on their own. You are right, Mr. Singer, the Court may be as specific as possible, but it doesn't always work. I will just briefly recount I had one case involving a lawsuit against Wal-Mart, a major lawsuit, took a long time. The reason I remember this is because it happened in September of 2001. And at the end of the trial it was revealed to the Court that a juror was going home at night, despite the instructions that were repeated most days at trial, and was

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getting on the Internet and investigating other lawsuits against Wal-Mart for similar conduct. I ended up having to declare a mistrial, which was most unfortunate because thereafter they declared bankruptcy. It wasn't Wal-Mart, it was Kmart. They declared bankruptcy. It was a horrific experience for everybody.

So I am very sensitive to that, and I do not want to do anything that would make it any easier for a juror in a three-week trial becoming really interested and trying to find out something on their own. So I would agree with that, Mr. Singer. Thank you.

MR. SINGER: Thank you, Your Honor. We intend to tell our witnesses to not inadvertently or otherwise make reference to those sites in their testimony.

THE COURT: All right. Mr. Acker, I would ask that you instruct your witnesses as well.

MR. ACKER: We will, Your Honor, with just one caveat, and we can bring this to the Court's attention during the course of trial. As the Court pointed out in its ruling, there are issues, with respect to damages and what was the causation of any reluctance on behalf of the licensee to take a license, that do involve commentary out there on these Web sites. So we can sanitize those documents and we can sanitize the way we ask questions, but we think that line of inquiry should be allowed. We're

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happy to bring that to the Court's attention before we dive into it.

THE COURT: Well, I hear nothing from Mr. Singer that would indicate he's trying to make this very broad ruling and you can't make reference to those sources, at least not the specifics of the sources. In other words, if you can ask about a Web site that may contain information without showing the Web site's address or something that would make it easier for the jury, the Court would appreciate it.

MR. ACKER: I understand. Thank you.

THE COURT: Those facts that have been stipulated to that are reflected in the pretrial order the Court does intend to read to the jury at the outset of the case.

I know that you are concerned about the jury pool, and we've instructed our office here to give us as many jurors as we can seat in this courtroom to select from.

How many would that be, Sandy?

THE CLERK: 56 or 54.

THE COURT: So that would be how many jurors we hope will be here. There are always a couple that don't show up.

Do you want an alternate in this case, counsel?

MR. ACKER: I understand the Court will seat 12 and 12 will deliberate?

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THE COURT: Yes.

MR. ACKER: Yes, we would ask for one.

THE COURT: Do you understand that under local rule we can have as few as ten?

MR. ACKER: I'm aware of that.

THE COURT: You still want one?

MR. ACKER: Yes.

MR. HATCH: I agree, Your Honor.

THE COURT: All right. We'll plan to have one alternate, then.

Let me instruct you on that right now. It would be my intention not to tell the jurors who the alternate is because I want us to have some flexibility. During the course of any trial, but in particular a three-week trial, it may become evident that one of the jurors has lost interest and is not paying attention. I would like the opportunity, with your agreement, to dismiss any juror that we think may be not appropriately conducting themselves during the course of the trial.

MR. ACKER: That's fine, as long as there is an agreement between the parties at the time with respect to --

THE COURT: That's what the Court would rely on. At the end of the trial, I would suggest that though juror 13 was the alternate, would you not both agree that juror number two ought to go. If you both agree with me, then I

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will do that. Otherwise, it will be the number 13 juror.

MR. HATCH: As long as we have an opportunity to talk about it at the end.

THE COURT: We certainly would, yes. But I don't want us or anyone else to intimate the juror seated on the bottom of that side is the alternate juror from the beginning so they are paying attention thinking they will not deliberate.

MR. HATCH: They will already feel bad they don't have nice little chairs.

THE COURT: They will. We'll give them one. We don't discriminate.

