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SCO v Novell Trial Transcripts as text, Day 4 - Messman, Levine, Mohan, Michels, Wilt, Broderick
Thursday, August 05 2010 @ 09:18 PM EDT

Here's the transcript as text for day four of the SCO v. Novell trial that began on Monday, March 8, 2010 in US District Court in Salt Lake City Utah and ran for 15 days, Monday through Friday, for three weeks. The Honorable Ted Stewart presided. Day 4 was Thursday, March 11, 2010, and the witnesses on that day, by video deposition, were Jack Messman, Burt Levine, Alok Mohan, Doug Michels, and Jim Wilt. William Broderick then took the stand, live.

I know. Lots of witnesses, but it's short snips from prior depositions mainly. Still, it feels like a long, long day.

This is still SCO presenting its case. Novell's turn comes later, and Novell's lawyer, Sterling Brennan, in his opening statement had asked the jury to wait for the rest of the story from Novell before reaching any conclusions during SCO's presentation. I have to say though that one inescapable conclusion from the day is that SCO didn't hit any solid home runs, but it definitely got hit in the head with a couple of fastballs. I think Fibers.com has a perfect T-shirt for SCO's Day 4 witnesses. It says:

"I reject your reality and substitute my own".
It's quite a stubborn performance by one and all. Novell shows them the APA and amendments, and witnesses say it's not what they meant, not what they had in mind.

The transcript of this day is in three parts as PDFs: Part 1 [Text with line numbers], Part 2 [Text with line numbers] and Part 3 [Text with line numbers], but if you prefer to jump directly on this page to the transcript as text without the line numbers, you can:

Part 1, Part 2, Part 3.

Here is Groklaw's earlier eyewitness report from the courtroom for that day. The day before, day 3, the witnesses for SCO were R. Duff Thompson and Ed Chatlos, and on the first day of testimony, day 2 of the trial, SCO's first witness was Robert Frankenberg, and on that day we also heard both sides' lawyers present opening statements, Stuart Singer and Brent Hatch for SCO and Sterling Brennan for Novell. Day 1 was jury selection. So that should orient you.

Jack Messman is not testifying for SCO, by the way. They presented him as a hostile witness by deposition, and later he will arrive and testify in person. And there are more lawyers actively questioning the witnesses on this, day 4, as Novell adds Michael Jacobs of Morrison & Foerster, who up to now has interacted with the judge but not with questioning of live witnesses.

G. Gervaise Davis was scheduled to appear live for SCO, but SCO opens the day by saying they won't be calling him after all. The judge inquires why, and it leads to this hilarious exchange between the judge, SCO's lawyer Stuart Singer and Novell's lawyer Michael Jacobs:

THE COURT: ... Was Mr. Davis the elderly gentleman who has been sitting through trial?

MR. SINGER: Yes.

THE COURT: Is his health not good, is that the problem?

MR. SINGER: He does have some health issues, that was one factor that played a role in our decision.

THE COURT: Okay.

MR. SINGER: We looked at, though, the fact that -- just to get us back on schedule, we concluded we didn't need him.

THE COURT: I just hate for someone to suffer through three days of trial and not get the reward of being able to testify. Maybe he wouldn't deem it to be a reward.

MR. SINGER: I think he is disappointed.

MR. JACOBS: As am I, Your Honor.

I enjoy Jacobs' understated sense of humor. If you read Novell's Motion for Daubert Hearing to Disqualify G. Gervaise Davis III [PDF] and the Memorandum of Points [PDF], I think you'll agree with me that very likely Jacobs was as eager as can be to cross examine Mr. Davis, SCO's expert that Novell argued was not qualified to testify on the subjects planned for him, and that this is the nature of Jacobs' disappointment, that SCO won't let the guy testify after all and therefore he can't make mincemeat of his testimony. Mr. Davis's expert report includes this gem:
18. Nature of Software Businesses. Any software business is primarily one of using and leveraging intellectual property rights into the creation and marketing of products based on software that is sufficiently useful to end users that they will purchase licenses to use it. In 1995, SCO purchased the entire UNIX software business, a long standing software development and licensing business, from Novell.
Any? Any software business? Are you sure? I mean, Caldera, now calling itself SCO Group, was exclusively in the Linux software distribution business for years, and they did it under the GPL, which forbids charging for a license and permits use of the IP rights without payment at all. Novell is in the Linux business as well, and so is Red Hat. So you can imagine the depth of Mr. Jacobs' disappointment, and that's just one example of the fun we will now miss. Mainly what Mr. Davis was supposed to testify to was "whether, in his experience, ownership of the copyrights was necessary for SCO to operate its business", as SCO put it in trying to get the judge to let him testify at all. And he was going to say they did, which directly contradicts what Darl McBride told the SEC, namely that the company didn't need the copyrights to run its UNIX or UnixWare software business. So all things considered, perhaps Mr. Davis's testimony might not have been particularly helpful.

There are some Novell objections to the Levine deposition, so that is the first order of business. Novell believes SCO is about to violate the order [PDF] on the Novell motion in limine [PDF] on this witness, and the judge says to give him their arguments in writing, and he'll discuss it with the parties at the first break. Novell doesn't have everything in writing yet, it says, but the judge says to hand his law clerk what is ready and he'll see if he can rule or if he needs further argument. Burt Levine's deposition is Exhibit 14 in this collection [PDF]. And the part in dispute is found on page 161, line 11, of his deposition through page 162, line 10, which begins on page 32 of the PDF. He was asked about Amendment 2, as to whether or not he knew what rights SCO needed with respect to the acquisition of Unix and UnixWare technologies, referencing the wording in Amendment 2, but the judge ruled [PDF] on Novell's motion in limine No. 19 earlier and decided that Levine can't testify about Amendment 2 if his opinion is based just on reading it, as opposed to personal knowledge:

Defendant seeks to preclude testimony from Mr. Levine concerning Amendment No. 2. Mr. Levine was not involved in the negotiations or drafting of Amendment No. 2. However, Mr. Levine testified that Amendment No. 2 confirmed his understanding that the copyrights were transferred to Santa Cruz. It is unclear what Mr. Levine bases this understanding on, though it appears that it is just upon his reading of Amendment No. 2. If this is the case, the Court finds that such testimony would not be helpful to the trier of fact and must be excluded. This ruling does not preclude Mr. Levine from testifying concerning the APA.
SCO's position in its opposition [PDF] to Novell's motion in limine was that this was admissable testimony because he was one of the witnesses with personal knowledge of the negotiators' intent, that it was "extrinsic evidence of the circumstances in which the APA and Amendment No. 2 was drafted; of the negotiations that occurred leading up to the execution of the APA and Amendment 2", and the appeals court had ruled that it wasn't only negotiators of the documents whose testimony was relevant. SCO lost that point, but the judge kindly opened the way for them to follow up with evidence of any personal knowledge, if there was any such. But they didn't, since in reality he has no personal knowledge. Novell's attorney Sterling Brennan references some pages of the deposition that we don't have, at least not in that exhibit, where Levine says that he didn't know anything about Amendment 2. So that's that.

Messman

Jack Messman testifies by deposition video that Novell did finally find a signed copy of Amendment 2, but only months after the original dispute with SCO surfaced. Legal didn't have one. They finally found it in Finance, which is odd. A dispute arises about SCO interrupting the deposition to introduce exhibits being discussed to the jury. Novell's lawyer, Eric Acker, objects, saying if SCO wanted to do that, it should have highlighted by its questions at the deposition the portions SCO now is wanting to highlight. But the judge overrules that objection, so SCO plays a bit of the deposition, then it stops and shows the exhibit on the screen to the jury, and then it picks up again with the video. Later, Novell follows the same process. What's good for the goose, and all.

However, later, reading other exhibits, SCO tries to read only parts of them, and Novell again objects and is sustained, so SCO has to read the entire exhibits. Thus, Stuart Singer reads to the jury the wording of Amendment 2. Next he reads the press releases Novell put out beginning on May 28, 2003 and asks if Messman knew that the SCO stock went down 30% that particular day. Messman says he wasn't tracking the stock, but it went up and down a lot depending on what Darl McBride was saying in the marketplace.

I'm puzzled by SCO's focus on a dip on a certain day. I realize they are trying to demonstrate harm for their purposes at trial, but why would SCO executives care so much about a temporary dip in the stock, unless they were playing the market themselves? I mean, were they planning on making personal killings from what they hoped would be a huge increase in the stock that one day? What kind of business is that?

Messman is asked about the Wall Street Journal article SCO loves so much, titled “Novell to Cede Control of Unix to 2 Companies” dated September 20, 1995, and so we find out what the first two paragraphs said, because Singer reads them:

Novell Inc. today is expected to announce plans to relinquish control of the widely used UNIX operating system to Santa Cruz Operation Inc. and Hewlett-Packard Company.

The deal includes the purchase by Santa Cruz Operation of most trademarks and intellectual property associated with UNIX software, one person familiar with the situation said. He said he expects SCO to pay about $140 million, some of which will be shares of SCO, a Santa Cruz, California company, that sells its own version of UNIX.

Singer then asks:
Q Now if your position is correct, no intellectual property transferred to SCO, right?

A That's correct.

I don't think that's exactly Novell's position, although it's substantially true, in that the 1995 APA says the excluded assets were "A. All copyrights and trademarks, except for the trademarks UNIX and UnixWare." But the excluded assets schedule does include this language:
I. Any asset not listed in Schedule 1.1(a) including without limitation any asset which pertains to NetWare which is not listed on Schedule 1.1(a)
So if it's not on 1.1(a), it didn't transfer. That is how I read that wording. Here's what is listed in 1.1(a) regarding intellectual property:
V. Intellectual property - Trademarks UNIX and UnixWare as and to the extent held by Seller (excluding any compensation Seller receives with respect of the license granted to X/Open regarding the UNIX trademark).
So, to me, even if you could change the other language in the excluded assets section about copyrights by Amendment 2, this wording is still in SCO's way.

Next Messman is shown a letter from Chris Sontag, then at SCO, to Chris Stone at Novell:

Q Do you see that the proposed letter that SCO asked Novell to sign in February 2003 would, quote -- would clarify that, quote, all right, title and interest in and to the copyrights associated with SVRX agreements held by Novell at the time of the asset purchase agreements were intended to be included in the included assets identified on schedule 1.1(a).

A I see that, yes.

Q When you've earlier testified that it was your understanding that what SCO was asking for was a transfer of the copyrights rather than a clarification that those had transferred, were you aware of this correspondence between Mr. Sontag and Mr. Jones?

A No. I just became aware of it right now.

Q I take it, then, in the May 28th, 2003 press release, which told the public that SCO had asked for a transfer of the copyrights, you were not aware of the February 2003 correspondence that we're looking at which asked for clarification that those had been transferred; is that correct?

A That's correct. I've never seen this before.

Steven Sabbath earlier used that same method, Allison Amadia later testifies, asking for a clarification, and he was told that the copyrights never transferred, so Novell wouldn't "clarify" that, and Amendment 2 resulted instead. So you would think SCO would know better than to describe the amendment as a clarification, but this is SCO. So here again SCO is using the word "clarify" as if that means they were not seeking to get the copyrights, and then using that word to imply that Messman was not truthful in describing it as SCO seeking a transfer. But from Novell's point of view, that's exactly what it was, regardless of what word SCO used to cloak the request.

What copyrights did SCO require to exercise its rights under the APA, he is asked? What was his view in 2003? Answer: His view was that they didn't need any copyrights to do what was contemplated by the APA, namely "to evolve the code that sat on top of the SVRX licenses". At that point Messman says something interesting with regard to UNIX and why they didn't need the copyrights on UNIX:

My view is they would be selling the stuff that they developed on top of UnixWare or SVRX, which they had develop. Remember, my view is, they had to evolve the code, they couldn't just take SVRX and sell it. They had to evolve the code to something more that they then had the intellectual property rights to....

SCO was buying the rights to develop -- further develop the SVRX code to create a merged product, to create a product that would bring the UNIX industry together hopefully to better compete with NT. That was the business that they were buying into.

That is how he explains the waiver rights Novell had under the APA, and explained like that, it makes sense.

Jim Wilt

Next up is Jim Wilt's deposition video from 2007. He admits he was active in the APA negotiations at the beginning more so than at the end, and he also says that no one ever specifically mentioned copyrights in his presence at least so far as he can recall it. But that was his assumption and intent on behalf of Santa Cruz. And he believes the Technology License Agreement is consistent with his belief. I don't think it helps him to use the TLA, in that the APA speaks about the parties doing that document and it says this:

1.6 License Back of Assets. Concurrent with the Closing, Buyer shall execute a license agreement under which it shall grant to Seller a royalty-free, perpetual, worldwide license to (i) all of the technology included in the Assets and (ii) all derivatives of the technology included in the Assets, including the "Eiger" product release (such licensed back technology to be referred to collectively as "Licensed Technology").
This matches what Messman testified to, that the whole idea was to create code on top of what they were getting from Novell, and of course Novell would want to be able to use that. And a careful lawyer would include language such as the first part to make sure there were no lawsuits over what was already written and what was future code. And by the litigation that we are watching, you can see why they try to think of everything to try to avoid litigation.

But having said this, this is also the part where SCO's strongest argument is found, that Novell shouldn't need a license back of the assets transferred, if it retained the copyrights. If you have no prior knowledge of this litigation, it resonates as being at least logical. Wilt also says that he doesn't think, from reading Amendment 2, and the APA that Novell has any right to waive any of SCO's IP rights or protections.

Discussion on Burt Levine Deposition Dispute

The jury is then excused, and the judge brings up the Levine deposition issue, as he said he would at the beginning of the day. He points to his order regarding that motion in limine as saying that Levine could only testify as to Amendment 2 if he had personal knowledge. Had SCO provided anything that could establish that point? SCO's lawyer Ted Normand honestly admits they didn't and they can't:

We don't dispute that we don't have a factual foundation that he was involved in the drafting. We do think it would be relevant, particularly in light of the sorts of questions that have been asked of witnesses already. He was an in-house attorney, and in effect the question is asking him, do you have a view as to what copyrights are required.
So this is like Mr. Davis opining about what copyrights are required. In effect, the SCO argument is, they're lawyers, so they can opine from reading a document. Except there is one important difference. Mr. Davis was a designated expert, and Levine isn't. So he's not allowed to opine on the law. He can only testify to things he personally knows about, and he wasn't involved in Amendment 2. So in essence, I take it that SCO dropped Davis and now are trying to use Levine to say what Davis would have.

The judge wavers a bit, wondering what to do, and he decides he wants to take more time to think. Novell's Brennan says if they are going to bring uninvolved lawyers in to opine on the words in Amendment 2, he could bring in "a whole slew of people. I could invite a number of lawyers from Salt Lake to come in and offer that opinion." The judge catches the point, and then there is a 15-minute break. And when he comes back, after likely researching the point or conferring with his law clerk, the judge decides SCO can't play that portion of the Levine deposition.

Alok Mohan

Next up is the video deposition of Alok Mohan, who was President and CEO of Santa Cruz in 1995. He acknowledges, somewhat reluctantly, that he was involved only at a high level, not in the drafting or the negotiations. Significantly, he says he read the APA in 1995 before he signed it, and it was accurate. That's hurtful to SCO, in that their final story about the APA, after several others, turned out to be that rogue lawyers inserted the exclusion of copyrights, and here's the CEO at the time, as well as the President and a member of the board, saying he read the document and it reflected the parties' intent, which is exactly what SCO is claiming it didn't do.

He goes on to say that he believed they bought everything from Novell, but that's exactly what the APA doesn't say, in that there is a schedule titled "excluded assets".

He's then shown the same Wall Street Journal article SCO is using over and over, the day before as well (and I address some other problems with that article in my coverage of Day 3), and even that article says that only "some trademarks" would transfer, and that means it was not a lock-stock-and-barrel transaction, which is what he's trying to say was his intention with this deal and what he thought it was.

So his testimony is contradictory, especially because he then adds that Santa Cruz couldn't afford the SVRx revenue stream, so Novell retained that. He is then asked this funny question:

Q I want to fairly characterize what you're saying, so correct me if I'm wrong. Is it a fair characterization of your testimony that you believe that Novell was retaining no rights through this transaction, but that it was retaining a revenue stream related to SVRX?
He's highlighting that his answer makes no sense. Mohan instead of making more sense, given the chance, digs himself in deeper:
A It's not so much a belief, because I know that there's documents that have a certain defined definition of what they can and cannot do. My negotiation, my involvement, was that it was -- we bought the business. And there were some aspects of things, and I can't tell you what they were, to allow them to protect the fact that the revenue stream -- that they get paid. And -- but I can't tell you anymore than that.

Q You keep referring to documents that you could look at. Are you referring to the contract?

A Yeah, I assume.

Q Okay. So if I wanted to know what rights Novell retained, can I look at the contract and find out?

A You'll have to look at it.

Q Is it true that if I wanted to find out what rights Novell did retain, I could look at the contract?

A I don't know that.

Mr. Mohan by the end seems to have caught on to the implications of this train of questions, and the last thing he wants to say is that you can understand the APA by reading it. SCO's position is that it didn't reflect the intent of the negotiators, after all. I would guess the jury noticed his discomfort in answering a really simple question.

I can't imagine what possessed SCO to want to play this part of the deposition.

You know what I'm feeling at this point? We're well into SCO's presentation of its case, the fourth day if you count opening statements by its lawyers, and so far, I haven't seen any home runs. We do see a measure of consistency, in that all the witnesses say it was their intent to transfer the copyrights, which to me is a warning sign, in that witnesses normally don't concur on all details if they are being honest.

No one yet has provided anything beyond hopes and dreams and intentions about the copyrights, and at that 15 years after the fact. No one at the time said a word about copyrights, according to these witnesses. And they're SCO's witnesses. Their position, which isn't consistent with the words used in the APA, is that they didn't need to mention copyrights, because when you buy an entire business, you get them automatically. But then they add details like Tuxedo didn't transfer and the patents didn't transfer, and the revenue stream didn't transfer. So how is that the entire business? And if it isn't the entire business, quite aside from the excluded assets wording, you surely do need to itemize, I was always taught. If they were supposed to get the copyrights, they'd have to list them with some specificity, so everyone was clear what did and what didn't transfer, in any situation where only some would and some wouldn't transfer.

After all, they listed Tuxedo with specificity and more than one witness claimed the excluded assets meant NetWare copyrights, the problem is, the words don't say that. Plus this was called an Asset Purchase Agreement, not a Sale of a Business. If you really buy an entire business, instead of some of the assets, you wouldn't expect them to use an asset purchase agreement in the first place. At least I wouldn't.

So there are many questions in my mind about the SCO presentation. For another example, SCO's lawyer reads from the SCO press release dated September 20, 1995 about the deal, which is Exhibit 8 in this collection [PDF], and it says this:

According to the terms of the agreement, SCO will acquire Novell's UnixWare business and Unix intellectual property.
Well, but does that mean SCO will acquire only the UnixWare business but not the UNIX business, and some or all the UNIX IP but not the UnixWare copyrights? The press release is not helpful to SCO, because it isn't clear. They also tried to present it as a joint press release with Novell, but the judge eventually ruled it was not so. It was a SCO press release, and that detracts from its value too. Also I notice that it uses the future tense, so as far as that goes, I see Santa Cruz predicting what the deal would be, but they didn't consider it a done deal on the day after the APA was signed.

The main contribution Mohan makes is his testimony about the IBM buyout in 1996, which Mohan didn't like, because Santa Cruz wasn't consulted before Novell did it. Novell didn't think that the terms of the APA required it to do so, only the reverse, which tells you a lot right there about what Novell at the time understood the deal to have been. But Santa Cruz threatened to sue Novell, so they did some new wording to avoid a lawsuit.

An exhibit is shown to him, a letter dated April 19, 1996 to him from Robert Frankenberg about the matter. Unfortunately, it's a letter we don't have available, but they go on to discuss Amendment X, which we do have. At issue is whether Novell ever had waiver rights. Amendment X was amending IBM's 1985 agreement with AT&T, and it includes this in the Recitals section:

AT&T Technologies, Inc. ("AT&T") and IBM entered into various software license agreements concerning the Software Product: UNIX System V, Release 3.2, which are Software Agreement SOFT-00015 as amended, Sublicensing Agreement SUB-00015A as amended, Software Agreement SOFT-00015 Supplement No. 170 as amended (or any other Supplements that pertain to prior versions or releases of the Software Product), and Substitution Agreement XFER-00015B (the "Related Agreements"). Novell acquired AT&T's rights under the Related Agreements. In an agreement between Novell and SCO dated September 19, 1995 (the "Asset Purchase Agreement"), SCO purchased, and Novell retained, certain rights with respect to the Related Agreements.
So right there, it's clear that SCO's witnesses are simply wrong to describe the deal as the entire business transferring, lock, stock and barrel. It says in black and white Novell retained rights. I mean, how much can SCO ignore? Even if the APA was from rogue lawyers, here's a second agreement, one that both Novell and Santa Cruz signed, that also says Novell retained some of what it got from AT&T. So, it was not everything. Or was this written by rogue lawyers too and nobody noticed once again? See how silly? And so the hapless Mr. Mohan is done on direct examination, claiming that the deal was completely everything, just like your body is arms, legs, and everything. The fact that this is the second SCO witness to use a body analogy -- remember the "your head goes with you"? -- tells me that there is at least the suspicion that the lawyers planted that idea or the witnesses got together and shared their thoughts.

So next Michael Jacobs has at Mr. Mohan, as played in the Novell portions of the deposition, and he gets him to state his opinion that the lawyers for both sides of the APA were good lawyers, that both companies were experienced in software transactions, and that the deal was an arms-length transaction. Mohan is asked if the contract wording matters, and he says it is "one of the most important things" to determine the terms of a deal and that businesses use contracts to make business decisions. He even says that if there are disputes down the road, you look to the contract as the "best evidence" of the terms.

Jacobs shows him another press release, a Santa Cruz release dated December 6, 1995, the closing date of the APA. The release lists a planned series of releases of products looking forward as far as the year 2000, including a merged product to be released in 1997, demonstrating that SCO had indeed planned to build on top of the code it was getting from Novell, that that was the purpose of the deal. Then Jacobs hands him another press release about working with HP and Novell to create "a high volume UNIX OS with advanced network and enterprise services". Next Jacobs reads to him from the APA, the section titled "Consideration", which lists as "full payment" as being only 6,127,500 shares of stock and the buyer assuming the assumed liabilities. It doesn't list the revenue stream for UNIX or confirm any of the rest of the stories the witnesses have told for SCO about how the copyrights were paid for.

Jacobs then asks him to show him in the asset purchase agreement what wording supports his belief that UNIX business transferred in its entirety to Santa Cruz. Of course, he can't, so he just restates that it's his belief. OK, Jacobs says, let me ask that again: Where can you point to anything that supports that belief? He says he would have to probably go through it line by line, but he's already stated in answer to a previous question that the APA does reflect their intent. So he's painted himself into a corner. Or more accurately, Jacobs has gotten him painted there.

Next Jacobs asks him if he knew that Steve Sabbath had signed two declarations? Mohan in his declaration, Exhibit 6 in this collection [PDF], had stated under oath that he had read Sabbath's October 2004 declaration. But did he know that in an earlier one, Sabbath had said that Novell had retained significant rights? Tellingly, Mohan says:

A: I -- I was not aware -- I'm aware of it now that there was an earlier declaration, but not when I looked at the 10-04, and I do not know of any declaration after 10-04.

Q Are you aware that in Mr. Sabbath's other declaration he stated that Novell retained significant rights after the asset purchase agreement, including the Unix copyrights?

A: I just found out about the --

MR. NORMAND: Objection to form.

THE WITNESS: -- Previous declaration the last day or so.

How would Mohan have just found out in the last day or so? Who is telling witnesses what other witnesses might have said or done? Here's the October 2003 Sabbath Declaration [PDF], by the way, if you want to check it.

Jacobs points out that Sabbath said that the retained rights are in the excluded assets schedule, all copyrights and trademarks except for Unix and Unixware. Mohan says he doesn't agree with Sabbath's words, then.

Next he's shown the proxy statement Santa Cruz sent to shareholders about the deal. Mohan admits it doesn't say in the IP description that SCO got the copyrights. Did anyone at SCO, Mohan or anyone, ever say to Novell, "We want the Unix copyrights"? He says he wouldn't know that, but he doesn't recall "any such".

Doug Michels

Next comes Doug Michels' video deposition which was taken in 2007. He tells us that he's bad on dates, but he was approached at some Unix Forum or other by Mike DeFazio about doing the deal. The transcript says Uniform, not Unix Forum, but let's assume that this is what it means. [PJ: A Groklaw member, xtifr, has a more likely assumption than mine, that it may be Uniforum, which does hold conferences. And for historians, here's a report on Unix.org of a 1998 UniForum conference, which is significant because it shows that Linux was already being used in business in 1998 -- for example by Ikea -- which is before SCO claims IBM made that possible some years later.] He can't recall the names of all the people involved in negotiating the deal. Asked about the legal people, all he mentions is Kim Madsen. But he recalls clearly that the deal was to get everything from Novell that Novell had gotten from AT&T.

That's so obviously false, to me, in that the patents didn't go to them, as SCO has acknowledged, and the trademarks went to X/Open, etc., that I don't understand why SCO lets their witnesses say something like this over and over, when jurors are not stupid and they are bound to think of exactly what I'm thinking, which is that the testimony can't be accurate even if it were sincerely offered.