Let me ask you, as to your expert witnesses, counsel, I appreciate the fact that you understand I request a vitae that will be attached and will be submitted to the jury, and I would request that when you on direct set the qualifications for the witness, that you keep it to five or ten minutes, that you do not go into lengthy, detailed qualifications because the jurors will have the vitae that will be submitted to them.

I believe you had discussions with Ms. Malley about your exhibit lists. If I may --

MR. HATCH: Your Honor, just on the vitae question, you know, I mean do you have any limitations on what is included in that? Do you just want the ones that

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are submitted as part of the reports?

THE COURT: I don't want the reports submitted. I want the vitae that would have -- I've never had that question asked before. I think it's pretty much understood what a vitae consists of.

MR. HATCH: I understand. The vitae should be probably the one that was submitted with the report, correct?

THE COURT: Unless I hear otherwise, I would -- Mr. Hatch, don't speak over me. I would say the answer to that is yes unless I hear objection from the other side.

MR. HATCH: Thank you.

THE COURT: Mr. Acker, do you object?

MR. ACKER: No, Your Honor.

THE COURT: The exhibit list, any questions about the exhibit lists?

MR. SINGER: No, Your Honor. The parties are working out a process of exchanging objections over the next few days and resolving as many of those issues as possible.

THE COURT: All right. Thank you.

Trial briefs will be due on this coming Monday. You already submitted your proposed voir dire questions. I understood, based on a conversation that one of you had with my law clerk, that you were contemplating perhaps suggesting or requesting an agreement between you as to what questions

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ought to be asked of the jury. Is there anything further on that?

MR. ACKER: We can talk during the week and over the next few days and see if we can come to an agreement between the two competing questions and see if we have objections.

MR. SINGER: We'll try our best to reach agreement.

THE COURT: If not, I will just make my best judgment of what ought to be asked. Please understand that after I've asked the questions, I will always have a side-bar. If you think there is something that needs to be asked that I did not, I will give you the opportunity to make that argument.

The one thing that I do want to add here, counsel, I believe it's been requested of you that you submit your exhibits to me in a DVD form. I like to put them on my computer so I have the opportunity to refer to them, even if you are not. So if you would do that and get them to the Court as soon as you can.

How are you doing on jury instructions?

MR. ACKER: Would you like hard copy as well for Your Honor or just the electronic?

THE COURT: Just the electronic.

MR. ACKER: On jury instructions we've exchanged.

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We're in the meet and confer process. We hope to have to the Court on Monday those that are agreed upon and those which there is dispute, which we'll give the Court competing versions.

THE COURT: All right.

MR. ACKER: Does the Court want -- I've seen the Court's standard instructions. My operating assumption was that you just want the substantive instructions in addition to standard or do you want a complete set that includes your standard instructions as well from us?

THE COURT: Just give us those substantive ones that you agree on and those you disagree on and we'll incorporate our own standard, okay?

MR. ACKER: Very well.

THE COURT: You say we'll have that by Monday, Mr. Acker?

MR. ACKER: Yes, Your Honor.

THE COURT: My understanding, you both have your evidence experts coming here on Friday to go through our system. Do you have any other special needs that we need to be aware of, counsel?

MR. SINGER: Does the Court have any objection to the use of a laptop at counsel table from time to time during the trial?

THE COURT: No. Apparently one of you requested

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that we have a screen that would show the audience, if you will, what is being displayed. I will not permit that. If I may just generally say, this trial has the potential of becoming a little bit of a circus, and I will do anything I can to avoid that. And I think that we've managed to get by for a long time without having those types of demonstrations made to those sitting in the courtroom, and I would avoid that in this case unless there is a really compelling reason for it.

MR. ACKER: I understand, Your Honor.

Just on experts, again, I assume there's a standing rule on witnesses that are not experts. Will the Court permit experts to sit and listen to other witnesses' testimony?

THE COURT: Yes.

MR. ACKER: There is a standing order as to any other percipient witness?