He says he was involved in the Technology License Agreement too. But then Jacobs drills deeper, in the video:

Q I want to talk a bit about some of the subsidiary related agreements that came along with the Asset Purchase Agreement. Did you have any involvement in the negotiation of the technology licensing agreement?

A Yeah. I tried to stay completely away from the actual mechanics of the agreement and stick to who was getting what. And what was in which piece of paper, I mean, I completely -- you know, had a great business development team. We had a good legal team. You know, as long as they found the right way to engineer the documentation to match what -- what we had agreed at a business level needed to happen, you know, as to which agreement did what, you know, that wasn't my job.

Q I take it then the answer is no, that you didn't have involvement in the actual negotiation of the technology licensing agreement?

A I don't know if I did or not. I had involvement in what -- what we got or what they had or who did what, which document it went into, I don't know.

Q Do you recall seeing drafts of the technology licensing agreement?

A I saw stacks of paper on people's desks.

Q But do you have any specific recollection of --

A Did I read them?

Q Do you have any specific recollection of seeing drafts of the technology license agreement?

A I'm sure they were in the stacks of paper on people's desks that I saw, but I didn't read them.

Now, I don't know about you, but if I'm a juror, at this point I'm saying to myself, "In other words, Mr. Michels was out to lunch, and nothing he says about the TLA has any meaning, because he left it to others to handle the details." He goes on and on like this, giving the same answer for the Operating Agreement [PDF]. "I have no memory specific to any specific agreement," the breezy Mr. Michels admits on the stand. Ditto for Amendment 1. Did he review any drafts, at least, even if he didn't involve himself in the process? Nah. He worked from term sheets:
We always worked from term sheets. And term sheets are things that lawyers don't write. They're simple. They're easy to read. They're clear. They're in English. I reviewed term sheets.
Mr. Jacobs at this point is having too much fun, methinks. He asks who is "we"? And Michels says Mahon, Madsen, Geoff Seabrook and Steve Sabbath. Uh oh. He's just contaminated them too, if all they were using was term sheets. Michels then says that not only did SCO buy Unix, it bought UnixWare, as well as "SVR IV and SVR III and SVR V". Here's his explanation of the TLA's purpose:
A Yes. We wanted to make sure that that license didn't give them any rights to go back into the Unix business or to use that technology other than had incidentally perhaps crept in. And so we -- we did effectively grant them rights to Unix technology as necessary to protect them from any incidental use of Unix inside of their existing products.
Next he waxes poetic about copyrights. Software businesses are about IP, he says, and you don't buy software without the copyrights. It's so essential, he says, it's like "breathing oxygen". It's "in the water". "There's no way," he says, "that the deal could have happened without getting the copyrights." And yet the SCO Group arranged to sell some IP assets to Darl McBride not too many months ago, in February, and the proposed deal was written with some of the copyrights remaining with SCO. Darl was to license the rest, as you can see on page 3 of this part [PDF] of the deal's paperwork, the Source Code License Agreement, Exhibit B. So perhaps Mr. Michels' analogies were a bit over the top. One can do such deals, I deduce, and SCO today is willing to do them. The deal later changed to a higher price so as to convey the copyrights too, but deals can be either one way or another, and the sky doesn't fall in, despite the testimony of SCO witnesses and the unused expert testimony of G. Gervais Davis that it never happens.

I know. SCO has always been in the Keystone Kops vein. What were they thinking, when they set up that deal?

The cherry on top of Michels' testimony is his assurance that there was no break in Santa Cruz's patterns of putting its own copyright on the code. But the truth is, they didn't do that. We've demonstrated that on Groklaw already repeatedly, but you can do it for yourself if you have Unix or Unixware. Just look at the copyrights with your own eyeballs.

The court takes a break, and you may want to too. When they return, before they play the Novell cross examination part of the video of Michels, the parties' lawyers discuss if Troy Keller is on the witness list, and he isn't, so the lawyers agree to try to work it out to see if he can be a witness for SCO on the following day. He was a lawyer who worked on the Santa Cruz to Caldera deal in 2000 and 2001. So that's five or six years after the Novell/Santa Cruz APA, which he had nothing to do with. He read it. So it's another attempt to get a lawyer on the stand who wasn't at all involved in the actual deal opining on what the deal meant with regard to copyrights. I don't know why they didn't just put Davis on the stand. Here's Keller's declaration. I've always found it odd that he claims he read the APA and all the amendments back then, including Amendment 2. Yet in 2003 SCO claimed to have "discovered" Amendment 2 in an old file cabinet a month *after* suing IBM. How could they not know about it until then? I find that story impossible to believe, since it doesn't match this declaration, for one thing. Mr. Keller never did take the stand, although he was deposed in the middle of the trial in another room, and if you read that linked article about his declaration, you may think he's a very fortunate man to be able to avoid the MOFO team asking about all that, if I could do as thorough a job of debunking his declaration, and I'm just a paralegal.

Then they get back to playing the Michels deposition video, but now the parts that Novell wants the jury to see, like the jaw-dropping part where Michels admits he's never even read the APA. He's glanced at it, and he's "skimmed through little bits of it", he says, but he didn't read it back then and he hasn't read it now, and ditto for the TLA and the amendments. He's not a lawyer.

No kidding.

So, asks Jacobs, before you signed your declaration, you hadn't read the APA? Nope, says the genial and nonchalant Mr. Michels. So how would you know what the deal was? He'd call the lawyer. Besides, it was the Board's responsibility to scrutinize details.

Heh heh. And yet, they didn't notice the "excluded assets" language? Hmm.

Burt Levine

So, after that amusing testimony, up comes the deposition testimony of Burt Levine, yet another SCO witness who had nothing at all to do with Amendment 2. He was an AT&T lawyer back in the '80s who went to USL when it was spun off in 1991. When Novell purchased everything from USL in 1993, Levine was there, and afterward he went to work for Novell. He was with Novell in 1995 for the deal with Santa Cruz, but only a few months, though, and then he went to work for Santa Cruz, at least by February 1, 1996. He views the excluded assets language in the APA as unclear, in that it seems to contradict what he thought the deal was, so maybe it was a "mutual mistake which wipes out any kind of an integration clause." Nevertheless he admits, in passing, that you can exclude a copyright if you are transferring just "the physical manifestation of the asset"-- which is exactly what Novell says it did.

He matches his testimony to all the others, claiming that the revenue stream was part of the consideration. That was the intent of the parties, but he admits it doesn't say that. But it's "inconceivable" that anyone would do this deal as written.

He also testifies that in his time at Novell, he was impressed that "it was a very ethical company". That doesn't help SCO, I don't think, but that's what he volunteers, adding that they'd never hold back something the other side was entitled to. This is all happening during SCO questioning him at the deposition. And it's SCO wanting to play this for the jury. And again, I can't figure out why they would want to.

Next, Novell plays the parts it likes. Michael Jacobs asks him what, as an experienced lawyer, the phrase "excluded assets" means. I know some of you hate lawyers already, so I hesitate to show you his answer, but here it is:

If you have a definition in the agreement of a particular term, an asset means so and so and so and so and so and so, usually you would put the exclusion right in that same paragraph, which is my practice. I'm assuming, because I don't know different, that this has got the same effect that whatever an asset is, it does not include this.
I know what you're thinking, that your little sister could explain it in a straighter line than that. So can he, of course. Mr. Jacobs helps him out by asking if he agrees that it means "assets that are not included in the purchase" and he admits that "as a matter of form that's true." He may not wish to support the words, let alone mouth them: it means Santa Cruz didn't get the stuff on the excluded assets list. Jacobs is unrelentingly moving his chess pawn forward:
Q. -- assets, correct? In reading this, do you understand that Novell is excluding all patents from this asset transfer?

A. I understand what the agreement says, I understand what the exclusions are in the document.

Q. Okay. And based on reading this exclusion in the contract do you understand that all copyrights and trademarks except for the trademarks UNIX and UnixWare are excluded from this asset transfer?

A. No, I don't.

Q. You disagree with the language in this schedule; is that right?

A. No, I don't disagree that these are listed here, I disagree that in the context of this agreement that this is, that this is the whole story.

Q. Based on what you're saying today, would you have stricken this from the Excluded Asset Schedule?

A. You're asking me to say what I would have done, certainly that would have been something that went through my mind, I don't know what I would have done.

But Mr. Jacobs knows. It seems Mr. Levine has forgotten something:
Q. So I take it today 12 years after the fact, you would strike this reference to all copyrights and trademarks except for the trademarks UNIX and UnixWare; is that right?

A. Or would have tried to have the agreement reformed or amended, yeah.

Q. You wouldn't have left it in, correct?

A. No, I wouldn't have left it in.

Q. In fact, Mr. Levine, you did review schedule 1.1(b) prior to the execution of this Asset Purchase Agreement on September 19th, 1995, didn't you?

A. I don't recall.

Check. Mr. Jacobs hands him an exhibit, a fax from Levine to Aaron Alter at Wilson, Sonsini dated September 18, 1995, the day before the APA was signed:
Q. Turning to Page 2 you write a note to Aaron Alter and it says, "Aaron: Attached are copies of the following: A suggested markups of certain pages in Schedules 1.1(a) and 1.1(b)." Do you see that?

A. Yes.

So he had his opportunity to change the excluded assets language in 1.1(b) back in 1995 so as to add copyrights to the included assets list. Let's see what he did:
Q. And then do you see you've made some comments on Roman V relating to intellectual property?

A. Yes.

Q. Okay. And you made one change adding the phrase "and to the extent" in between the phrase "trademarks UNIX and UnixWare as," and the phrase, quote, held by seller, do you see that?

A. I see it.

Q. You left in place "trademarks UNIX and UnixWare" as a type of intellectual property to be an included asset; is that right?

A. Yes.

Q. Okay. And you did not add any other types of intellectual property to this list of included assets, did you?

A. No.

Q. You didn't add copyrights?

A. Not as a specific item, no.

Q. Okay. You did not add UNIX copyrights?

A. No.

Q. You did not add UnixWare copyrights?

A. No.

Q. You did not add patents?

A. No.

And here's checkmate for Mr. Levine:
Q. And do you see that this is your markup of a portion of Schedule 1.1(b) of the excluded assets?

A. That's what it appears to be, yeah.

Q. And you actually reviewed the Intellectual Property section of the Excluded Assets Provision of Schedule 1.1(b) before the Asset Purchase Agreement was executed on September 19th, 1995; isn't that correct?

A. Yeah. Yes.

Q. And specifically looking at and commenting on intellectual property you deleted a reference to patent licenses, do you see that?

A. Yes.

Q. Okay. And do you see that in reviewing a draft Schedule 1.1(b) prior to the execution of the agreement you specifically looked at and commented on the exclusion of all copyrights and trademarks except for the trademarks UNIX and UnixWare?

A. Yes.

Q. Okay. And do you see that you made only one comment on that line item?

A. Yes.

Q. Okay. And the comment that you added was at the very end a phrase, quote, as and to the degree held by Seller, quote; is that right?

A. That's true.

Q. Okay. When you looked at the Excluded Asset Provision prior to the exclusion of the Asset Purchase Agreement, you left in tact the exclusion of all copyrights and trademarks except for the trademarks UNIX and UnixWare; isn't that correct?

A. Yes.

Q. And you also left in the exclusion of all patents as being a transferred asset; isn't that right?

A. Yes.

Q. And again you passed your comments on to the outside lawyers of Wilson Sonsini who were representing Novell in the negotiation and drafting of this contract between Novell and Santa Cruz, correct?

A. That's correct.

Q. And your inclusion of "all copyrights and trademarks except for the trademarks UNIX and UnixWare" in the Excluded Assets provision of Schedule 1.1(b) was also transmitted to Santa Cruz during the negotiations, correct?

A. Okay. My -- inclusion it wasn't modified "all of the copyrights and trademarks," yeah.

Q. You did not modify the line item "all copyrights and trademarks except for the trademarks UNIX and UnixWare," correct?

A. No.

Q. And so when your comments on Schedule 1.1(b) were transmitted to Santa Cruz the line item "all copyrights and trademarks" was included as an excluded asset, correct?

A. It was included.

Ta da! The masterful Mr. Jacobs at work. Trapping a fellow lawyer in his own words is very, very hard to accomplish, but here he has done it. And that isn't even the worst for Levine, because Jacobs now reads an email Levine sent to Chatlos in which Levine wrote:
My reading of the Asset Purchase Agreement is that while we would have the right to direct SCO to offer HP licenses on any terms we choose with respect to any SVRX products that HP needs to carry on the Rhine River work, it is not clear whether we can restrict SCO in the terms they can offer HP for UnixWare licenses for this purpose. Do you think we should try to cover by amendment that at least with regard to HP, we should have the right to specify the terms for UnixWare licenses as well?
This November 16, 1995 email is from the man who has just testified on the stand under oath that his understanding of the APA is that Novell had no right to waive. And yet back in the day, he understood it to mean the very opposite, that Novell had the right to direct SCO on any terms it chose with respect to any SVRx products. I can just imagine Mr. Levine slinking off the stand.

William Broderick

And then finally a live witness, our final one of the day, Bill Broderick of The SCO Group takes his place. Earlier, in 1991, he was with USL, managing the sales operations, until Novell bought the business, and then he went to Novell but still working on licensing source code. Then when Novell sold, he went to Santa Cruz in 1995. He was still licensing source code, but Santa Cruz, he tells us, had a binary product also. Broderick informs us that it was in fact Burt Levine who drafted the notice letter from Novell, lettings customers know of the transition. And then they had to get a second letter done for companies that had signed contracts with Novell, to get their approval for the assignment. SCO shows an exhibit, the latter type of letter, and Ted Normand reads from it:

As you may know, Novell transferred to The Santa Cruz Operation, Inc., SCO, its existing ownership interest in UNIX System-based offerings and related products as listed in Attachment A of this letter "collectively Transferred Products."
Broderick testifies that to him that matches his lock, stock and barrel understanding of the deal. But you can see with your own eyes, it doesn't say that. It says the ownership was going to transfer on the *products*, and it is silent on copyrights. This is the famous Prentice Hall letter [PDF] that you may recall from Darl McBride's testimony, or his attempt to use it in his testimony, at the first SCO v. Novell trial in 2008. As I explained at the time, AT&T and Prentice Hall had done a book deal in 1986, and this letter is about that. But it says nothing about copyrights, only ownership of the products, which is what SCO did get, the physical master tape and boxed stuff. And look at the RE part of the subject of the letter:
RE: December 17, 1986 Publication Agreement, as amended, now in effect between Novell, Inc. ("Novell") and Prentice-Hall, Inc. ("Prentice-Hall")
As you can see, this letter was not about software or copyrights. It was about a publication agreement from 1986, and it was letting Prentice Hall know it makes sense going forward to deal with SCO and that Novell represents that SCO has undertaken in writing to assume the obligations, and we know from the APA that contracts did transfer. He then states that his licensing work was exactly as it had been at Novell, just that they added licensing also binary products. And then Normand shows him the AT&T-IBM agreement, and just as they begin to discuss it, the judge indicates it's time to end for the day. Thank heaven. On day 5, Broderick will come back, and then Ty Mattingly and John Maciaszek are promised, plus the videotaped deposition of Maureen O'Gara. That should be a hoot. The parties may need to come in early to discuss further the Keller matter, if they can't resolve it in a meet and confer, and with that the day comes to an end.

But here's the bottom line impression I get so far: that all of SCO's evidence *almost* proves what it wants to prove, but not quite -- it never seems to go all the way to a home run.

Housekeeping After the Jury Leaves: Mentioning Prior Trials and Orders

After the jury leaves, perhaps pondering that very thing, the lawyers take up some matters, the most important being this one, raised by Novell's Michael Jacobs, regarding the issue of the court's prior ruling that neither side mention prior trials and rulings. But Jacobs feels that SCO has opened a door:

Mr. Jacobs: ... We think that there was a quite significant door opening event yesterday and in opening statements. And I just want to pull up my notes on this. The topic is the admissibility or instructions to the jury of what happened during the course of this litigation over the past several years.

The court's prior ruling and strong indication was that the court was reluctant to have the jury hear about that. And we understand the court's reasoning in that regard. The door opening event is that in examining Mr. Duff Thompson yesterday, Mr. Singer asked him what we're going to colloquially refer to as the "to this day" question. He asked Mr. Thompson, isn't it true that to this day Novell is publishing the allegedly slanderous statements on its website? That was not inadvertent because three times in SCO's opening statement the "to this day" comment was made as well. SCO argued to the jury "to this day Novell is publishing these statements." Well that places into question Novell's continuing basis for making the statements for not taking down, I suppose, the statements from the website. And, of course, Novell's continuing intent is heavily informed by the rulings that have been received over the course of the past several years.

What we propose to do is crystalize this in writing. We would -- we realize it is something that the court has given this whole question, that the court has given a lot of thought to this, so we would like to submit something tomorrow. Maybe give SCO until the first thing Monday or something like that. It is -- it is not urgent that the jury be informed of this, but I think both sides should know where this issue would fall out going forward.

THE COURT: Okay. Your point is well taken and I would request that you put it in the form of writing with a specific request for SCO to respond.

And after that, SCO's Stuart Singer mentions there are some disputes regarding the upcoming O'Gara deposition. The judge says to put it in writing. It's easier for him to read it in advance before he hears oral argument. Singer agrees to do so by "this afternoon", and with that the trial day is finally over.

Whew.

This is our text version without line numbers, for readability, particularly for those who depend on screen readers. But we also have a text version with line numbers, to match the PDF filed with the court. For transcripts as text *with* line numbers for the rest of the days of the trial, click on the date in this calendar that interests you. Eventually, we'll do a calendar for the text versions without line numbers as well. You'll find all the PDFs for the entire trial there as well, so you can verify the text versions for every day:

March 2010
M Tu W Th F
08 09 10 11 12
15 16 17 18 19
22 23 24 25 26

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

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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
---------------------------------
March 11, 2010
Jury Trial

REPORTED BY: Patti Walker, CSR, RPR, CP
[Address] Salt Lake City, Utah [Zip]

391


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
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]

392


I N D E X
Witness Examination By PAGE
Jack Messman Deposition 397
James Wilt Deposition 440
Alok Mohan Deposition 455
Douglas Michels Deposition 488
Burt Levine Deposition 515
William Broderick Mr. Normand (Direct) 541

EXHIBITS RECEIVED INTO EVIDENCE:
Plaintiff's 94 404
Plaintiff's 407 407
Plaintiff's 96 411
Plaintiff's 105 416
Plaintiff's 180 470
Defendant's J-10 485
Defendant's X-3 532
Defendant's I-5 539
Plaintiff's 580 550
Plaintiff's 4 556

393

SALT LAKE CITY, UTAH; THURSDAY, MARCH 11, 2010; 8:30 A.M.

PROCEEDINGS

THE COURT: Good morning.

Do we have anything before we bring the jury in?

MR. SINGER: I don't believe so, Your Honor. I did want to note that we have decided not to call Mr. Davis, so we simply have depositions today. We have five depositions lined up, four of them are ready to proceed. On the fifth one, there are two objections, which perhaps at a break could be resolved. But other than that, we have all depositions for today all set ready to go.

THE COURT: All right.

MR. BRENNAN: Your Honor, just on that later point, my impression is the deposition that Mr. Singer has referenced is the deposition of Mr. Levine; am I accurate?

MR. SINGER: Yes.

THE COURT: The one over which there is dispute.

MR. BRENNAN: If the Court would like, we could do it at a break. On the other hand, I don't think this issue has been properly or timely tendered to the Court in line with the instructions you gave us before. So if you want to do it on the fly, we can do that.

THE COURT: Is there anything in writing that I can look at during the break?

MR. SINGER: We can give you a copy of the

394

transcript. The objection is to two passages.

THE COURT: So you are objecting to something designated by defendants?

MR. SINGER: I think the other way around, they are objecting.

MR. BRENNAN: The very short version, without trying to argue it now, is we believe this is contrary to the motion in limine on this witness. I think the express terms of the motion in limine would prevent this. There are some other problems with the question and answer.

THE COURT: If you would give me what you have in writing and I'll try to look at it at the first break and decide whether I need argument or whether or not I can rule.

MR. BRENNAN: I'm sorry. I had my shirt sleeve tugged.

THE COURT: I just said I would like to look at what you have in writing and I'll decide whether or not I need further argument or whether or not I might be able to decide. You are correct that the timing on this is not what the Court had requested. I don't want to waste trial time either.

MR. BRENNAN: What we have at this juncture, Your Honor, we have Your Honor's motion in limine, we have the testimony that's at issue, we have the other testimony that formed the basis for the Court' motion in limine. What we

395

don't have is a formal written position on that.

THE COURT: I think I should be able to discern whether I need it from what you have. If you would just give that to Mr. Copeland right now.

MR. SINGER: Just for the record, the issue concerns the highlighted portion of page 161, line 11, through page 162, line ten of Burt Levine's deposition.

MR. BRENNAN: Thank you.

Also for the record, Your Honor, what I will be tendering does have our handwriting. I hope that's not offensive to the Court. But this is the Court's motion in limine with the highlighted portions, and also from the same deposition the witness's testimony essentially saying he didn't know anything about Amendment No. 2. That page referenced is page number 190, lines 11 through 22.

THE COURT: All right.

MR. BRENNAN: Thank you, Your Honor.

THE COURT: Thank you.

Counsel, if there is nothing else, I'll have Ms. Malley bring the jury in.

Was Mr. Davis the elderly gentleman who has been sitting through trial?

MR. SINGER: Yes.

THE COURT: Is his health not good, is that the problem?

396

MR. SINGER: He does have some health issues, that was one factor that played a role in our decision.

THE COURT: Okay.

MR. SINGER: We looked at, though, the fact that -- just to get us back on schedule, we concluded we didn't need him.

THE COURT: I just hate for someone to suffer through three days of trial and not get the reward of being able to testify. Maybe he wouldn't deem it to be a reward.

MR. SINGER: I think he is disappointed.

MR. JACOBS: As am I, Your Honor.

(Jury present)

THE COURT: Good morning, ladies and gentlemen.

Earlier in the trial it was explained to you what a deposition is. And today the witnesses that you will be hearing will all be by way of video depositions, depositions that were taken and videos were made of them. One of them -- I believe the first one will be Mr. Messman.

Is that correct?

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

THE COURT: I think I should indicate to the jury that he will be called as a live witness later in the trial, but plaintiffs wanted to put this part of his deposition before you earlier in the trial than he will be available. So you will hear from him again.

397

Mr. Singer, with that introduction, if you would like to go ahead, please.

MR. SINGER: Thank you, Your Honor.

We call, through deposition, the deposition of Jack Messman that was taken in Boston, Massachusetts on February 7th, 2007.

(Jack Messman Deposition)

Q I would like to begin with your background. When did you join Novell?

A I've been associated with Novell since -- I think it was 1981. I was a member of a venture capital firm called Safeguard Scientifics, and we had a significant investment in Novell, which was called Novell Data Systems at the time. And it was a hardware manufacturer manufacturing a PC disk drive and a printer. And we decided to change the strategy of the company in '81 because the competitors' products were significantly lower. So I became CEO for about two years and turned the company into a software company. I then hired Ray Noorda as my replacement, and other than a brief period I've been on the board of Novell since then. Then in 2001 Novell acquired Cambridge Technology Partners, where I was the CEO, and after the merger I became the CEO of the combined companies. And my predecessor at Novell, Eric Schmidt, left to become CEO of Google.

Q Did you have any personal involvement in the

398

transaction by which Novell sold certain assets to Santa Cruz?

A I was a director of the company at the time. Other than that, I had no personal involvement.

Q So as a director -- do you recall if that transaction required board approval?

A Yes, it did.

Q And you approved the transaction; is that correct?

A The board approved the transaction.

Q Other than considering and approving the board, at the board level, you had no other involvement in the negotiating of the asset purchase agreement and other documents related to that transaction; is that fair?

A Yes.

Q This is Exhibit 1, which has previously been marked, and it's the asset purchase agreement between Santa Cruz Operation and Novell dated September 19, 1995. Have you ever read this agreement from cover to cover?

A Yes.

Q When did you first do so?

A I would say it was in 2003.

Q Can you be more exact?

A I would say it was after SCO raised certain issues in the marketplace.

Q Well, more precisely, do you recall if you had read the

399

asset purchase agreement prior to a press release which was issued by Novell on May 28th, 2003?

A May 28th. I think that's the press release in response to a letter that Darl sent me from SCO, and I probably didn't read it. I did glance at it, but I didn't study it in-depth until sometime after that.

Q Do you recall ever having a discussion with anyone prior to May 28th, 2003 on what was intended by the asset purchase agreement?

A No.

Q That would include, then, by definition, the individuals who had been involved in negotiating the deal and drafting the documents back in 1995?

A Yes.

Q You never spoke with them prior to May 28th, 2003?

A Yes.

Q About the intent of the asset purchase agreement. Did you have any personal involvement in the negotiation of Amendment No. 2 to the asset purchase agreement?

A No.

Q Did you have any involvement with the drafting of Amendment No. 2?

A No.

Q Were you surprised to learn of the existence of Amendment No. 2?

400

A Yes.

Q You had not previously seen it in the course of your work at Novell?

A I had not seen a signed copy.

Q Had you seen an unsigned copy?

A Yes.

Q When did you see an unsigned copy of Amendment 2?

A It was just prior to the conversation that I had with Darl in early June.

Q My question precisely is: Did you take certain steps to determine whether Novell had executed Amendment No. 2?

A Yes.

Q Did you determine whether or not Novell had executed Amendment No. 2?

A Ultimately we did.

Q How much time elapsed before you made that determination?

A My recollection is that we found our version of the signed copy a couple months after Darl sent me a signed copy.

Q Is it true that Novell had in its possession at all relevant times in 2003 a signed copy of Amendment No. 2?

A No. It was only after Darl sent it to me that we had a signed copy.

Q Did you subsequently find a signed copy in Novell's

401

files?

A A couple of months later we did.

Q Did you have any reason to believe that that copy was not in Novell's files throughout the period in question, say back from the beginning of 2003?

A I don't know where -- we didn't know where it was, and we looked in all the normal spots, and ultimately we found it in the finance files rather than in the legal department or the contracts department.

Q So let me see if I can just clarify this point. You had Amendment No. 2 in the finance department at Novell, correct?

A Yes, that's where it was found.

Q You have no reason to believe that it wasn't in the finance department of Novell say throughout the year 2003?

A I have no reason to believe that, right.

Q It's just you weren't aware that it was in those files?

A I was not aware of it.

Q Do you know if others at Novell were aware that Amendment No. 2 was in fact signed and in the finance department files?

A To my knowledge, nobody knew that we had a signed copy of Amendment 2.

MR. SINGER: Your Honor, at this point we would like to put Amendment No. 2, which is in evidence as part of

402

SCO Exhibit No. 1, before the jury, which is what the witness is looking at in the deposition.

THE COURT: Any opposition to that?

MR. ACKER: I think the deposition should just be played as it is, Your Honor, as opposed to interjecting exhibits throughout it.

MR. SINGER: Your Honor, the questioning is about the exhibit. The witness has the exhibit before him. The exhibit is in evidence. It's just the jury following the deposition. What we propose to do is put the exhibits on -- certain exhibits which we would move into evidence, if they have not already been admitted into evidence -- this one is in evidence -- and ask that certain portions that are relevant be blown up, published to the jury, then taken down and continue with that passage of the deposition, as we would do if the witness was here at trial.

MR. ACKER: If they wanted to do that and highlight the deposition that way, they should have asked questions at the deposition to highlight those portions of the exhibit as opposed to this sort of presentation.

THE COURT: Mr. Acker, I believe Mr. Singer is correct. If Mr. Messman was here, this would have been the appropriate time to allow the publishing. So the Court will permit it.

MR. SINGER: Mr. Calvin, could you blow up -- what

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is, for the record, before the jury is Amendment No. 2, which is part of Trial Exhibit SCO 1, and would ask if you could blow up the first part, section A. From the top down to section A, highlight that section.

May I read this into the record?

THE COURT: Go ahead and read it into the record.

MR. SINGER: A, with respect to schedule 1.1(b) of the agreement titled Excluded Assets, section V, subsection A shall be revised to read: All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.

I would like to resume with the playing of Mr. Messman's deposition.

THE COURT: If you would, please.

Q If we turn to Amendment 2, which is also in front of you.

A Yes.

Q If you'd look at section A. Do you see it refers back to a schedule of excluded assets, and it states that, all copyrights and trademarks, except -- and this would be an item of excluded assets, you understand that, correct?

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A Yes.

Q You understood that when you read this in 2003 for the first time?

A Uh-huh.

Q This was modifying the assets that Novell got to keep under the agreement?

A Yes.

Q It would be all copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. Do you see that?

A Yes.

Q I would like to show you what --

MR. SINGER: We would like to, at this point, put before the jury the exhibit, which is the letter to Mr. McBride dated May 28th, 2003. And I thought I moved this into evidence previously. This would be SCO Trial Exhibit 94.

I would like to move Exhibit 94 into evidence at this time.

THE COURT: Mr. Acker.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 94 was received into

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evidence.)

MR. SINGER: If I could similarly publish this to the jury in the same fashion.

THE COURT: I'm assuming that this letter is now going to be testified to by Mr. Messman, that's why we're doing this; is that correct?

MR. SINGER: Yes. This is now going to be discussed.

Mr. Calvin, can you go down to the second page, page 2, and the last paragraph.

This is from the letter of May 28th, 2003, from Jack Messman to Darl McBride. This paragraph reads, importantly, and contrary to SCO's assertions, SCO is not the owner of the UNIX copyrights. Not only would a quick check of U.S. Copyright Office records reveal this fact, but a review of the asset transfer agreement between Novell and SCO confirms it. To Novell's knowledge, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights. We believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights. Apparently, you share this view, since over the last few months you have repeatedly asked Novell to transfer the copyrights to SCO, requests that Novell has rejected. Finally, we find it telling that SCO failed to assert a claim for copyright or patent

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infringement against IBM.

Please continue with the deposition.

Q -- has previously been marked as Exhibit 1012, which is a letter from you to Mr. McBride dated May 28th, 2003. Is this a letter which was sent by Novell -- in fact, sent by you as CEO of Novell to Mr. McBride, who was the president and CEO of the SCO Group?

A Yes.

Q Did you approve this letter before it was sent?

A Yes.

Q Do you recognize that in this letter you made the statement that appears in paragraph -- the last paragraph on page 2, quote, SCO is not the owner of the UNIX copyrights; is that correct?

A Yes.

Q At the time when you stated this to SCO, had you fully reviewed personally the entire APA?

A I think I had at this time.

Q You had not been read -- in fact, you were not aware of Amendment No. 2?

A That's right.

Q At the time you made this statement on May 28th, 2003, you had not spoken about the intent of the APA with any of the individuals who had previously been at Novell and had negotiated that deal or drafted those documents, correct?

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A I did not talk with them about the intent. I only knew what the agreement said.

Q Had you instructed either Mr. Stone or anyone else to go back and speak with the people who had actually negotiated the transaction on behalf of Novell and see what was intended with respect to the transfer of copyrights?

A I would assume that they would do that as a normal course of their work.

Q But you never made such an express instruction?

A I never instructed them to do so.

Q I would like to show you --

MR. SINGER: At this point, I would like to move into evidence SCO Exhibit 525, which is the press release which published the May 28th, 2003 letter.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 525 was received into evidence.)

MR. SINGER: I would like to publish this in the same fashion before the jury before the witness proceeds to testify concerning this letter.

THE COURT: Go ahead.

MR. SINGER: Could you show the top part first, the press release.

THE COURT: It may be best if you, again,

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emphasize the date of this press release.

MR. SINGER: This is the press release from Novell dated May 28th, 2003. The heading is Novell challenges SCO position, reiterates support for Linux. Provo, Utah. May 28th, 2003. Defending its interest in developing services to operate on the Linux platform, Novell today issued a dual challenge to the SCO Group over its recent statements regarding its UNIX ownership and potential intellectual property right claims over Linux.

First, Novell challenged SCO's assertion that it owns the copyrights and patents to UNIX System V, pointing out that the asset purchase agreement entered into between Novell and SCO in 1995 did not transfer these rights to SCO. Second, Novell sought from SCO facts to back up its assertion that certain UNIX System V code has been copied into Linux. Novell communicated these concerns to SCO via a letter, text below, from Novell chairman and CEO Jack Messman in response to SCO making these claims.

Mr. Calvin, could you go down to the last -- what would be the paragraph that appears on the second page of the letter.

This is the reproduction of the letter. Could you go down a little bit further?

This is the same paragraph that was previously read into the record from the May 28th, 2003 letter

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beginning with the statement, importantly, and contrary to SCO's assertions, SCO is not the owner of the UNIX copyrights.

Could you resume the playing of Mr. Messman's deposition.

Q -- Exhibit 1013, which is a press release issued by Novell on May 28th, 2003. Did you approve the issuance of this press release by Novell?

A Generally, yeah, I reviewed all press releases.

Q In this case you approved the issuance of the press release that appears as Exhibit 1013?

A Yes.

Q Do you recognize that the text of the letter from you to Mr. McBride, which we've just been looking at, Exhibit 1012, was reproduced in the press release?

A Yes.

Q Included therefor in the press release is your statement, which we've seen in the letter and we're now looking at in the press release, where you stated, quote -- this appears on the second page of the press release, the third paragraph before the bottom, quote, SCO is not the owner of the UNIX copyrights. Do you see that?

A You're on page 2 of this --

Q Page 2. It would be the third paragraph from the bottom. Importantly, and contrary to SCO's assertions, SCO

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is not the owner of the UNIX copyrights?

A I see that.

Q So is it fair to say that Novell, through your action as CEO, intentionally communicated to the public on May 28th, 2003, that SCO did not own the UNIX copyrights; is that correct?

A Yes.

Q Is it fair to say that you released the letter to Mr. McBride, your May 28th letter, in a press release so as many people as possible would read about it?

A That was the mechanism by which we could get our side of the story out. I didn't have a feeling as to who would read it.

Q At the time you wanted to get your position out as broadly as possible; is that correct?

A Sure.

Q Were you subsequently aware that SCO's stock price declined 30 percent in the immediate aftermath of your press release?

A SCO's stock price was going up and down during that period of time based on what was happening and what Darl was saying in the marketplace. I can't recall what it did on any given day when we were making these --

Q Clearly at the time of the press release, because it was the same day as your May 28th letter, you also had at

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that time no personal knowledge and had not spoken to any of the individuals who negotiated the APA or its amendments with respect to the transfer of the copyrights, correct?

A That's correct.

Q At the time of the press release on May 28th, just the same as the time of the letter, you were unaware of the existence of Amendment No. 2; is that correct?

A That's correct.

Q We haven't marked that yet --

MR. SINGER: At this time, I would like to move the admission of SCO Exhibit 96, which is Mr. LaSala's letter to Mr. McBride of June 6th, 2003, which accompanies the June 6th, 2003 press releases. It's the next document the witness will testify to.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 96 was received into evidence.)

MR. SINGER: Mr. Calvin, could you put Exhibit 96 on the screen and highlight or enlarge the portion of the text.

This is a letter from Joseph A. LaSala, senior vice president, general counsel and secretary of Novell, to Darl McBride, the president and CEO of the SCO Group, dated June 6th, 2003.

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Dear Mr. McBride, I've received your letter to Jack Messman with respect to Novell's May 28th, 2003 press release.

For your information, Novell has today issued a press release with respect to Amendment No. 2. A copy is attached for your ease of reference.

Your letter contains absurd and unfounded accusations against Novell and others, coupled with a veiled threat to publicly state those allegations in a SCO press call to be held today at 11:00 a.m. eastern standard time. Novell continues to demand that SCO cease and desist its practice of making unsubstantiated allegations, including the allegations contained in your letter of June 6, 2003. Sincerely, Joseph A. LaSala.

Turn to the press release, please.

This is for immediate release June 6th, 2003.

THE COURT: This was part of Exhibit 96?

MR. SINGER: Yes. This is part of Exhibit 96.

THE COURT: All right.

MR. SINGER: Novell statement on SCO contract amendment. Provo, Utah. June 6, 2003. In a May 28th letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. Amendment No. 2 to the 1995 SCO-Novell

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asset purchase agreement was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. The amendment does not address ownership of patents, however, which clearly remain with Novell.

Novell reiterates its request to SCO to address the fundamental issue Novell raised in it May 28 letter: SCO's still unsubstantiated claims against the Linux community.

Mr. Calvin, continue with the deposition.

Q This has previously been marked as Exhibit 1014. Have you seen this letter before that Mr. LaSala wrote Mr. McBride?

A Yes.

Q Did you approve Mr. LaSala sending it?

A Yes.

Q Did you review Mr. LaSala's letter in the press release that's associated with it prior to it being sent?

A Yes, I did review it.

Q And approved it being sent?

A Yes.

Q You agree this letter was written in response to the letter from Mr. McBride of the same date that we had just

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seen?

A This is responding to Novell's May 28th -- I'm sorry. He's responding on the June 6th to the May 28th, and then we're responding to him.

Q This was a response to demands that SCO had made that Novell clear up the record with respect to ownership of copyrights, correct?

A That's the demands they were making in their letter, yes.

Q And that press release, which was issued on June 6th, the response is the one which appears on the second page of this Exhibit 1014, correct?

A That's it.

Q That press release states that, in a May 28th letter to SCO, Novell challenged SCO's claims to UNIX patent and copyright ownership and demanded that SCO substantiate its allegations that Linux infringes SCO's intellectual property rights. Amendment No. 2 to the 1995 SCO-Novell asset purchase agreement was sent to Novell last night by SCO. To Novell's knowledge, this amendment is not present in Novell's files. The amendment appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996. The amendment does not address ownership of patents, however, that clearly remain with Novell.

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That statement was issued with your approval as an official Novell press release on June 6, 2003, correct?

A I did approve the release of this.

Q Everything in that statement was true and correct, to the best of your knowledge?

A Yes.

Q These statements are all true and correct, to the best of your knowledge?

A Yes.

Q Now the statement that to Novell's knowledge Amendment No. 2 is not present in Novell's files, it turns out that statement was false, correct?

A No. There was no signed amendment in our files.

Q You had determined at a later time that there was a signed copy in the CFO's files?

A Yes.

Q Don't you consider the CFO's files to be Novell's files?

A Sure.

Q At the time Novell said this, it was not aware that that signed copy was in Novell's files. It later turned out to be in Novell's files; is that correct?

A Yes.

MR. SINGER: I would now like to move into evidence SCO Exhibit 105, which is correspondence between

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Mr. LaSala and Mr. McBride dated August 4, 2003.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 105 was received into evidence.)

MR. SINGER: This is a letter, again, from Joseph

A. LaSala, senior vice president, general counsel and secretary, to Darl McBride, president and chief executive officer of the SCO Group, dated August 4, 2003.

Can you blow up the text of the letter so the jury can read this?

Dear Mr. McBride. This is further to my letter of June 6th, 2003 concerning ownership of the copyrights in UNIX and follows your announcement that SCO has registered its claim to copyrights in UNIX System V with the U.S. Copyright Office. We dispute SCO's claim ownership to these copyrights.

MR. ACKER: Your Honor, if we're going to read the exhibit, we should read the whole exhibit as opposed to just portions.

THE COURT: Let's go ahead and read the whole thing, then.

MR. SINGER: The asset purchase agreement, in schedule 1.1(b), contains a general exclusion of copyrights from the assets transferred to Santa Cruz Operation.

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Amendment No. 2 provides an exception to the exclusion, but only for, quote, copyrights required for Santa Cruz Operation to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies, close quote.

In other words, under the asset purchase agreement and Amendment No. 2, copyrights were not transferred to Santa Cruz Operation unless SCO could demonstrate that such a right was, quote, required for Santa Cruz Operation, close quote, to exercise the rights granted to it in the APA. Santa Cruz Operation has never made such a demonstration, and we certainly see no reason why Santa Cruz Operation would have needed ownership of copyrights in UNIX System V in order to exercise the limited rights granted SCO under the APA. Nor is there any reason to think that a transfer of the copyrights required for SCO to exercise its APA rights necessarily entails transfer of the entire set of exclusive rights associated with a particular copyrighted computer program.

Unless and until SCO is able to establish that some particular copyright right is, quote, required for SCO to exercise its rights under the APA, SCO's claim to ownership of any copyrights in UNIX technologies must be rejected, and ownership of such rights instead remains with Novell. Sincerely, Joseph LaSala.

Would you please continue the deposition.

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Q I would like to now show you Exhibit 1023, which is another piece of correspondence between Mr. LaSala and Mr. McBride that's been dated August 4th, 2003. Did you review this letter and approve it before it was sent?

A Yes.

Q In this letter, is it fair to say Novell rejects SCO's claim to ownership of any copyrights in UNIX technologies?

A Yes.

Q What background materials or other information not available to Novell in June of 2003 have resulted now in August of 2003 Novell taking this position?

A I don't think there were any new materials. There was a lot more attention devoted to the agreement and understanding the agreement.

Q So there was no new information that came to light, that you're aware of, between June 6th, 2003 and August 4th, 2003?

A Not that I'm aware of.

Q The position that Novell took in this letter was, quote, and I'm quoting from the third paragraph, we certainly see no reason why Santa Cruz Operation would have needed ownership of copyrights in UNIX System V in order to exercise the limited rights granted SCO under the APA. Nor is there any reason to think that a transfer of the

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copyrights required for SCO to exercise its APA rights necessarily entails transfer of the entire set of exclusive rights associated with a particular copyrighted computer program. That was Novell's position; is that correct?

A Yes.

Q Which of those two things is Novell's position, as you understand it, that no copyrights at all transferred or that only partially a copyright transferred, as suggested by the last sentence I read?

A My view is that we sold SCO the right to develop the code further than what it was at the time we sold it, we transferred the business to them, and they were going to evolve the code, particularly to try to unify UNIX, the various flavors UNIX and sell UnixWare.

Q So it's your view --

A And they didn't need the copyrights to do that.

MR. SINGER: At this point we have the Wall Street Journal article dated September 20, 1995 that is already in evidence. This is SCO Exhibit 133. With the Court's permission, we would publish it at this time.

THE COURT: Go ahead.

MR. SINGER: This is the Wall Street Journal article dated September 20, 1995. I would like to publish the first two paragraphs.

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Novell Inc. today is expected to announce plans to relinquish control of the widely used UNIX operating system to Santa Cruz Operation Inc. and Hewlett-Packard Company. The deal includes the purchase by Santa Cruz Operation of most trademarks and intellectual property associated with UNIX software, one person familiar with the situation said. He said he expects SCO to pay about $140 million, some of which will be shares of SCO, a Santa Cruz, California company, that sells its own version of UNIX.

Mr. Calvin, can you continue with the deposition, please.

Q I'd like to show you a Wall Street Journal article as the next exhibit. This is Exhibit 1030, Wall Street Journal article back on September 20, 1995. Do you recall whether you've ever seen this before?

A I don't recall it.

Q You were on the board of Novell and may have read it in The Wall Street Journal back then?

A I may have read it, yes.

Q Do you see where in this Wall Street Journal article it states in the second paragraph, the deal includes the purchase by Santa Cruz Operation of most trademarks and intellectual property associated with UNIX software, one person familiar with the situation said? Do you see that?

A I see it.

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Q Now if your position is correct, no intellectual property transferred to SCO, right?

A That's correct.

Q Do you know if Novell ever took any steps to correct The Wall Street Journal's characterization to the public of what had been sold?

A I don't know of any steps they took.

Q Are you aware of any public statement made by Novell after 1995, after the APA was signed, where Novell publicly stated it owned the copyrights up until the time, of course, of your press release of March of 2003 -- May of 2003?

A I don't know of any such thing, but they did do another transaction similar to this with BEA, and I know they may have made some comments then, but I don't know for sure.

Q Certainly as you sit here today, you are not aware of any public statement made during that eight-year period between the closing of the asset purchase agreement in 1995 and the press release which we've been looking at on May 28th, 2003 where Novell ever asserted ownership of UNIX copyrights?

A I'm not aware of any of that.

Q Look at Exhibit 1, and e-mail from Chris Sontag at SCO to Greg Jones at Novell. It says, attached is a first cut at a side letter to clarify the issues we discussed yesterday. I'll give you a call later, and so forth.

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Turning to Exhibit 2, you see a proposed letter. Have you ever seen this before?

A No.

Q Do you see that the proposed letter that SCO asked Novell to sign in February 2003 would, quote -- would clarify that, quote, all right, title and interest in and to the copyrights associated with SVRX agreements held by Novell at the time of the asset purchase agreements were intended to be included in the included assets identified on schedule 1.1(a).

A I see that, yes.

Q When you've earlier testified that it was your understanding that what SCO was asking for was a transfer of the copyrights rather than a clarification that those had transferred, were you aware of this correspondence between Mr. Sontag and Mr. Jones?

A No. I just became aware of it right now.

Q I take it, then, in the May 28th, 2003 press release, which told the public that SCO had asked for a transfer of the copyrights, you were not aware of the February 2003 correspondence that we're looking at which asked for clarification that those had been transferred; is that correct?

A That's correct. I've never seen this before.

Q When did you retire as the chief executive officer of

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Novell?

A June 21st, 2006.

Q Are you a stockholder in Novell at present?

A Yes.

Q Without wanting to pry into your financial affairs, would you say that your share ownership of Novell is material to yourself?

A Yes.

Q When did Novell begin considering a Linux strategy as part of its business?

A It was late 2002.

Q At the time when it first considered Linux as part of its strategy, what role did you envision Linux would play in Novell's overall business strategy?

A At the time we were going to take the services that were in NetWare and make them work on top of the Linux operating system.

Q At that time Novell didn't contemplate, either directly or through a subsidiary, being engaged in the business of distributing Linux itself?

A I think that -- our approach was to put the NetWare services on top of SuSE Linux, Readhat, even United Linux. We didn't care what Linux was underneath. Our strategy was to put our services on top of Linux.

Q But in late 2002 is when you decided that Novell should

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make the Linux strategy a significant part of Novell's business strategy moving forward?

A Yes.

Q When Novell decided it was going to pursue a Linux strategy in late 2002, did that lead you to believe it was important to have a relationship involving Linux with IBM?

A Well, we wanted to put NetWare on Linux and have IBM, Dell and HP sell it. All three of those companies had been involved with selling NetWare and had NetWare customers, and we felt that was a good transition to put NetWare on top -- the NetWare services on top of Linux so they could transition their customers to NetWare on Linux.

Q So one aspect of the Linux strategy, which would involve IBM, would be IBM selling a product of NetWare on top of Linux, correct?

A Yes.

Q Did there come a time when IBM paid Novell $50 million to assist in its Linux strategy?

A They paid us -- they bought $50 million worth of our stock, at my request, to give me comfort that they were going to support the Linux strategy.

Q When did that occur?

A We bought -- I think I said we bought SuSE Linux either in November or December -- I think it was November, and then the investment occurred like February or March of the

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following year.

Q When did you first discuss with IBM them making a $50 million investment in the stock of Novell?

A We had pretty much finished the negotiations with the sellers of SuSE Linux and the bidding got up to $210 million. We had $750 million worth of cash on our balance sheet, we didn't need the cash, but I wanted to make sure that if we bought this company, we would have support in the marketplace. So I called IBM to ask them what comfort they could give me that they were going to be there if we bought this company, bought SuSE Linux, and they asked --

Q Please continue.

A They asked me what were my thoughts as to what they could do. And we had talked about this back at Novell, and we were of the opinion that the best way that they could do that would be to sell our products and make an investment in the company, that would give a signal to the marketplace that they supported our acquisition of SuSE Linux.

Q My initial question was, when did you first discuss this with IBM. I think you discussed how the conversation came about, but you didn't put a date on that?

A I was saying we made the acquisition in November, and I think it was in -- it was just before we closed that I

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called them. I would say it was November.

Q Of 2003?

A 2003.

MR. SINGER: Your Honor, this completes the plaintiff's designations from Mr. Messman's deposition. There are a series of designated testimony that Novell wishes to present.

THE COURT: All right.

Q Now was it your understanding in 2003 that any copyrights were being transferred under this agreement by Novell to Santa Cruz?

A It was my understanding that they were not being -- they were not part of the assets being sold.

Q When did you first come to that understanding?

A Upon reading the asset purchase agreement.

Q Did you have any understanding one way or the other before reading the asset purchase agreement?

A I think in the board presentation they made to us in -- whenever it was, '81 or so. '83? No. Whatever that board presentation was, they basically said to us that the copyrights and the patents were not being sold.

Q Who said that?

A Well, I think David Bradford, who was the general counsel, was making the presentation.

Q He was the general counsel at the time of Novell?

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A Yes.

Q You have a distinct recollection of this board meeting, which would have been 1995, not 1981 or 1983?

A '95, right. Okay.

Q You have a distinct recollection now in 2006 that at this board meeting in 1995 the board was told that the copyrights and patents were not being sold?

A Yes.

Q Do you recall anything else that Mr. Bradford said with respect to assets being sold and not sold?

A No.

Q Just the issue about the copyrights?

A He explained the entire transaction, and it was a structured transaction, not a straightforward buy and sell. And it was complicated, and therefore we took time to understand what was being sold and what wasn't being sold. We were concerned about SCO and its viability, and we wanted to protect ourselves, because we had these royalty agreements out there, and therefore that was an issue that we were concerned about.

Q Did have you an understanding, based on what Mr. Bradford had said, that Novell was going to retain certain rights to receive royalties on existing licenses in order to -- to actually be part of the payment for the company?

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MR. BRAKEBILL: Foundation.

A Yes. We were selling certain of the assets that we had brought from AT&T, but not all of them, and we were not selling the existing royalty agreements, and we were not selling the copyrights and the patents.

Q If we turn to Amendment 2, which is also in front of you.

A Yes.

Q If you would look at section A. Do you see it refers back to a schedule of excluded assets, and it states that all copyrights and trademarks, except -- and this would be an item of the excluded assets, you understand that, correct?

A Yes.

Q You understood that when you read this in 2003 for the first time?

A Um-hum.

Q This was modifying the assets that Novell got to keep under the agreement?

A Yes.

Q It would be all copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. Do you see that?

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A Yes.

Q What was your view in 2003 as to which copyrights were necessary for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies?

MR. BRAKEBILL: Foundation.

Q Did you have any understanding?

A My understanding was that they didn't need any copyrights and patents to do what they were planning to do, which was to evolve the code that sat on top of the SVRX licenses.

Q This letter was sent to you May 12, 2003 by Mr. McBride of SCO. It's been previously marked as Exhibit 1021, dated May 12, 2003. Is this a letter which you received by fax on that date?