THE COURT: Traditionally I would ask the first day do either of you want to invoke the exclusionary rule. Always they do, and the witnesses are excluded. I'll assume you are invoking it by asking the question, and so the exclusionary rule will apply and no witness can be in the courtroom until he or she is called to testify.

MR. ACKER: Very well, Your Honor.

THE COURT: Counsel, in the trial order that you

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would have received, there is a section entitled courtroom conduct. And it's just a brief listing of things that the Court would like you to comply with. I would encourage all of you to read it between now and the 8th so you remind yourself of those little peculiarities that I may have in the way I conduct the trials.

Counsel, that is my checklist. Do you have anything else?

MR. ACKER: I have been briefed a bit on your voir dire procedures, Your Honor. If I could tell you what I understand and then you correct me where I've got it wrong.

THE COURT: Why don't you just let me tell everybody here.

MR. ACKER: That will be great.

THE COURT: Based on what you have submitted, I will -- let me first back up. We do have a questionnaire that we give the potential jurors that they fill out before they come down here. If you don't have a copy of that, please get it from Ms. Malley before you leave here today.

Basically, after a few preliminary matters, we'll have the jurors go one by one and answer that questionnaire. It just goes to the issues about their employment, their kids, what they like to read, their hobbies, and things like that. After that I then will ask a series of questions. I will rely on primarily on what you have submitted, and I

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will try to include those that I think appropriately should be asked.

After I have done that, I will ask a series of questions -- let me back up. All those are answered here in the courtroom in the presence of everybody.

Towards the end of that process, I then ask a series of questions that I don't want the jurors to respond to here. They deal with matters of prejudice, or something else that I don't want them to be expounding on in front of other jurors.

After I've asked those questions, I will then have a side-bar, give you the opportunity to suggest other questions, generally of a personal nature. We'll then bring the jurors that want to answer the personal questions back into the conference room behind me here with each of you. We'll have them come in one at a time, answer the questions. I'll give you the opportunity to ask them what you think needs to be asked.

After we've done that, I will then tell you those jurors I intend to dismiss for cause. We'll then come back here and you'll exercise your three preemptories.

Does that answer your question?

MR. ACKER: It does. Just a couple of questions, Your Honor. I understand that the preemptory strikes are blind strikes, in other words, both sides will strike at the

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same time, we'll excuse those jurors and move on to the next round, as opposed to plaintiffs striking, we see who they struck and then we strike?

THE COURT: The second is what we do. We'll have a sheet of paper with all the jurors on it and it will indicate those that are dismissed for cause based on what happens back behind us. We'll then bring it out and we'll have three preemptories exercised. Normally I think plaintiff goes first. They will strike it. Ms. Malley will then show you that sheet, you will see who they struck, you will do yours, and just go back until the three have been done.

MR. ACKER: Then the strikes, are we allowed to strike into the panel or just who is in the box with the three preemptories?

THE COURT: Anybody in the courtroom.

MR. ACKER: I assume they will be in order so we will know who's coming up next in the box?

THE COURT: Once people come in here, once the 50 of them come in here, they don't go out except for the break we have when we bring the jurors in one at a time back here. There is nothing in the box.

Does that answer your question?

MR. ACKER: I understand.

THE COURT: Mr. Hatch.

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MR. HATCH: Your Honor, I would assume at some point you'll ask us to introduce ourselves and our client?

THE COURT: That all happens in the preliminaries before we begin the jury selection.

MR. HATCH: One question, you know, my client is in bankruptcy, and we will have the trustee, Judge Cahn, here or one of his representatives I assume at the beginning of the trial and probably throughout. I don't have any intention to introduce him. And it seems to me, I don't see any reason why the bankruptcy should be mentioned at any point during the proceedings, unless you -- I don't know if you ever intend to reference it. It maybe seems like that ought to be -- if you have some reason to be, you ought to bring it to us in advance.

THE COURT: I would agree.