A I don't know how I received it.

Q Is this a letter that you received on or about that date?

A I recall getting this letter. Whether this is the one -- I mean, I received this letter.

Q Did you understand from this letter that SCO was asserting claims that Linux infringed on its UNIX rights?

A Let me read it. Yeah, I mean, that's what the assertion is, that UNIX is -- I mean, that Linux is violating the UNIX copyrights.

Q What did you do in response to this letter?

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A I think this is the initiation of my getting involved with these contracts and reviewing them and getting the officers who reported to me to start to address the issue and what we should do about it.

Q Why did Novell publish as a press release your letter to Mr. McBride of May 28, 2003?

A Well, there was a feeding frenzy in the stock market with regard to this issue that SCO continued to feed, and many of the statements that SCO was making were, in our opinion, misleading. And the press and the market weren't hearing our responses or our actions, so we decided that we had to be the ones who told them the other side of the story.

Q Did you have an understanding when you issued the press release that it was likely to adversely affect SCO's stock price?

A No.

Q You didn't think it would affect SCO's stock price to publicly state that SCO did not own the UNIX copyrights?

A I didn't have an opinion as to what it would do to SCO's stock price.

Q When you're saying there is a feeding frenzy in the market, did you believe that SCO's stock was trading upwards because of a misunderstanding with respect to what rights it in fact enjoyed?

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A I don't think it was a misunderstanding with what rights they enjoyed because the market didn't know. The market was trying to find out.

Q You were trying to correct or inform that market by making the statement that SCO did not in fact own the copyrights; is that correct?

MR. BRAKEBILL: Objection.

A We were trying to make the market aware of our side of the story, because the market was not being told the full story, in our opinion.

Q Well, you were doing more, weren't you, Mr. Messman, than saying, it's our position that SCO didn't own the copyrights, you were saying definitively that SCO is not the owner of the UNIX copyrights?

A Yes.

Q Correct?

A Yes.

Q Now you were also questioning in this letter the assertions by SCO with respect to the infringement of its UNIX rights by Linux; is that correct?

A Yes.

Q At this time, as of May 28th, 2003, what says investigation had you personally done as to whether or not any of the technology in Linux violated any of the intellectual property rights in UNIX?

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A Personally I had done none of that.

Q Did you ask Mr. Stone or anyone else at Novell to investigate whether or not Linux had within it any technology that would be protected by any of the intellectual property rights associated with UNIX?

A Well, we didn't think that there was any UNIX in Linux, and we were asking -- as I recall the sequence of events, we were asking SCO to tell us where the offending code was and if there was.

Q My question is a little bit different, Mr. Messman. Maybe I didn't make it clear. My question was whether or not you had asked anyone at Novell to investigate the issue of whether any of Linux violated any of the intellectual property protection in UNIX?

MR. BRAKEBILL: Apart from counsel?

MR. SINGER: Yes.

A No. I don't know how we would have done that, but I didn't ask anybody to do that. It would be a tremendous effort.

Q Following Mr. McBride's faxing that to you, did you call Mr. McBride back shortly after that?

A He called me back.

MR. BRAKEBILL: Foundation.

THE WITNESS: I'm sorry.

Q He called you back, is your recollection, a second

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time?

A Yes.

Q You're sure about that --

A No.

Q -- that you never placed a call to him? No. But that's just your best recollection?

A My best recollection, Darl was calling me.

Q Did you agree with Mr. McBride on that phone call that Amendment No. 2 confirmed that Novell had transferred the UNIX and UnixWare copyrights to SCO?

A No.

Q You're certain about that?

A I'm sure we didn't transfer the copyrights for that amendment.

Q My question is, are you sure you didn't agree with Mr. McBride on the phone back on or about June 3, 2003, that Amendment 2 had confirmed the transfer of copyrights?

MR. BRAKEBILL: Objection to form.

A My conversation with him only confirmed that we now had a signed of copy Amendment 2. That's all we talked about.

Q Do you recall asking Mr. McBride what SCO wanted Novell to do in consequence of Amendment No. 2?

A No.

Q You're not saying that didn't occur, you just don't recall it?

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A I don't think I would have asked that question, because I hadn't focused on Amendment 2 yet.

Q Do you recall Mr. McBride saying that SCO wanted a public statement by Novell that SCO is the copyright holder?

A No, I don't recall that.

Q Did Mr. McBride ask you about what involvement IBM had had in your actions of May 28th?

A I do recall him asking that question.

Q What did you say?

A I think I said something to the effect that I talk with IBM about a lot of things, and that's the way I left it.

Q In fact, had you talked to IBM specifically about the issue of copyrights?

A No.

Q Had you talked about SCO's claims with respect to Linux with IBM?

A No.

Q Why didn't you just deny to Mr. McBride that there had been any communications with IBM on those subjects?

MR. BRAKEBILL: Form.

A I didn't know what specifically his intent was. It was a nonanswer. I talk to IBM about a lot of things.

Q Are you aware of whether anyone at Novell, prior to May 28, 2003, had talked with anyone at IBM regarding what position Novell should take regarding SCO's ownership of

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copyright?

A I think I'm aware that at least Mr. LaSala talked to them.

Q You were aware, even at the time of this press statement, that there was an unsigned copy that had been in Novell's files, correct?

MR. BRAKEBILL: Form, mischaracterizes earlier testimony.

A I was aware that there was an unsigned copy of Amendment 2, but there could have been unsigned copies of other things too. They don't become binding until they are signed.

Q As of the date of this press release, you had become aware of the fact Amendment No. 2 had been signed, right?

A That's the purpose of that first statement.

Q Right. And that is the reason why you're informing the public on June 6, 2003 that Amendment No. 2 appears to support SCO's claim that ownership of certain copyrights for UNIX did transfer to SCO in 1996; is that correct?

MR. BRAKEBILL: Form.

A We're saying that this amendment appears to support SCO's claim. We're not saying that Amendment 2 transferred the copyrights.

Q As you sit here today, who do you identify in your mind, if you know, were the individuals who were in fact

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involved at Novell in the asset purchase agreement transaction?

MR. BRAKEBILL: Foundation.

A Well, we had a law firm that was doing most of the work.

Q Which law firm was that?

A Wilson Sonsini. And I can't remember the guys in corporate development that were working on this. There were several of them. As a board member I'm talking, not as the CEO of the company.

Q Right. You were a board member then?

A Yeah.

Q The position that Novell took in this letter was, quote, and I'm quoting from the third paragraph, we certainly see no reason why Santa Cruz Operation would have needed ownership of copyrights in UNIX System V in order to exercise the limited rights granted SCO under the APA. Nor is there any reason to think that a transfer of the copyrights required for SCO to exercise its APA rights necessarily entails transfer of the entire set of exclusive rights associated with a particular copyrighted computer program. That was Novell's position; is that correct?

A Yes.

Q I mean which of those two things is Novell's position,

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as you understood it, that no copyrights at all transferred or that only partially a copyright transferred, as suggested by the last sentence I read?

MR. BRAKEBILL: Form, compound, argumentative.

A My view is that we sold SCO the right to develop the code further than what it was at the time we sold it, we transferred the business to them, and they were going to evolve the code, particularly to try to unify UNIX, the various flavors of UNIX, and sell UnixWare.

Q So it's your view --

A And they didn't need the copyrights to do that.

Q So it's your view that the transaction did not transfer the intellectual property rights in UNIX to Santa Cruz?

A Yes.

Q Are you under any type of agreement with Novell that requires you to continue to cooperate with them in connection with litigation matters?

A No.

Q Do you have any type of nondisparagement agreement with Novell?

A No.

Q Do you have any consulting agreement or other agreement with Novell?

A No.

Q Would you agree they would either need to get the

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copyright or they would need to get a license or sublicense in order to be able to conduct a business of selling end-user licenses to UnixWare?

MR. BRAKEBILL: It calls for a legal conclusion.

A My view is they would be selling the stuff that they developed on top of UnixWare or SVRX, which they had develop. Remember, my view is, they had to evolve the code, they couldn't just take SVRX and sell it. They had to evolve the code to something more that they then had the intellectual property rights to.

Q I'm not talking about the legacy of SVRX products. I'm talking about UnixWare now. Do you deny SCO had the right after the closing to sell UnixWare --

A No.

Q -- in the form that 2.0 existed at the time of the closing -- to sell UnixWare in the form that it existed at the time of the closing?

MR. BRAKEBILL: It calls for a legal conclusion.

A Quite frankly, I haven't studied the UnixWare side of all this, so I can't come to a conclusion on that without further study.

Q Why didn't you enter into an agreement with them that would obligate them to sell and promote SuSE Linux as opposed to a $50 million cash investment in their stock?

MR. BRAKEBILL: Form.

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A They wanted to make sure they treated all participants in the Linux business equally, they had a relationship with Readhat, and they didn't want to exclusively sell our products, they wanted to get more than one into their customer base.

Q My initial question was, when did you first discuss this with IBM. I think you discussed how the conversation came about, but you didn't put a date on that?

A I was saying we made the acquisition in November, and I think it was in -- it was just before we closed that I called them. I would say it was November.

Q Of 2003?

A 2003.

Q Now what was -- if any action that SCO took was subject to being overruled by Novell, and Novell could force SCO to take any action which it wanted, then what, in essence, was SCO buying under the agreement?

MR. BRAKEBILL: Form, argumentative, asked and answered.

A SCO was buying the rights to develop -- further develop the SVRX code to create a merged product, to create a product that would bring the UNIX industry together hopefully to better compete with NT. That was the business that they were buying into.

MR. SINGER: Your Honor, that completes the

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designations and cross designations from the deposition of Jack Messman. Do you want us at this time to proceed with the next deposition?

THE COURT: I think we probably ought to get started into it, if you would, please.

MR. NORMAND: Your Honor, the next witness whose designations we'll play is Jim Wilt, who is in Santa Cruz.

THE COURT: Mr. Normand, will the deposition be identified when this was taken? If not, would you please do so.

MR. NORMAND: Yes, Your Honor. It was taken on January 26th, 2007.

THE COURT: Thank you.

(James Wilt Deposition)

Q Do you recall the title you had at the time of the asset purchase agreement?

A I believe my title was vice president of business development. I had taken a very generic title.

Q And how about after that, did your title change when you went into product engineering?

A Yes. I was senior vice president of products.

Q And did you have another position after senior vice president of products?

A Yes.

Q What was that?

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A I ran the consulting services business unit. I was president of -- I think it was president of consulting services. I'm not sure of the exact title.

Q What were your responsibilities as president of consulting services?

A The consulting services was a business unit that bespoke programming or services to help install or to create programs that went along with the software.

Q Have we gotten up to the point of the SCO-Caldera transaction yet or are we still in the period between the asset purchase agreement and that transaction?

A It was while I was the -- ran the consulting services that the Caldera transaction happened.

Q You said you were involved in some of the initial discussions concerning that transaction. At what point in the transaction did you stop your involvement?

A Relative to Caldera?

Q Relative to the Caldera. This is the SCO-Caldera transaction I'm talking about.

A As we got into more details, we discussed it as a management group.

Q Are you familiar with which assets were transferred as part of that transaction to Caldera and which assets were not?

A Of a general nature.

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Q I take it then that the UNIX business of SCO transferred to Caldera as part of the SCO-Caldera transaction?

A That's correct.

Q Do you know -- as a preliminary matter, do you know who Edward Chatlos is?

A Yes.

Q Who is he?

A He was the individual that we negotiated the agreement with from Novell.

Q Would it be fair to say, though, that you were more active in the negotiations at the beginning and less active at the end of the negotiations?

A Less active -- probably less active.

Q Certainly. With this text in mind and recalling your meetings with Novell leading up to the asset purchase agreement, do you recall anyone from Novell ever communicating to you affirmatively, specifically, that Novell was selling SCO the UNIX or UnixWare copyrights?

A I do not have specific recollection of somebody communicating they were transferring that explicitly in terms of saying copyrights because it was such a fundamental part of an asset purchase that if you didn't have copyrights and such go along with it, there was no asset purchase. It's called a license. We did not discuss a license. We

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discussed a purchase. So there are a lot of things that we didn't explicitly cull out as part of the purchase because they were just assumed. I mean, when you walk out the door, I assume your head goes with you, and the same thing is true when you buy the assets. Copyrights and things like that have got to go with it.

Q So to be clear, no one from Novell ever said to you copyrights are part of this deal, we're selling you the copyrights?

A That's not what I said. I said I could not recall anyone explicitly saying it. If they did, it's not something that would have been so out of the ordinary for me to remember because, as I said, it was just a natural part of what you expected to have transferred. So if somebody made such a statement, it would not be remarkable and not be something that one would remember. On the other hand, if somebody would have said we're not selling them to you, it would have been extremely remarkable and probably would have ended the negotiations.

Q Just so I understand, though, you do not recall anyone saying that copyrights were part of the assets transferred as part of the APA?

A Is that the same question you asked before?

Q I'm asking that question now.

A I'm asking is that the same question you asked before?

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It sounds like it. If it is, it's the same answer that I gave before. It's not a remarkable statement that I would have remembered.

Q I'm not asking whether it's remarkable or not. I'm just asking if you recall anyone saying, from Novell, copyrights were part of the assets transferred?

A And my answer is I have no recollection because it is not something that would have been remarkable to remember.

Q Do you have any stock options in the entity that's the plaintiff in this action, The SCO Group, Inc.?

A No.

Q Do you know whether any members of your immediate family own any stock or stock options in The SCO Group, the entity that is the plaintiff in this action?

A Not that I know of.

Q Mr. Wilt, you were handed an Exhibit 25 --

MR. NORMAND: Your Honor, there is reference to a declaration. Obviously we're not undertaking to admit the declaration into evidence. That's what is being referred to.

THE COURT: All right.

Q -- earlier in the day, which is described as your first declaration. Have you had occasion recently to review that declaration?

A Yes. I did read through it last night.

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Q Is there any part of the declaration that you feel is inaccurate or that you would like to correct?

A No.

Q If I could direct your attention to some language in that declaration. I'm looking at paragraph 7 at the end where you say, in referring to the negotiations from August to September 1995 between Santa Cruz and Novell, that you, quote, understood Mr. Chatlos to be Novell's chief negotiator during those negotiations. Is that a correct statement?

A This is a correct statement.

Q You say in paragraph 8, quote, it was my understanding and intent during those negotiations that SCO would acquire Novell's entire UNIX and UnixWare business, including the copyrights. I do not recall and do not believe that there ever was any instance in which anyone at SCO or Novell ever stated or exhibited any contrary intent or understanding to me or anyone else. Is that an accurate statement?

A That's an accurate statement.

Q You say in the back half of paragraph 9, quote, it was my intent on behalf of SCO to acquire, through the APA, Novell's entire UNIX and UnixWare business, including the UNIX and UnixWare source code and all associated copyrights, and I believed then, open parens, as now, close parens, that

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Novell's intent was to tell sell all of those assets and rights. Is that an accurate statement?

A Yes, that's an accurate statement. You wouldn't have had a business without having the copyrights and trademarks.

Q You say in paragraph 12, quote, I do not recall anyone on either side of the negotiations or transaction ever suggesting that Novell would retain a copyright relating to UNIX or UnixWare. I am not aware of any discussions, whether general or specific, during the negotiations that contradict my understanding of the transaction as set forth in this declaration. Is that an accurate statement?

A That is an accurate statement.

Q You say in paragraph 16, quote, pursuant to the APA, the parties also signed a technology licensing agreement in early December 1995 in which Novell licensed source code rights from SCO. In my view, this licensing agreement was consistent with SCO's ownership of the UNIX and UnixWare copyrights following the closing of the APA, end quote. Is that an accurate statement?

A That's an accurate statement because if you look at the technology licensing agreement, it includes our giving Novell the right to reproduce and license, under certain conditions, that code, which if we didn't own the copyrights

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and such, we wouldn't have had to give to Novell and wouldn't have been able to give to Novell.

Q I direct you back to paragraph 10 of your declaration. It states, quote, paragraph 4.16 of the APA pertains to the binary royalty income stream that Novell retained through the APA. The parties agreed to the language in paragraph 4.16(b) in order to allow Novell to manage that royalty stream within the operation of SCO's customer source code licenses -- not at the expense of SCO's right to enforce its intellectual property protections under any such licenses, and not to permit Novell to waive any of those protections. I have reviewed Amendment No. 2 to the APA and believe that the language therein confirms that intent. In light of my intent, and based on my understanding of the parties' intent, I do not believe that Novell had or has any right to waive, or to direct or require SCO to waive any of its intellectual property rights or protections. Is that an accurate statement?

A That's an accurate statement.

Q Let me direct your attention, Mr. Wilt, to what was marked earlier as Exhibit 27, which was described as your second declaration.

A Okay.

Q Have you had occasion recently to review Exhibit 27?

A Yes, I reviewed this yesterday again.

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Q Is there any aspect of Exhibit 27 that you believe is incorrect or that you would like to correct?

A No.

Q Let me ask you about some specific paragraphs in this declaration. You say in paragraph 4, quote, Santa Cruz's intent and agreement under the APA and Amendment No. 1 was for Novell to transfer the entire UNIX business, including the UNIX source code and copyrights to Santa Cruz except for binary royalties paid under the existing agreements pursuant to which UNIX System V, open paren, quote, SVRX, end quote, close parens, licensees were paying such royalties, and which Novell conveyed to Santa Cruz under the APA as part of the UNIX business. Is that an accurate statement?

A That's an accurate statement, and it was the existing licenses at the time of the transfer to SVRX that Novell retained, you know, the equity interest, the financial interest in.

MR. NORMAND: Your Honor, that completes SCO's designations of Mr. Wilt.

MR. JACOBS: Your Honor, we have no counter designations.

THE COURT: We'll go ahead and take a recess now.

Ms. Malley.

(Jury excused)

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THE COURT: Mr. Singer, let me ask you something about Mr. Levine's deposition testimony. The Court's motion in limine stated that Mr. Levine would only be allowed to testify as to the second amendment if he had personal knowledge in contrast to simply looking at it and saying, well, reading it now, this is what my interpretation would be. Have you supplied the Court -- and I said that because you were given the opportunity to provide a foundation for him having been involved in the negotiations so he would know what was the intent of the second amendment. Have you supplied the Court anything that would establish that foundation of his personal involvement or is it just simply his reading of the second amendment saying this is what I think it means?

MR. SINGER: May I have a moment, Your Honor?

THE COURT: Yes. And if it's easier, Mr. Normand, if you would just answer the question.

MR. NORMAND: Can I run my answer by Mr. Singer? Run it by the Court first.

THE COURT: You may be safer if you run it by Mr. Singer.

MR. NORMAND: I won't be long. We don't dispute that we don't have a factual foundation that he was involved in the drafting. We do think it would be relevant, particularly in light of the sorts of questions that have

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been asked of witnesses already. He was an in-house attorney, and in effect the question is asking him, do you have a view as to what copyrights are required. And I don't think he would be anymore instructing the jury on what the law of copyright is. I think he's offering at least a largely relevant view as to his view why would you need copyright ownership. That's how we interpreted his answer to that question.

THE COURT: Do you wish to respond, Mr. Brennan?

MR. BRENNAN: Your Honor, I think this falls squarely within the scope of the Court's motion in limine. It's already been established that he did not have personal involvement regarding Amendment No. 2. We tendered to the Court the testimony that confirmed that.

In addition, I think a problem with this question and the answer is the answer is not even responsive to the question and it was objected to at the time. So we have a couple of issues here. Number one, it's beyond the scope of this witness's personal knowledge. Number two, and because of number one, it falls within the ambit of the Court's prior motion in limine ruling. Number three, the question, as put to him, is whether he has a view as to what copyrights were necessary. The answer doesn't even reveal that.

For all those reasons, this particular question

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and answer are objectionable and should not be presented to the jury.

MR. NORMAND: Your Honor, I think what Mr. Brennan said is begging the question a little bit. I think Mr. Levine's response can be read to say I see the word required, my view of what is required is all the copyrights. So I read this as a clarification that all the copyrights came over. I think the trial concerns, in significant part, trying to help the jury understand what copyrights are required, and I think the testimony of attorneys who were at both companies is relevant to that issue. He is an attorney whose testimony we want to rely on.

THE COURT: I will look at it. My concern is that it becomes, then, expert testimony, speaking as an expert as an attorney, as Mr. Davis was going to testify. And he was designated as an expert and everything else was -- the T's were crossed and the I's dotted to permit him. I just don't -- let me take a look at it.

MR. NORMAND: The only comment I would add, maybe you made the point jokingly in limine arguments about Mr. Davis, but you pointed out that if he were not an attorney, you wanted to get in his testimony if he were not an attorney, we would hear an objection that he is not an attorney.

THE COURT: Good point. All right. You are

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throwing that back at me now, aren't you?

MR. NORMAND: I didn't mean to, Your Honor.

MR. SINGER: Mr. Normand obviously now understands the comment you made on that point.

THE COURT: Which was injudicious on my part. I never meant to insult Mr. Normand when I said that.

MR. BRENNAN: Your Honor, just so we're clear on the point, the situation here, if we're going to have any lawyer or any person, who is unconnected, uninvolved, to come into this courtroom and say, I've read these words and this is what I think it means, we would have a whole slew of people. I could invite a number of lawyers from Salt Lake to come in and offer that opinion.

THE COURT: Mr. Davis was uniquely qualified because of the number of transactions he had been involved in, and that was what the Court was relying on in allowing him to testify. I don't know that we've got anything here that would put Mr. Levine in that same category.

MR. NORMAND: While I would agree with that, Your Honor, I still think it goes to the weight of his testimony. That's for the jury to decide.

THE COURT: I will take a look at it and I will let you know as soon as we come back from the break.

We'll take 15 minutes, counsel.

(Recess)

***** Part 3 *****

(10:20 A.M.)

THE COURT: Counsel, the Court will not allow the jury to hear that portion of the deposition of Mr. Levine that's in question. I believe that it would be inconsistent with the Court's prior ruling, and I believe that the prior ruling was well founded. So if you would make certain that that part is not presented to the jury.

MR. NORMAND: Thank you, Your Honor.

THE COURT: Is there something else we need to deal with before we bring the jury in?

MR. BRENNAN: Just a quick housekeeping matter in terms of order, Your Honor. We've had a bit of a dialogue during the break. As Novell understands it, the order of the remaining videotape depositions today will be Mr. Mohan will be next, and then Mr. Michels following, and then Mr. Levine, the witness that you just made reference to in your comments, Your Honor. And then, at least as we've played through the time here, it looks like there will still be time available. And I believe, certainly SCO's attorneys can speak for themselves, that they may try to bring over their next witness, who will be a live witness. And if that can't be arranged, we'd have a time gap. We would expect that that vacuum would be filled with a charge against the plaintiffs for not using the time or some other remedy that the court might think appropriate.

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THE COURT: Mr. Singer.

MR. SINGER: We don't disagree with what Mr. Brennan has said. I mean we'll try to get -- if there is time left over after running through those three depositions, and it makes sense to start Mr. Broderick if there's more than just a few minutes, we'll try to present him. But we certainly understand if he's not ready to go, if there's some gap of time, that would be on our account.

THE COURT: Would you have any -- are you prepared to deal with Mr. Broderick if he is brought on live?

MR. BRENNAN: We are, Your Honor.

THE COURT: I would prefer that we not waste any time, the jury's time.

MR. SINGER: And that's our preference as well, and we're trying to get him ready to go in the afternoon if there's some time.

MR. NORMAND: We need to get him into a suit, Your Honor.

The Court: A suit.

MR. NORMAND: A suit.

THE COURT: You know, the marshals have suits downstairs I think. I'm not sure about the fit, but -- All right, Ms. Malley, if you'd please bring the jury in.

(jury present)

MR. NORMAND: Your Honor, the next witness SCO will

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call by video deposition is Alok Mohan, who was deposed on February 23rd, 2007.

(Alok Mohan called as a witness via videotape deposition)

Q In 1995 were you the President of the Santa Cruz Operation?

A I was CEO around that time, '95 to '98.

Q Were you President and CEO Of the Santa Cruz Operation in 1995?

A I was Chief Operating Officer for a short while, and then I became CEO.

Q Do you remember what your position was at the time of the transaction between Novell and Santa Cruz Operation?

A I was the CEO.

Q Were you also a member of the Board of Directors?

A Yes.

Q And would it be fair -- what would -- you were aware that there was a contract relating to the transaction between Novell and Santa Cruz; correct?

A Yes.

Q Would it be fair to say that your involvement in the Novell/Santa Cruz deal was only at a high level?

A I was involved as a CEO, at the CEO Level.

Q Would it be fair to say that your involvement as the CEO For Santa Cruz on the Novell/Santa Cruz transaction was only at a high level?

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A What do you mean by high level?

Q Do you recall having characterized your involvement in the Novell/Santa Cruz transaction as at the high level?

A Well, I was the CEO and there were a lot of people involved within the transaction from our side, so I was involved as a CEO.

Q So is it fair to say that your involvement in the Novell/Santa Cruz deal was only at a high level?

A Yes.

Q Is it fair to say that you were not involved in the details of the legal documents that were executed as part of the Novell/Santa Cruz deal?

A I was involved in the normal processes. I was involved in reviewing documents. I was not involved in writing them. And the detail level of negotiations, I was not involved in that, although I did have some discussions with Duff Thompson, as well as Frankenberg.

Q You said, "I was involved in reviewing documents." As you sit here today, what documents do you recall reviewing as part of the Novell/Santa Cruz transaction?

A I recall looking at the APA and reviewing that.

Q Is it fair to say that you were -- you did not participate in the negotiation meetings between representatives of Novell and Santa Cruz when the legal document was being drafted?

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A I was --

MR. NORMAND: Objection to form.

THE WITNESS: -- involved in the negotiations with Duff Thompson, and -- at a -- and, again, at a strategy and CEO level. The specific drafting of the documents were done by people, and I was not involved in that.

Q Now, you signed the Asset Purchase Agreement; is that right?

A That's true.

Q Did you review the document before signing it?

A Yes, I did.

Q Did you go through it in a -- on a detailed basis by yourself?

A I read it.

Q Did you read the Asset Purchase Agreement from the front cover to the end?

A Yes.

Q And I take it that when you signed the Asset Purchase Agreement on September 19th, 1995, you had no reason to believe it was inaccurate?

A Yes, I agree with that.

Q And you had no reason to believe that the Asset Purchase Agreement was not clear?

A It -- it -- these complex documents, it -- it represented as best as we could tell at that time what the intent was.

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And I looked at it, as I do all documents, with that in mind, and it looked right to me so I signed it, yes.

Q When you read the document before you signed it, nothing jumped out at you as being unclear; is that a fair statement?

A Yes.

Q And when you signed the document on September 19, 1995, you had no reason to believe that that contract did not accurately reflect the parties' intent; correct?

A That's right.

Q One of the other items that Santa Cruz got through its transaction with Novell in 1995 was the right to sell UnixWare; correct?

A We bought the business.

Q Santa Cruz got the right to sell UnixWare; right?

A And, again, I -- I -- I will just keep it in terms of we bought the business. We could do whatever we wanted to do it. As part of that could we sell UnixWare? Absolutely. But as part of the whole -- it's the whole business we bought.

Q And in 2000 do you recall that Santa Cruz agreed to sell, among other things, the SCO OpenServer product to Caldera?

A This is where I was not -- I was on the Board. I was not the CEO at that time. I was further removed from the business, but -- so keep that in mind as you ask these questions. Yes, we entered in an agreement to sell the Unix

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business to Caldera.

Q And when you say that Santa Cruz agreed to sell the Unix business to Caldera, I take it you're referring to not only the SCO OpenServer product but also the Unix business that it had purchased from Novell?

A Yes, everything.

Q In your personal view, what rights, if any, did Novell retain after the Asset Purchase Agreement with Santa Cruz?

A I -- my belief has always been, and I believe we bought the whole business. And I -- the intent of that -- intent of that agreement, when I was talking to Duff Thompson and at least in the higher level discussions, was we were buying the whole business. It wasn't leaving any rights behind. It was -- what happened was that since we couldn't afford the purchase price of the SVRX revenue stream, which is like checks coming in every month, basically what it was, and we couldn't afford it. We couldn't pay the present value of what that stream would be. We also felt that there was a difference of opinion about what that stream is. And so as I looked at it, it was a financial engineering -- it was a transaction bridge between what we were willing to pay and what they were willing to pay. What they wanted was to allow them to keep that revenue stream. Now, to keep a revenue stream, they needed the ability to -- I assume -- the ability to make sure that we kept the

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clients. If they had a problem with the SVRX, that we will take care of -- or that problem is taken care of. But I was not -- at least at our level, I was not thinking of that we're leaving any rights like they owned anything or any rights of that kind, no.

Q And So I -- I want to be clear. What particular rights then do you think Novell retained? You said -- you said -- let me look at it this way. You said -- you said you thought that Santa Cruz was leaving no rights behind.

A Yeah, pretty much.

Q So is it a fair statement then that you believe that Novell was retaining no rights?

A My -- without -- without getting into the specific documents, which every -- there were a lot of other people in the organization who could do that for you. From a -- the view of what we're buying, we're buying the whole business, and we -- we had all the rights as we bought the business. There was a revenue stream that -- and -- and I have to assume that there is some ways to protect that revenue stream, but I can't tell you what that would be, but it was not like we were leaving something behind. We were buying the business.

Q I want to fairly characterize what you're saying, so correct me if I'm wrong. Is it a fair characterization of your testimony that you believe that Novell was retaining no

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rights through this transaction, but that it was retaining a revenue stream related to SVRX?

A Yeah. I was -- I'm trying to state this is what my --

Q And I'm only talking about your personal belief, no one else's.

A It's not so much a belief, because I know that there's documents that have a certain defined definition of what they can and cannot do. My negotiation, my involvement, was that it was -- we bought the business. And there were some aspects of things, and I can't tell you what they were, to allow them to protect the fact that the revenue stream -- that they get paid. And -- but I can't tell you anymore than that.

Q You keep referring to documents that you could look at. Are you referring to the contract?

A Yeah, I assume.

Q Okay. So if I wanted to know what rights Novell retained, can I look at the contract and find out?

A You'll have to look at it.

Q Is it true that if I wanted to find out what rights Novell did retain, I could look at the contract?

A I don't know that.

Q You believe that Santa Cruz got the Unix copyrights through the APA; is that right?

A We believe I bought the whole business. That includes all kinds of stuff. And -- and, you know, I gave you the

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answer. I think we bought -- we got the whole thing.

Q Okay. But you haven't -- you haven't confirmed. Is -- is -- are the Unix copyrights part of the Unix business?

A Absolutely.

Q What is the basis of your opinion that Santa Cruz got the business?

A That -- that's -- that was the whole discussion and intent, negotiations. That's my recollection of what we were doing.

Q Now, back to the topic of Unix copyrights. Are you aware that the subject of Unix copyrights was specifically addressed in the contract?

A No, I'm not aware of that.

Q When you signed this document, you -- did you actually look to see whether or not there were any provisions in here relating to Unix copyrights?

A I -- I think -- I think we have to -- what I'm trying to get across is it is not one item at a time. It is the entirety of the document as I read it. I felt then that this was buying the business. And I -- I -- it's not about specific provisions. It was the entirety of the document. And to me the business includes copyrights.

Q I'll just repeat the question. Is it your testimony that you can't just look at the excluded assets provision to determine whether or not Unix copyrights were included in the

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transaction?

A Again, you got to look at the whole thing as an entirety. And there were some issues relating to -- and that's why there were amendments to these documents. And -- but my -- my point that the intent was that we're buying the whole Unix business, that included copyrights, etcetera, still that's what I believe.

Q Do you recall who else at Novell you were dealing with beside Mr. Frankenberg?

A The other person that I dealt with on the APA or the discussion leading up to that was Duff Thompson.

Q Duff Thompson was the person that you were speaking to before the Asset Purchase Agreement was executed?

A Right.

Q When you signed the declaration, were you content that the language of the declaration reflected your views?

A Yes, I think so.

Q Looking at paragraph four of your declaration, Mr. Mohan, you say in the third Sentence of that paragraph four quote: "To the extent anyone is claiming that Novell retained the Unix copyrights or that Novell retained the right to waive material breaches of Unix system V agreements years after the sale to Santa Cruz, such claims are contrary to my understanding, intent and agreement. I would not have agreed to do -- to those terms if anyone had suggested that that was

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what Novell was offering," end quote. Do you see that language?

A Yes.

Q Why would you not have agreed to those terms if someone had suggested that that was what Novell had offered?

A Well, I -- I was -- I can speak to the strategy and the intent was we wanted to buy the business. I made this point earlier today. And the business included all the assets, which included in my view copyrights. And what -- and we're kind of buying the stuff lock, stock and barrel. It would have been that way if you could have afforded the present value of the royalty stream, but because of cash constraints we had to -- cash constraints and the differences -- potential differences on what the value of that future stream would be, that we said we'd pass the revenue on to Novell, 95 percent of it on to -- to Novell. But as I saw it, we bought the business that included all this stuff. And if you -- if you don't buy -- an evaluation in my mind was set based on we bought the whole business.

Q Why would you not have agreed to the terms of the deal if someone had told you that the Unix copyrights were being retained by Novell?

A I felt -- I believe that is all part of the value of what we were buying, and it's -- it's an assessment of the value of what you buy, what you pay for. And to me that was -- that

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was part of what we had bought, and it would be a lot less value without it in my view.

Q Why would you not have agreed to the terms of the transaction if anyone had suggested to you that Novell retained the right to waive material breaches of Unix System V agreements?

A If they could waive material breaches, then we did not control Unix System V as an asset. It was of less value to us.

Q You say in paragraph five quote, "As the Chairman of the Board of Santa Cruz in 2001, I understood that Santa Cruz conveyed to Caldera International, Inc. all of the Unix and UnixWare assets that Santa Cruz owned, including all of the Unix intellectual property rights, such as the copyrights that Santa Cruz had obtained from Novell," end quote. Do you see that language?

A Yes.

Q Is that an accurate statement?

A I think so.

MR. NORMAND: Your Honor, at this point we would ask to publish to the jury SCO exhibit 526, which is already in, And to highlight the portions of that exhibit that Mr. Mohan will be subsequently asked about.

THE COURT: Go ahead.

MR. NORMAND: This is the press release from

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September 20th, 1995 after the execution of the APA. The first paragraph of the press release states quote, "The Santa Cruz Operation, Inc. and Novell Inc. today announced a definitive agreement for SCO to purchase the Unix business from Novell." Next paragraph down: "Alok Mohan, President and CEO Of SCO, said, 'This extends SCO's leadership position in the Business Critical Server market. Our customers and resellers not only get a powerful Unix operating system, but also the most advanced network services in the world. Novell's advanced network services, such as NetWare Directory Services, are setting the standard for business networking. Our customers will be able to integrate their Business Critical Servers with their existing work groups to provide their people with greater access to corporate data." And on page two of this press release there's a -- Mr. Calvin, let's start with the top paragraph -- those two. The first paragraph is a quote from Robert J. Frankenberg, Chairman and CEO of Novell. And then the next paragraph states: "According to the terms of the agreement, SCO will acquire Novell's UnixWare business and Unix intellectual property." And I'd like to continue with the deposition, Your Honor.

Q -- Mr. Mohan, what's previously marked as Exhibit 1028.

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Exhibit 1028 is titled "Press Release" under SCO letterhead. The title of the press release is, quote: "SCO acquires Unix business from Novell and licenses NetWare technology," end quote. Do you see that you're quoted in the second paragraph of the first page?

A Yes.

Q And do you see that Robert Frankenberg, Chairman and CEO Of Novell, is quoted at the top of the second page?

A Yes.

Q The press release states on page two, in the first Sentence of the second paragraph quote: "According to the terms of the agreement, SCO will acquire Novell's UnixWare business and Unix intellectual property," end quote. Do you see that language?

A Yes.

Q Does that language accurately reflect your understanding of the transaction?

A This language is consistent with what I've been saying today about we bought the business. We bought the UnixWare and Unix intellectual property. We bought the business. And that's what I thought we were buying, and I still believe that's what we bought.

Q Did anyone from Novell ever say to you prior to the execution of the APA that Novell intended to retain any Unix

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or UnixWare copyrights?

A No.

Q Did anyone from Santa Cruz ever say to you prior to the execution of the APA that they understood that Novell intended to retain any Unix or UnixWare copyrights?

A No.

Q You say in paragraph six of your declaration quote: "In approximately early April, 1996, it came to my attention that Novell, purportedly on behalf of itself and Santa Cruz, was planning to enter into an agreement with IBM purportedly amended its Unix license agreements by granting IBM a buyout of its binary royalty obligations and expanding its source code rights," end quote. Do you see that language?

A Yes.

Q Did anyone from Novell ever say to you at anytime in 1996 that Novell had retained any Unix or UnixWare copyrights under the APA?

A No, I don't recall that.

Q Did anyone from Santa Cruz, including Santa Cruz' outside counsel, say to you at anytime in 1996 that they believed Novell had retained any Unix or UnixWare copyrights?

A I don't recall that.

Q Was it ever your view in the course of 1996 that Novell had the right to direct Santa Cruz to waive its rights under its SVRX licenses?

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A No. Again, I thought we had bought the business so we had the rights. And if someone else could just tell us to waive the rights, then what did we buy? So I -- I -- I felt -- I had felt that we bought the business.

Q Do you recall whether Mr. Frankenberg or anyone else at Novell ever said to you that Novell had retained the rights to waive Santa Cruz' rights under Santa Cruz' SVRX agreements?

A No.

Q Was it ever your understanding of the APA that Novell had the right to prevent SCO from exercising its rights with respect to SVRX source code under the agreement?

A It was our business, it was our ownership, and we could do according to whatever our rights were.

MR. NORMAND: Your Honor, we would propose to move into evidence SCO exhibit 180 on the basis of foundation laid a few minutes ago by Mr. Mohan regarding a dispute that had arisen concerning IBM.

THE COURT: Mr. Jacobs.

Mr. JACOBS: Yes, Your Honor. Could we have a quick sidebar, Your Honor?

THE COURT: Yes. Do you want this on the record?

Mr. JACOBS: Yes, please.

(bench conference discussion according to the reporter's ability to hear and understand what was said)

Mr. JACOBS: I want to make sure at the time --

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(Reporter interrupted due to inability to hear and understand)

(inaudible) there was a stand-still agreement between the companies in agreeing that this sort of correspondence would not come in in the event of a future dispute. I want to have an understanding that if we don't object on the basis of that agreement to this exhibit coming in, that SCO will not object to corresponding exhibits from our side coming in with respect to the nature of this dispute.

MR. NORMAND: We have no objection. We have no such objection.

THE COURT: All right.

Mr. JACOBS: That's fine, Your Honor.

(In open court)

Mr. JACOBS: In light of our sidebar, Your Honor, no objection.

THE COURT: Exhibit 180 will be admitted.

(Plaintiff's Exhibit 180 received in evidence)

MR. NORMAND: This is a letter dated April 19th, 1996 from Mr. Mohan identified as President and Chief Executive -- sorry -- from Mr. Frankenberg, CEO of Novell, to Mr. Mohan, President and Chief Executive Officer of SCO. The first paragraph says: "Dear Alok, thank you for your letter today. I understand your deep concern about this matter. We had been expecting your response yesterday and have already continued our discussions with IBM today. I will

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do my best to make sure that we address your concerns in our ongoing negotiations. In addition, I believe I need to clarify some potential misconceptions in your letter." The letter continues: "First of all, I would like to clarify that we are not granting IBM any additional rights beyond what they already have. With the minor exception of allowing IBM's VAR -- VAR's to make minor modifications to AIX code to support unique hardware devices and allowing IBM's major accounts to make temporary fixes from AIX source code, the proposed transaction does not grant any additional rights beyond those granted other similarly situated Unix licensees. Specifically no right to sublicense source code is being granted." And we'd like to continue with the deposition at this point, Your Honor.

THE COURT: All right.

Q Mr. Mohan, what's been marked as Exhibit 1064, a letter to you from Mr. Frankenberg dated April 19th, 1996. The letter contains the following language in the -- beginning in the second paragraph, quote: "First of all, I would like to clarify that we are not granting IBM any additional rights beyond what they already have, with the minor exception of allowing IBM's VAR's to make minor modifications to AIX code to support unique hardware devices and allowing IBM's major accounts to make temporary fixes from the AIX source code.

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The proposed transaction does not grant any additional rights beyond those granted other similarly situated Unix licensees," end quote. Do you see that language?

A Yes.

Q Was it ever your understanding of Amendment-X that IBM received additional rights beyond what it already had, with the exceptions that I just read into the record?

A I believe that -- that we did not grant any additional rights in this buyout of the -- of the kind which is we talk about here.

Q Assuming that Santa Cruz got the Unix copyrights in this deal, would possession of the Unix copyrights have been a significant part of Santa Cruz' business going forward?

A I don't know what you mean by a significant part. I can't parse an asset purchase that has all these pieces that we buy to parse it to -- to try to assign values within this stuff. We bought the business. We paid a certain price for the business. Business includes everything. It's like a human being, you know, just you -- your arms and legs and everything are part of you. It's part of the business.

MR. NORMAND: Your Honor, that completes SCO's designations for Mr. Mohan's deposition testimony.

Mr. Jacobs: And we have some counterdesignations, Your Honor.

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THE COURT: All right. Go ahead, please.

Q You weren't participating in the meetings that were occurring between the respective parties that were --

A I was not.

Q -- drafting the document?

A I was not.

Q Would you agree with me that both companies, Novell and Santa Cruz, had very capable skilled legal teams that were representing it in this transaction?

A You're looking for my opinion?

Q I'm asking for your opinion.

A My opinion is that these lawyers are probably pretty good, yes.

Q I assume as Chief Executive Officer you've been involved in a number of transactions over the years?

A Uh-huh. You're looking for my opinion?

Q I'm asking for your understanding.

A My opinion is that these lawyers are probably pretty good, yes.

Q I assume as Chief Executive Officer you've been involved in a number of transactions over the years?

A Uh-huh, yes.

Q And you would use experienced and capable law firms in representing you in complex transactions such as this?

A We would try to.

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Q Would you agree with me that Santa Cruz and Novell at the time of the transaction were experienced companies in software transactions?

A Yes.

Q They were both large companies?

A We were a $200,000,000 revenue company at that time. Novell was larger.

Q Would you agree with me that the transaction between Novell and Santa Cruz in 1995 was an arms-length transaction?

Mr. NORMAND: Objection to form.

THE WITNESS: Yes. We were two separate companies, and there was no other connection between them.

Q Would you -- you have no reason to believe that either company was in an unfair bargaining position at the time of the deal?

MR. NORMAND: Objection to form.

THE WITNESS: I don't think so.

Would you agree with me that the contract is the most important item in determining what the terms of the deal are?

MR. NORMAND: Objection, asked and answered.

THE WITNESS: And you want my opinion on that?

Q Asking for your understanding based on your experience.

A I think contract is one of the most important things, yes.

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Q And based on your experience and understanding, companies make their business decisions based upon the terms in a contract; is that right?

MR. NORMAND: Objection to form.

THE WITNESS: Yes.

Q And if there's a dispute in the future after a transaction, the first thing the parties would look to is the contract to determine what the terms of the deal were; is that right?

MR. NORMAND: Objection to form.

THE WITNESS: Yes.

Q And oftentimes disputes, such as in this case, they don't arise until many years down the road?

A Many years? Yes.

Q And would you agree with me that when they do, the contract is the best evidence of the parties' rights and obligations under the deal?

MR. NORMAND: Objection to form.

THE WITNESS: Yes.

Q This is a Santa Cruz press release dated December 6th, 1995, entitled "SCO Takes Major Step in Consolidating Unix System Market".

A Uh-huh.

Q And below that it says, "SCO Completes Agreement With Novell, Significantly Increasing Market Strength; Industry

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Partners Endorse".

A Uh-huh.

Q And do you see the -- again, the date of this was December 6th, 1995, which was the date of the closing of the Novell/Santa Cruz deal.

A Yep.

Q Do you recall that?

A I see it here, yeah.

Q Is this one of the press releases that you would have reviewed in -- as your -- in your role as Chief Executive Officer of Santa Cruz?

A Probably, I just don't recall this particular -- a specific press release.

Q The second full paragraph it says quote: "SCO has already planned a stream of product and technology releases reaching beyond the year 2000. These releases will include the next release of the SCO UnixWare system in 1996; the next release of SCO OpenServer system in 1996; a Compatibility Tool Kit in 1996 for creating applications that run on both the SCO UnixWare system and the SCO OpenServer system; and a 1997 release that merges the SCO UnixWare system and the SCO OpenServer system. SCO is also working closely with its strategic allies, HP and Novell, to develop a highly -- a high availability, high RAS, 64 bit Unix system for the next generation intel architecture expected to ship in 1998."

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A Uh-huh.

Q As you sit here today, do you have any reason to believe that this was not Santa Cruz' plan after the closing of the Novell/Santa Cruz transaction?

A I have no recollection that it wasn't our plan. Generally at -- I remember at SCO we had road maps. We always had road maps on our products, and they would have had events like these. So it does not look unusual that we would have a road map.

Q And this press release that was issued on December 6, 1995 is what Santa Cruz was telling the marketplace its plans were going forward; correct?

A Some aspects of it, yes. That particular paragraph you just read, it talks about future years.

Q And you see where it talks about release of a merged product in 1997?

A Yes, it does. That's what I read right now.

Q And I'll hand you another exhibit that we'll mark as exhibit 72. Mr. Mohan, this is another press release dated September 20, 1995 entitled "HP, Novell and SCO to deliver high volume Unix OS with advanced network and enterprise services".

A Uh-huh.

Q Do you see that?

A Yes.

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Q I'm referring to the second bullet point --

A Uh-huh.

Q -- on page one --

A Uh-huh.

Q -- where it reads, and I quote: "SCO has purchased the UnixWare business from Novell and will consolidate its SCO OpenServer system and Novell's UnixWare into a merged high volume intel-based Unix operating system that provides interfaces in common with HP-Unix." Do you see that?

A Yes, I see it.

Q Is that consistent with your memory of the transaction?

A Yeah.

Q I'm going to get into that in a second. The consideration that was paid from Santa Cruz to Novell as part of the Asset Purchase Agreement was Santa Cruz' issuance of stock to Novell; right?

A Yes.

Q And I'd ask you to turn to page two of the contract.

A Yeah.

Q And do you see subparagraph-A? It says, "Consideration for assets: stock"?

A Yes.

Q And I quote: "On the terms and subject to the conditions set forth in this agreement, as full payment for the transfer of the assets by buyer to -- by seller to buyer, at the

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closing buyer shall assume the assumed liabilities and issue to seller 6,127,500 shares of fully paid and non-assessable shares of common stock to buyer." Do you see that?

A Yes.

Q Is that consistent with your memory that Santa Cruz paid Novell 6,127,500 shares of stock for this purchase?

A Yes. It's in this agreement, and I've signed this agreement. I assume the data is correct. But if you're asking if I remember 6,127,500, I do not remember the exact number, but it's here on this document.

Q Do you know who Steve Sabbath is?

A Yes.

Q Who is Steve Sabbath?

A Our legal counsel.

Q Is he the lead legal --

A Yes.

Q -- Counsel for Santa Cruz?

A Yes.

Q Did you trust Mr. Sabbath's judgment at the time?

A Yes.

Q When you use the phrase asset purchase agreement, are you referring to the September 19th, 1995 agreement?

A Yes.

Q So, again, let me make sure I'm clear. It is your testimony --

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A Uh-huh.

Q -- that the September 1995 contract reflects the intent of the parties concerning what the deal was about?

A The -- it's -- if you read the whole thing in its entirety, it -- it reflects what we were trying to do.

Q Let me ask this question. Do you have any contractual basis at all as we sit here today for your belief that the Unix business was transferred to Santa Cruz in its entirety?

A My belief is that the APA in its entirety gave us the right to the business.

Q Let me ask the question again. As you sit here today, can you point me to any specific contractual provision in support of that belief?

A Short of going through the document line by line, I -- I -- I can't tell you the answer to that question. I -- I can tell you what the APA was, what the intent was, what we were trying to do, and it was the purchase of the Unix business.

Q So you would need to go through this contract to answer that question; is that right?

A Probably.

Q Paragraph four of your declaration says, "I have reviewed the declarations of Jim Wilt October '04, and Steve Sabbath, October '04."

A Yeah. That's the one -- that's the ones I've looked at.

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Q Were you -- at any point were you ever aware that Steve Sabbath had submitted a second declaration?

A After this? Before?

Q Or before?

A I -- I was not aware -- I'm aware of it now that there was an earlier declaration, but not when I looked at the 10-04, and I do not know of any declaration after 10-04.

Q Are you aware that in Mr. Sabbath's other declaration he stated that Novell retained significant rights after the asset purchase agreement, including the Unix copyrights?

A I just found out about the --

MR. NORMAND: Objection to form.

THE WITNESS: -- Previous declaration the last day or so.

Q So we're handing you exhibit 76, which is a December 22nd, 2003 declaration of Steve Sabbath. Do you see that?

A Yep.

MR. NORMAND: Your Honor, can we stop the tape for a moment?

THE COURT: Yes.

MR. NORMAND: Can we stop the tape for a moment and have a sidebar?

THE COURT: You may.

MR. NORMAND: Thank you, Your Honor.

THE COURT: On the record?

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MR. NORMAND: Yes.

(Bench conference discussion according to the reporter's ability to hear and understand).

THE COURT: Counsel, I want you to speak up. The jury can't hear you no matter what, so speak loudly and clearly.

MR. NORMAND: Your Honor, I can try to find the documentation, but I had believed that we had objected to this and it had been excluded. It's clearly hearsay on its face. He's citing a declaration that someone else has signed.

Mr. JACOBS: Let me introduce Mr. Daniel Muino to Your Honor. He's been working on these designations as we try to keep up with SCO's designations.

Mr. MUINO: Good morning, Your Honor.

THE COURT: Good morning.

Mr. MUINO: As I recall, I believe we had agreed as to a horse trade on this whereby this testimony from Mohan would come in for the exchange for something else. I think we have to --

(the reporter interrupted due to an inability to hear clearly).

I believe we had come to an agreement on this. There may have been a misunderstanding, but I thought we had agreed to keep this in exchange for testimony that you had objected to in the course of our negotiation on this.