Mr. Acker, think about it. If you contemplate that you intend to, I want you to bring it to my attention before the -- during the break, the morning of the trial, whatever the case may be, whenever that may happen. All right?

MR. ACKER: Very well.

THE COURT: I would agree with you, Mr. Hatch, do not introduce the bankruptcy trustee.

MR. HATCH: I'm happy to introduce him to Your Honor, but we'll do that early on.

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THE COURT: That's fine.

Before we begin questioning the jurors, I will have, as Mr. Hatch indicated, an introduction by you and all those who will be sitting at your tables. I will also ask you to identify those individuals that you intend to call as witnesses. I would ask that you would just, in addition to their name, have some identifying characteristics, something as simple as who they work for, or where they live, anything like that because we do want to briefly provide some context for the potential jurors because the whole purpose of this is to see whether or not any of them know those individuals you intend to call as witnesses.

Mr. Singer.

MR. SINGER: Your Honor, I just wanted to note that Mr. Jacobs and I had discussed before trial a few things which we reached agreement on, people who may be with us during the jury selection process who would not be identified. I think one on each side.

THE COURT: Jury selection experts?

MR. SINGER: Yes, Your Honor.

MR. HATCH: My intention would be we would introduce the lawyers and the client and just ignore them, if that's okay.

THE COURT: I would rather they at least be introduced, but just give a name.

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MR. HATCH: Just give a name?

THE COURT: Just a name.

Anything else?

The reason why I don't want some mysterious person sitting at the table and the jurors wondering why was everybody else introduced except for him or her, unduly speculating as to say what their role in this thing is.

Mr. Brennan.

MR. BRENNAN: Yes, thank you, Your Honor.

We are mindful of the rulings on the remaining motions in limine this morning. There are, we think, some important issues regarding the application and scope, for example, First Amendment issues and privileges. We believe it might be helpful to the Court, if the Court were to agree with us, to have a hearing at some juncture between now and the start of trial to more further explore those primarily because of our view of the nature of the issues and the need for the Court to make legal decisions regarding the scope and application of those issues.

So I wanted to at least stand and see if that might be something that we could schedule with the Court so we could have a full presentation on these critical First Amendment issues we've been grasping.

THE COURT: Mr. Brennan, the dilemma is that you were given your best shot to provide case law. What I need

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is case law. I don't need argument. I need case law. If you can come up with some case law between now and the time that this Court instructs the jury, then I would want it.

But other than that, I see no reason to have a separate hearing on that issue. I think I will be curious to see what jury instructions you come up with. And we'll be doing the work we need to during the course of the trial to help make those decisions. But let's just play that one by ear. I don't want between now and the trial, because I will have a very busy week next week, but until the Court actually instructs the jury, I think this issue can wait.

MR. BRENNAN: I appreciate that. Perhaps stated another way, although I may anticipate the Court's response, is whether, in essence -- some of these issues, in essence, ought to be bifurcated. I'm not suggesting that we continue the trial for that purpose, but whether the Court believes that in addition to legal authorities, there would need to be some sort of evidentiary presentation to the Court so it can make its determination?

THE COURT: On the question about the First Amendment? Well, if you want to submit a motion to that end, I would prefer that we deal with it on paper.

MR. BRENNAN: Thank you, Your Honor. I understand. Appreciate the instruction.

THE COURT: If you intend to, then do it --

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MR. BRENNAN: If we do it by Tuesday?

THE COURT: That would be very helpful.

MR. BRENNAN: Thank you, Your Honor. Appreciate it.

THE COURT: Again, counsel, if you, Mr. Singer, Mr. Hatch, if you would respond by Thursday.

Do you see a need for a hearing on the constitutional issues?

MR. SINGER: No, Your Honor, we don't. We think that the motions in limine briefed the issues. We'll continue to work on the jury instructions. We think this is appropriately dealt with in the framing of jury instructions and verdict form.