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MR. NORMAND: I apologize to Your Honor. I wish we had a record here that reflects this. It's hard for me to imagine I would have wanted this to come in. It's so clearly hearsay. But I have no reason to dispute Mr. Muino's description of what he understood. And I don't want to keep Your Honor or the jury waiting. I'm not sure I have a great solution other than the two of us taking three or four minutes and trying to check our notes. I don't know if that -- that's acceptable to Your Honor.

THE COURT: Why don't we do that. Let the jury stand, get their attention back to where it ought to be. So why don't you take the time you need and see if we can't reconcile this.

MR. NORMAND: Thank you, Your Honor.

Mr. MUINO: Thank you.

THE COURT: Ladies and gentlemen, we're going to take a brief recess, but here in the courtroom. So if you'd like to stand for a few minutes while the attorneys do some quick consulting.

(brief pause)

MR. SINGER: Your Honor, we apologize. We sorted it out. The video can continue.

MR. JACOBS: Your Honor, with your permission, we're just going to roll back about 15 seconds to start the sequence over.

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THE COURT: That will be fine. Before you do though, if you'll hold on. Ladies and gentlemen, I have to ask you this. During the sidebars, do any of you hear anything that is being said, even close?

A JUROR: No.

THE COURT: You can see our lips move?

A JUROR: Just a lot of fuzz.

THE COURT: All right, thank you. Go ahead.

Q So we're handing you exhibit 76, which is a December 22nd, 2003 declaration of Steve Sabbath. Do you see that?

A Yep.

Q I'd ask you to turn to page 6, paragraph 11.

A Uh-huh.

Q It reads, quote: "Under the Asset Purchase Agreement, Novell retains significant Unix related assets following the sale. For example, schedule 1.1(b) of the Asset Purchase Agreement provided that much of the Unix System V intellectual property would not be transferred to Santa Cruz by listing the following items as excluded assets." And then it goes on to quote Roman V on intellectual property from excluded assets.

"A: all copyrights and trademarks, except for the trademarks Unix and UnixWare." Do you see that?

A Uh-huh, I see it.

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Q Do you agree with Mr. Sabbath's statement in paragraph 11 that we just read?

A No. As I've stated so many times to you, I believe that we were buying the Unix business, and we were buying the complete business, except for the economic financial binary revenue stream. That was my intent. That was what my belief is, and it still is belief, irrespective of number 11 on page six on this old document, which is not something I'd seen before.

Q Mr. Mohan, I'm -- I've handed you exhibit 80 --

A Yes.

Q -- which is the proxy statement -- I'll represent to you is the proxy statement that was sent to Santa Cruz shareholders.

A Okay.

Q Can you just look --

MR. JACOBS: Your Honor, at this point we would like to move into evidence Novell's Exhibit J10, which is a Santa Cruz proxy statement sent to shareholders. We will trim this exhibit so that only the relevant pages are provided to the jury. We'll be looking at pages 132 and 133.

THE COURT: Any objection?

MR. NORMAND: No objection, Your Honor.

THE COURT: It will be admitted.

(Defendant's Exhibit J10 received in evidence)

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Q Look at the first couple pages of this, which are letters from Steve Sabbath to the shareholders describing what this document is.

A Yep.

Q Do you have any reason to believe this is not a proxy statement that was sent out to shareholders on around 2001 prior to the Caldera transaction?

A I have no basis.

Q And do you see that on page 132 there is a description of Santa Cruz' intellectual property, runs from page 132 to 133?

A Uh-huh.

Q I'd ask you to take a look at that, please.

THE COURT: Mr. Jacobs, do you want to read that as we had Mr. Normand do?

Mr. JACOBS: Thank you, Your Honor. I think the jury can read along with us pretty quickly, and I'd rather not use the time for that.

THE COURT: All right. Did you all get that read?

A JUROR: We're not that fast.

THE COURT: Have you all now read it? Anyone who has not? All right.

Mr. JACOBS: Your honor, I think if anyone is still reading it on the jury, the next question and answer sequence

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will make clear the point of this excerpt in any case.

THE COURT: Go ahead, please.

A Do you want me to read all of page 133?

Q Just the section called intellectual property that begins on 132 and runs onto 133.

A Okay.

Q Do you see that nowhere in this intellectual property section does Santa Cruz claim to own the Unix copyrights?

A If you're asking if I can read English and say there's no word copyright, my answer is yes, there is no word copyright in here.

Q Did anyone from Novell at the time of the Asset Purchase Agreement ever say to you or any representative of Santa Cruz that SCO, after the transaction, would own the Unix copyrights?

A Again, the same answer. No one from -- that I work with from Novell, which would be limited people, Frankenberg and Duff Thompson, they did not speak to copyrights, so they did not tell me that they'd kept it. They did not tell me they'd given it to us. So it's neither in nor out.

Q To your knowledge, at the time of the Asset Purchase Agreement did anyone from Santa Cruz expressly say to Novell, "We want the Unix copyrights as part of this transaction"?

A I would -- I would not know that. I -- that level, and I don't recall any such -- I would not know that.

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Mr. JACOBS: That completes the testimony of this witness, Your Honor.

THE COURT: Thank you, Mr. Jacobs. Mr. Normand, if you would, please, your next one.

MR. NORMAND: Your Honor, we next call -- we propose to present the designations of Doug Michels, who was at Santa Cruz.

THE COURT: The deposition was taken when?

MR. NORMAND: March 28th, 2007.

THE COURT: Thank you.

(Douglas Michels called as a witness via video deposition)

Q -- September of '95 at SCO?

A Dates aren't my favorite thing, but as best as I can determine, I was probably CTO At that point, Executive Vice-President and CTO.

Q Are there other possibilities or are you --

A I was there for 20 years and I had half-a-dozen titles, and it never really changed my job much, so I never worried about what the title was.

Q Well, how would you characterize your participation in the Asset Purchase Agreement negotiations?

A Well, I was very involved in the initiation of it, and I was very involved in the strategy behind it, and I was very involved in the high level structure of the agreement, and I was involved in supervising pretty directly the people who

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were negotiating the details of the agreement.

Q When you say you were involved in the initiation of the agreement, can you tell me what you mean by that?

A Well, unfortunately this is a very long time ago, and I'm really bad at dates and, you know, trying to -- trying to get, you know, remote facts in exactly the right order. But, you know, the discussion of essentially acquiring Unix had been going on for ten years. And before Novell even bought Unix we were involved in discussing it with A.T.& T. And so I believe this particular round that went to the Asset Purchase Agreement was kicked off by Mike DeFazio contacting me at a Uniform conference and opening up the discussion. I mean I know he contacted me and I know he opened up the discussion, and I'm pretty sure that it was that conversation that went to the Asset Purchase Agreement, but it could have been -- it could have been a different iteration. I'm not a hundred percent sure. This was as a -- as I say, a ten year process.

Q Understandable. Can you put even a rough time frame on Mr. DeFazio's initial conversation with you?

A Well, we'd have to go identify when Uniform in Dallas was, but I suspect it was, you know, within a few months of the negotiations getting serious.

Q You also said that you were involved in the strategy of the Asset Purchase Agreement. Can you tell me more about what

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you meant by that?

A Sure. It's a big -- a major decision for the company to -- to, you know, make that bet. So the whole issue of did we want to own it? Did -- what did we want to do with it? How do we figure out how to pay for it? I mean That was all -- that was all, you know, discussions that were strategic in nature and that I was involved with.

Q And you also mentioned that you supervised the people who negotiated the deal. Who were those people?

A Primarily Jim and Geoff and some of the legal people, but the real business development team was Jim Wilt and Geoff Seabrook. And, again, I don't recall whether -- whether they were directly reporting to me at that point or not, or one of them was and one of them wasn't. I mean, again, over the years they often reported to me, and I worked very closely with -- whether they were reporting to me or someone else, we worked very closely as the team and business development was one of the -- one of my main roles. I met with them regularly, and whatever issues came up that they had trouble resolving, they would -- they would come to me, so --

Q Apart from your initial meetings with Mr. DeFazio, did you have other meetings face-to-face with Novell personnel as part of the APA negotiations?

A Yes.

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Q With whom?

A I don't remember.

Q How -- how many meetings would you say?

A Two or three.

Q Okay. Do you recall the time period of those? Was it close to the execution? Earlier?

A Both.

Q Do you recall anyone who was at -- present at those meetings, either from your side or from Novell?

A Well, certainly Jim Wilt and Geoff Seabrook and I think Ed Chatlos, some of the legal -- some of the legal people.

Q Do you recall any of the legal people?

A Kim Madsen on our side. I don't remember the names of the Novell legal people.

Q Do you have an understanding as to what the purpose of the Asset Purchase Agreement was?

A Sure.

Q What is your understanding of the purpose of the Asset Purchase Agreement?

A We were buying the original A.T.& T./Unix business from Novell, who had bought it from A.T.& T.

Q And what's the basis for that statement? What leads you to say that?

A That was the deal.

Q Um --

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A That's what Mike and I talked about in Dallas and that's what the deal was, was Novell didn't want it anymore, we'd always wanted it. He said, "Do you want to buy it?" I said, "Yeah." We bought it.

Q I want to talk a bit about some of the subsidiary related agreements that came along with the Asset Purchase Agreement. Did you have any involvement in the negotiation of the technology licensing agreement?

A Yeah. I tried to stay completely away from the actual mechanics of the agreement and stick to who was getting what. And what was in which piece of paper, I mean, I completely -- you know, had a great business development team. We had a good legal team. You know, as long as they found the right way to engineer the documentation to match what -- what we had agreed at a business level needed to happen, you know, as to which agreement did what, you know, that wasn't my job.

Q I take it then the answer is no, that you didn't have involvement in the actual negotiation of the technology licensing agreement?

A I don't know if I did or not. I had involvement in what -- what we got or what they had or who did what, which document it went into, I don't know.

Q Do you recall seeing drafts of the technology licensing agreement?

A I saw stacks of paper on people's desks.

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Q But do you have any specific recollection of --

A Did I read them?

Q Do you have any specific recollection of seeing drafts of the technology license agreement?

A I'm sure they were in the stacks of paper on people's desks that I saw, but I didn't read them.

Q How about the Operating Agreement? Do you have any recollection of being involved in the negotiation of the Operating Agreement?

A Same answer. I was involved in the negotiation of the deal. I was involved in the several page summary that all those agreements stemmed from. And I was involved in determining, you know, what we would give and what they would give. And when issues came up about how would something work, because in writing the agreements they would come up against some -- some edge condition, and then they might bring it to me and say, "Well, what do you think should happen in this edge condition?" And we'd discuss it, and they'd go off and do it. So was I involved in the agreement. I'm sure I was. Do I know which agreement evolved out of which discussion? No.

Q To clarify, you don't have any memory of being specifically involved in the negotiation of the Operating Agreement?

A I was specifically involved in the negotiation of all the

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agreements, but I don't know what agreements were -- resulted from what conversations. I was involved in the entire process. I had daily discussions with the people doing the negotiation, and they would come to me with issues and concerns and discussions about how should something work. I never asked them, "Well, does that go in the Operating Agreement or does that go in the Technology License Agreement?" I didn't care. Didn't matter to me.

Q I understand that you were involved in the deal generally, and I understand the testimony you've given so far. What I'm trying to do now is compartmentalize that a bit and see if you have any memory specific to particular agreements?

A I have no memory specific to any specific agreement.

Q Did you have any involvement in the negotiation of Amendment No. 1 to the Asset Purchase Agreement came a few months later?

A Same answer.

Q No memory specific to --

A I was involved in the discussions leading up to every agreement. I was not focused on what pieces of paper came out of those discussions.

Q Continuing in paragraph nine of your declaration on page two, the last sentence of it reads, "There was no intent to grant Novell any rights to waive or to direct or require SCO

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to waive any of its intellectual property rights or protections contained in the Unix licenses." What's the basis for that statement?

A We bought the whole business.

Q Except for certain revenue streams though; isn't that right?

A We bought the whole business. We partially paid for it with the residual revenues from certain contracts.

Q As to those contracts, did Novell retain any rights?

A It was purely a financial arrangement. We bought the whole business. The only rights they retained was rights preventing us from arbitrarily destroying that revenue stream.

Q What rights were those?

A Well, I mean if -- if we were to go to the customer and say, "Okay, you don't have to pay anymore," then they would have to approve that because that would be damaging their revenue stream.

Q And I -- so I understand your testimony, and what I'm trying to do here is drill down a bit. You've testified about the intent of the deal, and you're testifying specifically about the intent as applied to Novell's rights, and I want to know why you believe this is the intent. Is this something that was told to you? Is this something -- you know --

A This was the agreement that I reached with Novell, that

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the group meetings -- I mean it was clear from day one in our strategy we were buying the business. We needed to control the customers. We didn't need to be -- have Novell also talking to our customers. The reason that -- even on the residual revenue stream that they essentially got all the money, we said we're going to collect the money for you because we don't even want you talking to our customers at all. That was the discussion. The reason we demanded the five percent was we needed that just to cover our costs to collect the money because we were collecting it on behalf of Novell because they were not to ever talk to our customers. Otherwise we would have just let them collect the money. I mean that was clearly discussed by all parties, that we were to be the complete relationship management of that -- of all customers, and we should be the only ones ever talking to them.

Q And what I'm talking about is something a little more specific than that than relationship manager. Novell retained certain revenue streams, we've agreed. And Novell has argued in this case that it retained certain rights with respect to those contracts. One of those rights is the ability to command SCO to do certain things as concerns those contracts. I take it that's inconsistent with your memory of the negotiations; is that right?

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A That's correct.

Q And tell me more about why it's inconsistent with your memory of the negotiations. Can you come up with anything specifically?

A Yes. Our -- our agreement with Novell was that we were buying the entire business. We would have all relationship management and account control with those customers. How can you have all account control if somebody else can order you to do something with them? Doesn't make any sense. It's inconceivable. We would never agree to that.

Q Did they say at any point during -- did Novell convey that it didn't have the authority to direct SCO to make changes to SVRX licenses at any point to you?

A As I said, I'm talking about their actions, not what they said. Their actions were that they made direct contact with a customer and directly modified the license agreement with a customer, and we said that's a breach of contract, and they negotiated a settlement.

Q I take it then the answer to my question is no, you never heard Novell say something like that?

A I'm not saying that.

Q Okay. I'll ask you the question again. Did you ever hear Novell tell --

A You know --

Q -- you that -- that they did not have the authority to

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direct SCO to take actions as concerned SVRX licenses?

A We had a very long discussion, set of discussions, with Novell about the incorrect actions they had taken. And you're asking me to recall specific conversations that happened ten years ago, and I don't. But in those conversations they did acknowledge that maybe they had exceeded the rights under their license agreement, and they were willing to enter into settlement discussions.

Q What was your involvement in those agreements? Did you for example draft any of the language of those agreements?

A Oh, sure, of course. I love to write legal contracts.

Q I take it the answer is no, you did not write any of the language in those agreements?

A No, I did not write any of the language in those agreements.

Q You're not going to go to law school?

A I was involved in the discussions about the settlement and what we would be willing to settle for and, you know, what -- you know what -- what we needed them to agree to do to avoid this happening in the future. How it got implemented and what amendments, I don't know.

Q Do you recall reviewing any of the drafts of the agreements that surrounded this, whether it be Amendment No. X or Amendment No. 2 or whatever agreement?

A We always worked from term sheets. And term sheets are

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things that lawyers don't write. They're simple. They're easy to read. They're clear. They're in English. I reviewed term sheets.

Q So I take it then the answer is no, you do not recall reviewing any drafts of the actual language of the amendments or agreements that took place as part of this?

A Only to the extent that it was the same as the language in the term sheet, which it may or may not have been.

Q Do you recall there being term sheets as part of this effort to resolve this dispute?

A There was some form of term sheet. What form it was in, whether it was e-mails or whether there was an actual, you know, Word document, I don't know. But there was definitely a short English summary of what the terms of the settlement would be.

Q And I take it you were involved in the term sheet portion of this --

A Yes --

Q -- Negotiation?

A Absolutely.

Q Who else was involved in that?

A Alok, and I'm sure Geoff, Steve Sabbath, Kim. I don't know who else.

Q You testified this morning that one of the purposes of the APA was to buy the original Unix business. Do you recall

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that?

A Yes.

Q Was one of the purposes of the APA to buy the UnixWare business as well?

A Yeah. What I meant was the intent was to buy the business that had originally started at A.T.& T. and Bell Labs, and then became U.S.L., and then was acquired by Novell, and then -- and that -- that whole business is also what created UnixWare. But I mean we bought the employees and the body of that business, which included everything they ever did, which obviously included UnixWare, as well as SVR IV and SVR III and SVR V.

Q Do you recall -- independent of how it was embodied in a particular agreement, do you recall the issue of a license back to Novell in --

A Yes. We wanted to make sure that that license didn't give them any rights to go back into the Unix business or to use that technology other than had incidentally perhaps crept in. And so we -- we did effectively grant them rights to Unix technology as necessary to protect them from any incidental use of Unix inside of their existing products.

Q And did you have an understanding at the time as to the basis on which Santa Cruz granted Novell rights to the Unix technology?

A The basis, what do you mean?

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Q Was it your view that Santa Cruz owned rights in the Unix technology as of the date of the license back to Novell?

A Of course. We bought the business. And as a result of buying the business, we owned all the intellectual property.

Q Was it ever your understanding when you were at Santa Cruz that in order to acquire any Unix or UnixWare copyrights, Santa Cruz was obligated to go back to Novell and make a case as to why Santa Cruz needed the copyright?

A Of course not.

Q Did any attorney --

A We owned the business.

Q Did any attorney from Santa Cruz ever tell you any such thing?

A No.

Q Did any executive or any employee of Santa Cruz ever tell you such thing?

A Not that I can recall. If they did, I would have laughed them out of my office.

Q Let me direct your attention to paragraph nine, which you looked at earlier with Mr. Melaugh. You say in the last sentence, quote, "There was no intent to grant Novell any right to waive or to direct or require SCO to waive any of its intellectual property rights or protections contained in the Unix licenses," end quote. Do you see that language?

A Yes.

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Q Does that language accurately reflect your intent?

A Yes, it does.

Q I have a few follow-ups. Let's begin where we left off -- or he left off. And Mr. Normand just listed through a series of bases for your testimony about the intent of the deal. One of those bases was communications back from SCO employees. What specific communications back from SCO employees were you referring to?

A Again I had close, close interaction with particularly Geoff Seabrook and Jim Wilt, as well as Kim and Steve and the legal department and had, you know, virtually daily e-mails or phone calls or conversations.

Q Okay.

A Continuous conversations I mean.

Q Can you recall any specific e-mail, telephone conversation, in-person conversation that has informed the testimony that you've given today?

A Oh, sure, ten years ago on Tuesday I think it was -- no, of course not. I mean we talked daily.

Q I'm going to -- I'm going to ask the same thing about each of the topics Mr. Normand went through, but maybe we can shortcut it.

A That would be nice.

Q What is your opinion as to the scope of that phrase, namely, copyrights required for SCO to exercise its rights,

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and so on? What copyrights does that include?

A I mean I believe the scope of the term here is all copyrights relating to the Unix business: Source code, documentation, screens, you know, training materials, you know, brochures, marketing literature. I mean, you know, there's millions of copyright things in a business.

Q Why are all those copyrights required for SCO to exercise its rights with respect to the acquisition?

A We took over the business. We were in the business of selling intellectual property. We were in the business of supporting the intellectual property. We were in the business of providing training. We were in the business of providing marketing materials. We couldn't do any of that without owning the copyrights.

Q Just one question. You said in response to a question from Mr. Melaugh that you assumed to the copyrights we're going over. Do you recall using words to that effect?

A Okay, I might have.

Q To the extent that you did, what did you mean by that?

A I meant that the only way I know of and anyone on my team knew of to buy a software business is to buy the copyrights. And there's no way we would have ever done a deal to buy a software business where we didn't get the copyrights and all the other intellectual property. That's what you're buying. And especially in the case of Unix with its convoluted

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intellectual property history and whatnot, to not -- to not get that stuff would be to not do the deal. And so it was implicit in everything we did, everything we thought. Every single person on my team understood that. The lawyers understood it. The business development people understood it. I mean it's just -- it's so essential it's, you know, like breathing oxygen. I mean there's no way that deal could have happened without getting the copyrights.

Q What's the basis for that testimony?

A And we had, you know, many meetings, many dinners. I mean it was just implicit. It's in the -- it's in the water. I mean you -- you don't buy software companies without buying the intellectual property, and you don't buy the intellectual property without buying the copyrights.

Q But no one from Novell ever said to you, "We're transferring the Unix copyrights as part of this deal"?

A I have no idea what people said ten years ago.

Q You don't have a memory of someone saying that?

A Specific words? I have no memory of any specific words at all from ten years ago.

Q Or words to that effect?

A You know, I'm not going to testify to words I don't remember. I know that -- I know with certainty that everybody involved understood the copyrights were part of the deal.

Q Did anyone from Novell -- I believe you were asked did

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anyone from Novell ever tell you that Novell owned the Unix copyrights. Did anyone from Novell ever tell you that SCO owned the Unix copyrights between the time of the Asset Purchase Agreement and 2001?

A You know, the reason I can say with certainty that nobody from Novell ever said that they did is because that's so preposterous a thing, I would remember it.

Q Well, Mr. Normand asked you I think a fairly specific question, whether SCO held itself out to be the owner of the Unix copyrights --

A Yes.

Q -- between 1995 and 2001?

A We thought ourselves to be the owner of everything. We owned Unix. We owned the product. We spent a lot of money. We gave away 20 percent of our company to buy Unix. Of course we held ourselves out to be the owner of Unix.

Q I'm talking specifically about copyrights in this instance.

A In my mind they're not separable. If you own UNIX, you own the copyrights. It's a legal distinction that you're making that doesn't parse to a -- to a normal human being. I don't -- I don't know how to answer your questions. It's jibberish.

Q Apart from the license deals, are you aware of any other instance in which SCO held itself out specifically to be the

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owner of the UNIX copyrights, as opposed to Unix generally?

A I don't -- I'd have to think about that. I don't know.

Q If you need a moment to think about it, I'm happy to --

A I can think about it for a couple hours I might not know. I mean I don't think that way. We don't talk about copyrights. But I'm sure there are places where we held ourselves out to own the copyrights, because there's no question in our minds that we did. You're asking me to recall where specifically ten years ago we might have said something obvious, and that's a very hard question.

Q If you don't have a memory of it, you don't have a memory of it. I'm not asking you definitively whether it occurred or not. I'm just asking you about your recollection.

A Well, you know, I guarantee you we put copyright notices in every document we wrote. How could we do that if we didn't own the copyrights? We put copyright notices in every module of source code we wrote. They all said we owned the copyrights. So there's two more examples. We signed non-disclosure agreements with people. I'm sure they included copyrights. So I mean it's everywhere. Everything we did. There's no -- there's no break in this pattern. We owned Unix. We owned the copyrights. We owned the trademarks. We owned the intellectual property, and every action we took represents that.

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MR. NORMAND: Your Honor, that concludes our designations of Mr. Michels' amusing testimony.

Mr. JACOBS: We have some small amounts of additional testimony.

The Court: How long do you think it will take, Mr. Jacobs?

Mr. JACOBS: Ten minutes.

THE COURT: Would you have any objection if we were to take our break before you start?

Mr. JACOBS: No.

THE COURT: Let's take a 20 minute recess.

(Jury excused)

After Mr. Michels, you will have who again?

MR. NORMAND: Mr. Levine, Your Honor.

THE COURT: Will his be very long?

MR. NORMAND: I think it adds up to 20, 25 minutes.

MR. SINGER: Ours is 18 minutes. I'm not sure how much is designated by Novell.

MR. NORMAND: Apparently it adds up to more like 35 minutes, Your Honor.

THE COURT: Do you have anything before we recess?

MR. JACOBS: No, Your Honor.

MR. SINGER: No, Your Honor.

THE COURT: We'll take 20 minutes then.

(recess 11:47 a.m.)

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***** Part 2 *****

(12:10 p.m.)

THE COURT: I understand that there are some of you who are protesting my time keeping. Ms. Malley did not indicate to me any specific names, but I try to keep us going. Do you have anything, counsel, before we bring the jury in?

MR. JACOBS: Not from us, Your Honor.

THE COURT: Ms. Malley, if you would, please. I'm curious, Mr. Normand, Mr. Singer, why you don't have the words below the deposition? Is there some conscious effort?

MR. NORMAND: There was no conscious decision, Your Honor. It was my understanding was it was something that was very difficult to accomplish.

MR. SINGER: Part of it was we had edited out objections that weren't being made, and that couldn't have been apparently done from running transcript.

MR. JACOBS: Just on that point, Your Honor, we're going to try to make sure that the objections are edited out going forward. You have been kind not to call us on it but --

THE COURT: It is really quite distracting. It is even more so than, well, I do -- I don't know which is better in terms of whether you should have the banner below or not, but it is kind of like going to a basketball game and spending the whole time looking at the screen, the

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floor, because you become distracted by those words moving below it. I will not stop either of you from doing it or not doing it, I was just curious why the decision was made for one to do it and the other not.

Mr. Singer, did you have something?

MR. SINGER: There is. What we're trying to clarify is one of the witnesses that we plan to call tomorrow there has been a concern that somehow he is not properly listed. And we are trying to get to the bottom of it. He is on the pretrial order signed by the court. There has been a suggestion that he was not on a more recent order and Mr. Jacobs and I have been trying to work through that issue. But right now there is nothing we need to take up with Your Honor.

THE COURT: All right. Was his name read the first day?