THE COURT: Again, if any of you come up with any additional law, you know, I would want it not only by next Tuesday, but during the course of the trial if something should come to your attention. It really is, to me, a purely legal issue and it's a very intriguing issue, and all the help you can give the Court would be appreciated.

All right. Mr. Singer, do you have anything else?

MR. SINGER: I think we may have one or two other issues that Mr. Hatch was going to address.

THE COURT: Go ahead, Mr. Hatch, as long as you don't talk when I'm talking. All right.

MR. HATCH: One is more administerial, opening

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statements. I don't know if you want to address how long each party will take. We also have an issue that we would like during the course of ours, if it would be acceptable to Your Honor, given the type of case, to be able to use two different lawyers presenting our opening statement.

THE COURT: Because of the nature of the case, I will allow two attorneys both for openings and closings on either side. All right.

MR. HATCH: Okay. Do you have any care about the length?

THE COURT: Well, I do, but tell me what you are thinking. Tell me how much I have to care.

MR. HATCH: Well, I recall a conversation like this with you once before, but we would suggest an hour each side.

MR. ACKER: An hour is fine.

THE COURT: Let's plan on no more than an hour for openings. I think it becomes more interesting when it comes to the question of how long for closings. But we'll deal with that at the end of the three weeks.

MR. HATCH: The other issue, there are some witnesses that we would -- we've started discussions with Novell. There are some issues that we believe are under their control that we would like to be able to call in our case in chief, particularly in the first week, so that we

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don't have to read depositions and then they provide the person live during the course of their case. I don't know how Your Honor would prefer to handle that.

THE COURT: My preference is that you just work with each other and show one another respect -- professional respect and allow that to happen. I think it would be a disadvantage to the jury for it to happen in the way that you just described. So I would request that you try to work that out. If you can't, then bring it to my attention, and then I will order if I must.

MR. HATCH: Thank you, Your Honor.

I think we've handled everything else, Your Honor.

THE COURT: All right.

Mr. Acker, Mr. Brennan, do you have anything else?

MR. ACKER: Your Honor, given the procedure for jury selection, can we anticipate openings not taking place on the 8th and beginning on the 9th?

THE COURT: You know, I really don't know how well this will go. This is not a typical trial in one respect, and that is this case has such a long history and the greatest concern I'm going to have is whether or not we find jurors with some knowledge of the case. That to me is the greatest dilemma. If we end up with a whole bunch of people standing up and saying they want to come back and talk with us, that takes a lot of time. But I would ask that you be

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prepared in case we somehow whip through this thing and we finish at 11:30, and that would give us two more hours and I would like to not waste that time.

I need you to know that I am always very, very sensitive to the jury time concerns. And I don't want us to waste time. I don't want us to have the jury going home early some days because a witness for some reason is not available and stuff like that. If we're going to impose three weeks on their lives, I want us to be as efficient as we can.

To be specific, if we can, I would like to do openings Monday. If, however, it's obvious that only one of you can do it, then I probably will wait and let you both do it at the same time. I think that's the only fair thing to do.

MR. ACKER: Appreciate that, Your Honor. We don't have anything else.

THE COURT: Counsel, I want to thank you because of the level of cooperation that you have demonstrated to this point. I think it was very wise for you to, for example, have the motion in limine deadline when it was instead of what would have been next Monday, which would have been a nightmare. I hope you will continue to show that level of professionalism and cooperation throughout the course of this trial. And, again, I do want to thank you

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for that which you have displayed to this point.

If there is nothing else, we'll be in recess until eight o'clock on the 8th.

(Whereupon, the proceeding was concluded.)

1

C E R T I F I C A T E

I hereby certify that the foregoing matter is transcribed from the stenographic notes taken by me and is a true and accurate transcription of the same. PATTI WALKER, CSR-RPR-CP DATED:

Official Court Reporter [address]

Salt Lake City, Utah [zip] [phone]


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