MR. HATCH: I will start bringing that every day. I can look again, but I am pretty sure he was.

THE COURT: Is his name on my witness list?

MR. HATCH: That is the problem, Your Honor, Troy Keller is the name.

MR. SINGER: He was on the pretrial order signed by the court. We would need to check to see whether he was on the list that was read.

MR. JACOBS: He is not on the list.

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MR. HATCH: He is not on the list, I agree with that.

MR. JACOBS: There may be a set of privilege issues. He is a lawyer. So we'll try and work this out and get it up to you.

THE COURT: All right.

THE CLERK: All rise for the jury.

(Whereupon, the jury returned to the courtroom.)

THE COURT: Go ahead, Mr. Jacobs, if you would, please.

(Whereupon, the deposition continued.)

Q. Did you draft any of the language of the Asset Purchase Agreement?

A. No.

Q. Did you review drafts of the Asset Purchase Agreement?

A. No, not really. I think there was, you know, a -- a -- prior to the Asset Purchase Agreement there was some kind of letter of intent or -- or high level deal, and I'm sure I reviewed that carefully, but once we -- the trans- -- translation from the sort of two- or three-page deal to the Asset Purchase Agreement -- you know, had a great team to do that, and they didn't -- they only came to me if there was a debate about the translation process. So --

Q. Do you recall any of the debates that they came

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to you about on the translation process?

A. Not in detail, no.

Q. Even -- even vaguely?

A. Not really.

Q. But sitting here today, you don't have any recollection of being involved in the negotiation of Amendment Number 1?

A. I -- same answer. I was involved in the negotiations of all of the agreements, and I don't have any recollection specific to any particular agreement.

Q. Is the same true of Amendment Number 2? Were you -- do you have any recollections of being involved -- specific recollections of being involved in the negotiations of Amendment Number 2?

A. I don't even know what Amendment Number 2 is.

Q. Fair enough. Let's talk a bit about the declaration you gave in this action. I'm going to hand you a copy of it. Let's mark this as exhibit -- I think we're -- the first one is Exhibit 241. Do you recognize this document?

A. This is a declaration I gave in regard to the case with IBM, not the case with Novell, correct?

Q. That is correct, as far as I understand. Now, I'm -- the last page, that's your signature above the line, "Doug Michels"?

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A. I would say that looks like my signature.

Q. Did you draft the language of this declaration?

A. Not -- I edited it, but I didn't draft it.

Q. Who drafted the language of this declaration?

A. The -- the SCO attorneys.

Q. So let's talk again a bit more about the basis for your conclusion that copyrights transferred as part of the Asset Purchase Agreement. I take it that's based on your general understanding of the deal? It's -- you don't recall anything specifically told to you about this? Is it based on -- are there provisions of the Asset Purchase Agreement that you can recall that support this opinion?

A. I -- I didn't read it then, and I haven't read it recently. I've never read it through. I'm not a lawyer, and I have no comment about the Asset Purchase Agreement.

Q. And did you read the Asset Purchase Agreement agreement in preparation for your December, I think -- November 2006 declaration?

A. No.

Q. When was the last time you read the Asset Purchase Agreement?

A. I have never read the Asset Purchase Agreement. I've glanced at it, I've skimmed through little bits of it, but I have never read it.

Q. Is the same true of -- of the other agreements we

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discussed earlier?

A. Yes.

Q. The Technology Licensing Agreement, The Operating Agreement?

A. Yes.

Q. And the two amendments?

A. I have never read any of them cover to cover.

Q. So to begin back where we left off, to be clear, you did not review the Asset Purchase Agreement in preparation for the execution of your declaration?

A. I don't -- did not, no.

Q. And -- and you have not read the Asset Purchase Agreement cover to cover?

A. No.

Q. So if I asked you, as a businessman, where would I go to learn the answer to this question, what would your answer be?

A. My answer would be I would call my counsel and ask them, you know, what's the answer to this question?

Q. What was your involvement in those agreements? Did you, for example, draft any of the language of those agreements?

A. Oh, sure, of course. I love to write legal contacts.

Q. I take it the answer is no, you didn't -- you did

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not write any of the language in those agreements?

A. No, I did not write any of the language of those agreements. I was involved --

Q. Now, is it fair to say that for all of those topics -- term sheets, communications with Novell, communications with the Board of Directors, press releases, communications with counsel and paralegals -- you have no specific recollection, sitting here today, that's informing your testimony?

A. No. I mean, I can't give you a specific -- I mean, I know in order to -- to do a deal in this magnitude we had to do a major presentation to the Board, you know, before you can make a deal involving nearly 20 percent of the equity of the company. I mean, the Board -- the Board had a duty to scrutinize it in great detail. And we -- we prepared a detailed analysis of the deal, and the rights, and, you know, all that.

So there was -- there was a lot of discussion internally, and -- and even formalization of that. But, you know, from ten years ago, can I remember the exact details of that? No.

Q. I take it it is your testimony then, that you don't have any specific memory of conversations with people from Novell in which they said they're transferring the UNIX copyrights as part of the Asset Purchase Agreement?

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Q. I take it it's your testimony that you haven't had conversations, one way or the other with Novell, about UNIX copyright ownership between 1995 and 2001?

A. I might have. I don't know. I don't recall.

Q. You don't recall any conversation, one way or the other?

A. I certainly recall with certainty that Novell never claimed that they had the copyright.

Q. Did SCO -- did anyone from Novell ever say that SCO owned the UNIX copyrights?

A. I don't know.

MR. JACOBS: That concludes this witnesses testimony, Your Honor.

THE COURT: Thank you, Mr. Jacobs.

Mr. Normand, your next deposition?

MR. NORMAND: The next deposition designation will be of Burt Levine who was deposed on March 23rd, 2007.

(Whereupon, the following is deposition excerpts of Mr. Burt Levine's deposition.)

Q. Okay. You were a lawyer for AT&T back in the 1980's; is that correct?

A. That's correct.

Q. How many lawyers were there in the legal department at AT&T in the eighties? Roughly.

A. I guess between 75 and a hundred.

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Q. At some point in time when you were a lawyer in AT&T's Legal Department, were you involved in working on AT&T's UNIX business?

A. Yes.

Q. What portion of the 75 to a hundred lawyers in AT&T's Legal Department were involved in working on AT&T's UNIX business, to the best of your recollection?

A. I guess, um, 15 to 20.

Q. When AT&T spun off its UNIX business in the form of UNIX Systems Labs in 1991, did you go to USL?

A. Yes.

Q. Now do you recall that I believe in 1993 USL and its UNIX assets were purchased by Novell?

A. Yes.

Q. Do you recall what the purchase price was?

A. I don't.

Q. When Novell purchased USL and its UNIX assets in 1993, did you move to Novell?

A. Yes.

Q. And when I say "moved to Novell," I meant you went to work for Novell in 1993; is that right?

A. That's correct.

Q. Is it fair to say that you and Mr. Weitz and Mr. Tannenbaum in New Jersey were continuing to head up the legal efforts relating to UNIX after Novell's purchase of

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the USL in 1993?

A. That was my understanding.

Q. Do you have an understanding that on September 19th, 1995 Novell sold certain UNIX assets to a company called Santa Cruz?

A. Yes.

Q. Immediately after that purchase on September 19th, 1995 did you continue to work with Novell back in New Jersey?

A. As I recall, I did. In the same facility --

Q. Right.

A. -- I remember I did.

Q. Were you still in Summit, New Jersey, at that point in time?

A. I believe we were, yeah.

Q. A few months or so after the purchase by Santa Cruz of certain UNIX assets from Novell did you then move to Santa Cruz, meaning you began to work for Santa Cruz?

A. Yes.

Q. Do you remember approximately when that happened?

A. It was a transition time and by February 1st of 2006 I know that the three of us in the Legal Department were considered SCO employees, whether there was anything that was formalized on company records before that, I don't know.

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Q. Is this document, Schedule 1.1(b), unclear to you?

A. Yes.

Q. How is it unclear to you?

A. The asset that purports to be transferred from Novell to SCO in the intent of the parties ex -- will include, to my reading or to my knowledge, even though I don't remember the specific terms of this agreement, the intention was to convey all of these ownership and auxiliary ownership rights to the asset including copyright. And the fact that there is this kind of an exclusion there tells me that there is an ambiguity in this agreement or a mutual mistake which wipes out any kind of an integration clause. I don't agree that that's what the agreement means.

Q. Can you tell me in your view what is ambiguous about the exclusion on Schedule 1.1(b) of, quote, all copyrights and trademarks except for the trademarks UNIX and UnixWare?

A. I don't think you can exclude a copyright in this kind of an asset transfer. I think you can exclude a copyright if you're transferring the physical manifestation of the asset, but when you purport to transfer the whole asset and all the business and everything else I think inherent in that is going to be the copyright and it's a contradiction in terms for the copyright to be excluded like

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this.

Q. What language can you point me to where there is that restriction in Section 4.16(b)?

A. I think you would have to look at the intent of the parties. The intent of the parties was to give as one category of compensation a royalty stream.

Q. Aside from the intent of the parties, can you point me to any specific language in Section 4.1(b) that supports your limitation on Novell's dictation right?

A. No, I can't point to anything specifically in those sections but it's inconceivable to me that if you take the language of (b) literally, this derogates 100 percent from the grant that's being given from Novell to SCO. The grant is illusory if Novell wanted to actually enforce something like this to the extent it says in subsection (b). There may as well not be an agreement.

Q. Now you've talked about the intent of the parties, Mr. Levine, as being the basis for your view that the dictation right in 4.16(b) is limited to a royalty stream. What specifically can you point me to in support of your view of the intent of the parties on 4.16(b). You can answer?

A. I can't point you to anything in the agreement.

Q. What are you referring to when you talk about the intent of the parties? What are you basing that on?

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A. One of the few things that I can recollect about these things is the discussions that I've had with the negotiating people.

Q. Which people?

A. With Novell.

Q. Which people in the negotiating team did you discuss concerning any limitation on Novell's dictation right under Section 4.16(b)?

A. Definitely Chatlos and probably Maciaszek.

Q. Do you remember any specific conversations with Ed Chatlos concerning your view that Section 4.16(b) in Novell's dictation right thereunder is somehow limited to a royalty stream?

A. No. No, nothing specific.

Q. Do you recall how long you stayed with Santa Cruz?

A. Yes.

Q. How long did you stay with Santa Cruz?

A. Till September of 2000.

Q. Was it your understanding at the time of the drafting or negotiations of the APA that Mr. Bradford was personally involved at all?

A. Yes.

Q. Did Mr. Bradford ever tell you that Novell was retaining any UNIX or UnixWare copyrights with respect to

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the APA?

A. No.

Q. Did Mr. Bradford ever tell you that he had informed Wilson Sonsini lawyers to draft the APA so as to have Novell retain any Unix or UnixWare copyrights?

A. No.

Q. Mr. Levine, from the time of the APA in 1995 until you left Santa Cruz in 2000, did you ever hear anyone whether inside or outside of Santa Cruz or inside or outside of Novell say that Novell had retained the UNIX or UnixWare copyrights?

A. No.

Q. If you had heard anyone make such a statement, would that have been a surprise to you?

A. Very much so, yeah.

Q. And why do you say "very much so"?

A. My personal experience with the couple of years that I spent at Novell was that it was a very ethical company and I, I was very impressed with that.

Q. And how has that fact bear on your answer, the fact that you had the view that Novell was an ethical company?

A. Was ethical and I believe that being an ethical company in its dealings with its partners or transferees or whatever it is that they would not resort to withholding

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information or trying to withhold something that the transferee in this case would be entitled to.

Q. As I ask you now, what words would you use to describe your view that the copyrights had been transferred?

A. Right. That the transfer of the business, including both the physical assets and the intellectual property assets, would automatically convey the copyright along with the rest of the business assets.

Q. Is it your view that under the Asset Purchase Agreement between Novell and Santa Cruz that Santa Cruz merely acquired a license from Novell to use the UNIX and UnixWare source code?

A. No, they obtained a full right, title and interest in ownership of that asset.

Q. If a prospective licensee had signed a software agreement and no other documentation with AT&T, what rights with respect to source code did it have?

A. It would have no rights under the agreement because there was no product identified.

Q. And how would that licensee gain rights to use source code from AT&T?

A. It would have to obtain a supplement and schedule for that product to define what it was it was licensing and pay the fees.

Q. If a licensee had entered into a software

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agreement and sublicensing agreement and no other agreement with AT&T, what rights would it have, if any, with respect to binary products or sublicensed products?

A. If you mean a form sublicensing agreement without any identification of the product, then they would have no rights.

Q. Do you recall reviewing the language of Section 4.16(b) with Mr. Brakebill earlier?

A. Yes.

Q. And I believe that you testified in response to Mr. Brakebill's questions that part of the source of your understanding of Section 4.16(b) is discussions with Mr. Chatlos and Mr. Maciaszek following the execution of the APA; is that fair to say?

A. Yes.

Q. And I believe you said with respect to Section 4.16(b) that to read it literally would make the transfer of the assets and the licenses under the APA illusory, do you recall using that word?

A. Words to that effect, yes.

Q. Could you just review for me in your words how it is that you used that word and what you meant by using that word illusory?

A. Yes. That given the scope of the grant of the agreement, the fact that the intention of the parties, as I

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read the agreement, was very broad and commensurate with that, that to give this under -- to give this paragraph any interpretation other than the limitation that I testified to would render this broad grant illusory, certainly weaken it substantially if the things that Novell could do or require SCO to do were part of this agreement and in the limit it could nullify it completely. So I think reading the agreement as a whole as to what was intended and what is here that this is the only proper interpretation of 4.16(b).

Q. Was it ever your view while at Novell or Santa Cruz to the best of your recollection that Novell under the APA retained the right to direct SCO to modify or change its source code rights under the agreements that had been transferred under the APA?

A. No.

MR. NORMAND: Your Honor, that completes SCO's designations of Mr. Levine.

THE COURT: Mr. Jacobs?

MR. JACOBS: We have some additional testimony of Mr. Levine.

THE COURT: If you would like to go ahead.

Q. Do you have an understanding that there was an Asset Purchase Agreement that was signed by Novell and Santa Cruz on September 19th, 1995?

A. Yes.

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Q. Just so you have it, I'm going to hand you what's been marked as Exhibit 1 in this case.

A. Thank you.

Q. Do you recognize this document, Mr. Levine?

A. Yes, I've seen it.

Q. Okay. And this is a document entitled Asset Purchase Agreement By and Between The Santa Cruz Operation, Inc. and Novell, Inc., dated as of September 19th, 1995; do you see that?

A. I see it.

Q. As you sit here today, do you recall what involvement, if any, you had in drafting or contributing any portion of this particular agreement dated September 19th, 1995?

A. I know that I worked on drafting some of the provisions, I don't know which ones in particular.

Q. And how is it that you recall that you were involved in drafting some provisions?

A. I was asked to do it by the negotiators for Novell.

Q. And as you sit here today are you sure that any drafting that you did relating to the Novell-Santa Cruz deal was in connection with this particular September 19th, 1995 contract as opposed to an amendment to this contract?

A. No, I can't recall specifically, you know, what

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work I did on one versus the other.

Q. Do you remember any particular provisions in this contract as you sit here today?

A. No.

Q. Memories can fade over time?

A. Yes.

Q. You would agree with me that a contract is written to govern the rights and obligations of the party; isn't that right?

A. I believe that's usually the purpose of it.

Q. Do you recall as you sit here today that there were any provisions in this September 19, 1995 contract relating to intellectual property as assets?

A. No, I don't recall.

Q. Let me turn your attention to Exhibit 1 which is the September 1995 contract between Novell and Santa Cruz?

A. (Complies.)

Q. And ask you to turn to the page in the lower right-hand corner ending in 950?

A. (Complies.)

Q. Are you there?

A. Yeah.

Q. Okay. And you'll see this is a part of the contract entitled Schedule 1.1(a) entitled Assets?

A. Yes.

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Q. Okay. And if you turn to -- you see there are a series of Roman numerals on the left-hand side, do you see that?

A. Yes.

Q. I'd ask you if you could turn to Roman numeral V which is on the third page of Schedule 1.1(a)?

A. (Complies.)

Q. Do you see that?

A. I do.

Q. Okay. And do you see that Roman numeral V is entitled Intellectual Property?

A. Yes.

Q. And do you see that it lists one particular type of intellectual property as an asset?

A. Yes.

Q. And it's listed as "trademarks UNIX and UnixWare as and to the extent held by Seller, parenthetical, excluding any compensation Seller receives with respect to the license granted to X/Open regarding the UNIX trademark"?

A. I see it, yeah.

Q. And that's the only type of intellectual property listed as an asset; is that right?

A. Yes.

Q. Aside from listing trademarks UNIX and UnixWare, it doesn't list any other type of intellectual property as

527

an asset, does it?

A. No.

Q. Do you recall that there was a schedule of excluded assets in the September 19th, 1995 contract between Novell and Santa Cruz?

A. I guess to the extent I remember anything about this document, I would have remembered this, but -- as a title of something in here, I think so, yeah.

Q. And I'll ask -- well, as an experienced lawyer in transactions what does excluded assets mean to you?

A. Just off the top of my head what you're asking.

Q. Yes.

A. If you have a definition in the agreement of a particular term, an asset means so and so and so and so and so and so, usually you would put the exclusion right in that same paragraph, which is my practice. I'm assuming, because I don't know different, that this has got the same effect that whatever an asset is, it does not include this.

Q. Do you see the last sentence, Mr. Levine, of this Section 1.1(a) of the contract that says, quote, Notwithstanding the foregoing the capital assets to be so purchased shall not include those assets, parenthesis (the, quote, excluded assets, quote) parenthesis, set forth on Schedule 1.1(b)?

A. I see it.

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Q. Now turning back to the Excluded Asset Schedule in Schedule 1.1(b) that we were just looking at which is on Page 954 of this document in front of you, as an experienced lawyer do you understand that what's listed in this Excluded Asset Schedule is specifically an asset or assets that are not included in the purchase?

A. As a matter of form that's true, I agree with you.

Q. Then referring you to Page 955 in the lower right-hand corner which is the second page of the Excluded Asset Schedule?

A. (Complies.)

Q. By the way, there are eight items that are listed on the Excluded Asset Schedule; is that right?

A. Eight Roman numerals, yes.

Q. Right. And those are assets of substance; isn't that right?

A. Intellectual property, yes, definitely.

Q. And if you look at Roman V it is entitled Intellectual Property, correct?

A. Right.

Q. And it lists as two types of excluded intellectual property, one, all copyrights and trademarks except for the trademarks UNIX and UnixWare, and two, all patents; do you see that?

529

A. I see that.

Q. Okay. What is listed is (a) and (b) of Roman V are specifically excluded assets under this contract, would you agree with me?

A. Specifically listed assets, yes.

Q. Specifically listed as excluded --

A. Right.

Q. -- assets, correct? In reading this, do you understand that Novell is excluding all patents from this asset transfer?

A. I understand what the agreement says, I understand what the exclusions are in the document.

Q. Okay. And based on reading this exclusion in the contract do you understand that all copyrights and trademarks except for the trademarks UNIX and UnixWare are excluded from this asset transfer?

A. No, I don't.

Q. You disagree with the language in this schedule; is that right?

A. No, I don't disagree that these are listed here, I disagree that in the context of this agreement that this is, that this is the whole story.

Q. Based on what you're saying today, would you have stricken this from the Excluded Asset Schedule?

A. You're asking me to say what I would have done,

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certainly that would have been something that went through my mind, I don't know what I would have done.

Q. Well, you seem to think there's an ambiguity as you sit here today in this copyright --

A. Well, ambiguity or mistake, yeah.

Q. Okay. As you sit here today you think there's some kind of ambiguity or mistake in this Excluded Assets Schedule excluding all copyrights and trademarks except for the trademarks UNIX and UnixWare; is that right?

A. Yes.

Q. So I take it today 12 years after the fact, you would strike this reference to all copyrights and trademarks except for the trademarks UNIX and UnixWare; is that right?

A. Or would have tried to have the agreement reformed or amended, yeah.

Q. You wouldn't have left it in, correct?

A. No, I wouldn't have left it in.

Q. In fact, Mr. Levine, you did review schedule 1.1(b) prior to the execution of this Asset Purchase Agreement on September 19th, 1995, didn't you?

A. I don't recall.

Q. I'm going to hand you what's been marked as Exhibit 202?

A. Thank you.

Q. For the record this is a fax from you,

531

Mr. Levine, to an attorney named Aaron Alter at the Wilson Sonsini firm that was representing Novell?

A. Okay.

Q. Do you see that?

A. I see.

Q. Okay. And this fax cover from you is dated September 18th, 1995, do you see that?

A. Correct.

Q. In fact, there's a fax transmission line up at the top, it says September 18, 5:20 a.m. USL Legal Department, do you see that?

A. I see it.

Q. Okay. This is a fax that you sent, isn't that correct?

A. I'll accept that I did, I have no reason to think I didn't, but I don't recall it.

MR. JACOBS: Your Honor, I would like to move into evidence Novell's Exhibit X3, the fax from Mr. Levine to Aaron Alter at Wilson Sonsini just referred to in the deposition.

MR. SINGER: No objection.

THE COURT: Exhibit X3 will be admitted.

(Whereupon, Defendant's Exhibit X3 was admitted into evidence.)

MR. JACOBS: Your Honor, what I propose to do, the

532

witness is going to walk through various pages. So we'll go through his walk through and alternate between the deposition and showing the jury the various pages that he is referring to, okay?

THE COURT: All right.

Q. Turning to Page 2 you write a note to Aaron Alter and it says, "Aaron: Attached are copies of the following: A suggested markups of certain pages in Schedules 1.1(a) and 1.1(b)." Do you see that?

A. Yes.

Q. Okay. And then turning you to Page 3 of this document there's a draft of Schedule 1.1(a), do you see that?

A. Yes.

Q. Okay. Do you recognize this as the schedule, a draft of the Schedule 1.1(a) that you were just looking at?

A. Yes.

Q. And do you see some handwriting about halfway down the page and then on a few of the subsequent pages of Schedule 1.1(a), that's your handwriting; isn't that right?

A. Yes.

Q. Okay. You reviewed Schedule 1.1(a) prior to the execution of this September 19th, 1995 contract; isn't that right?

A. It seems that way, yeah.

533

Q. And you provided some comments on this Schedule 1.1(a) draft?

A. Yes.

Q. And if you turn to Roman V of this Schedule 1.1(a), do you see that page?

A. Yes.

Q. And up in the left you've written in your handwriting "from Schedule 1.1(a)"?

A. Yes.

Q. And then do you see you've made some comments on Roman V relating to intellectual property?

A. Yes.

Q. Okay. And you made one change adding the phrase "and to the extent" in between the phrase "trademarks UNIX and UnixWare as," and the phrase, quote, held by seller, do you see that?

A. I see it.

Q. You left in place "trademarks UNIX and UnixWare" as a type of intellectual property to be an included asset; is that right?

A. Yes.

Q. Okay. And you did not add any other types of intellectual property to this list of included assets, did you?

A. No.

534

Q. You didn't add copyrights?

A. Not as a specific item, no.

Q. Okay. You did not add UNIX copyrights?

A. No.

Q. You did not add UnixWare copyrights?

A. No.

Q. You did not add patents?

A. No.

Q. Now your cover memo to Mr. Alter of Wilson Sonsini says that you also were attaching suggested markups of certain pages in Schedule 1.1(b), correct? And this is Page 2 of the fax.

A. (Reviews.) 1.1(a) and 1.1(b), yes.

Q. And turning your attention to the excluded asset draft which is on the page ending 613 of this fax number in the lower right-hand corner, are you there?

A. Okay, yeah.

Q. Do you see that up in the left-hand corner you've handwritten "from Schedule 1.1(b)"?

A. Yes.

Q. And do you see that this is your markup of a portion of Schedule 1.1(b) of the excluded assets?

A. That's what it appears to be, yeah.

Q. And you actually reviewed the Intellectual Property section of the Excluded Assets Provision of

535

Schedule 1.1(b) before the Asset Purchase Agreement was executed on September 19th, 1995; isn't that correct?

A. Yeah. Yes.

Q. And specifically looking at and commenting on intellectual property you deleted a reference to patent licenses, do you see that?

A. Yes.

Q. Okay. And do you see that in reviewing a draft Schedule 1.1(b) prior to the execution of the agreement you specifically looked at and commented on the exclusion of all copyrights and trademarks except for the trademarks UNIX and UnixWare?

A. Yes.

Q. Okay. And do you see that you made only one comment on that line item?

A. Yes.

Q. Okay. And the comment that you added was at the very end a phrase, quote, as and to the degree held by Seller, quote; is that right?

A. That's true.

Q. Okay. When you looked at the Excluded Asset Provision prior to the exclusion of the Asset Purchase Agreement, you left in tact the exclusion of all copyrights and trademarks except for the trademarks UNIX and UnixWare; isn't that correct?

536

A. Yes.

Q. And you also left in the exclusion of all patents as being a transferred asset; isn't that right?

A. Yes.

Q. And again you passed your comments on to the outside lawyers of Wilson Sonsini who were representing Novell in the negotiation and drafting of this contract between Novell and Santa Cruz, correct?

A. That's correct.

Q. And your inclusion of "all copyrights and trademarks except for the trademarks UNIX and UnixWare" in the Excluded Assets provision of Schedule 1.1(b) was also transmitted to Santa Cruz during the negotiations, correct?

A. Okay. My -- inclusion it wasn't modified "all of the copyrights and trademarks," yeah.

Q. You did not modify the line item "all copyrights and trademarks except for the trademarks UNIX and UnixWare," correct?

A. No.

Q. And so when your comments on Schedule 1.1(b) were transmitted to Santa Cruz the line item "all copyrights and trademarks" was included as an excluded asset, correct?

A. It was included.

Q. And do you recall that one of the types of intellectual property that was excluded was all patents?

537

A. Yes.

Q. As you sit here today, do you have any understanding as to whether SCO as part of the Asset Purchase Agreement in 1995 got a license to practice the UNIX patents or any other IP that Novell retained?

A. Yes, I do.

Q. And what is your understanding today?

A. My understanding is similarly to my stand on copyrights that the grant of the whole business carries with it at least licenses under the patents needed to carry on the business to the extent that Novell had them.

Q. Do you remember any specific conversations with Ed Chatlos concerning your view that Section 4.16(b) in Novell's dictation right thereunder is somehow limited to a royalty stream?

A. No. No, nothing specific.

Q. So you just recall in general having a conversation with Ed Chatlos --

A. Yes.

Q. -- at some point in time?

A. Yes.

Q. Okay. And 12 years ago you wrote some documents concerning 4.16(b), didn't you?

A. Very possibly.

Q. And we looked at -- do you have Exhibit 206

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before you?

A. Yes.

Q And if you look at Paragraph 2 at the bottom this is an e-mail that you sent Mr. Chatlos on November 16th, 1995, do you recall that

A. I don't recall that, I see that that's what happened.

Q. This is an e-mail that you sent to Mr. Chatlos on November 16, 1995?

A. Okay.

MR. JACOBS: Your Honor, at this point we move into evidence Exhibit I5 which is the memo or e-mail that is being referred to in this portion of the deposition.

THE COURT: Any objection?

MR. SINGER: No objection.

THE COURT: I5 will be admitted.

(Whereupon, Defendant's Exhibit I5 was received into evidence.)

MR. JACOBS: Your Honor, in this case I think it would be helpful to read it out loud.

THE COURT: You may do so.

MR. JACOBS: My reading of the Asset Purchase Agreement is that while we would have the right to direct SCO to offer HP licenses on any terms we choose with respect to any SVRX products that HP needs to carry on the Rhine

539

River work, it is not clear whether we can restrict SCO in the terms they can offer HP for UnixWare licenses for this purpose. Do you think we should try to cover by amendment that at least with regard to HP, we should have the right to specify the terms for UnixWare licenses as well?

Q. And in this e-mail to Mr. Chatlos you expressed your viewpoint concerning Novell's rights to direct SCO to offer licenses, quote, on any terms we choose with respect to any SVRX products, isn't that what you said?

A. Yes, it is.

Q. You did not say in this memorandum dated November 16th, 1995 that Novell would have the right to direct SCO to offer HP licenses on any terms we choose with respect to any binary SVRX agreements, did you?

A. No, I didn't.

Q. You don't say in April of 1996 that Novell's dictation right under 4.16(b) only extended to binary SVRX agreements, isn't that the case?

A. That's true.

MR. JACOBS: That ends the testimony of Mr. Levine, Your Honor.

THE COURT: Thank you, Mr. Jacobs.

Mr. Singer?

MR. SINGER: Our next witness is Bill Broderick.

THE COURT: All right.

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THE CLERK: Mr. Broderick, if you would come forward. If you would raise your right hand.

WILLIAM BRODERICK, called as a witness at the request of the Plaintiff,

having been first duly sworn, was examined

and testified as follows:

THE WITNESS: Yes.

THE CLERK: Thank you. Please be seated. If you would please state and spell your name for the court.

THE WITNESS: William Broderick, B-R-O-D-E-R-I-C-K.

THE CLERK: Thank you.

DIRECT EXAMINATION

BY MR. NORMAND:

Q. Good afternoon, Mr. Broderick.

A. Good afternoon.

Q. Are you currently employed?

A. Yes, I am.

Q. Where?

A. I am director of software licensing for the SCO Group.

Q. Could you briefly summarize your responsibilities in that capacity?

A. I am responsible for all software licensing and contracts that go through the company.

Q. And what kind of software licensing or contracts

541

are you talking about?

A. Um, it is -- we have business in certain areas. We have source code licensing, binary licensing, we have support contracts, third-party software agreements where we license products with third parties.

Q. Okay. I'm sure we will get into more of that later. Could you briefly describe your educational background?

A. Well, I graduated high school in 1966. I went my freshman year out to Missouri. I have completed my freshman year and I enlisted in the Army. I spent two and a half years in the Army, a year and a half with 101st Airborne Division in Vietnam. Came home, graduated in 1973 from William Patterson College with a degree in business. And in 1975, I graduated from Santa Clara University of California with an MBA.

Q. What did you do after that?

A. I went to work for Trans World Airlines. I spent five years with them in various accounting positions in New York, London and Paris.

Q. Did there come a time when you became involved in the UNIX business?

A. I did. That was in 19 -- late 1991.

Q. And in what capacity did you become involved with the business at that time?

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A. I was working for a computer manufacturer in New Jersey and I had an opportunity to join UNIX System Laboratories, it was AT&T's UNIX Group. And in I believe it was December of 1991, I joined USL as manager of sales operations.

Q. USL is UNIX System Labs?

A. Yes.

Q. And what did you do there?

A. Um, I managed the sales operations. I had some people that worked with me. I was responsible for the sales compensation plan, of coordinating revenue forecasts and expense forecasts with the finance people, and chasing down any problems the vice-president of sales told me to chase down.

Q. What did the UNIX group at USL do at that time?

A. At that time they -- they licensed source code for the UNIX operating system. Source code is the code where it's -- it is a code that you actually go in and manipulate and you work with. So what we had was a lot of computer manufacturers, also government agencies, that licensed the source code because they wanted to go in and be able to work with it. And you have got a computer, you take the source code which is a generic operating system, you know how to manipulate that source code so it would work on your computer. So what you did was you created your flavor

543

of UNIX. And so we licensed the source code for companies to do that. These are companies like Hewlett Packard, IBM, Stratus, large -- every large computer manufacturer in the world licensed to UNIX. And we licensed them the source codes so that they could do that.

Q. And how long were you at USL?

A. I was at USL until 1993 when Novell purchased the business. I think it was officially called a merger with USL but it was a purchase of the business from AT&T.

Q. And did you transition over to Novell at that point?

A. Yes, I did.

Q. And in what capacity?

A. I first went as -- I continued in sales operations but just a short time, just a few weeks, and then I was put into doing contracts and licensing.

Q. And what does that mean "doing contracts and licensing"?

A. I became a person at Novell who worked with the sales people, product management, development people and the customers. We actually licensed the source code I talked about earlier.

Q. And did there come a time when you became aware of a sale of the UNIX business to Santa Cruz?

A. Yes, there was.

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Q. When did you become aware of that?

A. That was the fall of 1995. We were all -- all of the employees were called down to a cafeteria in the building where we were at. And the executives from the -- from Novell's UNIX group were there. Mike DeFazio was the lead executive and he chaired it and he made the announcement that Novell was going to refocus their attention back to their net ware product, which was their flagship product, and as a result of that refocussing, they were going to be selling the UNIX business and the technology to a company called Santa Cruz Operation.

Q. And did you have any particular reaction to that announcement?

A. God I hope I go to Santa Cruz Operation.

Q. Did that end up happening?

A. Yes, it did.

Q. And in what capacity did you end up going to Santa Cruz?

A. Pretty much the same the job I had. We had three license -- three people that did licensing and contracts at Novell and we moved to the Santa Cruz Operation. And we primarily handled the source code licensing, but Santa Cruz was also in the business of licensing a binary product. They weren't a computer manufacturer, but they had developed a UNIX for what they -- it is sort of an Intel platform. I

545

don't want to get too complicated, but it was kind of like Microsoft windows, but it was a UNIX operated system. And they sold binary. You can go into a store and you can buy a copy of Microsoft windows and load it onto your computer.

Santa Cruz had a product where you could go to a distributor, go to a store, and actually buy a UNIX product, same type, a binary, and load it onto your computer. So Santa Cruz was in that business and now by purchasing the UNIX Technology they were in the source licensing business. So we did a combination of all of that.

Q. Did you participate in any transition process upon the announcement of the sale from Novell to Santa Cruz?

A. Yes. Starting in the -- starting after the announcement in September of '95 that they had -- Novell was selling the business, um, they put together a lot of employees in the transition teams. And these handled all of the different areas of the company from the development, product management, IT, contracts, finance, and they had to work together to see how best to transition the business from Novell to Santa Cruz. And we met over the next few months.

Q. And in the course of those transition team meetings, do you recall any discussion about the notion that copyrights had been retained by Novell?

MR. ACKER: Objection, hearsay, Your Honor.

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MR. NORMAND: The question is whether he recalls any such statement being made.

THE COURT: I believe I can have this answer given but not beyond that if it is going to be specific.

MR. NORMAND: Thank you, Your Honor.

Q. (By Mr. Normand) Mr. Broderick, do you recall the question?

A. Yes. So I can give a simple yes or no?

THE COURT: You may.

THE WITNESS: Give the question again.

Q. (By Mr. Normand) Do you recall any discussions in these transition meetings about whether Novell was retaining any UNIX or UnixWare copyrights as part of the transaction?

A. Retaining ownership, no, I did not hear any comments.

Q. Did the transition team discuss the issue of whether copyright notices in the source code had to be changed?

MR. ACKER: Same objection, he is asking for hearsay. Objection, Your Honor.

MR. NORMAND: Same response, Your Honor. It doesn't go to the truth, it goes to what Mr. Broderick remembers and how it bears on what he did during the transition work.

THE COURT: Well beyond that, isn't this a party

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opponent?

MR. ACKER: Well, I don't know who he said he heard things from.

THE COURT: Well, until we get more specific, I'm going to have to allow the questions to be asked.

MR. ACKER: All right.

Q. (By Mr. Normand) I take it you don't recall the question?

A. Give it again.

Q. Do you recall during the transition work as to whether the issue of needing to change copyright notices came up?

A. Yes.

Q. And in what sense did that issue come up?

A. The Novell software engineers announced that they were completing the changing of the Novell copyrights in UNIX to Santa Cruz.

Q. And do have any firsthand knowledge as to how that work was undertaken?

A. No.

Q. In the course of explaining what copyright notices would be changed, do you recall there being any discussion about some copyright notices not being changed?

MR. ACKER: Your Honor, again I'm going to object. That is really very vague as to who these comments were

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allegedly coming from. I don't think he has clearly established if it is going to come from a party to be qualified as a party admission.

THE COURT: I would agree with Mr. Acker. You have got to ask more specific questions before you elicit this type of testimony.

MR. NORMAND: Thank you, Your Honor.

Q. (By Mr. Normand) In the course of this transition work, did you undertake to send out any letters to UNIX customers to inform them of the transition that was happening?

A. Yes. As part of the transition meetings it was Burt Levine who was the attorney at the Novell UNIX Group who was tasked with putting together a notice letter. We had some discussion on who the notification should go to the licensees from, Santa Cruz or Novell, and it was decided that Novell ought to send the license because, you know, if you received a letter from somebody saying make your mortgage payments to me now, you probably wouldn't comply with it and have your bank to do it.

So Burt Levine drafted up a letter that would go to all of the general licensees, all of the ones that had the standard license agreements. And he drafted it up and passed it around to some of us to look at. And that letter was sent down to all licensees. Then what we did was we had

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to go through because there was some contracts, mostly third party suppliers, or we had some special agreements with some other companies that required their approval of an assignment of the contracts. So we had to go through, dig through the files, and find those companies and they were given a slightly different letter where it was, you know, Novell is doing this, Santa Cruz is doing this, please sign below your acceptance of the assignment.

Q. In your work with respect to the drafting of these letters, did you ever speak with Mr. Levine about the issue of any retention of copyright?

A. No.

MR. NORMAND: Your Honor, I would propose to put into evidence SCO Exhibit 580.

THE COURT: Which number again?

MR. NORMAND: 580, Your Honor.

THE COURT: 580. Any objections to this?

MR. ACKER: No, Your Honor.

THE COURT: 580 will be admitted.

MR. NORMAND: Thank you, Your Honor.

(Whereupon, Plaintiff's Exhibit 580 was received into evidence.)

Q. (By Mr. Normand) Do you see the document on your screen?

A. Yes.

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Q. I'm going to blow up the language so you and the jury can see it better. Is this letter in the form of the letters you just described?

A. Yes, it is. This is in the form of the letter of one of the customers who would have to approve the assignment of the agreement.

Q. And, again, what was your understanding as to the purpose of this letter and letters of this sort?

A. Well, it was to advise any licensees or people we had contracts with that Santa Cruz owned the business and the technology.

Q. Would you pull up the first two paragraphs? Actually, the one above that as well. The opening paragraph of the letter, Mr. Broderick, as can you see, quote, "as you may know, Novell transferred to The Santa Cruz Operation, Inc., SCO, its existing ownership interest in UNIX System-based offerings and related products as listed in Attachment A of this letter "collectively Transferred Products."

Could we go to Attachment A. Attachment A begins, "Novell Software Products, all releases of UNIX System V and prior Releases of the UNIX System. All UnixWare releases up to and including UnixWare Release 2 (encompassing updates and upgrades to these releases as well.)

Do you see that language, Mr. Broderick?

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A. Yes, I do.

Q. How does this language comport with your understanding of what ownership interest Novell had transferred?

MR. ACKER: Objection, Your Honor, based on hearsay, based on the testimony so far of what his understanding is of what ownership rights --

MR. NORMAND: It is not all based on hearsay, Your Honor. It is his personal experience and his work and his work drafting the letter and the transition team meetings and his employment.

MR. ACKER: He has testified that he had no involvement in the APA, any of the contracts. That anything that he heard was heard from others and he has already established that is hearsay. This is going to be based on hearsay.

MR. NORMAND: We have established, Your Honor, that what he heard, at least some of what he has heard, he has heard from Novell employees.

THE COURT: I will overrule the objection.

Q. (By Mr. Normand) The question, Mr. Broderick, was how does this description of the ownership interest that Novell had transferred comport with your understanding of what you believe Novell had transferred during the course of your employment?

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A. It is -- it is exactly consistent with what I know of the sale from Novell to Santa Cruz. In fact, during the transition teams, we were given portions of the Asset Purchase Agreement where Novell sold all right, title and interest in the assets. This letter seems to state that they sold all their interests.

Q. Go back to Page 1. Thank you. Mr. Broderick, the second paragraph begins, "it makes immeasurably more business sense for SCO, as the owner of the Transferred Products, to handle directly with Prentice-Hall any matters that may become relevant under the subject agreement." Do you see that language?

A. Yes.

Q. How does that language comport with your understanding of what Novell was intending to achieve by sending these letters out?

A. It was telling people don't call us any more, call SCO.

Q. Why?

A. Because SCO owned divisions from that point on.

Q. Do you recall who Prentice-Hall was, the addressee in this letter?

A. They were a publisher, book publisher, they published some books on UNIX.

Q. Do you see at the bottom of this paragraph,

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Mr. Broderick, it states, "accordingly, Novell would appreciate Prentice-Hall's formal concurrence under Section 28 of the subject agreement, to Novell's assignment of its rights and delegation of any remaining obligations under the subject agreement insofar as such rights and obligations relate to the Transferred Products to SCO. Novell represents that SCO has undertaken in writing to assume such obligations." Do you see that language?

A. Yes.

Q. Is it your understanding that SCO had undertaken to assume the obligations of the UNIX business?

A. Absolutely.

Q. Now, let me take a step back, Mr. Broderick. You started to speak to this issue already. You did go over to Santa Cruz as part of the transition; is that right?

A. Yes, I did.

Q. And what was your job responsibilities the next several years?

A. It was as a licensing and contracts manager.

Q. What did you do from day-to-day?

A. I wrote contracts, issued contracts. I dealt with sales people and customers, negotiated terms of the contracts. We answered questions from current contract, you know, companies that had contracts as far as what their rights were under the contract. If you wanted to license

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software from Santa Cruz Operation, you went through the sales people to the contracts people, and I was one of the contracts people.

Q. Did you approach your contracts work at Santa Cruz in any way different from how you approached it when you were at Novell?

A. With the exception that we added that extra binary business to some of our responsibilities. As far as the source code goes, they were exactly the same. In fact, in the transition meetings, we were directed by Novell on the source code licenses not to make any changes to the licenses except to replace the name Novell with Santa Cruz.

Q. Is that what you did?

A. Yes.

Q. What were the agreements that Novell and Santa Cruz actually used in licensing source code products to licensees?

A. The source code products it is -- it started with an umbrella agreement called the software agreement. And that software agreement --

Q. What do you mean by umbrella agreement?

A. It is -- overall, it was the general terms and conditions that you would agree to when you licensed the source code product. So when I talk about -- we always refer to it as an umbrella agreement because it covered the

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general terms and conditions. We will license you source code, you can do this with the source code, you can't do this with the source code, you have to protect the source code, you can't tell anybody or show anybody the source code because the source code is the company's family jewels. If you lose control of the source code, you're out of business.

Now, what we did was with the software agreement, it was that umbrella agreement that had the general terms and conditions for being able to license a source code product.

MR. NORMAND: Okay. Your Honor, I would move into evidence SCO Exhibit 4?

MR. ACKER: No objection, Your Honor.

THE COURT: Exhibit 4 will be admitted.

(Whereupon, Plaintiff's Exhibit 4 was received into evidence.)

Q. (By Mr. Normand) Do you see the document on the screen, Mr. Broderick?

A. Yes.

Q. Do you recognize this document?

A. Yes, this is a software agreement.

Q. That is the document you just described?

A. Yes.

Q. And with whom is this software agreement or who is it between?

A. This is between AT&T and IBM.

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Q. And in the course of your work at Santa Cruz, did you have occasion to read and review and grapple with documents of this sort?

A. Yes, I did.

THE COURT: Mr. Normand, would you be looking for an appropriate time for us to recess for the afternoon?

MR. NORMAND: I think in a minute or two we'll be there, Your Honor. I apologize for the delay.

THE COURT: All right.

Q. (By Mr. Normand) Mr. Broderick, we're having brought out Section 7.03 of the software agreement which states, "AT&T warrants that it is empowered to grant the rights granted hereunder." Do you see that paragraph?

A. Yes, I do.

Q. It continues a couple of lines down, "AT&T makes no representations or warranties of merchantability or fitness for any particular purpose, or that the use of any Software Product will not infringe any patent, copyright or trademark." Do you see that language?

A. Yes, I do.

Q. In the course of your work, did you develop an understanding or view as to what the point of this kind of language and software agreement was for?

A. Yes, I did.

Q. In summary, what was the view that you developed?

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A. Well, what they were doing was they were licensing the software. You are licensing the software product. Here is our software product, um, go ahead and license it and go ahead and use it. Don't come back to us and tell us it won't run your Ferris Wheel.

Q. Now we're going to stop in a few minutes. Did the software agreement actually license any product as such?

A. No, it didn't. It was the umbrella agreement that had general terms and conditions. If you look through this software agreement, you get -- you get the right at some point in time to license a software product. This does -- this agreement does not give you a software product. There are no fees associated or royalties associated with this software agreement.

MR. NORMAND: Your Honor, on that cliff-hanger, we will end.

THE COURT: All right. Thank you. Um, we will recess. You get to come back tomorrow, Mr. Broderick. We will recess for the afternoon.

Ladies and gentlemen of the jury, I do not want to, again, be too specific other than to remind you about the importance of you avoiding any exposure about this case on the television, radio, newspaper, internet. Again, do not do any research on your own. Do not do anything that would violate those instructions you have been given. More

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specifically, do not discuss the case with anyone or allow anyone to discuss it with you. If anyone attempts to, again I will remind you to bring it to my attention.

Finally, as I have told you today, you have heard a lot of evidence so far. You have yet to hear a lot more. So it would be inappropriate for any of you to be making up your minds about this case in any respect. And we'll start at 8:30 in the morning and we will be in recess until then.

THE CLERK: All rise for the jury, please.

(Whereupon, the jury left the courtroom.)

THE COURT: Mr. Broderick, we will have you back here I believe at 8:30 in the morning. You intend to continue with this witness, don't you, Mr. Normand?

MR. NORMAND: Yes, Your Honor.

THE COURT: Please do not discuss your testimony with any other witness or in the presence of any other witness. Do not discuss this matter with anyone other than perhaps attorneys. All right.

THE WITNESS: Certainly.

THE COURT: Thank you. Counsel, the issue about the witness that suddenly appeared out of nowhere, is it a significant issue that we need to meet earlier in the morning to deal with it?

MR. SINGER: I don't believe so because what I think we may be prepared to do, I mean this witness, Mr. Keller,

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was listed in initial 26(a)(3) disclosures and was in the joint pretrial order as issued by the court. He was not on the forms which were submitted to the court for witnesses. And we understand that therefore there may be some surprise to Mr. Jacobs and to Novell's team. So instead of us trying to call him tomorrow, what we would propose to do is call him out of turn. He is going to be out of the country next week on business, he works for Huntsman Corporation, and he would then appear out of turn during the third week with the court's permission.

And hopefully during the time, between now and then, Novell's counsel and myself would be able to work out any issues regarding his privilege point which has been raised. That is how we would propose to handle the issue.

THE COURT: Mr. Jacobs?

MR. JACOBS: Your Honor, if we could meet and confer this afternoon and I'll alert your office if we need to come in early tomorrow morning on this topic, all right?

THE COURT: All right. And unless I hear from you, then we will presume we'll start at 8:30 then. All right. But we are agreeable to start earlier, if necessary. I would rather we deal with it before 8:30 instead of keeping the jury in the jury room too long in the morning.

Anything else before we recess?

MR. SINGER: I was going to mention the order of

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witnesses or the other witnesses for tomorrow.

THE COURT: If you will, please.

MR. SINGER: We will finish with Mr. Broderick. Then we are going to call Mr. Mattingly and then Mr. Maciaszek. We may -- I'm not certain of the order of those, one order or the other, it will be Maciaszek and Mattingly or Mattingly and Maciaszek. And then we will go to the videotape deposition of Ms. O'Gara. We think that would be the final -- that will take us through the end of the day. If not, we will play another deposition.

THE COURT: All right.

MR. JACOBS: Two things.

THE COURT: Yes, sir.

MR. JACOBS: We talked earlier about the relationship between the evidence coming in on the breach of the covenant of good faith and fair dealing relating to Section 4.16(b) and the slander of title claim. And I think where we left it is that you were considering -- as it is turning out, evidence is coming in on both claims during the course of the trial.

I think where we left it is that you were going to consider instructing the jury that they're going to hear evidence in the interest the efficiency, something like that, but it is reserved for the court. So we would, now that it has happened, it has crystalized in the proceeding,

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we thought it might be a good time to renew that request.

THE COURT: Mr. Jacobs, my desire would be not to tell the jury now because my fear is that they would begin to speculate what they have to pay attention to and what they don't. I think it would be best to just simply make a strong -- give them strong instruction at the end that you ought not to worry yourself about the fact that there will be some issues you may have heard evidence to that you are not asked in the verdict form to decide. But can you see my concern? If I do it now, I think it would be fairly natural for them to begin wondering okay what is and what isn't for us to decide.

MR. JACOBS: I understand, Your Honor. The second topic. We think that there was a quite significant door opening event yesterday and in opening statements. And I just want to pull up my notes on this. The topic is the admissibility or instructions to the jury of what happened during the course of this litigation over the past several years.

The court's prior ruling and strong indication was that the court was reluctant to have the jury hear about that. And we understand the court's reasoning in that regard. The door opening event is that in examining Mr. Duff Thompson yesterday, Mr. Singer asked him what we're going to colloquially refer to as the "to this day"

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question. He asked Mr. Thompson, isn't it true that to this day Novell is publishing the allegedly slanderous statements on its website? That was not inadvertent because three times in SCO's opening statement the "to this day" comment was made as well. SCO argued to the jury "to this day Novell is publishing these statements." Well that places into question Novell's continuing basis for making the statements for not taking down, I suppose, the statements from the website. And, of course, Novell's continuing intent is heavily informed by the rulings that have been received over the course of the past several years.

What we propose to do is crystalize this in writing. We would -- we realize it is something that the court has given this whole question, that the court has given a lot of thought to this, so we would like to submit something tomorrow. Maybe give SCO until the first thing Monday or something like that. It is -- it is not urgent that the jury be informed of this, but I think both sides should know where this issue would fall out going forward.

THE COURT: Okay. Your point is well taken and I would request that you put it in the form of writing with a specific request for SCO to respond.

MR. JACOBS: Perfect. Thank you, Your Honor.

THE COURT: All right. Anything else?

MR. SINGER: Um, Your Honor, there are some disputes

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regarding Ms. O'Gara's deposition. Would you like to undertake those now or bring us in early in the morning or --

THE COURT: I would rather you get me something in writing as I have requested. It always easier for me to read it in advance before I hear argument on it.

MR. SINGER: We will submit something this afternoon.

THE COURT: Thank you. We do not have any hearings this afternoon, so you don't need to move anything more than you feel you need to. We'll be in recess. Thank you.

(Whereupon, the hearing adjourned for day at 1:36 p.m. The jury trial will continue at 8:30 a.m. on Friday, March 12, 2010.)

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